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How to Trade on Tesla's Win Against Auto Dealerships: StockTwits

NEW YORK (TheStreet) -- Tesla  (TSLA - Get Report) gained ground this week against the auto dealer lobby. And investors on StockTwits.com believe it is only a matter of time before Elon Musk & Co. secure the ability to continue selling electric cars directly to consumers.

The New Jersey assembly passed a bill Monday that would allow manufacturers of zero-emissions vehicles to sell cars without going through dealerships. The bill would overturn an earlier rule by the New Jersey Department of Motor Vehicles, adopted this year, that demands new cars be purchased from dealers with the ability to service the vehicles. The legislation must still go to the house before it can go to Governor Christie.

$TSLA After the Bill passes the Senate in NJ. Tesla will BOOM — Kevin Van Horn (@kvanhorn829) Jun. 17 at 11:10 AM

Tesla Motors ($TSLA) Will Be Allowed to Open Two New Stores in NJ By Year-End, Says Wedbush http://stks.co/i0iv7 — SIAnalystWire (@AnalystWire) Jun. 17 at 10:39 AM

The New Jersey state assembly's action comes in the wake of New York governor Andrew Cuomo signing legislation that will allow Tesla to keep its five New York stores.

$TSLA NY agreement with auto dealers Association. — Darryl Schmiermund (@schmiergolf) Jun. 16 at 04:46 PM

Under the New York agreement, Tesla will continue to operate its existing stores but will go through dealerships for any new stores. The electric car manufacturer initially reached the deal with the New York Automobile Dealers Association in March.

The deal shows how Tesla could resolve state-specific disputes with its direct-to-consumer business model. Investors on StockTwits.com reacted bullishly to the news. Sentiment on the stock is 83% bullish, according to site analytics. Shares rose nearly 3.5% by noon.

Most cars are sold through dealerships that buy the car from the manufacturer -- and the Automobile Dealers Association lobby intends to keep it that way. However, Tesla has insisted that, because its cars are new technology, it needs direct-to-consumer stores where its own salespeople can explain how the electric cars work. The concern for Tesla, according to CEO Musk, is that dealers will sell what they know, leading them to push gasoline cars over Tesla's Model S or coming Model X.

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