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Feds Criticize NJ’s Tesla Ban [AUDIO]

Tesla has been banned since March from selling its electric vehicles directly to consumers in New Jersey, but the story may not be over. Now the feds are weighing in on recently-introduced legislation that would assist manufacturers of zero-emission vehicles.

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In staff comments from the Federal Trade Commission, New Jersey’s ban against Tesla is attacked, and the state is urged to completely repeal its prohibition on direct sales by any manufacturer.

Tesla vehicle
Justin Sullivan, Getty Images

“These laws operate as a special protection for these dealers — a protection that is likely harming both competition and consumers,” the FTC staff said of New Jersey’s current statute, which requires manufacturers to sell through independent auto dealers.

A measure unveiled this month by Assemblyman Lou Greenwald (D-Voorhees) would let Tesla and other electric vehicle manufacturers operate with a maximum of four retail locations in New Jersey, and a minimum of one service center. The FTC staff comments indicated the bill could promote competition and benefit customers, but it just doesn’t go far enough.

Noting the FTC has no jurisdiction over franchise laws at the state level, Jim Appleton with the New Jersey Coalition of Automotive Retailers said repealing the ban would end up having a negative effect on competition and consumers in the Garden State.

You would have 40 manufacturers competing against each other, instead of 515 dealers,” Appleton said. “The best competition in the marketplace today for the car you want to buy is the dealer down the road who sells the same car. In a factory model, it’s completely controlled, essentially a monopoly on that product.”

The FTC suggestion, according to Appleton, “places the fox in charge of the chicken coup” when it comes to warranty claims and safety recall services. When faced with a claim or recall, he said, manufacturers see headaches and expenses. A dealer, meanwhile, sees the chance to help a customer and the opportunity for revenue because law requires that manufacturers pay dealers to handle claims.

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