Tesla Fights New Jersey Ban on Direct Car Sales in Court
Tesla Motors Inc. (TSLA) appealed New Jersey’s ban on direct auto sales, arguing that the decision thwarts the carmaker’s mission of providing sustainable transportation and unfairly favors entrenched franchise dealers.
The action comes as Elon Musk, Tesla’s chief executive officer and co-founder, fights with car dealer groups across the U.S. to let the Palo Alto, California-based maker of electric Model S sedans sell directly to consumers from company stores.
Tesla challenged a direct-sales ban imposed by a New Jersey commission in state Superior Court, according to documents made available by the company. The filing couldn’t immediately be verified in court records.
Restrictions by U.S. states on how Tesla sells its battery-powered Model S, priced from $71,000, would slow Musk’s plan to shift his company from a niche maker of battery-powered luxury cars to an automotive powerhouse. Tesla’s fight with dealers has increased scrutiny of U.S. auto franchise rules that go back eight decades.
“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.”
Tesla rose 6.1 percent to $230.29 at the close in New York, the biggest one-day jump since Feb. 25. The shares have advanced 53 percent this year. (Pearson and Ohnsman/Bloomberg)