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Trouble for Tesla as NJ bans direct to auto sales

Tesla Motors progress stymied by NJ Ruling
Tesla Motors progress stymied by NJ Ruling
Tesla Motors

The New Jersey Motor Vehicle Commission today banned direct to dealer auto sales, joining Texas and Arizona in barring the ability of automobile manufacturers to sell directly to consumers.

Controversy-ridden NJ Governor Chris Christie proposed the changes, and Tesla immediately made a statement that this was a move to protect special interest groups.

"Indeed, the Administration and the NJMVC are thwarting the Legislature and going beyond their authority to implement the state's laws at the behest of a special interest group looking to protect its monopoly at the expense of New Jersey consumers. This is an affront to the very concept of a free market," said Tesla.

The current automotive industry won't be affected because they already operate under the auspices of selling their products through dealerships. This rules change mainly effects, and is a very big affront to, Tesla Motors.

Tesla is part of the dynamic vision of owner Elon Musk, who is the original developer behind Paypal, the online payment distribution service, and Space X, the private space flight company that has made an industry out of delivering goods, supplies, and additional capsules to the International Space Station, as well as satellites into orbit on behalf of various corporations.

Car Dealerships are risk averse enterprises. This means, more specifically, that they buy cars directly from manufacturers, taking a chance that they will be able to sell them to consumers at a profit. It's not a cottage industry and with the uncertain future of the automotive sales already in question, they have a great personal stake in this issue.

Tesla, on the other hand, has seen its sales of cars go from relatively obscure vehicles driven by environmentalist celebrities and the ultra-rich, to the highest selling luxury automobile on the planet. It's an unprecedented success story that is in direct contrast to already shaky ground of the American auto industry.

Tesla's stock since January of 2013 has risen 500 percent and currently stands at around $234 per share. This is even more impressive considering that the meteoric rise in stock price has been routinely stymied by developments similar to the decision made by the New Jersey Motor Vehicle Commission today to block direct-to-consumer car sales.

Tesla has two shops in NJ, not car dealerships, but individual stores where they sell their electric cars, and through those dual locations have been enabled to sell hundreds of cars to consumers in the Garden State. This decision is a very poignant statement made towards Tesla, much to it's chagrin.

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