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Why Tesla Can't Sell Cars Directly to NJ Drivers

Thursday, March 13, 2014

(Niall Kennedy/flickr)

A new rule in New Jersey bans car companies from selling vehicles directly to customers. Hunter Walker,  politics editor for Business Insider, explains what the decision means for the electric car company Tesla, which doesn't want to work with car dealerships that sell gas-powered cars.

Guests:

Hunter Walker

Comments [39]

Bill Milbrodt from Howell

PS ... Another BUSINESS area in which government -- or at least the judiciary -- should become involved is antitrust. Therefore, for clarification, I wish to correct what I wrote to this: "The government shouldn't get involved unless there is an adverse impact on health or the environment, or there appears to be an antitrust issue."

Otherwise, our government employees -- elected and otherwise -- should just clock, clock out, and bounce their pencils on their desks in between. Lunch and rest room breaks allowed.

Mar. 17 2014 11:42 AM
Bill Milbrodt from Howell

Get rid of the law. New business models should be welcomed. And they should be allowed to succeed or fail on their own merits. The government shouldn't get involved unless there is an adverse impact on health or the environment. People complain about large "box" stores putting local sellers out of business. Well, one of the tenets of capitalism is that we, as capitalists are supposed to adapt. My own business has taken severe hits from new technologies (and the currently slow economy). So what? I CHOSE to be in business. It's MY job to adapt and figure out how to become competitive again. Car dealers shouldn't be any different.

Mar. 17 2014 11:20 AM
Tom from Tenafly

Frank in Chester hasn't done his research, Tesla do have a service center in New Jersey – it's in Springfield.

Mar. 14 2014 12:04 PM
Bob.Per from Bronx

This is so wrong for a number of reasons. The NJ Dealers paying off politicans, Dealers add a layer of cost, they are in it for as much profit they can pull from the customer, who pays for their "cheesy" television commericals but the customer. I have had to fight with dealer service to get things resolved so dont tell me about the dealer is their to look out for the custumer. When you buy a car its a game with the dealer sales people. Tesla is providing charging stations, battery swapouts, a car rated as the BEST of all. They are entirely made in the US and we have NJ politicans with making a rule with NO hearing to prohibit them from selling cars!!!! Mind bloggling.

Mar. 13 2014 03:18 PM

[Snark Alert]

I'm surprised that WNYC seems to have adopted the selfish "dog-eat-dog" ethic of the "laissez-faire" capitalists and is insensitive to the New Jersey legislature's "legitimate" concern with maintaining future employment opportunities.
The automobile infrastructure is a major area for forward looking, job preservation measures. E.g., since 1949 New Jersey has prohibited self-service gasoline stations.
It has not gone unnoticed by the "99%" that Mr. Musk's millions have been extracted, to a large extent, by failing in his social duty to provide employment for his fellow citizens. At the very least, his corporation's obscene profits should be taxed to provide a "living income" to the persons his "no-local-dealerships" model has pauperized.

Mar. 13 2014 12:02 PM
Robert Fahey from Massachusetts

Petition begun:

https://petitions.whitehouse.gov/petition/inform-new-jersey-markets-should-be-free-tesla-motors-and-everyone/ptHTHYMP

Mar. 13 2014 12:00 PM

My wife and I have been happy Prius owners since 2008. Until recently we had all our car service done at our local dealer because of the greater complexity of the hybrid design. AND until recently all the conventional car manufactuters would not provide complete diagnostic computer code information to anyone except an authorized dealer service center. (Except in states that mandated the release.)

The above situation, generalized to all modern cars, is part of the explanation for pervasive dealer support of full-service service facilities at their facilities -- they are an extremely lucrative part of their business.

Mar. 13 2014 11:48 AM
PS from NJ

The car salesman who called near the end of the program said he is for this law because customers would not get as good service without a traditional dealership. Why not let the customers decide that for themselves? His other argument is that they should not sell directly because it's the law. So if the law is changed then he would be okay with it? His other argument is completely bewildering, that this favors the one percent who buy Tesla. How? back to number one, can't people decide for themselves if they want a dealership/service center car or not? Obviously this baloney salesman, I mean car salesman, either does not even have the reasoning ability of a twelve year old or he's just plain afraid of competition.

