Editor's note: An earlier version of this story incorrectly described what bills covering direct sales have passed in New Jersey's two legislative chambers.
Tesla Motors Inc., in a court filing submitted Tuesday, argued that New Jersey regulators have no authority to shut down direct sales at the electric-vehicle maker’s stores in the state.
Tesla is appealing a rules change made in March by the New Jersey Motor Vehicle Commission. That change blocked Tesla’s New Jersey stores from selling vehicles as of April 15, when their licenses expired.
But the top representative for dealers in the state says the conflict likely will be resolved legislatively before Tesla’s regulatory challenge is even heard.
“Something may be on the governor’s desk and signed before they even decide to grant oral arguments at all,” said Jim Appleton, president of the New Jersey Coalition of Automotive Retailers.
‘Made in error’
Tesla filed for the appeal back in March, and Tuesday’s brief details the company’s reasons why the Superior Court of New Jersey should overturn the commission’s rules change.
“We believe the regulatory action was made in error,” Diarmuid O’Connell, Tesla vice president of business development, told Automotive News. “We’ve prepared a legal action to deal with that, and I’m feeling pretty good about that.”
In the filing, the company argues that:
- New Jersey’s franchise statute, which regulators purported to rely on, doesn’t apply to Tesla because it has no franchisor-franchisee relationships.
- The New Jersey Motor Vehicle Commission has limited powers and is not entitled to enforce the franchise statute anyway.
- Certain elements of the rule previously have been found to violate the New Jersey Constitution. Those are requirements on minimum square footage, multiple car models on display and on-site servicing equipment.
At least two bills are pending in the New Jersey Senate that would give Tesla an exemption to sell directly at up to four stores in New Jersey. It now has two stores.
One of those bills deals just with the Tesla issue and passed the state Assembly earlier this year. The second bill also would update the state’s auto franchise law. Appleton said he expects the Senate to take a vote on the franchise bill in late September or October. In addition to the exemption for four factory-owned stores, that bill requires Tesla to have two service facilities, and any fifth store would have to be franchised, Appleton said.
“It appears that Tesla’s best and shortest route to relief is part of a package that addresses both Tesla’s concerns and the dealers’ concerns,” Appleton said.
Back in the spring, the rules change sparked controversy in New Jersey. Dealers said Tesla never should have been granted licenses and that the commission was merely bringing regulations in line with long-standing state law that requires franchised dealerships.
Tesla accused Gov. Chris Christie’s administration of going back on its word to delay the regulation. Christie was pilloried by Tesla supporters and even some conservatives for what they deemed anti-free market actions. In July, Christie called that criticism “complete crap.”