We’ve been covering the Tesla Motors direct-sales approach in depth, but a big blow came from New Jersey lawmakers in March.
Tesla Motors’ direct-sales models has lawmakers, automobile dealers, and even some other automaker, up at arms. In the United States, the only country in which these laws exist at all, automakers are not allowed to sell direct to the consumer, mostly because they’d be selling right alongside the automobile dealers selling the same product. The result would be unfair competition, seeing as the automaker would be able to sell at a much lower price than the dealers. In fact, most state laws are written specifically prohibiting an automaker selling alongside a dealer of the same brand.
On the other hand, there are zero Tesla Motors franchises, which really renders the law a moot point. The automobile dealer associations (ADA) don’t see it that way, and have used their considerable financial and political power to sway legislators to keep Tesla Motors out of some states. After “unexplained delays,” or at least much wining and dining with ADA officials, New Jersey eventually turned down Tesla Motors’ bid to sell direct to the consumer. Controlled “outrage” is the only real response to such a decision, which Elon Musk handled very well in an open letter.
All hope is not lost, however. A recent bill, one that would allow Tesla Motors to do business at its two New Jersey Tesla Stores, was unanimously approved by an Assembly Committee. Bill A3216 would allow Tesla Motors, or any other electric vehicle manufacturer, such as up-and-coming Elio Motors, to sell direct to the consumer. In addition to allowing direct sales, in as many as four stores per automaker, the bill would also require each automaker to have at least one service center. While no one contested the bill, ADA officials called for language ceasing direct-sales if one of the automakers were to be bought by an automaker with an established dealership network. I don’t think any automaker is going to buy Tesla Motors, so that’s not likely to come up.
Image © Tesla Motors