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Tesla faces lawsuit from New Jersey auto dealer association
Tesla is currently facing a lawsuit from an auto dealer association operating in New Jersey. In a filing submitted on Wednesday to the state’s Superior Court, the New Jersey Coalition of Automotive Retailers (NJ CAR) called for legal action against the electric car maker for what it alleged were violations of multiple laws.
The dealer association argued in its filing that the New Jersey Motor Vehicle Commission, together with a number of state agencies, have so far failed to enforce consumer protection laws, advertising laws, and franchise and dealer licensing laws regarding the electric car maker. In a statement to Automotive News, Jim Appleton, president of New Jersey’s Coalition of Automotive Retailers, argued that the group does not fear competition from Tesla. Instead, it simply objects to unfair competition.
“It may appear ironic that the head of a trade association that represents new car dealers is suing the State of New Jersey to urge enforcement of the strict laws that regulate new car dealers. But 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. 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,” he said.
At the center of the dealer association’s lawsuit against Tesla is the electric car maker’s expanding presence in the state. In 2015, New Jersey allowed Tesla to operate four direct sales locations, a rule that the coalition argues was violated when Tesla decided to open a fifth location in the form of a gallery. According to the auto dealers, the fifth location’s distinction as a “gallery” does not mean anything since the electric car maker conducts sales-related actions in the location. Interested customers, for example, could configure their vehicle orders on the gallery.
“Whether or not any sales are finalized at Tesla’s gallery, the above-mentioned activities that take place at the gallery are designed and intended to lead to a sale and certainly constitute ‘offering vehicles for sale,’” the complaint read. It should be noted that while the dealers’ concerns appear valid, the lawsuit fails to account for the fact that customers do not need to be in a Tesla gallery or store to configure their vehicle order. Due to the company’s simple online configurator, vehicle orders could be completed in any location with mobile internet access.
Apart from its grievances about Tesla’s fifth location, the dealer association also alleged that the state failed to enforce consumer protection laws when the electric car maker pulled a “bait and switch” with the Model 3 by announcing a $35,000 variant of the vehicle and later encouraging its customers to purchase more expensive versions of the electric sedan. This complaint will likely be easily rebutted, considering that the $35,000 Model 3 is available today, albeit as an off-menu item. Business practices that incentivize consumers to purchase higher-end products are pretty common as well, in both the auto and tech sphere.
Lastly, the New Jersey Coalition of Automotive Retailers also accused Tesla of misleading consumers by describing its Autopilot system as a “Self-Driving” solution and listing incentives and estimated gas savings in its vehicle pricing. “There is simply no justifiable basis for the State to continue to permit Tesla’s conduct here. When taken together, the actions make it clear that state defendants have chosen to actively ignore Tesla’s unlawful acts and have permitted them to continue,” the coalition wrote in its complaint.
Similar to its other allegations, the dealers’ complaints about Tesla appear to be the result of misinformation. For example, Autopilot, which comes standard with any Tesla except the $35,000 Model 3, is not advertised as a “self-driving” solution. Tesla’s autonomous driving suite is its Full Self-Driving system, which is separate from Autopilot. Tesla’s configurator also allows customers to view a vehicle’s default purchase price and one that includes potential savings. An explainer on incentives is also present on Tesla’s official website, where all vehicle purchases are made.
Neither Tesla nor the New Jersey Motor Vehicle Commission has issued a comment about the recently-filed lawsuit.
Tesla operates differently from traditional automakers since the company does not utilize a dealer network to sell its vehicles. Instead, it sells its cars directly to consumers. This allows Tesla to have full control of vehicle pricing, ensuring that the purchase price of its electric cars is regulated, while making the car buying experience as simple as possible. This strategy is akin to what is being adopted by tech companies such as Apple, whose stores provide interested customers with an opportunity to interact with its products.
Tesla is using the vehicles’ internal microphones to improve build quality, Vice President of Engineering Lars Moravy revealed recently.
