Tesla CEO Elon Musk Attacks New Jersey Gov. After Direct Auto Sales Ban
March 17, 2014 12:50 PM
comment(s) - last by
Elon Musk threw mafia and Bridgegate references out there
Tesla Motors CEO Elon Musk is clearly a bit sore about
New Jersey's recent decision
to ban direct sales of the Model S, as he accuses the new rule of being a "backroom deal" between New Jersey Gov. Chris Christie's administration and auto dealers.
Musk wrote his frustrations in a blog post titled,
"To the People of New Jersey"
on the Tesla Motors website. Musk said Christie's "protection" of consumers is similar to that of the mafia, and even brought up the Bridgegate scandal.
“The rationale given for the regulation change that requires auto companies to sell through dealers is that it ensures ‘consumer protection’. If you believe this, Gov. Christie has a bridge closure he wants to sell you!” wrote Musk.
“Unless they are referring to the mafia version of ‘protection’, this is obviously untrue. As anyone who has been through the conventional auto dealer purchase process knows, consumer protection is pretty much the furthest thing from the typical car dealer’s mind."
Musk went on to say that New Jersey's Tesla stores would become galleries after April 1, where customers can come look at the Model S and ask questions, but cannot discuss prices or purchase the cars.
Earlier this month, New Jersey Gov. Chris Christie’s administration
proposed the new rule
, which requires a person to have a franchise agreement with an auto manufacturer in order to be granted a license to sell.
Then, last week, the New Jersey Motor Vehicle Commission voted in favor of the ban of direct auto sales. Tesla already operates two stores in New Jersey, and had plans to open more before this new rule.
Elon Musk has his game face on. [SOURCE: Business Insider]
New Jersey is now the third state to ban Tesla's direct sales model. Arizona and Texas were the first two states to give Tesla the boot.
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. 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.
This type of lobbying seemed to work in Ohio recently, as Ohio Sen. Tom Patton (R-Strongsville) came under the spotlight for backing a 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." 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.
Musk seems to be getting fed up with the auto dealer fight, and aimed to hit Christie right where it hurt after the New Jersey ban.
For the New Jersey citizens who are bummed out about the recent ban, Musk wrote that Tesla's cars could still be purchased in the Manhattan store just over the river in Chelsea or the King of Prussia store near Philadelphia.
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5 million free cars
3/18/2014 8:19:21 AM
The mere fact that they spent $90 million greasing politicians is proof enough that there is some corruption there. In this day and age auto dealers are safe to go away. You can find a great deal of information about a car online. Maybe not so much about how it handles on the road, but certainly everything about its price. The idea that dealerships serve some sort of price discovery role in the market is just absurd.
"Spreading the rumors, it's very easy because the people who write about Apple want that story, and you can claim its credible because you spoke to someone at Apple." -- Investment guru Jim Cramer
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