These Three States Is Trying To Brew Something For Tesla
Electric car manufacturer Tesla has been in discussions for some time using the New Jersey Government and Motor Vehicle Commission about the implementation of its direct dealership model. This week the Administration, following suit with Texas and Arizona, moved to block Tesla from selling cars within its own stores. So, what’s every one of the fuss about?
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Tesla called the move “”an affront to the very concept of a no cost market”” inside a blog post on Monday, praoclaiming that the proposal “”would, among other things, require brand-new motor vehicles to be sold through middlemen and block Tesla’s direct sales model. The EV manufacturer argues how the New and Administration Jersey Automobile Commission are “”going beyond their authority to implement the state’s laws on the behest of a special interest group planning to protect its monopoly at the expense of New Jersey consumers.
Kevin Roberts, a spokesman for the office of NJ governor Chris Christie responded by stating that the “”administration does not think it is appropriate to unilaterally modify the way cars are sold in New Jersey without legislation and Tesla has been conscious of this position since the beginning.
So, in a nutshell, Tesla wants to push forward with its direct sales model, while the government wants to protect the traditional model where cars are sold through franchised dealerships.
So what is it about Tesla’s unconventional model that is such threat to the American way? Well for one thing, it’s different. For some the notion of change seems right up there on par with alien communism and invasions. Don’t fix it if it ain’t broke.
The Tesla dealership model is agile and small. Typically no greater than a good sized shoe keep the Tesla shops can be found in fashion districts, shopping centers or as standalone stores. The dealerships or boutique shops, in keeping with Tesla’s contemporary approach are designed with highly stylized kiosks, color palettes and swatches, the occasional Model S, high gloss finishes and non-commission sales people. The theory according to Elon Musk is always to allow customers to be properly educated, without the typical high-pressure sales tactics predominantly connected with traditional dealerships. So that’s the important scary monster that will destroy America and contains auto dealers running for his or her shotguns and bear spray?
Tesla’s store employees typically spend two to three hours with potential customers explai…
Tesla argues that its specialized stores are not just a way to sell new cars but also to promote new technology. Again quoting Tesla’s blog post from earlier this week: “”This model is not only a matter of selling more cars and providing optimum consumer choice for Americans, but it is also about educating consumers about the key benefits of going electric, which is central to our mission to accelerate the shift to sustainable transportation, a new paradigm in automotive technology.
Unfortunately for Tesla, New Jersey isn’t the first state to snub the company’s unique dealership concept. Arizona and Texas have both implemented laws which makes it illegal for Tesla to promote cars within their states. It can be”” unable to sell its vehicles directly to the general public because it has no franchised dealer relationships in Texas, or in other states.?, tesla says that under the current Texas Occupations Code?
Tesla surprisingly still has two dealerships in Texas; one in Houston then one in Austin. While this might sound like it managed a workaround to the legal dilemma, Tesla employees at these galleries are “prevented from discussing pricing, lease options, or offering test drives.” The in-shop kiosks have likewise had all pricing removed. But can you imagine if a clever, entrepreneurial employee just happens to mention a dealership in California that can help with pricing, leasing, etc. questions? Texas lawmakers have previously thought of that. No, employees cannot provide assistance to interested consumers. A similar restrictions will apply in New Jersey.
Over $86.8 million of dealership monies has been spent on state election races across the …
Rhett Ricart, President of Ricart Automotive in Columbus and a plaintiff in a lawsuit filed against Tesla in Ohio, offers an insight into the attitudes Tesla is against in an interview with Bloomberg : “I don’t want ‘Hydrogen Motors’ ahead along 5 years from now or some other Mickey Mouse thing to come along and then just jack in the industry. It’s not right.” Ricart does give Tesla a back-handed compliment by saying, “they make a great car,” however, he proceeds to add that “the reason these laws are in these states are going to protect the consumers.”
“”Consumer protection”” seems to be a stick employed by both sides with this debate, but it’s tough to see how clinging to an 80 year old enterprise model that only adds costs to the finished product is benefiting consumers.
There is obviously, an elephant in the room in all of this. “In 2012 there are an estimated 17,600 dealers of new cars and trucks in the US, according to the Bloomberg report cited above. “”From that group, over US$676 billion of sales were generated, making up almost 15 percent of all US retail activity.” To say the automotive industry along with its dealerships are an integral part of the usa economy is usually to state the most obvious. “”over $86.8 million of dealership monies was spent on state election races across the US since 2003 with $57 million funneled into federal campaigns.” Tesla, the new kid on the block, has only only managed to throw roughly $500,000 towards federal and state politics. There’s also the issue of the amount of tax dollars each dealership brings to state coffers. A figure difficult to ignore on either side from the aisle.
So is this all just a bit of proper ol’ fashioned fear mongering on the part of the establishment? It wouldn’t be the first time. In the 1970s and 80s when foreign entities began to enter US markets, anti-American rumblings became common place and driving a foreign car like a Toyota or a Datsun (Nissan) was frowned upon in some quarters. But Tesla isn’t a foreign entity, it’s a home-grown success story that employs 4,000 people and whose stocks have risen 500 percent previously 12 months. Its Model S has consistently been named as one of the best overall cars in recent memory – of gas or electric persuasion. Further reinforced the argument that technology with this quality will be the way for the future, even though my experience in driving the Model S has not yet only changed my opinion of what an electric car can be. Slowly the shift from that of a gas-only, my F150 is larger than yours mentality can happen, although perhaps not tomorrow, or next year. It appears to me this whole is dust-up is a case of not seeing the hood ornament for the trees.
What next? Tesla being Tesla, and Elon Musk being Elon Musk, are not using this lying down drinking flat mojitos. The next salvo will be fired when Musk testifies personally at a hearing into the issue at the Texas State.