Bloomberg is reporting that NJ caught Tesla by surprise when it moved to block direct sales of cars to the public forcing Tesla to consider what to do with their two auto stores in the most densely populated state in the nation.

Tesla says that the company has been talking to NJ Government. The governor has said Tesla needs to work with the state's political system to change existing laws.

Either way, Tesla is in a long fight as more states pass tougher direct sales laws for auto sales to protect their current franchise network of dealers. Texas just passed some of the strictest laws around.

Full Story:

http://www.bloomberg.com/news/2014-03-11/tesla-stores-may-be-closed-after-n-j-blocks-direct-sales.html

such a farce

i know, elon should get over himself, right?

Check your hate.

While I have not been a fan for the pure electric play of auto's as they really are more focused on inner city driving, I have allot of respect for what Tesla has been doing and that this Billionaire is working to push more than anyone else or company the electric solution.

Yes I think the CNG is a far superior middle step off pure petrol only and we will eventually get to the day when electric will offer a 500 to 1000 mile range for nice road trips, I think an investigation needs to be done into the specific people working to block a better way of buying auto's.

This smells of Back Alley payments to keep the existing caste system in place.

These laws go against what the Capitalist system and what democracy are all about.

Like Drew, this is a Farce against the system. Let the existing dealers compete rather than cry about having someone come up with a better way to sell a product due to technology.

NJ government just wants to get their kickbacks...corrupt, mobbed-up state..

^ That's entrenched democrats for you.

I see a LOT of Teslas rolling around central NJ, for what's that worth.

i know, elon should get over himself, right?

If this were say, Carbon Motors, and they were trying to sell a civi version of their diesel sedan through direct sales channels and getting shut down by NJ... you'd certainly be crying foul and yellin about freedoms and the 'merican way.

Hmmm... no. What is wrong with franchised dealers? They have a right to earn a living, I guess. The bad ones go away, the good ones remain.

I never quite understood the whole franchise thing. Theoretically, it's supposed to prevent 'price fixing' or the like, but why -for EX- WallieMart doesn't face the same restrictions; IDK. I realize this was put in place eons ago- anyone ever hear -beyond this Tesla issue- any talk about abolishing it?

I don't really understand the usefulness of dealer franchises to the consumer in the modern business climate. It was a model for a different time and I'm convinced the only people that benefit from it are the franchise owners themselves. What other product HAS to be sold through a franchise? Does New Jersey allow home builders to sell direct? Do they have any Apple stores in NJ? Where is the push to ban them? I'm sure there are many manufacturers in NJ and the other states pushing these franchise laws that are allowed to sell direct to the consumer.

I never quite understood the whole franchise thing. Theoretically, it's supposed to prevent 'price fixing' or the like, but why -for EX- WallieMart doesn't face the same restrictions; IDK. I realize this was put in place eons ago- anyone ever hear -beyond this Tesla issue- any talk about abolishing it?

I think the basic idea was that it was started back when a couple of automakers completely dominated the market. Now, we have bunch of automakers from around the world that all have a decent slice of the market with no dominant OEM's. We also have the threat of the Chinese coming over which is not a case of if but when. My personal opinion is that in this climate, it would be better for the consumer if there was no middle man involved in the sale of a vehicle. As we all know, it is not about consumer protection any more, though. It is about franchise owner protection and politicians lining their pockets.

Hmmm... no. What is wrong with franchised dealers? They have a right to earn a living, I guess. The bad ones go away, the good ones remain.

It was put in place to prevent the manufacturer from coming in and undercutting existing franchises on pricing.

But those rules dont seem to apply in Fast Food or Hotels, so why should it apply to cars?

In Tesla's case, there are no Tesla franchises to complete with, thus it should be free to sell direct.

+1000 to Drews last comment. There is no real justification for this Tesla denial of selling direct other than others do not want to have direct sales push in on their franchise.

How would this make car buying better for the consumer? I doubt prices would go down.

How would this make car buying better for the consumer? I doubt prices would go down.

Better, more consistent service. The ability to let people actually buy a car online. Less wait-times, as dealers have to 'swap' models if a customer wants something that isn't on the lot, requiring additional negotiations; corporate stores wouldn't have those problems.

Did you have a retroectomy lately? Everything you support is archaic and old.

Edited March 16, 201412 yr by FAPTurbo

No, not lately.

Mid Life Crises???

How would this make car buying better for the consumer? I doubt prices would go down.

Better, more consistent service. The ability to let people actually buy a car online. Less wait-times, as dealers have to 'swap' models if a customer wants something that isn't on the lot, requiring additional negotiations; corporate stores wouldn't have those problems.

Also, maybe it would also eliminate the price haggle bull$h!. Just a standard price across all stores for the same model and equipment level.

no price competition = higher prices

I have three little letters that are the biggest reason to be against franchise laws: ADM

Maybe they could then properly fund the pension funds and not DUMP them on the Tax payers like the Airplane companies have done.

I thought free enterprise was about the ability to challenge the established business model, in this case by having a sales channel not going through a franchised dealer. I guess it isn't after all...

Edited March 17, 201412 yr by ZL-1

no price competition = higher prices

Shouldn't the price competition be between the different automakers and not be between different dealer franchises selling the same product? The automakers are going to compete on price with each other. That is why vehicles have incentives on them. I guess i don't see where dealers competing with each other helps anything. I personally don't like the negotiation process (and I'm betting most other people don't either) so having fixed sale prices that fluctuate month to month via incentives would make the process more relaxed and less stressful for the majority of buyers.

Dealerships are the worst aspect of buying a car. Everyone knows it. People hate dealing with them and they hate haggling on price just to not be ripped off. They are greedy, money-hungry, and have a business model straight out of the 50's. Not only that, like many other big businesses, they have deep political ties, generally within one certain party. They use these ties in an attempt at having a monopoly on the market. What we are seeing here is exactly what I just described. Tesla scares these traditional dealerships, not because its a sales threat, but because of the prospect of more automakers following Tesla's lead. They know that if more automakers open up to the direct-sales approach and more consumers see the benefit of not being ripped off... there will be a direct threat to their business model. They absolutely cannot take that risk. They need you to buy all those add-ons that cushion their margins. They want to you to pay that market-adjusted price to make a bit more on hot-selling models. As such, they will use every political advantage they have to avoid the risk. No matter what you think of Tesla, this is a lose-lose situation for the consumer. Sad state of affairs here.

Plus eleventy BV

Dealerships are the worst aspect of buying a car. Everyone knows it. People hate dealing with them and they hate haggling on price just to not be ripped off. They are greedy, money-hungry, and have a business model straight out of the 50's. Not only that, like many other big businesses, they have deep political ties, generally within one certain party. They use these ties in an attempt at having a monopoly on the market. What we are seeing here is exactly what I just described. Tesla scares these traditional dealerships, not because its a sales threat, but because of the prospect of more automakers following Tesla's lead. They know that if more automakers open up to the direct-sales approach and more consumers see the benefit of not being ripped off... there will be a direct threat to their business model. They absolutely cannot take that risk. They need you to buy all those add-ons that cushion their margins. They want to you to pay that market-adjusted price to make a bit more on hot-selling models. As such, they will use every political advantage they have to avoid the risk. No matter what you think of Tesla, this is a lose-lose situation for the consumer. Sad state of affairs here.

Nicely stated!