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Pro-Tesla Legislation Passes Assembly

Jun 23, 2014

A3216 Soon To Be Heard By Senate

The New Jersey Assembly voted 77-0 on June 16, 2014 to approve a bill (A3216) that will allow Tesla to operate up to four (4) retail facilities where they can sell new vehicles directly to consumers. Tesla would only be required to have one (1) service center in NewJersey. While the legislation does not expressly mention Tesla Motors, the bill was written for any all-electric company with a new dealer license in effect on January 1, 2014. This criteria only applies to Tesla. This bill, if signed into law, would change the rules for a company that captured just 0.1% of NewJersey auto retail sales in 2013.Many Legislators—even those who voted in favor of the bill—voiced concerns that the legislation could hurt traditional dealerships, if Tesla ever becomes a major industry player. This prompted some lawmakers to suggest that there should be some kind of time limitations included in the bill.NJ CAR is committed to working with members of the Legislature who are exploring options that would allow a start-up electric car maker, like Tesla, a reasonable period of time to ramp up operations (or sales volume) before they conform their business operations to the franchise model. However, NJ CAR does not believe the bill that passed the Assembly is an ideal solution and will continue to work with Legislators to find a solution that better balances the needs of consumers and the economy.The franchise system of responsible local businesses:

  • Creates fierce intra- and inter-brand price competition for motor vehicle sales and service;

  • Prevents manufacturer monopolies within the motor vehicle sales and service network;

  • Ensures ready access to independent warranty and safety recall services; and

  • Generates good-paying local jobs, tax revenues and economic benefits.

NJ CAR contends that sales through franchised dealers ensure competition and consumer access to independent warranty and safety recall service, both of which are grievously harmed in a factory-direct model.The bill is expected to be heard by the Senate Commerce Committee very soon.