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Tesla Regains Spark as It Fights N.J. Rule:

Stocks in this article: TSLA

NEW YORK (TheStreet) --New Jersey hasn't driven away Tesla, (TSLA), yet. The electric car manufacturer is asking the N.J. Superior Court to overturn a Department of Motor Vehicle's decision that prevents the company from selling cars directly to consumers.

The stock climbed more than 3% Wednesday after the news. And the rise had investors on maintaining that the momentum darling of 2013 had regained its positive mojo after falling 13% in the past month.

$TSLA Technicals are showing great signs of upside potential. Six months target: $279.62. - msilcpom (@stoxlineinvestment) Apr. 2 at 10:58 AM

Sentiment on the stock is 69% Bullish, according to StockTwits' analytics.

$TSLA Just checked in. Very pleasantly surprised. Keep it going. - alan goode (@alpagoode) Apr. 2 at 11:49 AM

Earlier this month the N.J. DMV ruled that all auto companies must sell through dealerships and offer vehicle service at sales centers. Tesla sells cars directly to consumers at glossy stores in high-end N.J. malls such as The Garden State Plaza Mall in Paramus and The Mall at Short Hills. The rule would not force Tesla to close stores, but it would turn them into stagnant show rooms where interested customers could only learn about the car and not complete a purchase.

Tesla CEO Elon Musk responded to the ruling with a scathing blog post accusing N.J. Governor Christie of putting the desires of the auto dealer lobby above consumers' best interests. Gov. Christie has said that he is only upholding the law.

It is not clear if the current DMV rule, as it stands, will really impact Tesla's business in the short term. There is currently a three-month wait to get a $60,000-plus Model S sedan. So it's not as though the appeal of a Tesla store was that it allowed customers to drive one off the lot. And N.J. customers can complete a purchase online and get the car delivered. Arguably, that's what many customers are already doing. Tesla also has test drive events throughout the state in which potential customers can take the sedan for a spin then go online and place and order.

Customers can also order, in person, in Manhattan. Though New York state is debating similar rules.

Longer term, a direct sales bans could impact Tesla's business. The company plans to produce a mass market electric car around the same time it gets its Gigafactory battery facility up and running in 2017. Such a car would battle more directly with other auto dealers and the ability to "drive one off the lot" might be needed to effectively compete. However, investors have faith that Elon Musk will prevail?particularly after seeing him in a 60 Minutes interview on Sunday.

$TSLA Finally got to watch the Elon Musk story on 60 Minutes from 3/30. Awesome, motivational, can't go to sleep now! - Brian M (@Chevelle70) Apr. 1 at 10:02 PM

Tesla Motors Inc $TSLA : The Future Looks Bright - ETF Daily News (@ETFDailyNews) Apr. 2 at 10:48 AM

At the time of publication the author held no positions in any of the stocks mentioned.

This article represents the opinion of a contributor and not necessarily that of TheStreet or its editorial staff.


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