It’s no secret that Tesla is always finding ways to make its manufacturing operations more efficient, accurate, and valuable. Constantly trying to make its cars better, the company has never placed any restrictions on what it will do to improve everything from panel gaps to paint.
As Teslas have been driving autonomously on the property of the Gigafactory Texas plant for a while now, Moravy revealed to Herbert Ong in a new interview that cars rolling off production lines now autonomously navigate themselves through a bumps, squeaks, and rattles (BSR) portion of the line. This helps to identify any loose or improperly installed internal parts.
The cabin’s microphones, which are used for a variety of things in ownership, simultaneously monitor any noises inside the vehicle while it rolls through the BSR portion of the production line. Moravy actually revealed that Tesla is trying to build “Full Self-Hearing,” an AI system that will detect minor imperfections so they can be corrected before delivery.
It’s no secret that build quality is something that Tesla struggled with as it scaled to a fully massive production operation that manufactures over 1.6 million vehicles per year. However, in recent years, especially, there have not been as many complaints. Tesla has truly improved upon its build quality and paint quality over the past several years, especially in the U.S.
Tesla’s ‘megacasts’ are key to massive build quality improvements
While those improvements have been evident, there are still some complaints; no automaker is perfect with this. But this step will now ensure that every single car that rolls off the production lines at Gigafactory Texas will be void of any creaks, squeaks, or squeals when it leaves the factory.
This measure is one of the most unique we’ve seen in terms of a strategy to avoid build quality issues, but it is not exclusive to Tesla.
Ford uses acoustic analysis AI to find abnormalities in seat motors, climate control units, and other components. Suppliers and OEMs will also use microphone arrays or particle velocity sensors in end-of-line stations.
The full interview with Lars Moravy is available below:
🚨 If you’re a Tesla investor, this is one interview you don’t want to skip. The full video posted below.
Jeff Lutz @thejefflutz and I sat down with Tesla VP of Engineering Lars Moravy, and it was packed with insights!
A few of the biggest takeaways:
• Cybercab is expected to… pic.twitter.com/fhYSr2dCqP
— Herbert Ong (@herbertong) July 1, 2026
Investor's Corner
Tesla crushes Wall Street expectations, beats delivery estimates by over 15 percent
Tesla (NASDAQ: TSLA) beat Wall Street expectations of 406,000 vehicles delivered in Q2 by reporting 480,126 deliveries for the three months ending in June.
Tesla reported it delivered 467,762 Model 3 and Model Y units, while 12,364 Model S, Model X, and Cybertrucks switched hands during the quarter. The Model S and Model X were officially sunset this past quarter and will no longer be part of the company’s Production & Delivery reports moving forward.
🚨 BREAKING: Tesla delivered 480,126 vehicles in Q2, ANNIHILATING Wall Street expectations of 406,000. Production was reported at 451,758.
Deliveries:
Model 3/Y: 467,762
Other Models: 12,364Production:
Model 3/Y: 442,936
Other Models: 8,822 https://t.co/TTHwQAsKt8 pic.twitter.com/7qI4Zj6FE5— TESLARATI (@Teslarati) July 2, 2026
The quarter is a pleasant surprise and a good rebound from Q1, when Tesla slightly missed the Wall Street consensus of 365,645 cars by reporting 358,023 deliveries for the first three motnhs of the year.
Energy storage deployments also provided some strength in Tesla’s delivery report, hitting 13.5 GWh for Q2. This is a particular division of Tesla’s business that has been overwhelmingly robust over the past few years, truly being a strong point of the company’s overall model.
For the year, Tesla analysts still predict deliveries to trend in the 1.69 million unit region, a modest 3 to 5 percent increase from the 1.64 million cars the company delivered last year. Tesla will likely return to more sequential and noticeable year-over-year growth as the Cybercab project starts to ramp up considerably in the next few years.
Tesla has some other potential catalysts to spur vehicle deliveries, too. Not only is it expecting Cybercab to truly start making a change in the next few years, but other vehicles could be entering the company’s lineup.