Mar. 13 2014 11:37 AM
Danielle Molleur from NJ

I receive delivery of my Tesla S in December 2012 after researching the company, reading the website and test driving the car at a scheduled event. I ordered the car online and it was delivered to me.
This rule to disallow the direct sale absolutely disgusts me. It's protectionist and anti growth. And the guest who claims that dealerships are good for the communities because of the jobs they create, what about the jobs Tesla is creating in the retail stores in malls and service centers in the suburbs?

Mar. 13 2014 11:34 AM
Taher from Croton on Hudson

Car dealers generally overcharge for service. They simply are corny capitalist crocks. The consumer is left with paying high prices or go to mechanics with equally bad reputations. Real public transportation is the answer and less usage of personal cars.

Mar. 13 2014 11:27 AM
Shawn from Bergen County

That car salesman sounded like exactly that, a used car salesman. I mean, how many people love going to the car store to haggle and fight and negotiate about a car? Car salesmen have a reputation for a reason, because they are dirtballs for the most part.

Apple has had very high customer satisfaction ratings for years. Number 1 for many years. Google that fact.

The better Apple analogy would be when they opened their music store. The radio industry complained and complained. Because their profits were going to get eaten. But what happened? Online music purchases have saved the music industry.

This used car salesman is complaining because HIS profits are going to get eaten. Any disruptive technology gets pushback at first. I just hope Tesla continues to fight, and changes the industry.

Mar. 13 2014 11:26 AM
Barbara Hoffmann from Millrift

I hope electric cars, including Tesla, become a major factor in our choice of transportation. But, one problem I see with it, is that taxes on gasoline pays for the maintenance of our roads. We are going to need a new funding mechanism as electric vehicles become more prominent.

Mar. 13 2014 11:26 AM

It's incredible to me that we're not further down the line with solar and wind energy, as well as stopping our addiction to fossil fuel.

During a visit to the Stony Brook museum we saw an Electric Car(!) amongst all the Model T's they had. Can you imagine? We've had this technology for over a century. But you would never know it, because history is written by the conquerers. Big Business doesn't exist for mankind, it exists to make the half dozen people sitting around a corporate conference very wealthy. Environment, social upheaval and regulations be damned - I got mine!

When the electric car movement gained some momentum again in the 90's the oil and car companies colluded to crush them. http://www.pbs.org/now/shows/223/ "Who Killed the Electric Car?"

Guess what Exxon Mobil does with all that tax-free investment money the US govt gives them every year? They make sure electric cars, solar and wind energy are properly disparaged in the media and the right lobbyists and lawyers are paid handsomely to protect the status quo.

Mar. 13 2014 11:24 AM

Dear car dealer
I'm a big boy. I don't think I need you to hold my hand. I know your other hand is in my pocket!
No free market in Nj.

Mar. 13 2014 11:23 AM
Rosie

Dear car dealer:
Yes, your business will "take care" of my car, $2000 later, for an issue my car did not have to begin with or that my local guy could have fixed for $100. Yes, I am talking from experience having gotten ripped off my dealer so many times that the only reason why I ever take any of my cars to a dealer these days is if they are under warranty and I will not pay a cent. I do not appreciate being told I need a new transmission to fix my cruise control when my local guy changed a switch for $20. Oh, and not to mention how you are treated if you are a woman!!!!

Mar. 13 2014 11:23 AM
Lars from Windsor Terrace, Brooklyn

I think anyone who buys a car through a dealership knows it's about as pleasant as a root canal. What other industry has no set prices and puts their customers in an adversarial position in order not to get ripped off? The strong-arming of Tesla by the dealerships shows that they are not much more than thugs who would have long been out of work if not for their political clout.

Mar. 13 2014 11:22 AM
Seth

Where was the last caller, Frank, when the same thing was happening to book stores, record stores, and many other businesses that online buying is changing? Why should car dealers stay stuck in the past???

Mar. 13 2014 11:21 AM
Meg from Stamford, CT

I test drove a Tesla recently and the Tesla reps who organized it were the most professional, well informed and polite individuals I have ever encountered. If Tusk isn't giving $$$ to the car dealership PAC then it is a deliberate decision not to play that game. He is not only brilliant and a successful entrepreneur he is an original thinker.

Mar. 13 2014 11:19 AM

Uhmmm…mafia??

Mar. 13 2014 11:19 AM
Howard from NY/NJ

What do you expect from a state where you can't even pump your own gas??

Mar. 13 2014 11:18 AM
Ed from Oak Ridge, NJ

Tesla absolutely does have a service center in NJ, in Springfield, and they do excellent work. They also have one in King of Prussia PA servicing south Jersey customers, contrary to what the current caller is saying, in his own self-interest.

