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Tesla said Governor Christie’s administration has "gone back on its word"

Tesla Motors has been trying to push its direct sales model into various U.S. states, and while it saw a bit of success with New Jersey, a new state rule could destroy Tesla's plans. 

According to Tesla, New Jersey Gov. Chris Christie’s administration recently proposed a new rule that requires that a person have a franchise agreement with an auto manufacturer in order to be granted a license to sell. 

This is a problem for Tesla, considering it already operates two stores in New Jersey and had plans to open more. It's possible that Tesla could have to stop selling its all-electric Model S and any future vehicles in these stores and instead use them as showrooms where customers can look, but not buy. 

"Unfortunately, Monday we received news that Governor Christie’s administration has gone back on its word to delay a proposed anti-Tesla regulation so that the matter could be handled through a fair process in the Legislature," said Tesla in a statement. "The Administration has decided to go outside the legislative process by expediting a rule proposal that would completely change the law in New Jersey. This new rule, if adopted, would curtail Tesla’s sales operations and jeopardize our existing retail licenses in the state.

"Having previously issued two dealer licenses to Tesla, this regulation would be a complete reversal to the long standing position of NJMVC on Tesla’s stores. Indeed, the Administration and the NJMVC are thwarting the Legislature and going beyond their authority to implement the state’s laws at the behest of a special interest group looking to protect its monopoly at the expense of New Jersey consumers. This is an affront to the very concept of a free market."


Tesla CEO Elon Musk and President Barack Obama

Tesla has been in a battle with many states regarding its direct sales model. The issue is that auto dealerships feel Tesla's new sales model threatens their network, which many other automakers rely on. If other automakers were to follow Tesla's example, it would put the dealerships in a bad spot. The National Automobile Dealers Association (NADA) said that dealerships are necessary to ensure competitive prices for customers, and that it will continue to defend franchise and consumer laws in the states.
 
Tesla CEO Elon Musk, on the other hand, believes that auto dealerships don't do a very good job at selling specialty cars like Tesla's high-end electric vehicles (Roadster, Model S). Hence, he's looking to run his own Tesla stores around the U.S. where he believes his cars will get a fair shot at being sold. 
 
However, the problem for Tesla is that auto dealerships have much deeper pockets -- meaning that they have a lot more to spend on lobbying, and lawmakers will surely side with them when money is involved. 
 
In fact, auto dealers spent $86.8 million on state election races across the U.S. between 2003 and 2012. They also spent $53.7 million on federal campaigns. Tesla, on the other hand, has spent less than $500,000 on both state and federal politics. 
 
Tesla has gone head-to-head with many other states that are protecting auto dealerships, such as Massachusetts, Ohio and New York. 
 
Just last month, it was reported that Ohio Sen. Tom Patton (R-Strongsville) backed a new bill called Senate Bill 260, which aims to prevent Tesla and any other automaker from "applying for a license to sell or lease new or used motor vehicles at retail." Tesla opened its own stores in both Cincinnati and Columbus, as Ohio's current laws allow the automaker to do so. However, Senate Bill 260 would certainly put a stop to it, unless existing stores opened before the bill are deemed safe. 
 
What's interesting is that Patton received at least $42,825 between 2002 and 2013 from state and national auto dealership owners, employees, and political action committees. 

Source: Tesla Motors



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RE: Just stop
By Motoman on 3/11/2014 4:49:10 PM , Rating: 2
quote:
The credible reason for keeping auto dealers local is to keep auto sales profit local.


For what possible reason do you think that makes any sense? Because it's also the *local* people PAYING for that unnecessary "local profit." All you're doing is robbing cousin Peter to pay cousin Paul.

Your little rant though about trying to tie dropping the requirement to have dealerships into destroying your communities though is just hilarious. The shareholders are already getting their money, and they'd continue to get the same amount of money - with or without a dealer. The question is simply whether or not there's another hand out in the middle.

You want a dealership, then fine. Have a dealership. Just don't pretend there's any basis to have to require them by law.

By the way...if dealerships were "necessary" you wouldn't need a law to force them into use, now would you?


RE: Just stop
By coburn_c on 3/11/2014 6:38:42 PM , Rating: 2
unnecessary profit?

That's nonsense, the dealer markup won't disappear anymore than the the Bose markup disappears when you walk into a Bose store.

In case you have completely missed it, this argument is about letting the manufacturers run the dealerships. Any savings that would come about for the consumer would only be temporary while they run the locals out of business. Once firmly in the monopoly it is likely prices would rise as corporate could control local competition.

This is entirely about shifting dealer profit from local small businesses to corporate. If you think the dealership will just magically disappear and you will order your car via UPS then you are mistaken.


RE: Just stop
By Reclaimer77 on 3/11/2014 7:38:21 PM , Rating: 2
In Moto's world you can buy an unlocked flagship smartphone for like $200. It's the carriers (middleman) that make them $700!


RE: Just stop
By Motoman on 3/11/2014 8:41:21 PM , Rating: 2
quote:
In case you have completely missed it, this argument is about letting the manufacturers run the dealerships


No...as a matter of fact, no such thing has been uttered until you did just now. This categorically isn't about letting manufacturers run dealerships - it's about whether or not a state should *require* dealerships in order to sell cars there at all.

quote:
Any savings that would come about for the consumer would only be temporary while they run the locals out of business. Once firmly in the monopoly it is likely prices would rise as corporate could control local competition.


What monopoly? Is there only going to be one automaker left if the laws requiring dealerships are lifted? Or is the consumer still going to have the choice between Chevy, Ford, Chrysler, Dodge, Cadillac, Lincoln, Jeep, Acura, Honda, Toyota, BMW, Audi, Volvo, Mitsubishi, Kia, etc. etc. etc. ad nauseum? Oh that's right...it'll be the latter. In which there isn't the slightest whiff of a monopoly.

And even if there are manufacturer-owned dealerships...who cares? Did it make any difference when Apple started opening their own stores? Or Nike? Do corporate-owned Burger Kings somehow dominate over franchisee-owned Burger Kings?

Get a f%cking grip.


RE: Just stop
By Mint on 3/12/2014 3:49:47 AM , Rating: 2
quote:
No...as a matter of fact, no such thing has been uttered until you did just now. This categorically isn't about letting manufacturers run dealerships - it's about whether or not a state should *require* dealerships in order to sell cars there at all.


No, actually you are incorrect.

This whole issue IS indeed about Tesla being able to run their own dealerships, i.e. Tesla Stores/Galleries. How many people would buy a car without ever sitting in it or doing a test drive? Only a small fraction. Tesla isn't so cocky as to think that they can operate showrooms with significantly less overhead than dealerships.

What they really want is to control the sales message for their products, and point out things you wouldn't hear from a dealer getting 90%+ of his revenue from gas cars.

quote:
What monopoly?
Indeed. The rest of your post is correct. coburn is dead wrong about the implications.


"And boy have we patented it!" -- Steve Jobs, Macworld 2007














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