Tesla sends production Cybercab with no steering wheel, pedals to on-road testing
The slightly longer Model Y L has been a highly speculated release candidate in the U.S. It has already done incredibly well in China, and U.S. buyers have been wanting slightly more interior space than the Model Y. Now that the Model X is gone, it is more needed than ever.
Q2 highlights a pretty stable automotive division within Tesla, and no true concerns arise from these figures, especially considering it managed to beat expectations convincingly.
Tesla CEO Elon Musk posted a photo of himself standing with the Optimus production team inside Tesla’s Fremont factory, arms crossed amid workers in hard hats and safety vests. The image captures a pivotal industrial shift: the same facility space once dedicated to building Tesla’s flagship Model S sedan and Model X SUV is now home to the company’s humanoid robot manufacturing line.
Walking the Optimus production line in Fremont pic.twitter.com/ABS0tuRibW
— Elon Musk (@elonmusk) July 1, 2026
Tesla’s Fremont Factory, acquired in 2010 from the former NUMMI joint venture between Toyota and GM, has been the company’s original U.S. manufacturing hub since Model S production began in 2012.
The Model X followed soon thereafter. These premium vehicles offered lower annual volumes, recently around 30,000 combined, compared to the high-volume Model 3 and Model Y lines that continue around the site. Over their combined run, the S and X accounted for roughly 610,000 units.
In late January 2026, during Tesla’s Q4 2025 earnings call, Elon Musk announced the end of Model S and Model X production in Q2 2026. The final vehicles rolled off the line in early May. Rather than retooling for another vehicle, Tesla chose to convert the dedicated S/X assembly area into a dedicated Optimus Gen 3 production line.
Model 3 and Y manufacturing remains unaffected. Tesla’s official Fremont Factory page now lists Optimus alongside the 3 and Y as core products.
The conversion was executed with remarkable speed. After production stopped, crews dismantled the existing vehicle line and installed entirely new modular equipment—including lines sourced from Germany and dozens of sub-lines for actuators, batteries, and other components—in roughly four months.
Musk described the timeline as “insanely fast,” noting it would be unprecedented for any other manufacturer. Initial Optimus output is expected to ramp slowly due to the robot’s roughly 10,000 unique parts and the brand-new production processes involved. The Fremont line targets an eventual capacity of 1 million Optimus units per year.
Tesla isn’t joking about building Optimus at an industrial scale: Here we go
Optimus Development Timeline
- August 19, 2021: Optimus (then called Tesla Bot) formally announced at Tesla’s first AI Day. A concept video showed a person in a suit demonstrating the vision for a general-purpose humanoid capable of dangerous, repetitive, or boring tasks using the same AI architecture as Full Self-Driving.
- 2022: Early prototypes displayed. At the second AI Day in September, semi-functional units demonstrated walking across a stage and basic arm movements
- 2023: September videos showed improved capabilities, including sorting colored blocks, precise limb awareness, and holding a Yoda pose.
- 2024-early 2025: Factory integration videos showed Optimus navigating workspaces and handling objects like battery cells.
- January 2026: Gen 3 mass-production activities began at Fremont, with reports of over 1,000 Gen 3 units already operating inside the factory for real-world learning and AI training
- April 2026: Musk confirms Optimus production on converted Fremont line would begin in late July or August 2026. The Gen 3 reveal, originally eyed for Q1, was pushed closer to production start. A second, much larger Optimus factory at Giga Texas is under construction, with volume production targeted for Summer 2027 and long-term capacity of 10 million units annually
- July 1, 2026: Musk’s on-site visit and team photo confirm the Optimus line is operational and the transition is actively progressing
Tesla positions Optimus as potentially its largest project ever, leveraging vertical integration, AI expertise, and car-like manufacturing know-how to scale humanoid robots first for its own factories and later for broader industrial and consumer use.
The Fremont conversion serves as a critical proving ground for this ambitious new chapter in Tesla’s already-rich history.
Tesla is using vehicle microphones to improve build quality: here’s how
Tesla crushes Wall Street expectations, beats delivery estimates by over 15 percent
