Car Industry

New Jersey reverses ban on Tesla's direct auto sales

Gov. Chris Christie signs bill Wednesday that allows the electric carmaker to open a maximum of four direct-sale dealerships in the state.

The electric carmaker can now sell its Model S sedan in New Jersey direct to consumers, reversing regulation imposed by the state in April 2014. Josh Miller/CNET

Tesla just notched another victory against the traditional auto industry: it can sell its electric cars in New Jersey after a nearly year-long ban in the Garden State.

New Jersey Gov. Chris Christie signed a bill Wednesday afternoon reauthorizing the Palo Alto, Calif.-based electric automaker to open a maximum of four direct-sale stores with at least one service center. New Jersey last April capitulated to lobbying demands from the New Jersey Coalition of Automotive Retailers by passing regulation that halted Tesla's ability to sell its electric cars direct to consumers instead of through independent dealerships.

Tesla's Model S sedans, which range in price between $70,000 and into the six figures, are selling at a faster clip each year, and New Jersey is home to the fourth-largest luxury car market in the US -- behind New York, California and Florida.

Tesla has clashed with the traditional auto industry, especially in states that require carmakers to sell their vehicles through third-party dealerships. Tesla CEO Elon Musk has said that electric vehicles, as relative newcomers in the market, should not be subject to standard automobile sales procedures. Musk has criticized the practices of car dealers, saying they up-sell consumers to items they don't need or steer them toward more expensive models that yield higher commissions.

Musk insists that Tesla be allowed to sell its cars like Apple sells consumer technology, in specialized stores dedicated to a simplified line of cars.

"This [sales] model is not just a matter of selling more cars and providing optimum consumer choice for Americans, but it is also about educating consumers about the benefits of going electric," Musk said last year regarding New Jersey's initial ban. Such education "is central to our mission to accelerate the shift to sustainable transportation, a new paradigm in automotive technology."

A few have resisted Musk's message. Tesla's sales model is still outlawed in Texas, Virginia, Arizona and Michigan. In those states, as was the case in New Jersey last year, auto retailer coalitions lobbied state government officials to ban direct sales and force Tesla to sell through them.

"If you're an Internet billionaire, maybe you think the world revolves around you, and the world springs from your laptop," said Jim Appleton, president of the New Jersey Coalition of Automobile Retails, in an interview with The Verge last year. "Well, I got news for him. This is not a new law, Tesla is operating illegally, and as of April 1st, they will be out of business unless they decide to open a franchise."

One year later, however, it appears the state of New Jersey is welcoming Tesla.