Pub. 5 Issue 2

19 Car Dealers Sue New Jersey Over Regulation of Tesla BY RYAN HUTCHINS A trade group representing new car dealers in New Jersey filed suit Wednesday against sev- eral state agencies it says have allowed Tesla, the California-based electric carmaker, to cir- cumvent laws governing sales and advertising practices in the auto industry. The New Jersey Coalition of Automotive Retailers, or NJ CAR, alleges Tesla is selling its vehicles out of five locations in New Jersey in direct violation of a 2014 law allowing the company to sell cars at just four facilities. New Jersey’s Motor Vehicle Commission, it says, has allowed the company to continue the practice. The lawsuit also alleges Tesla has engaged in false advertising, notably by offering for sale its Model 3 at $35,000 but failing to deliver for many years and, in some cases, pushing buyers into more expensive vehicles – a move NJ CAR claims is a classic “bait and switch.” Tesla, the suit says, has also padded its sticker prices with assumed savings on gasoline, failed to properly disclose destination fees and made misleading claims about its “autopilot” self-driving system. All of that, the trade group alleges, has been willfully overlooked by the MVC, the Attorney General’s Office and the Division of Consumer Affairs, endangering consumers and depriving trade- group members of equal treatment under the law. Jim Appleton, who leads NJ CAR, says the lawsuit, filed in Superior Court in Mercer County, isn’t about taking out the competition from Tesla – it’s about making sure they don’t start a “race to the bottom.” “This is less about Tesla and more about this administration not stepping up and doing its job as the cop on the beat,” Appleton said in an interview. “NJ CAR’s concern is not that Tesla is going to take advantage of that – they already have and they’ve achieved 1 percent of the marketplace. My concern is there are others, including members of the association, who will read the lack of enforcement by the administration as an invitation” to act the same way. Tesla did not immediately offer comment. The company, which has fought in many states to be able to offer cars through a direct-sales model, has been jostling with state regulators since it started opening facilities in New Jersey in 2012. Its initial locations were billed as “galleries,” where consumers could look at the cars and get information before going online to make a purchase. But some said the approach was no different than selling cars, a violation of state law requiring all new cars to be sold by franchised dealers, not directly by manufacturers. After a crackdown by the state, which passed new rules prohibiting the practices, Tesla lobbied and managed to convince then-Gov. Chris Christie to sign a 2015 law allowing the company to have four direct sales locations in New Jersey. NJ CAR says Tesla is violating that law because it has added a gallery location, at Garden State Plaza in Paramus, and is planning another in Lawrence Township. The state also thought initially that Tesla was in violation of the law, withMVC last year issuing a “notice of proposed suspension” of the company’s sales