The New Jersey Senate on Monday passed proposed legislation that would allow Tesla Motors Inc. to sell its electric vehicles directly to consumers in the Garden State and undo a controversial regulation that requires manufacturers to sell cars through dealerships.
The bill passed the Senate on a 30-2 vote and will now be sent to the desk of Gov. Chris Christie for his signature. The proposal received overwhelming support in the New Jersey Assembly, passing on a 77-0 vote, with only one abstention.
If approved, the legislation would override a New Jersey Motor Vehicle Commission decision from last year that requires new vehicle sales go through brick-and-mortar franchise agreements.
The legislation allows manufacturers to sell the vehicles at four locations in the state so long as it owns or operates at least one retail facility in New Jersey for servicing vehicles.
On June 5, the Assembly Consumer Affairs Committee advanced the litigation in a 5-0 vote, with Eustace telling the panel he doesn’t expect the changes to disrupt the existing auto market in the near future.
The legislation is part of a multipronged effort to overturn the MVC’s decision, which made New Jersey the third state to ban direct-to-consumer auto sales after Arizona and Texas. The New Jersey ban got a combative response from Tesla, which accused the MVC of buckling under pressure from auto dealership advocates in an official blog post.
Tesla is also attacking the MVC’s decision with a formal challenge in the state Appellate Division and the filing of a Superior Court complaint against the MVC in April alleging it is violating New Jersey’s Open Public Records Act by withholding documents related to its decision. That litigation is pending.
Direct-sales bans in various states have been backed by auto dealer associations that see the new model as a threat to their business model. Tesla only accounts for a fraction of U.S. auto sales: a little more than 22,000 out of 15 million cars sold in the U.S., according to the Federal Trade Commission.
Auto dealers could be left out of the loop if General Motors Co. or another large U.S. automaker decides in the future to make a shift in its business model and also choose to go with direct sales.
Tesla is one of the few areas where Democrats and Republicans could find a common cause. Congressional Republicans, including 2016 presidential hopeful Marco Rubio, have criticized the Tesla sales ban on free-market grounds. Democrats, meanwhile, have backed Tesla’s innovation and the environmental benefits of electric cars. Tesla has sought to leverage the public backlash against the sales bans to pressure lawmakers for a legislative fix.