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Bill to allow direct Tesla sales in NJ makes progress
June 16, 2014
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The state Assembly today easily passed a bill that would allow electric car manufacturer Tesla to once again sell its cars at its New Jersey showrooms, and even open two more.
But the bill’s fate in the state Senate is unknown.
Without any debate, the Assembly approved the measure (A3216) by a vote of 77-0 with 1 abstention. It would allow Tesla, or any company that sells zero-emission vehicles directly to consumers, to open up to four stores in the Garden State — up from Tesla's current two showrooms. The company would also be required to have at least one facility that services the vehicles.
Although the New Jersey Motor Vehicle Commission had previously allowed Tesla to sell cars at its showrooms in Paramus and Short Hills, it halted the sales in April. The commission justified the decision on a state law from the 1970s that requires cars to be sold through dealerships.
The New Jersey Coalition of Automotive Retailers supported the MVC's rule change.
Tesla officials said the old sales model does not work for their product because dealerships make much of their money from maintenance, and Teslas — which currently start at around $70,000 — require far less maintenance than traditional cars.
The vote came after Assemblyman Tim Eustace (D-Bergen), a sponsor of the bill, rallied on the Statehouse steps with Tesla owners, environmentalists and the president of the New Jersey Commerce and Industry Association, John Galandak.
“We firmly believe that the bill sends the right message to innovators and entrepreneurs that New Jersey will not be an obstacle when creating, building or promoting and selling new products and services,” Galandak said.
While Eustace said he’s confident the bill will pass the state Senate, he said he had not yet gotten a commitment of support from Senate President Stephen Sweeney (D-Gloucester).
“Not yet, but we’re working on it,” Eustace said. “It’s a common sense bill. IT has bipartisan support. It brings jobs and revenues to the state. What’s to fight against?”
Chris Donnelly, a spokesman for Sweeney, said only that Sweeney "will review the legislation once it reaches the Senate.”
Sierra Club New Jersey Director Jeff Tittel said the bill’s passage in the Senate is not a sure thing.
“I am a little concerned there will be gridlock in the Senate,” Tittell said, citing “pushback from the people who got the rule changed in the first place.”
Indeed, the New Jersey Coalition of Automotive Retailers is not backing the bill. The group would prefer the state give Tesla a limited amount of time to make direct sales, and then require it to sell through dealers.
"No one wants to see Tesla out-of-business in New Jersey. Still, we’re not certain that A3216 is an ideal solution for New Jersey’s economy, the State’s consumers or Tesla’s long-term prospects for success," the group's president, Jim Appleton, said in a statement. "NJ CAR is committed to working with members of the Legislature who are exploring options that would allow a start-up electric car maker, like Tesla, a reasonable period of time to ramp up operations (or sales volume) before they conform their business operations to the franchise model. We feel this solution better balances the needs of consumers and the economy."
Tesla’s showrooms in Short Hills and Paramus remain open, but the company is not allowed to sell the cars there. New Jersey consumers who want to buy Teslas can still buy them online and have them delivered, or at Tesla showrooms in other states.