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N.J. Gov. Christie Burns Another Bridge, This Time With Tesla Motors

Tesla Motors (NASDAQ: TSLA  ) could lose the ability to sell its all-electric cars in New Jersey after the state's Coalition of Automotive Retailers, or NJ CAR, challenged the company's disruptive business model of selling its vehicles directly to consumers. The upstart electric-vehicle maker knows this conflict all too well. Tesla has been fighting similar battles across the country as the company tries to revolutionize the way we buy cars today.

Tesla has been aggressively growing its retail footprint by opening up showrooms in busy malls around the country. As of November, the EV maker had 47 stores open in the U.S. and Canada, 22 in Europe, and four in the Asia-Pacific region.

Unfortunately, this retail strategy has made Tesla enemy No. 1 to the country's big auto dealers. Tesla's retail aspirations in New Jersey came to a head today after the company accused Gov. Chris Christie's administration of going back on its word to "delay a proposed anti-Tesla regulation so that the matter could be handled through a fair process in the Legislature."

Up to this point, Tesla has been working with both the New Jersey Motor Vehicle Commission and Christie's administration to sell its cars legally in the state. Tesla operates two retail stores and one service station in New Jersey. However, it warned that adoption of the regulation "would curtail Tesla's sales operations and jeopardize our existing retail licenses in the state." 

Ultimately, this law would ban Tesla from selling cars directly to consumers in New Jersey. On top of this, Tesla claimed that the New Jersey Motor Vehicle Commission has unjustly delayed the renewal of Tesla's current sales licenses. As a result, Tesla said it has been forced to delay its growth plans in the state. Not only do these actions hurt Tesla, but they also affect New Jersey citizens because the automaker would no longer be creating jobs in the state or investing in new store openings or service centers there.

New Jersey approved this rule to ban direct auto sales this afternoon. That means Tesla may be forced to close up operations in New Jersey.

New Jersey is the third state in the U.S. to ban Tesla from selling directly to consumers, following Texas and Arizona, which have sided with the vehicle dealerships that spend millions of dollars each year lobbying for auto franchise rules.

Shares of Tesla were down less than 1% on this news. While Tesla may have lost this battle, it certainly hasn't lost the war.

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Despite today's upsetting news that Tesla will not be allowed to sell its cars in New Jersey, the company still has plenty of room to run in markets outside of the U.S. like China. As Chinese consumers grow richer by the day, savvy investors can take advantage of this once-in-a-lifetime opportunity with the help from this brand-new Motley Fool report that identifies two automakers to buy for a surging Chinese market. It's completely free -- just click here to gain access.

Read/Post Comments (8) | Recommend This Article (7)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On March 11, 2014, at 8:18 PM, Charlotte49er wrote:

    A Republican wants to block the sale of electric cars? I'm shocked. SHOCKED, I tell you!

  • Report this Comment On March 11, 2014, at 10:01 PM, secularinvestor wrote:

    What a hypocrit!

    On March 6, at the Conservative Political Action Conference in Maryland, Christie had this to say: “We need to talk about the fact that we are for a free-market society that allows your effort and ingenuity to determine your success, not the cold, hard hand of the government,” as reported by Bloomberg.

  • Report this Comment On March 11, 2014, at 10:33 PM, singaporenick wrote:

    Americans claim they are the heart of free market capitalism. Ha-Ha!

  • Report this Comment On March 11, 2014, at 10:45 PM, DoctorLewis4 wrote:

    State Auto Dealer associations contribute millions to keep the status quo going. For the consumer this means: Bait and switch. Hidden financing charges. Up sale on worthless items like under coating. And many other fun rip offs. Tesla comes along with a better idea. Take a look at the states giving Tesla trouble. Sort of says it all doesn't it.

  • Report this Comment On March 12, 2014, at 3:35 AM, AdvanderMeer wrote:

    The free market is obviously for sale to the highest bidder.

    God bless America and please hurry!

  • Report this Comment On March 12, 2014, at 6:40 AM, bostontrip wrote:


  • Report this Comment On March 12, 2014, at 6:47 AM, bostontrip wrote:

    ChRISTIE Why would you do this? You run such a beautiful state. Isn't it called the Garden State? That sounds so lovely. I'm picturing lots of Flowers and beautiful moonlit paths. But your thinking is Oldschool. I Feel you may not be a truly HONEST person? perhaps there is some greater reason you changed your mind? Went against your word. WAS IT MONEY? KICKBACKS? Afraid of these Electric cars and how they could improve the Pollution around your Botanical Utopia?

  • Report this Comment On March 12, 2014, at 8:42 AM, pondee619 wrote:

    " which have sided with the vehicle dealerships that spend millions of dollars each year lobbying for auto franchise rules" And contributed how much to the elections funds of, and possibly directly to, the elected officials.

    Governor Christie, how much did it cost for you to turn your back on the people of New Jersey? Are the car dealers really that generous? Please tell us that you didn't go cheap!

    If the auto franchise was best for the consumer and manufacturers their would be no need for laws and rules requiring them. They would be the natural way of doing business. They would not need to be forced.

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Tamara Rutter

I've been an analytical writer for The Motley Fool since 2011. I cover the sectors of Consumer Goods, Technology, and Industrials. Connect with me on Twitter using the handle, @TamaraRutter -- I'd love to hear from you!

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