By on March 12, 2014

tesla courtesy nicholas fleury via flickr

In the wake of the New Jersey Motor Vehicle Commission’s decision to enact new rules banning direct sales of vehicles by automakers, Tesla may have no other recourse than to vacate the local market come April 1.

Automotive News reports Governor Chris Christie’s administration faces accusations by Tesla from the decision, stating the automaker and the New Jersey Coalition of Automotive Retailers both agreed they would “address their issues in a more public forum: the New Jersey Legislature.”

In turn, the governor’s office responded by reminding Tesla that in order to conduct their brand of selling in New Jersey, the automaker “would need to engage the Legislation” in drafting a bill that would allow for direct sales.

Begging to differ, Tesla vice president of business development Diarmuid O’Connell explained his employer’s standpoint:

The statute in New Jersey plainly allows Tesla to be licensed to sell cars there. Indeed, the Motor Vehicle Commission has licensed Tesla under that statute ever since October 2012, and any suggestion that Tesla was told “since the beginning” about any problem with its ability to be licensed there is false. The only thing that has changed is the Christie Administration’s sudden decision to go around the Legislature in an attempt to enact a rule that the statute doesn’t permit. Worse, it has done so without any reasonable notice or even a public hearing.

NJ CAR president Jim Appleton, however, believes the commission is doing what is mandated in the enforcement of the statute. He doesn’t want to see the automaker leave the state, only wanting to help Tesla “operate in a manner consistent with the law.”

The commission’s decision places New Jersey on a list of states barring direct sales, including Arizona, Ohio and Texas.

Get the latest TTAC e-Newsletter!

Recommended

54 Comments on “Tesla Vacating New Jersey Market Amid Direct-Sales Ban...”


  • avatar
    redav

    Here in Texas, I was told that if I bought a Tesla, I would do it online through Tesla’s website and then pick it up at their service center. I don’t know exactly how that is not a “direct sale,” but the ban is silly in that a Tesla representative cannot assist, describe, or guide me in the use of their website.

    • 0 avatar

      In Texas, call David Blassingame at AutoFlex leasing in Dallas. They are leasing AND arranging the balloon financing for Teslas regularly and know how to navigate the waters there. I’ve visited the Austin Tesla location and received the same experience you describe.

  • avatar
    vent-L-8

    I had liked Christie, but this is IMHO a real hit against him and his administration. How about some free enterprise for NJ?

    • 0 avatar

      Chris Christy is bad for my stock shares, so right up until this point I was ambivalent about his bridge-closing-scandal.

      NOW…HE’S GOT TO GO!

    • 0 avatar
      NotFast

      While I would love to blame Christie – can we? Isn’t this a legislative decision rather than an executive one?

      • 0 avatar
        jrhmobile

        No, it’s specifically a Christie-administration executive agency decision.

        Basically, the NJ Motor Vehicle Commission has said that Tesla doesn’t get to play until it addresses the issue (e.g. pays to play) through the NJ legislature.

        Feel free to consider this a shakedown of Tesla to fold or raise the payola spread by the NJ Council of Automotive Retailers lobbying efforts.

        • 0 avatar
          morbo

          First Christie kills the ARC (train tunnel from Hoboken to Manhattan that would ease overcrowding on PATH and NJT trains). Than his staffers gridlock Fort Lee like amateurs.
          Now he’s caving into the dealer lobby.

          i used to like Christie cause he was supposed to lower my outrageous property taxes, taking on the teachers unions and such. My taxes are still going up, but now he’s causing me to go slower too.

          All hail your next president America, bumbling, incompetent, a bully that’s easily bullied, and surrounded by amateurs.

          • 0 avatar
            fozone

            Chris Christie may be many things, but he will never be president.

            This man has more skeletons in his closet than Jeff Dahmer.

            Seriously, Tony Soprano would be a more viable candidate. Or James Gandolfini — and he’s dead.

          • 0 avatar
            Dr. Kenneth Noisewater

            Indeed, all any foe need do during the primaries is to make a simple ad with pics of Christie hand-in-hand with Barry Soetoro.

            http://www.nowtheendbegins.com/blog/wp-content/uploads/obama-rino-chris-christie-jersey-shore-lovers-may-2013-traitor.jpg

            Game over.

