Why New Jersey’s Ban Of Tesla Motors Is Bad For Everyone

Senior Contributor
03.14.14 25 Comments

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We make a lot of fun of Tesla on here, mostly because Elon Musk has athin skin and a loud mouth. But they’re undeniably both popular and fiscally sound, so much so that they paid off a half-billion loan from the government a decade in advance. And now, they’re completely unwelcome in New Jersey, and it’s for reasons that, no matter where you live, you should be deeply concerned about.

The Internet is telling me this is because Chris Christie is an environment-hating Republican?

While Chris Christie is a Republican, and may hate the environment, that’s not what’s happening. Tesla’s cars may be green, but we’re talking about high-end luxury vehicles here. No, the problem isn’t with Tesla’s cars, it’s how Tesla sells them: Directly to the consumer.

Wait, I can just go to a dealership down the street and buy a car! How’s that different?

Because that dealership isn’t owned by the manufacturer. Essentially, a dealership works by buying cars from the manufacturer on spec and trying to get them off the lot at a profit. Tesla doesn’t do that, and that’s pissed off car dealerships across the country.

Why doesn’t Tesla want dealerships?

Tesla can’t afford to set up a network of dealerships, and the Internet is a more efficient way to do things anyway. And normally this wouldn’t be a problem, except car dealers hate and fear this model. Under the current system, car dealers have a lot of power; their franchise agreements essentially give them a monopoly over a specific region of the country, and that also gives the dealer a lot of leeway to treat you badly, like for example tacking a few points onto your car loan.

Christie essentially made it the law that you have to go through the middleman and give them their cut in the state of New Jersey. He also did it unilaterally, through a state commission, instead of through legislation.

Wait, so you’re telling me the governor of New Jersey put through a regulation that forces you to go through a crooked middleman to buy something many people view as a necessity?

Yeah, we know, it’s like he woke up and said “New Jersey hasn’t been made to look like a terrible stereotype! What can I do to fix that?” But that’s more or less what happened.

Does Tesla have any recourse?

Unfortunately, this is a case that might have to go to the Supreme Court. New Jersey is the third state to pass a law like this, the other two being Texas and Arizona. Worse for the company, New York and North Carolina are considering similar bans, both pretending that a luxury automaker selling cars directly is somehow “unfair competition” with the rest of the market.

Simply put, it’s not out of the realm of possibility that large swaths of the country might not be able to buy a car without having to use a tightly controlled service that will mercilessly jack up the price because it feels like it, thanks to attempts to ban Tesla. So, if you’re thinking about buying a Tesla, you might want to pull the trigger now… and if you live in a state considering a ban, it might be time to write a few letters.

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