Fun times. New Jersey is working on a compromise as
Tesla Motors will have at least 15 more days to sell its electric cars in New Jersey and legislation is in the works that may let the automaker sell directly to consumers for much longer. Tesla has been selling cars at its two company-owned stores in the state for 18 months. But the state’s Motor Vehicle Commission voted on March 11 to enforce an existing law that bans direct auto sales. Every other automaker sell only through independently-owned dealerships. Dealership associations across the country have been fighting to block Tesla’s direct sales. They argue that dealers offer car buyers competitive pricing and consumer protections… The ban on Tesla sales was due to take effect April 1, but this week the state extended that deadline to April 15, according to Jim Appleton, president of the New Jersey dealer’s trade group. Appleton said dealers would support an even longer extension to keep Teslas on sale while the state legislature works on a compromise. But Appleton cautioned that dealers would not support Tesla being able to sell directly to consumers forever. “There needs to be a pathway for them to come into compliance with franchise laws,” he said.
Meanwhile, across the Hudson, the New York Times OpEds that Car Dealers should leave Tesla alone, and that it is a desperate and unfair way to try to defeat the upstart electric automaker.
The dealers’ associations say the laws against direct sales encourage price competition among dealers for a particular brand of car. While dealers do compete with each other, consumers can end up paying more when they buy through middlemen than directly from producers.
The fight with Tesla is not really about this niche company, which expects to sell just 35,000 cars this year. The dealers are afraid that if Tesla is allowed to sell directly to consumers, General Motors, Ford and other carmakers might be emboldened to do so as well.
Lawmakers should not be telling Tesla how it should sell its cars, especially since the company is not displacing existing dealers. There’s no reason to believe that independent dealerships would be better able to sell or service Tesla cars than the maker itself. Instead of fighting Tesla, dealers should be improving customer service.