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In major reversal, New Jersey allows Tesla to sell its cars directly, without dealerships

In major reversal, New Jersey allows Tesla to sell its cars directly, without dealerships


Governor Christie signed the bill into law this afternoon

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Almost exactly one year after it was banned from selling its cars directly in New Jersey, Tesla will be back in business in the Garden State. Governor Chris Christie signed into law a bill this afternoon that reversed last year's ban. The new legislation comes with some limits. Tesla can only open a total of four direct sale dealerships and has to operate at least one service center. But it's a major win following a heated war of words that saw Tesla CEO Elon Musk compare local dealers to a mafia protection racket subverting the democratic process.

New Jersey represented the fourth largest market for luxury automobiles — like Tesla's Model S, which can tip the scales past $100,000 — trailing only New York, Florida, and California. So it's a key win for the electric car company. Bans on direct sales have kept Tesla out of Virginia, Arizona, Texas, and Michigan. Legislators in some of those states are working on legislation similar to the reversal just passed by Christie.

Musk has argued in the past that direct sales are key to building out a fledgling industry. "We strongly believe it is vital to introduce our own vehicles to the market because electric cars are still a relatively new technology. This model is not just a matter of selling more cars and providing optimum consumer choice for Americans, but it is also about educating consumers about the benefits of going electric, which is central to our mission to accelerate the shift to sustainable transportation, a new paradigm in automotive technology."

Local auto dealers saw things differently. "If you’re an internet billionaire, maybe you think the world revolves around you, and the world springs from your laptop," Jim Appleton, the president of the New Jersey Coalition of Automobile Retailers, told The Verge last year. "Well, I got news for him. This is not a new law, Tesla is operating illegally, and as of April 1st, they will be out of business unless they decide to open a franchise."

Of course, Musk also believes cars operated by humans will eventually be illegal. It's unclear how we'll shop for cars in a future where we never get to drive them.

Update: The New Jersey Coalition of Automobile Retailers sent along the following statement:

The factory-store model advocated by Tesla, on the other hand: Creates a vertical monopoly and eliminates competition. Limits consumer access to qualified, independent warranty and safety recall service offered by independently owned and operated neighborhood new car dealerships. Generates jobs, tax revenue and economic benefits in Silicon Valley and on Wall Street, but not here in New Jersey.