Tesla: N.J. can't pull plug on us

The Tesla store in Paramus, N.J., will become a gallery for the time being.

Tesla Motors CEO Elon Musk says the electric-vehicle maker will explore "judicial remedies" to restore its ability to sell directly from two factory-owned stores in New Jersey.

A rules change on dealership licensing by the state's motor vehicle commission last week will block those stores from selling vehicles as of April 1. That's when their existing licenses expire.

The locations will stay open as galleries, displaying Tesla cars and answering consumers' questions, Musk said in a statement Friday afternoon. But store staffers won't be able to discuss price or complete a sale. New Jersey buyers will still be able to purchase vehicles using Tesla's Web site, Musk said.

Tesla called the move "an affront to the very concept of a free market."

Dealers say the commission was merely bringing its regulations in line with long-standing state law that requires franchised dealerships. They said Tesla never should have been granted licenses.

Tesla says its licenses were properly granted and shouldn't be taken away.

"The statute in New Jersey plainly allows Tesla to be licensed to sell cars there," Diarmuid O'Connell, a Tesla vice president, wrote in an e-mail.

The rules change sparked a firestorm in New Jersey. Tesla accused Gov. Chris Christie's administration of going back on its word to delay the regulation. A Christie spokesman denied any such deal, saying it was made clear to Tesla from the outset that the company would need to lobby the legislature for a bill to establish direct-sales operations. O'Connell called that assertion from the governor's office false.

The controversy drew national headlines. Tesla supporters blasted the New Jersey Coalition of Automotive Retailers and its president, Jim Appleton, on Facebook and Twitter, calling them horrible, greedy and economic terrorists.

Appleton told Automotive News dealers aren't looking to put Tesla out of business. "I don't want to see Tesla close their doors," he said. "I want to find a way to keep Tesla in New Jersey. I just want them to operate in a manner consistent with the law."

You can reach Amy Wilson at awilson@crain.com -- Follow Amy on Twitter: @theamywilson



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