Tesla fights N.J. law banning direct selling

Electric-car company Tesla Motors has filed notice it intends to go to court to appeal New Jersey's ruling that would stop it from selling its vehicles in the state within two weeks.

The notice, filed last week to the state appellate division, seeks to overturn regulations imposed by the state Motor Vehicle Commission that require new-car dealers to have franchise agreements before they can be licensed.

Those regulations, proposed last fall and implemented last month, effectively will prohibit Tesla from using its direct-sales model. The company, based in Palo Alto, California, has been selling cars at two locations in New Jersey for about two years. Its electric cars retail for around $60,000 before incentives.

Tesla's filing says the Motor Vehicle Commission exceeded its authority when it amended the regulations and was under pressure from the New Jersey Coalition of Automotive Retailers, an industry group that represents new-car dealers. The deadline for dealers to be relicensed originally was Tuesday but was extended to April 15.

Tesla contends that forcing it to operate under a franchise agreement would be self-defeating.

"Franchise dealers have an inherent conflict of interest in selling electric vehicles," the filing says. "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."

The head of the New Jersey dealers' group, Jim Appleton, criticized Tesla's attempt to change the regulations and said in a statement that Tesla's business model stifles competition and limits car buyers' access to warranty and safety recall services.

"No one wants to see Tesla out of business in New Jersey," Appleton said. "But the (New Jersey Motor Vehicle Commission) must fairly and equitably enforce the law and Tesla should be required to play by the same rules as everyone else."

Tesla says in the filing that it was negotiating with state lawmakers earlier this year over the regulations when Republican Gov. Chris Christie and the Motor Vehicle Commission "abruptly changed course" and adopted the amendments.

A Christie spokesman didn't immediately return an email seeking comment on Wednesday, but administration officials disputed Tesla's claims last month.