Tesla hit with new lawsuit from New Jersey dealer association


SEPTEMBER 20, 2019

The dealer association is also suing state regulators and claims they failed to enforce fair rules.

Tesla’s direct sales approach has long stirred up controversy among dealer organizations that claim the automaker doesn’t follow the rules, and for New Jersey dealers, it’s reached a tipping point.

The New Jersey Coalition of Automotive Retailers filed a lawsuit against Tesla on Wednesday that principally alleges Tesla violates franchise laws. Automotive News first reported on the lawsuit on Thursday.

Not only does the dealer association have Tesla in its sights, but it’s also serving state regulators with a lawsuit for failing to enforce fair rules and regulations that all automakers and dealer groups are subject to. These include consumer protection, advertising and franchise laws.

“NJ CAR has spent decades advocating for firm and fair rules that create a level playing field and promote a competitive marketplace that benefits consumers and honest business owners alike,” Jim Appleton, president of the Coalition of Automotive Retailer said in a statement. “Neighborhood new car dealers don’t fear competition from Tesla — which accounts for less than 1% of the new car market in New Jersey — they simply object to unfair competition which places consumers at risk and local businesses at a competitive disadvantage.”

Tesla did not immediately respond to a request for comment.

The various complaints in the lawsuit allege Tesla violated laws after opening a fifth direct-sales location in New Jersey. The state allowed it to open four locations four years ago, and it plans for a sixth currently. The complaint does note the fifth location is classified as a “gallery” but the coalition argues vehicle configuring and other tools onsite lead to vehicle sales.

The complaints continue to include issues over advertising incentives and gas savings without presenting how they’re calculated (Tesla does provide a breakdown on its website) and alleges a “bait and switch” by offering the most affordable, $35,000 Tesla Model 3 for a brief period of time. While it’s more difficult to order the $35,000 Model 3, it can still be done.

Perhaps the most intriguing complaint is that Tesla advertises its Autopilot system as a “self-driving” system, which can mislead buyers into overpromising its capabilities. Today, there are no Level 5, nor Level 4, self-driving cars on sale, per the SAE scale of autonomy. Tesla does state on its website, “Current Autopilot features require active driver supervision and do not make the vehicle autonomous.”

Courtesy/Source: cNet