NJ Assembly, NY Governor Pass Direct Auto Sales Legislation

Cameron Aubernon
by Cameron Aubernon
nj assembly ny governor pass direct auto sales legislation

Tesla is one step closer to resuming direct sales of its electric vehicles in New Jersey after the N.J. Assembly passes a bill that would allow it and other ZEV manufacturers to bypass the independent franchise system in selling electric vehicles.

Automotive News reports the bill comes after the state’s Motor Vehicle Commission banned the automaker from using its business model within the state earlier this year. Once passed in the N.J. Senate and signed by Governor Chris Christie, Tesla and any other ZEV manufacturer who sold direct to the public prior to January 1, 2014 could now return to business in full.

Meanwhile, New York Governor Andrew Cuomo signed similar legislation that had already been approved, allowing Tesla to continue direct sales in its five stores. However, no other manufacturer is allowed to use the EV automaker’s business model for their own, and Tesla’s stores must be transferred to an independent dealer should things change for it. Cuomo said the bill would ensure “that both sides will thrive to be able to grow the market for cutting edge zero emission vehicles.”

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  • Hreardon Hreardon on Jun 18, 2014

    Ohio passed similar legislation very recently. Thank goodness, too. The dealership network is scared witless about the floodgates being opened and I think at this point it is only a matter of time before the manufacturers really start pushing to relax the franchise protection laws. Here's the funny thing - I suspect, without much evidence mind you, that retail prices on automobiles are lower thanks largely to competition between dealerships. In a world where manufacturer-run stores dominate you are likely to see that competition evaporate and purchasing at MSRP become much more common. A not-entirely comparable example is Apple. When the first Apple Stores opened about ten years ago there was a massive outcry from local retailers. In a short period of time a great number of those retailers who were Apple-specific went belly up as buyers flocked to the Apple Stores. Why? Better retail experience, period. So, while you could save a few bucks at the local Apple shop, or even get them to throw in some freebies with a new purchase - the Apple Stores are straight MSRP, al day, every day. Now I'm not directly comparing the purchase of a $299 iPhone or $1495 Macbook to a $25,000 car, but the lesson, I'm sure, has not been lost on the automakers who see a great way to eliminate the middle man and gain better control over their brand image. The big question will be: will people still demand discounts from the manufacturer run stores, or will they be willing to take the sticker price and be happy with it in compensation for a greater retail and service environment?

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    • Ruggles Ruggles on Jun 21, 2014

      @ihatetrees RE: "I don’t KNOW the best car retail model. It is not know-ABLE." Actually, it is. Put up your own money and you can find out. You can do things exactly your way and succeed or fail on the results. It is NOT state franchise law preventing OEMs from owning their own sales points. It IS the franchise agreements auto OEMs entered into with their dealers to gain access to the dealers capital and local expertise and experience. Franchise law only clarifies the framework if there is any issues of interpretation in the franchise agreements. Don't think the OEMs don't have high priced lawyers writing those things up. Its a pretty adversarial relationship between dealers and their OEM ESPECIALLY now that dealers typically represent more than one OEM. The system how it exists was NOT created by dealers. It was created by the OEMs. And the Federal Trade Commission likes consumers to have the right to shop without having to worry about price fixing. Yes, some have to pay more so some can pay less. That's just the facts of life. Will you be one to get a better than average deal? OR will you be one to pay more so some can pay less. IF you don't like the setup, lobby the FTC to allow dealers to fix prices so everyone can pay the same. that'll make consumers happy, right?

  • Fred Fred on Jun 18, 2014

    It's now getting other manufacturer's attention as they want in on this deal as well.

  • Wsn Wsn on Jun 18, 2014

    Franchise protection should only apply to makers who already have a franchise network in place. The very fact that this is even an issue for a clean start such as Telsa shows there is something wrong with the US of A. Too much protection and too little progress. Too socialist and not capitalist enough.

  • TrailerTrash TrailerTrash on Jun 18, 2014

    I still do not know how this will work..other than keep Tesla alive as a ridiculously small company and allow it to go on as a scam stock. There can only be a small amount of people willing to pay a lot of money for a car that cannot be serviced easily and locally. That at is unless everybody keeps buying into it simply as a city electric car. I guess as a city car you don't have to worry about a break down along Hwy 75 outside Knoxville, TN. Everybody else does. So, unless I am totally missing the so-called business plan along with the consumer plan...this is nothing more than enabling.

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    • Vulpine Vulpine on Jun 18, 2014

      @TrailerTrash It's quite obvious you don't understand how Tesla operates. Everything you say is a "promise" from Tesla is fact. Just ask any Tesla owner, like Alan Dean Foster, the author, who owns a 65kWh Model S in Phoenix, Arizona. Just because the car is pricy now doesn't mean it will remain pricey. Tesla has already announced a $35-$40K model coming out in '17 and a pickup truck around '20. Not snake oil, reality.