          • 0 avatar
            CJinSD

            The progressive brainwashing machine firing up against Christie is the best thing they have ever done for the country.

      • 0 avatar

        I don’t think Christie could change this situation via executive order.

  • avatar
    Rod Panhard

    1. Ms. Panhard works in retail. When she saw the store and said, “That’s a nice pop-up store.”

    2. The law, like many bizzaarrroooo laws here in New Jersey, was in effect before Tesla hung out a shingle. What happened yesterday was the state agency voted to enforce the law.

    That’s how it is here.

  • avatar
    carrya1911

    New Jersey also doesn’t let you pump your own gas. It’s a state with a whole lot of needless special interest protectionism.

    • 0 avatar
      redav

      I wonder if you can plug in your Tesla yourself in NJ? Maybe that’s the problem?

      • 0 avatar
        redliner

        All supercharger stations will now be maned by high school students who will be busy texting when you pull up, then they will attempt to connect the charger and miss, scratching your paint in the process. After 20 min. you will have to go find him/her so that they can unplug your car and you can tip them. All for your safety and to create jobs, of course.

  • avatar
    tedward

    New Jersey is probably the most corrupt state in the nation and the current governor has recently suffered a serious blow to his fund raising capabilities and political ambitions. How is this surprising at all? To anyone?

    Also the entire state is a parking lot, there are probably more cars per capita there than anywhere in the country (new cars at that.) Of course the dealers have the current governor (who has never been known for having clean hands) in their pocket.

    • 0 avatar
      morbo

      “Also the entire state is a parking lot,”

      You would think so, but no. As a Jersey native that’s been transplanted to the Capitol Wasteland, boy how i miss Jersey roads and Jersey drivers. 80mph+ minimum actual speed on the Parkway, low cost gas (relative to NY/PA) that i don’t got to pump for myself, and drivers that actually know how to drive. Here in the capitol wasteland, the light will turn green and the morons around me won’t notice. Once I lay on the horn, they proceed to accelerate as slow as humanly possible towards the scary, dangerous, 4 lane intersection with an alternating traffic flow (3 reds / 1 green).

      But my biggest gripe are the roads. New jersey roads lead towards New York, worlds most important city. New Jersey builds 16 lanes of super highway directly into the city. Virginia roads lead towards DC, political capitol of the world. Virginia restricts construction to a single, 2-lane highway speed limited to 45mph, HOV3 mandatory for all cars (I-66).

      I would gladly trade Virginia’s abysmal road network for the glorious Garden State’s.

      • 0 avatar
        Jeff Weimer

        Would you believe VADOT holds that area as a priority? the roads here in SE VA have been atrocious forever and we’re not really holding out hope VADOT will ever do much.

        • 0 avatar
          morbo

          Unfortunately yes. When I told my uncle in Norfolk that potholes on inside the beltway state roads ate two of my tires, he said I was lucky. I simply don’t get how NJ, as expensive, corrupt, and slow as the government is, can be so much better than VA at road construction and maintenance. And VA collects more in gas taxes than NJ (per gallon). it literally hurts my brain.

    • 0 avatar
      probert

      I know where you’re coming from but you’re talking coastal New Jersey. There are some really beautiful parts of the state – stunning. “Garden state” seems like a joke but it isn’t.

  • avatar
    olddavid

    Be careful what you wish for. You think you have problems with the dealer body? Wait until direct sales have you traveling to regional service centers. Who do you sue if you buy a lemon? In what state- the manufacturer or the delivery state? I come from a dealership background. To allow the manufacturer to compete when I’ve invested several generations of sweat equity is unfair and probably violates my franchise agreement. The distribution system is not broken; the way the dealers market and deal with people at the point of sale is. Tesla is asking to be allowed to have their own rules. Were everybody starting from the same line, fine. This late in the game -no.

    • 0 avatar
      jpolicke

      And when the dealer jerks you around or rips you off, you can complain to the factory and get told that the dealer is an “independent business” and there’s nothing they can do to help you. The service issue could be resolved by leaving the dealers with the profitable parts of the business: service, parts, and used cars; the manufacturers are well aware that customers aren’t going to haul their cars long distances for service and repair.