Mar. 13 2014 11:18 AM
MichaelB from Morningside Heights

It just goes to show how negligent and incompetent the other auto manufacturers are: How old is Tesla?

In that short period of time, they've managed to build a world-class car, and that's for all the aspects of it apart from the simpler power plant (as the caller just pointed out, 1500 fewer moving parts compared to an internal combustion engine.)

But in over 100 years, the traditional auto manufactures are still struggling to achieve quality (although contemporary autos are worlds better than the bad old days of the 60's through the 80's!)

GM's most recent problems with the ignition switch is a prime example. After all these years, they can't design a problem-free ignition switch???

Mar. 13 2014 11:14 AM
garrett

How is this not supressing the free market. I feel the law needs an overhaul.

Mar. 13 2014 11:14 AM
Rosie

Because this New Jersey where money talks REALLY, REALLY LOUD. BTW, CarPAC: car dealers as customer's advocates?!?!?!? HA! HA! HA! HA! HA!HA! Having to shop for a new car or taking your car to "the dealer" is one of the most unpleasant experiences. Really up there on my list of "I'd rather have 4 root canals with not sedatives at once than....."

Mar. 13 2014 11:13 AM

One more reason to admire Tesla's boss: he refuses to give $$$ to politicos! Wish I could work for them!

Mar. 13 2014 11:12 AM
The Truth from Becky

This guy "absolutely" works for Tesla! LOL

Mar. 13 2014 11:11 AM
Orin from Queens

The expert is missing a reason why Tesla would be especially interested in New Jersey and Connecticut. Part one is, as he said, the two states have a lot of commuters. Pert two, which he is missing, is that these are small states, and installing the recharging infrastructure will be much cheaper in more concentrated areas. I'm not sure whether Teslas also don't travel as far as regular cars, but that would also make small highly populated states the first priority.

Mar. 13 2014 11:11 AM

NO REGULATION…!!!

…unless, of course it benefits us!!!!

Mar. 13 2014 11:10 AM
Bob from Fairfield County

Connecticut is rebuilding its rest areas. The recent ones that re-opened in Greenwich and Darien along I95 and the Merrit Parkway have Tesla charging stations, at least 4 stations each, I think.

Mar. 13 2014 11:10 AM

…Bri'!!!

It's NOT a "form" of crony capitalism, IT IS ONE OF THE MOST EGREGIOUS EXAMPLES!!!

This is good ol' fashioned criminal activity!!

Mar. 13 2014 11:08 AM
PJ from Northern NJ

1. I am thinking that if the notice was so short, Tesla could get a stay from the courts while they appeal this decision.

2. Why doesn't Tesla transfer its dealerships to another party, retaining majority stock, to keep this at "arm's length"?

3. This law might just be illegal. I hope Tesla prevails.

Mar. 13 2014 11:08 AM

DISGUSTING!!

This sounds like the RIDICULOUS NYS three tier liquor laws that protect the lucrative status quo…

BREAK THIS CRAP UP!

Mar. 13 2014 11:07 AM

CRUSH these Koprorate KLOWNS™!!!

Mar. 13 2014 11:04 AM
Adam from NJ

How come dealerships must be closed in Sunday - if the lobby is so strong?

Mar. 13 2014 11:04 AM
DGI

The relationship between NJ CAR (the dealership association) and NJ MVC is an incestuous one. NJ CAR usually helps shape rules and processes of the MVC. This isn't lobbying, this is collusion.

Mar. 13 2014 11:04 AM
Ed from Oak Ridge, NJ

I own a Tesla Model S that I purchased online last year, as a resident of NJ. It was absolutely the best car-buying experience I have ever had. I love the vehicle as well.

Mar. 13 2014 11:03 AM

Who are the NJ legislators who backed this one? Unbelievable! Tesla is selling Tesla not any other brand of car. Therefore, the traditional dealers do not have a disadvantage because they sell other cars!!!!! So therefore, in their twisted logic--they are admitting that they really offer NO intrinsic benefit to the car itself!!! This is a scam!

Mar. 13 2014 11:02 AM
Peg

Seems like business and corporate interests are against regulation UNLESS it benefits them.

Mar. 13 2014 10:39 AM
John S from Manhattan

Please make sure your guest(s) answer this one question....How EXACTLY is the public welfare in New Jersey helped or protected by this legislation banning direct sale of cars from the manufacturer?

Thank you

Mar. 13 2014 10:34 AM

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