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N.J. bill would let Tesla sell cars directly, reversing ban

Florida's Rubio says he supports Tesla's direct sales

Assemblyman Tim Eustace: "How does sending business to other states help New Jersey's economy?"

UPDATED: 3/25/14 4:38 pm ET - adds details

A New Jersey lawmaker has introduced a bill that would allow Tesla Motors Inc. to continue selling its electric vehicles directly to consumers, a practice banned by the state two weeks ago.

Assemblyman Tim Eustace’s bill follows the March 11 vote of the eight-member state Motor Vehicle Commission, which consists of members of Gov. Chris Christie’s cabinet and other gubernatorial appointees, to block Tesla’s business model that circumvents the use of traditional dealerships.

"Because of this new rule, an interested buyer looking for more fuel-efficient, environmentally-friendly vehicle options can go look and ask questions about an electric car in New Jersey, but will have to go to Pennsylvania or New York if he or she actually wants to buy the car," Eustace said in a statement. "How does sending business to other states help New Jersey's economy?"

As of April 1, New Jersey’s two Tesla stores will be banned from selling vehicles. That's when their existing licenses expire.

The locations will stay open as galleries, displaying Tesla cars and answering consumers' questions. 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.

Dealers said 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.

Tesla accused 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.

Three NJ bills

All told, three bills addressing the Tesla issue have been introduced in the New Jersey Legislature, said Jim Appleton, president of the New Jersey Coalition of Automotive Retailers. Appleton said Tuesday that, while he hasn’t yet seen the language proposed in those bills, the dealers coalition opposes them based on what he knows thus far.

But dealers are stressing to legislators that they aren’t trying to put Tesla out of business, Appleton said. If Tesla says it’s not ready to have franchised dealers, the association is open to talking about changes in timing or enforcement, he said.

“We hold as sacrosanct the franchise system,” Appleton said. “There is no resolution to this problem that allows Tesla to operate outside the franchise system forever. But we’re open to accommodations if Tesla can make the case that there’s a reason why they can’t.”

Tesla could not be reached for comment on the matter.

Rubio sparks Fla. debate

Meanwhile, an influential U.S. senator from Florida today voiced support for Tesla.

Sen. Marco Rubio, R-Fla., said on CNBC that he is OK with Tesla selling directly to consumers in his home state.

"It's an established product," Rubio said this morning. "Customers should be allowed to buy products that fit their need, especially a product that we know is safe and has consumer confidence beneath it."

Ted Smith, president of the Florida Automobile Dealers Association, said he was surprised by the comments made by Rubio, who is considered a possible GOP presidential candidate in 2016.

"It appears that Senator Rubio is confusing the concept of over regulation with regulation to protect customers," Smith told Automotive News today. "I’m surprised by Senator Rubio intertwining Tesla with laissez-faire economics."

Smith added: "[Sen. Rubio] has been supportive [of the FADA] in the past, he understood the need for franchise protections in law, not as protections for the dealers, but as protections for the consumers. I don’t think politicians are thinking things through -- they just want to jump on the new thing. If the entire system is controlled by the manufacturers, just think down the road what the prices might look like. It won’t look too good."

Smith said Florida dealers are making no attempt to stop any of Tesla's six Apple-like stores in the state "because we don’t see it as any threat to dealers. They are selling to such a finite number of people that it doesn’t matter..."

Amy Wilson, Sean Gagnier, Bloomberg and Automotive News staff contributed to this report.

Tags: Dealers Tesla

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