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Tesla vs. NJ: Electric carmaker wins initial direct sales battle but with a caveat

19 June 2014, 2:41 pm EDT By Mark Hawver Tech Times
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The state of New Jersey has reconsidered its previous ban on the direct sale of Tesla all-electric automobiles within the state.

The New Jersey Assembly voted unanimously in favor of a bill that will allow Tesla and other zero-emission vehicle manufacturers to open their own showrooms and sell their vehicles directly to consumers. The law applies to manufacturers who were licensed by the state motor vehicle commission prior to Jan. 1, 2014. One caveat is that the manufacturer must also operate a service center in the state.

The bill will now move to the Democrat-controlled New Jersey Senate, where it is expected to be reconciled with a Senate version of the bill and passed.

One of the Assembly's bill sponsors, Assemblyman Tim Eustace (D-Bergen) said, "New Jersey prides itself as being pro-business, pro-innovative and pro-jobs. And this (Tesla) is a company that is an American company, an American idea."

The bill is a turnaround from the ban that was imposed on Tesla in March by new regulations propelled by Gov. Chris Christie-appointed members of the New Jersey Motor Vehicles Commission. As a result, Tesla was forced to convert two showrooms in the state into "look, but can't buy" galleries. If the new legislation passes and is signed into law, Tesla may open an additional two sales facilities for a total of four, the limit mandated in the new legislation.

Christie has not taken a position yet on whether the bill will be signed or vetoed, according to a spokesperson.

The argument for and against allowing manufacturers to open company stores, often in competition with their franchised dealerships, is ongoing in many other states. New York just passed a law supporting the right of Tesla to keep its five showrooms open, while establishing other guidelines that protect franchised dealerships from manufacturer direct competition.

Tesla's position is that it has no franchisees against whom it competes. Franchised auto dealers of other brands worry that the manufacturers they represent will open up shop in their territories and undercut their vehicle pricing and service rates. A similar comparison, at least in a somewhat apples-to-automobiles manner, is the proliferation of stores that are licensed to sell Apple computers, iPhones, etc., versus the corporate-owned Apple stores.

Tesla vehicles are entirely powered by rechargeable batteries. Unlike hybrid gas-electric vehicles like the Toyota Prius, Tesla cars must be connected to a recharging station when necessary. Similar vehicles already on the market include the Nissan Leaf and the Chevrolet Volt.

The Tesla, though, is a luxury car that carries a base retail price of $71,000. The Tesla and other all-electric vehicles offer environmentally friendly zero-emission ratings.

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