      If a manufacturer with an existing franchise structure wanted to start competing with their dealer through company outlets, I could see how you might have a valid grievance. For a startup with miniscule sales, I think they should be free to try a different model.

      • 0 avatar
        redav

        The big car companies are already so large and unwieldy that I doubt they could pull off owning dealerships. That’s not their business model. I doubt many would even want to do it, and those that do would likely change their mind once they got knee deep in it.

        Tesla’s business model is obviously different. Being small, it makes sense for them.

    • 0 avatar
      LALoser

      Price fixing would be a concern for me. Now we have Honda on Honda, Ford on Ford competition. Imagine checking ebay for a good new car deal with manufacturers setting the price…they would all line up, and cross manufacturer shopping would be within just hundreds of dollars. Dealers also beat-up manufactures for better pricing, packages and give direct criticism, something a salaryman would be reluctant to do.
      In my industry, some manufacturers are going direct, and it is not good. Service is worse, pricing breaks have all but evaporated and lead time has stretched out so far its painful.

    • 0 avatar
      mcs

      >> Wait until direct sales have you traveling to regional service centers.

      That’s already happening with dealerships. Mine has one, and it’s closer to my house and really nice.

      >> To allow the manufacturer to compete when I’ve invested several generations of sweat equity is unfair and probably violates my franchise agreement.

      There are no existing Tesla franchises as far as I know. Besides, just because you’ve invested years of sweat equity doesn’t entitle you to government protection from competition.

      Maybe Tesla can pick up a Suzuki dealership in NJ on the cheap. Then use it to sell Teslas.

      • 0 avatar
        Lynchenstein

        I was just thinking that there will likely be a way around these laws. Tesla has Musk at the helm, and whatever you may think of him personally, you have to give him credit for being a very savvy businessman. If the book stores had a good lobby group and governments in their pockets, you know that Amazon would have had a much harder time of it and we may very well not have next-day delivery of everything and all-we-can-eat streaming media.

        Of course we have lots of smaller and larger bookstores (heck, all retail stores) under pressure from Amazon and Internet sales in general. We have classic Darwinism at play here. The existing car dealers have every right to try to hold on to their market, but the truly worthy businesses will embrace the better ways and thrive.

        I have no idea if direct sales of cars is actually better, but I think that Tesla has every right to give it a shot and see what happens.

    • 0 avatar
      dal20402

      “The distribution system is not broken.”

      Anyone who’s ever tried to custom-order a car in the United States, or even obtain an already-built car in the configuration they desire rather than the one the dealer wants to sell, would disagree with this.

      The distribution system is designed to favor the dealer, not the consumer, and lobbying keeps it that way. I can’t wait until it’s blown up by Tesla, working with states with more forward-looking leadership than Governor Christie’s administration.

    • 0 avatar

      I have no problem with a legacy auto OEM selling direct to consumers as long as they buy out all of their dealer partners first. Just imagine the capital requirements to accomplish that. The OEMs do arithmetic pretty well which is why they have made no move in that direction.

      After all, it isn’t state law prohibiting OEMs from selling direct. It is the franchise agreements OEMs freely entered into with their dealer partners to gain access to dealer capital and local connections. Who is going to make a $20 million investment without an agreement in place with one’s supplier?

  • avatar
    redliner

    Why is this acceptable with cars, but nothing else?

    If I can buy a computer direct from the manufacture, a new house direct from the builder, and a thoroughbred straight from the breeder, why do I have to buy my car through a middle-man BY LAW? I should have a choice.

    • 0 avatar
      mcs

      I was looking at running shoes this morning – and apparently I can buy them directly from New Balance if I want. In fact, I can even buy groceries from some of the small farms near my house where they grow the food. Fortunately, there’s no grocery store lobby to prevent me from going to the farms and the shoe salesman lobby isn’t forcing me to go to Al Bundy.

    • 0 avatar

      I’ll be glad to tell you why. Because the auto OEMs wanted it that way.

      If TESLA wants to own their own stores there really shouldn’t be any problem with that. They’ll find out soon enough how capital intensive that can be.

