Tesla Motors Inc (TSLA) to Stop Selling Electric Cars in New Jersey

Tesla retail

Tesla Motors Inc (NASDAQ:TSLA) was forced to stop selling its electric vehicles in New Jersey after the Motor Vehicle Commission approved a regulation prohibiting automakers from selling directly to consumers.

According to the Dow Jones, the electric car manufacturer will no longer sell its vehicles in the state effective April 1.  Tesla Motors Inc (NASDAQ:TSLA) has two stores in New Jersey with 27 employees, and had plans to expand its operations in the state.

Aside from New Jersey, the states of Arizona and Texas have also rules preventing automaker from selling cars directly to consumers. Colorado and Virginia imposed a regulation that limits the operations of Tesla Motors Inc (NASDAQ:TSLA).

Under the newly approved regulation of the New Jersey Vehicle Commission, automakers are required to enter a franchise agreement with auto dealers or retailers to obtain a license to sell cars in the state.

Tesla Motors Inc (NASDAQ:TSLA) learned about the rule change yesterday. Jonathan Chang, the legal counsel representing the electric car manufacturer said, “There’s no question that this rule was aimed directly at Tesla. New Jersey does not believe in free enterprise, the bedrock of this nation.”

In a conference call on Tuesday, Diarmuid O’Connel, vice president of business development at Tesla Motors Inc. (NASDAQ:TSLA) commented the administration of New Jersey Gov. Chris Christie “abrogated” an agreement to delay action to the proposal of the Motor Vehicle Commission.

O’Connel said, “This is at the very least disappointing, if not outright outrageous what’s going on with our business in N.J. right now.”  He added, “Clearly, a decision was made rather abruptly and certainly without any consultation with us. There are a couple levels of bad faith and surreptitious behavior.”

On the other hand, Gov. Christie’s spokesperson, Kevin Roberts said that the administration made it clear to the electric car manufacturer needs to engage lawmakers to create a bill to establish its direct sales operation under the state law. “This administration doesn’t find it appropriate to unilaterally change the way cars are sold in New Jersey without legislation. Tesla has been aware of this position from the beginning.”

The shares of Tesla Motors Inc (NASDAQ:TSLA) dropped nearly 2% to $234.41 per share on Tuesday.