[New Jersey] State motor vehicle officials have approved a regulation that would require all new car dealers to obtain franchise agreements to receive state licenses, a move critics say will hurt the electric-car industry's attempts to expand.
The regulation, adopted Tuesday by the state's Motor Vehicle Commission by a 6-0 vote, effectively prohibits companies from using a direct-sales model.
Tesla, which makes electric cars and sells them directly to consumers, will be forced to shut down its two New Jersey showrooms. Teslas are not carried by regular auto dealers, so New Jerseyans will now have to travel out of state to test drive or buy one. By cutting out the middleman of an independently owned auto dealership, Tesla has been able to make its cars more affordable. (Electric cars cost more than conventional ones -- Teslas in particular -- but some of the difference can be recouped over time with savings from not having to buy gasoline.)