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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: I don't get it
By wookie1 on 6/6/2014 11:27:37 AM , Rating: 3
The dealers know that they don't add much value to the car-buying process. If there were a direct sales model, consumers would probably flock to that and avoid the high-pressure haggling and sneakiness that is part of the process of buying from a dealer. There's a very good chance that dealerships would cease to exist, which is why they are so opposed to this competition and pressure the government to block it.

In most states, dealerships collect large amounts of sales taxes for the state and especially the municipality that they locate in. You see tax break wars between cities as dealers locate themselves near city borders so that they can offer to pick which side of the border to locate themselves based on the best tax break. Municipalities favor this over direct sales as well.

RE: I don't get it
By bug77 on 6/6/2014 12:33:22 PM , Rating: 2
I know that, I was asking what's the argument the dealerships make to regulators.

RE: I don't get it
By wookie1 on 6/6/2014 4:15:41 PM , Rating: 2
The argument is this: "if you lock out my competition, I will donate $XXXXXXX to your campaign".

It seems to be a very convincing argument.

The other one is "car sales in your state/city bring you $XXXXXXXXX in sales tax revenue, make sure nobody forces me out of business!"

RE: I don't get it
By Dr of crap on 6/6/2014 12:41:55 PM , Rating: 3
Kind of sounds like a union - !

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