For more than a century, New Jersey law required cars and trucks to be sold through an extensive network of franchised dealerships that competed for vehicle sales and service. In March 2015, after many months of NJ CAR lobbying against the push, the New Jersey Legislature passed legislation authorizing Tesla to sell directly to consumers. There were limitations, but the damage was done. Eleven years later, Tesla remains the only manufacturer that has secured an exemption from the New Jersey Franchise Practices Act (NJFPA).

The Battle Continues in 2026

The special treatment Tesla received in New Jersey enticed other manufacturers, such as Rivian and Lucid, to lobby for the same exemption so they can also sell directly to consumers. In fact, they opened galleries/studios in New Jersey, taking advantage of the accommodation awarded solely to Tesla, this time by the New Jersey Motor Vehicle Commission (NJMVC) as part of a settlement agreement in November 2018. Tesla agreed to not SELL at these locations, only to DISPLAY vehicles and refer consumers to one of their four (4) authorized sales locations to complete a purchase. This created a massive loophole that Tesla has exploited over the past eight years, where they opened several more galleries throughout the state.

In addition to Rivian and Lucid, other EV-only brands tied to legacy manufacturers, including Scout and Afeela, are also advocating to sell directly to consumers and continuing to challenge states that use the franchise distribution model. Right now, their momentum seems focused on the western United States; however, New Jersey must remain vigilant and stand firm in advocating for the benefits of the franchise system.

Keep in mind, Tesla’s introduction of its first EV got the ball rolling for them to receive special treatment. More than 10 years later, Tesla offers a few more models that are only available in a handful of colors. Meanwhile, the EV market has exploded, and New Jersey’s franchised dealers now offer dozens of BEV, plug-in hybrid and hybrid options that are available in virtually any color.

Legislation Introduced Against Tesla’s Exemption

The million-dollar question in New Jersey remains: With the evolution of the EV market (accounting for 11% of all vehicle sales in New Jersey last year), will the State continue its support for Tesla’s special exemption, discontinue the exemption, or expand the exemption to authorize other direct sellers?

In May 2025, Assemblywoman Heather Simmons (D-3) introduced legislation removing the Tesla exemption, but it was never posted for a hearing during the 221st Legislative Session. It was reintroduced on January 13, 2026, and referred to the Assembly Consumer Affairs Committee. As of right now, the bill not been scheduled for a hearing.

Fighting Direct Sales Across the Country

NJ CAR continues monitoring direct sales efforts in other states. To date, direct sales advocates — such as Tesla, Rivian, and Lucid — have been electric vehicle (EV)-only manufacturers without a history of long-established production. The push by direct sellers is now being challenged throughout the country.

Lawsuits filed by trade associations — and, in some cases, Volkswagen, Audi, and Porsche dealers in California, Florida, Virginia, and Colorado — are pushing back hard on plans by Scout Motors to engage in direct sales. They claim (and rightfully so, in my opinion) that Scout is affiliated with Volkswagen Group of America, and this connection does not allow Scout to bypass the franchise protection laws in those states by declaring itself a separate entity from Volkswagen to permit competition against Volkswagen’s own franchisees. Efforts are also being made by Rivian and Lucid to enact legislation in other states to allow them to sell directly to consumers.

Emphasizing the Benefits of the Franchised System

NJ CAR believes the franchise system works best for New Jersey. Franchises benefit consumers by fostering intra- and inter-brand competition for sales and service. These locally owned businesses have invested hundreds of millions of dollars in the New Jersey economy and stand behind what they sell. Franchised dealers have also invested in an extensive network of service facilities for their customers and are vigorous advocates for warranty and recall repairs.

Employing nearly 75,000 people (directly and indirectly) within the Garden State, New Jersey’s franchised new car and truck dealers contribute more than $45.4 billion to the State economy and $21 million to charitable causes in the hundreds of communities in which they operate.

This is why NJ CAR fights so hard to protect the franchise system that benefits consumers and will continue fighting any effort to sell directly to consumers in New Jersey.