Print 37 comment(s) - last by tng.. on Jun 12 at 11:40 AM

Tesla CEO Elon Musk
Assembly Consumer Affairs Committee votes 4-0 to allow Tesla to sell cars directly to customers

Tesla Motors has been the subject of a statewide ban on direct car sales in the state of New Jersey since April 1. The ban was the result of the state Motor Vehicle Commission’s (MVC) decision to enforce a 1970s law that required new vehicles to be sold through a dealership.
However, a new bill by the New Jersey Assembly Consumer Affairs Committee would allow Tesla to resume its direct cars sales in the state. The bipartisan committee voted 4-0 to give Tesla a reprieve as long as the company follows a few simple rules. Tesla would be limited to just four stores in the state (for now) and would be required to have at least one facility to service Tesla vehicles.
“New Jersey prides itself as being pro-business, pro-innovative and pro-jobs. And this is a company that is an American company, an American idea,” said bill sponsor Tim Eustace (D-Bergen). “I think we would be mistaken if we didn’t’ reverse the idea that the MVC made, making it illegal to sell Teslas in New Jersey.”

Tesla Model S
Tesla CEO Musk has long rallied against the dealership model and says that these “middlemen” don’t have customers’ best interests in mind. Musk points to the fact that dealerships make a large portion of their profits from vehicle services (repairs, routine maintenance, etc.), but electric vehicles like the Model S require far less maintenance than conventional automobiles, lessening the need for middlemen.
This latest move by New Jersey comes after Musk lashed out at Governor Chris Christie, stating, “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 even invoked “Bridgegate” by stating that if selling through dealerships ensures “consumer protection”, then “Gov. Christie has a bridge closure he wants to sell you.”

New Jersey Governor Chris Christie
More recently a number of directors for the Federal Trade Commission have come out in direct support for Tesla’s direct sales model in two separate blog postings. The FTC noted that the market should determine if a direct sales model is beneficial to customers. “Our point has not been that new methods of sale are necessarily superior to the traditional methods—just that the determination should be made through the competitive process,” said the FTC directors in an April blog posting.

“We hope lawmakers will recognize efforts by auto dealers and others to bar new sources of competition for what they are—expressions of a lack of confidence in the competitive process that can only make consumers worse off.”


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RE: Here's an idea
By tng on 6/6/2014 10:25:22 AM , Rating: 2
Why don't we make a federal law to allow direct sales throughout the country?
There will still be money and influence from auto dealers at the federal level, probably more than at the state level.

Also I do not doubt that if given enough money, eh, campaign contributions, that state legislators will find a way to make it hard on Tesla.

RE: Here's an idea
By Mint on 6/11/2014 3:08:02 PM , Rating: 2
It's not that simple, though. Dealers bought land, built showrooms, and bought inventory assuming they get sales for a particular area. For Tesla, this argument doesn't fly because there are no independent dealers, but for all other automakers this is a legit gripe.

Companies generally hate it when laws mess around with a business model they already invested in under the assumption that the laws wouldn't change. In this case, there needs to be serious negotiation between the manufacturers, dealers, and lawmakers.

OTOH, if dealers refuse to negotiate, then such a nuclear option should be on the table.

RE: Here's an idea
By tng on 6/12/2014 11:40:58 AM , Rating: 2
Actually it is that simple...
Dealers bought land, built showrooms, and bought inventory assuming they get sales for a particular area.

Yep, as I assume Tesla does when they open a showroom, they have to invest in the infrastructure. So to say that this is somehow just something that independent dealers do is not true. Also why would other automakers want to gripe about it?

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