By on April 3, 2014

Tesla brown front quarter

With the Ides of April fast-approaching before direct sales come to an end, Tesla filed an appeal with the New Jersey Superior Court asking to overturn a government ruling that banned the automaker from directly selling vehicles to consumers in its two New Jersey stores.

Automotive News reports Tesla proclaimed the action by the New Jersey Motor Vehicle Commission is not legal and harms consumers in the state:

As the [Motor Vehicle Commission] itself recognized when it licensed two Tesla locations in 2012, New Jersey law was clearly written to prevent car manufacturers from exploiting their greater market power to compete unfairly against dealership franchises that sell their cars, something that simply doesn’t apply to Tesla because it has no dealership franchises.

In response, New Jersey Coalition of Automotive Retailers president Jim Appleton felt confident that “the courts will recognize the compelling state interest in regulating the sale and distribution of new motor vehicles,” and that Tesla would fail to overturn the ruling. He added that NJCAR wasn’t out to push the EV automaker out of the state, but only wanted Tesla to play by the same rules as those in the state’s franchise dealer network.

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11 Comments on “Tesla Appealing NJ Direct Sales Ban Ruling...”


  • avatar
    SCE to AUX

    “He added that NJCAR wasn’t out to push the EV automaker out of the state, but only wanted Tesla to play by the same rules as those in the state’s franchise dealer network.”

    Spoken like a true mobster.

    • 0 avatar
      healthy skeptic

      That “play by the rules” crap makes me sick. Those protectionist “rules” were written into state law by the dealers themselves, solely to rig the game to own benefit, not some impartial third party looking out for the common good.

  • avatar
    schmitt trigger

    Isn’t this a moot point?

    What prevents NJ residents from crossing the state line into NY, PA or CT and purchasing a Tesla there?

    • 0 avatar

      Nothing keeps New Jersey residents from buying from buying direct and taking delivery from Tesla sites in other states.

      In TX there are at least 3 retail locations. They call them “showrooms.” They can’t talk price. A friend in Dallas owns a leasing company in Dallas and is leasing them all along. There are a LOT of Tesla’s on the road in TX, considering the brand’s overall low volume.

      While I don’t think Tesla should receive any special treatment I think dealers and dealer organizations do themselves a disservice by opposing Tesla’s direct sales model. And Elon Musk is able to create an “us versus them” mentality to rallye loyalists.

      What is amazing to me is that there are many in this country who have never heard of Tesla. If one judged the overall population by these blogs one would think there is a really large battle taking place. It isn’t, at least not yet.

  • avatar
    jpolicke

    Why can’t Tesla beat the restriction against factory stores by simply saying that no “selling” takes place there? Call them something completely non-retail related, like “discovery centers” or “display exhibit”, not “showroom” because of its long connection to traditional dealers. The First Amendment says I can open a storefront and tell you all about my old bathtub if I want. If no offer to sell is made it’s not selling. The purchase process is done electronically with a location where it’s legal.

    • 0 avatar
      healthy skeptic

      >> Why can’t Tesla beat the restriction against factory stores by simply saying that no “selling” takes place there?

      That’s what they’re already doing. What they call the place doesn’t have any legal bearing.

      In any case, as far as I’m concerned, it’s wrong to force them to do this in the first place. They should be allowed to sell direct, anytime and anywhere they wish.

    • 0 avatar
      redav

      In Texas, Tesla is not allowed to have a dealership or “directly sell” (or whatever the actual wording is) their cars. They have storefronts like you describe. Here, the law prevents them from discussing price.

      However, even though they supposedly can’t sell their cars in Texas, that doesn’t mean people in Texas can’t buy Teslas from Tesla. All I would have to do is go online to Tesla’s website and order/buy a car. It would be delivered to their service center where I would pick it up. How is that really different than having a dealership? I don’t know. Is it a bit less convenient? Sure–the product experts in their store can’t even discuss how to use/navigate the website. Also, I would have to do all the legwork to get it licensed/registered.

      I suspect things are similar in NJ. People there can likely just buy the car online. (Has anyone in NJ gone to one of their stores and asked? I think we’d all like to hear.)

      Given that there really isn’t a barrier to buying a Tesla even in a state that supposedly doesn’t permit sales, I wonder what the fight is really about. It clearly isn’t about competitors keeping Teslas off the streets. It isn’t about Tesla having the ability to sell cars. There must be something else about having a “dealership” that would benefit Tesla. Perhaps it is as simple as the convenience of them taking care of the registration/licensing and other tasks. Maybe it’s about consolidation of business models (ability to combine service center, sales, etc.).

      Also, dealerships (or rather, the dealer associations) must be scared of besides having Tesla as a competitor. Clearly, that has something to do with how much money they can make. (Only a fool believes it has anything to do with benefiting the customer.) Maybe it’s the parasitic associations and not the actual dealers. Maybe the dealers are genuinely concerned that the Fords & Chevys will set up their own stores and muscle them out of business. (I recall reading about the manufacturers used to rent a building/warehouse for a fly-by-night operation to dump excess inventory straight to the public.) Sure, if I were a dealer, I’d hate that (and hate the idea of consumers buying a car online straight from the factory). But these fears are independent of Tesla because they have no franchisees, and I doubt other car companies are capable of running a successful dealership. After all, GM doesn’t even know how many people they employ.

    • 0 avatar

      That seems to be the precedent set by Tesla in TX. There are other issues, however. The state can collect its sales tax when the vehicle is registered and plated. What is completely lost to the consumer is the sales tax credit available when a vehicle is traded in. In TX, the tax is only owed on the “difference” amount. This is one of the major hurdles to “direct sales.” States want their sales tax and so do the counties and municipalities. This all varies from state to state. BUT consumers also want their trade in credit.

      Frankly, there are so many things that those who write about these issues don’t know about the retail auto business because they have never done it. I’m not talking about you, but about people who are taken seriously who write for national pubs.

    • 0 avatar
      wumpus

      My first instinct would be to put a Tesla “non-showroom” in NYC (and possibly one near Philly, not all Jersey is that close to NYC) and cut out the state taxes.

      I know there is at least one Tesla repair shop in Maryland, but I don’t know where the “non-showrooms” are (probably near the beltway due to VA issues). They would have to keep the repair shops (hello, towing costs) out of state as well.

  • avatar
    bomberpete

    Cheap shot of the day: I feel like Tesla would have no problem if Chris Christie could fit into one.

  • avatar
    Janet Kirst

    A republican governor that is imposing job-killing regulations? Like in Texas and Arizona? States that are open for business? Big believers in the free market? How can that be?

    Oh right, big Republican car dealer campaign donors trumps ideology.
    http://www.cdl4sure.com/blog/dealership-vs-direct-sale-cars-in-new-jersey/


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