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New Jersey Revises Rules on Tesla

March 2015

By:  Steven A. Weisfeld, Esq. and Cristin M. Keegan, Esq.

On March 11, 2014, the New Jersey Motor Vehicle Commission revised its licensing regulations to make it clear that Tesla’s current method of selling cars in New Jersey is impermissible under New Jersey law.  Tesla’s current operating model is to sell vehicles directly to customers, and in locations which would not permit them to meet a two (2) vehicle per showroom requirement. The revised rules provide that all dealers of new vehicles in New Jersey must submit a copy of their franchise agreement, and must have facilities which can display two (2) vehicles simultaneously (N.J.A.C. 13:21-15). While these are new requirements in the regulations, the existing New Jersey Statute requires new motor vehicles to be sold by a franchisee (N.J.S.A. 56:10-27), and further requires that the premises used for selling vehicles be at least 1,000 square feet of floor space. (N.J.S.A. 39:10-19). Tesla had hoped that there would be public notice before the rule was passed. The New Jersey Motor Vehicle Commission, however, did not change the law in New Jersey, which, long before Tesla sought to sell its cars in New Jersey under its current business model, has prohibited the sale of motor vehicles directly by the manufacturer.

In June 2014, the New Jersey Assembly approved a bill that would enable makers of zero emission vehicles to sell them directly to customers but requires the manufacturer to have at least one service center in the State. The State Senate approved the bill on March 16, 2015. On March 18, 2015, Governor Christie signed the bill into law. Tesla's lawsuit against the New Jersey Motor Vehicle Commission from 2013 has since been dismissed.