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Tesla to appeal New Jersey direct sales ban

Tesla argues the state's Motor Vehicle Commission overstepped its authority in approving the rule changes, in violation of the state's constitution.
By Ananth Baliga Follow @antbaliga Contact the Author   |   April 2, 2014 at 5:06 PM
PALO ALTO, Calif., April 2 (UPI) -- Tesla Motors has decided to appeal a New Jersey state ban on selling cars directly to customers without the use of a dealership network.

The car company's share price ended the day six percent higher at $230.29, on account of the appeal. Filed last week in the New Jersey Superior Court, the appeal seeks to overturn a March 11 ban imposed on the direct sale of vehicles in New Jersey, a move seen as directed at Tesla. The appeal argues that the decision impedes the company's mission of providing sustainable transportation and unfairly favors franchise dealers.

“Franchise dealers have an inherent conflict of interest in selling electric vehicles,” Tesla said in court papers. “In order to do so effectively, they would need to enthusiastically tout the reasons why electric vehicles are superior to gasoline vehicles.”

“This is not something that they are going to do since gasoline vehicles represent virtually all of their revenue,” lawyers for Tesla wrote.

Tesla has been selling cars directly to customers instead of using a dealership network. Texas and Arizona have laws preventing Tesla from selling cars directly to customer, but Arizona lawmakers are trying to pass legislation that would green light Tesla sales in the state.

The New York Automobile Dealers Association and Tesla reached a deal last week that would allow the car company to deal its cars in New York City and the surrounding suburbs.

According to Tesla, the New Jersey commission exceeded its authority with the rule changes, which also violates the state’s constitution.

[CNN Money]
[Bloomberg Businessweek]

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