It’s been over six months since New Jersey put a halt to Tesla sales, and a bill that would restart sales has sat idle in the State Senate. Tesla has filed a hard-hitting legal brief that calls out the New Jersey Motor Vehicle Commissioner as part of a lawsuit to win back its dealership rights, reports NJ.com.
The latest legal brief claims that the New Jersey Motor Vehicle Commission’s operated outside its authority to enforce the Franchise’s Protection Act. Tesla claims that MVC commissioner Raymond Martinez, who was appointed by New Jersey Governor Chris Christie himself, even admitted that the MVC lacked the authority to enforce the Franchise’s Protection Act in a 2013 letter. That letter said that the Motor Vehicle Commission does not enforce the law “pertaining to the sale of motor vehicles by a franchisor and the ownership of a franchise by a franchisor.” The car dealer’s association needed to approach the State Supreme Court if it wanted to pursue action against Tesla.
Furthermore, Martinez even wrote that; “MVC has carefully reviewed Tesla Motors’ New Jersey motor vehicle license application and has consulted with the Division of Law, and has found no violations that could form the basis of license denial or revocation.” Pretty cut and dry, right?
Yet for reasons not fully explained, the Motor Vehicle Commission yanked Tesla’s dealer licenses in March, leaving one store unable to sell cars and two other proposed galleries left in a legal limbo. Chris Christie claims that Tesla has knowingly operated in New Jersey for two years outside the law, but the letter from Martinez seems to clearly contradict that statement.
Furthermore, the Franchise’s Protection Act can only be enforced in a franchisor-franchisee relationship, which Tesla doesn’t have because every store is factory owned and operated. This is the same line of reasoning Tesla has used to win approval to sell its cars in states like Massachusetts, where the Supreme Court finalized Tesla’s victory over the local dealership association. Parts of New Jersey’s anti-Tesla law, which require a certain amount of square footage and to have more than one vehicle model on display, have already been found to violate the state constitution.
While the law will almost certainly end up siding with Tesla, it’s a frustrating situation that only serves to stifle actual competition in the auto industry. I guess car dealerships don’t really have much customer goodwill to burn, so they don’t have much to lose from taking an insanely unpopular stance on something like direct car sales.
Tesla however has everything to gain from keeping its factory-direct sales model, and Elon Musk’s victory over the antiquated dealership model may be delayed, but it still feels inevitable.