  • avatar
    bills79jeep

    “The commission’s decision places New Jersey on a list of states barring direct sales, including Arizona, Ohio and Texas.”

    So, the store in Easton is a service center on, can’t buy a Tesla there? Hmm, I thought it was going to be a store too.

  • avatar
    npaladin2000

    Dealers are working very VERY hard to try and justify their little place in the distribution system. Unfortunately, many dealers are “working hard” by lobbying their favorite politicos, rather than trying to justify their existence to the customers (though some do).

    • 0 avatar

      Dealers don’t have to work hard at all to justify their place in the distribution system. But that doesn’t mean TESLA shouldn’t be allowed to own its own distribution system. There is a lot of misunderstanding on this issue from consumers who don’t understand how the system works.

      I wonder if Tesla’s attorneys understand how the system works. Most dealers I know have no problem with TESLA owning all of their own sales points. What they are concerned about is legislation that might impact their own relationships with their own current OEMs.

      Legacy auto OEMs have already owned their own sales points in NJ. They do so by establishing a separate corporation that holds the dealers license. There is generally a non corporate partner/dealer/operator at the helm of such an arrangement. Sometimes it is a temporary operator that keeps a dealership in operation until a buyer can be found. The various auto OEM minority dealer initiatives operate this way all over the USA.

      • 0 avatar

        Hey I just wanna let you know first hit on google still evidently produces better results than decades of hard time in the dealer biz, and you’re still making excuses.

        https://www.thetruthaboutcars.com/2014/02/tesla-q4-fall-16-million-in-losses-annual-revenue-climbs-to-2-billion/#comment-2836129

        Most worthless job experience ever.

  • avatar
    RogerB34

    WSJ 12 March 2014:
    …”A spokesman for Gov. Christie said that his administration made clear to Tesla when it began operating in New Jersey a year ago that it would need legislation to establish direct-sales operations under state law. The change made Tuesday was the final step in a rule-making process that began in October and has been open to public comment.

    “They’ve been portraying this as sprung upon them, but that’s just not true,” the spokesman said. “Tesla has been aware of this position from the beginning.”…

  • avatar
    John R

    Whatevs. Come to Delaware! Rest assured, you WILL get the NJ customers you want.

  • avatar
    CapVandal

    This is simply more good publicity for Tesla.

    Like their product is SO GOOD that the dealers are afraid of it?

    Or the abused little ‘green’ company getting beaten up by the car dealer associations?

    Dealers have their arguments (and some of them, I’m sure are good), but they can only come off as bullies.

  • avatar
    APaGttH

    Inconvenient? Yes. Does this hurt Tesla in relationship to New Jersey specifically? Doubt it.

    Not a huge drive to NYC or Philly from almost anywhere in Jersey to buy your new Tesla.

    You have to love Capitalism American style. Capitalism is good, unless a competitor wants to come in disrupt my market – then we need good old fashioned government regulation to crush the competition and maintain the status quo

  • avatar
    Whatnext

    Unbelievable that some posters are defending the archaic dealership shakedown model. This is the 21st century.

  • avatar
    mkirk

    Let them sell here in NJ, I’ll take care of them when they try to drive over the G.W. Bridge.

    – Chris Christie

  • avatar
    Beerboy12

    Somehow I am left thinking NJ could handle this better. A draconian banning… How 3rd world.

Read all comments

Back to TopLeave a Reply

You must be logged in to post a comment.

Recent Comments

  • lstanley: Just wait until this technology also won’t allow your car to start until the windshield is replaced....
  • N8iveVA: More commercial applications for EV’s and a growing world population?
  • dukeisduke: Peter M. De Lorenzo over at The Autoextremist roasted this decision pretty well in “On The...
  • Art Vandelay: If you look at the “big-3” disasters at Three Mile Island, Chernobyl, and Fukishima, I...
  • N8iveVA: Those are some good lookin seats.

New Car Research

Get a Free Dealer Quote

Who We Are

  • Matthew Guy
  • Timothy Cain
  • Adam Tonge
  • Bozi Tatarevic
  • Chris Tonn
  • Corey Lewis
  • Mark Baruth
  • Ronnie Schreiber