Tesla Faces New Jersey Challenge as Rule Change Looms

Tesla Motors Inc., the electric-car maker that doesn’t have franchised retail dealers, may be forced to close its stores in New Jersey if the state changes rules for selling autos, Diarmuid O’Connell, the company’s vice president of business development, said on a conference call.

The automaker, based in Palo Alto, California, said it learned yesterday that the New Jersey Motor Vehicle Commission is reviewing a change today to block manufacturers from being licensed to sell cars directly in the state. This comes the same day Tesla is to meet in Ohio with officials to find a compromise that would let it keep selling its luxury electric cars there.

“Clearly, a decision was made rather abruptly and certainly without any consultation with us,” O’Connell said in the call on developments in New Jersey. “There are probably a couple levels of bad faith and surreptitious behavior.”

Car-sellers in Ohio, New York, Minnesota, Georgia and elsewhere in the past year have sought to block Tesla from directly retailing its models. Texas dealers successfully backed a law setting the nation’s toughest restrictions on Tesla, and Arizona, Colorado and Virginia also imposed limits on its retail activities.

Action Today

The New Jersey agency, under Governor Chris Christie, a Republican, will take up the issue today at 2 p.m. in Trenton, Tesla said. The carmaker currently has two stores in the state.

“Since Tesla first began operating in New Jersey one year ago, it was made clear that the company would need to engage the Legislature on a bill to establish their new direct-sales operations under New Jersey law,” said Kevin Roberts, a spokesman for Christie. “This administration does not find it appropriate to unilaterally change the way cars are sold in New Jersey without legislation and Tesla has been aware of this position since the beginning.”

Should the commission approve a rule change today, the move would “shut us down and put people out of work” in the state, O’Connell said.

Tesla was little changed at $238.84 at 1:19 p.m. in New York.

Before it's here, it's on the Bloomberg Terminal.