Tesla and New Jersey: Capitalism, What?
I’m sure everyone has heard that California-based Tesla Motors and their CEO (and my personal hero) Elon Musk is having a bit of trouble selling their cars in certain states. And, it is complete and utter bullshit. If I could, I would go out and buy a Tesla Model S and park it right in front of the homes of certain governors with a giant sign that calls them weenie-heads or make some other heretofore un-thought-of intelligent and poignant comment.
Before I go off on an unavoidable rant on the values of competition in the automotive marketplace and the evils of backroom political deals, let me outline the situation. Telsa (like Apple) has created a disruptive technology. The Tesla Model S is a groundbreaking electric car that is changing the automotive game forever, much like the iPhone has done for mobile phones.
And, like with all disruptive technologies, Tesla feels the people best equipped to sell the world’s first functional, practical and useful electric cars are their own people via Tesla-owned corporate dealerships. As far as I can tell, the reasoning behind this retail model is three-fold.
(1) Tesla can ensure those selling the Model S are trained experts in the car. (2) Related Tesla corporate service centers specialize in the repair and maintenance of Tesla cars and the problems unique to electric cars. (3) There would be huge pressure from the traditional car-makers to push buyers away from Tesla electric cars towards the traditional brands. That really only applies for any potential Tesla-licensed dealers that also carry other more traditional brands.
I’m okay with those reasons. But, even if I wasn’t, it shouldn’t matter, because Tesla is a company in the United States that is seeking to sell their product. They build a safe car that is certified as such by the government, and they should be allowed to sell that product using pretty much any reasonable retail model that they see fit. Because, capitalism.
I’m not talking about the ridiculous levels of free market that some people preach. I’m talking about the simple notion that innovation and progress are good (i.e. electric cars) and that competition among companies in the same sphere leads to better products. We would have no iPhone 5S or Samsung Galaxy or Nokia Lumia if there was no Blackberry or Motorola Razr. We would have no Koenigsegg Agera R if there was no Lamborghini Miura. And, you know what, we probably wouldn’t have the forthcoming BMW i8, BMW i3 or Cadillac ELR if there was no Tesla Roadster or Fisker Karma (RIP).
The traditional automakers are scared of Tesla. They’re scared that the Tesla Model S and next year’s Tesla Model X are going to steal sales. Rightfully so. They probably will. Who can really argue with fuel costs that are a fraction of the price per mile and a car that looks as good as the Tesla? But, more than the automakers, the auto dealers are terrified… terrified and pissed that Tesla is going to steal their customers without needing their existing dealership and service networks.
Here’s what should happen… Car-makers and car-dealers should see Tesla’s innovation and progress and work harder. Make a better product. Offer a better buying experience. Make a nicer looking dealership. Stop sucking so much. But, no. That’s not what actually happened.
Here’s what actually happened… Interested parties (read: dealers) in a dozen states have sued, petitioned, fought and lobbied politicians for regulations, limits or outright bans on Tesla’s freedom to sell their cars. Tesla has won some battles (Massachusetts, Minnesota, North Carolina) and lost some (Arizona, Maryland, New Jersey, Texas, Virginia). Some are still in progress or rather limited in reach (Colorado, Georgia, Ohio, New York).
Most recently, through lobbying of Governor Chris Christie, some backroom political maneuvering and questionable legal interpretations, New Jersey has banned the sale of cars not sold through independently owned dealerships, effectively banning the sales of Tesla Motors. So much for a Republican view of capitalism. Needless to say, Tesla CEO, Elon Musk is a bit upset. Check out his blog post on the topic.
Tesla Motors isn’t the last maker of electric cars. Their Model S, upcoming Model X and rumored electric truck are only the tip of the iceberg. This problem won’t go away for Tesla or other brands to come. Tesla will probably sue to have these laws and decisions reversed. And, I wouldn’t be surprised if this eventually goes all the way to the Supreme Court. So, keep an eye on how this whole Tesla Motors and founding principle of the country (yes, I’m still talking about capitalism) this works out. Who knows, maybe people will come to their senses and realize that competition is good and Tesla has every right to succeed. Until then, check out a quick explanation of the Tesla Motors-centric regulations below.
- Arizona: Tesla sales effectively banned.
- Colorado: Tesla has a single store near Denver in the Park Meadows shopping center. Due to a law passed after the store’s opening, Tesla cannot open more dealers in Colorado.
- Georgia: Tesla is only allowed to sell 150 cars a year there, under an existing exemption from Georgia auto-dealer regulations. A pending bill will allow an increase to 1500 per year while eliminating the $5,000 electric-vehicle rebate.
- Maryland: Tesla sales effectively banned.
- Massachusetts: Tesla won a lawsuit brought by MA car dealers there that challenged Tesla’s Natick dealership license.
- Minnesota: In March 2013, a bill encouraged by dealers to ban Tesla sales died in the state legislature.
- New Jersey: Tesla sales effectively banned.
- New York: NY Governor Andrew Cuomo promised state auto dealers that he would sign a Tesla ban currently in the state legislature.
- North Carolina: In June 2013, a bill encouraged by dealers to ban Tesla sales died in the state legislature.
- Ohio: In December 2013, Ohio state car dealers worked to attach a Tesla ban as pork to an unrelated bill, which failed. A new version of the bill limiting the number of Tesla dealerships to two is working its way through.
- Texas: Tesla sales effectively banned.
- Virginia: Tesla sales effectively banned.