The New Jersey legislature quickly set about fixing its law, and the state Assembly’s consumer affairs committee voted 4-0 on Thursday to approve a bill that would allow Tesla to open four stores in the state, including the two that have essentially been operating only as showrooms since last March. The law makes it legal for any maker of all-electric vehicles to sell those all-electric cars directly to consumers, as long as at least one facility in the state also provides service for the vehicles.
The state’s auto dealers did not testify against the proposed legislation, recognizing a losing issue when they saw one. According to a report at NJ.com, one group called for amendments that would protect the dealer “status quo” and another group said that Tesla should eventually be forced to adopt the dealership model.
In late April, three Federal Trade Commission (FTC) staff directors argued that state laws prohibiting direct automobile sales by manufacturers to consumers is “bad policy.” And they said why: “Regulators should differentiate between regulations that truly protect consumers and those that protect the regulated.”
State legislatures generally like the dealership model because it benefits states, which collect state sales taxes on dealers’ sales. Dealerships also typically employ thousands of employees in a state and pay millions of dollars in business taxes. From state government’s point of view, what’s not to like?
Tesla shares were up about 1% early Friday morning, at $208.88 in a 52-week range of $94.05 to $265.00.
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