After suffering a defeat in New Jersey, Tesla Motors (NASDAQ:TSLA) might be staring down another legislative battle in the neighboring state of New York, as dealers in the Empire State renew their fight against Tesla’s direct-to-consumer sales approach.
Sources told the New York Post that dealers in New York said they hope to ban Tesla’s direct-sales method as soon as this summer; it would make New York the sixth state to ban the sales of the electric vehicles at the behest of dealer networks who are concerned that other automakers may follow suite and cut out the middlemen between manufacturer and consumer.
“My hope is that we are going to be the next state,” Mark Scheinberg, the president of the Greater New York Automobile Dealers Association (GNYADA) told the Post on Thursday. “I feel confident.”
Tesla lambasted New Jersey Governor Chris Christie’s administration earlier this week, after the vote on the legislation was bumped up to expedite its passage, and the company took to its blog to weigh in on the decision. “The Administration has decided to go outside the legislative process by expediting a rule proposal that would completely change the law in New Jersey,” Tesla said. “This new rule, if adopted, would curtail Tesla’s sales operations and jeopardize our existing retail licenses in the state. ”
Industry experts are whispering that CEO Elon Musk might chase New Jersey with a lawsuit, but those speculations have not been substantiated. Texas, Arizona, and Virginia are among the other states that have implemented legislation to curtail Tesla’s direct sales approach, the Post said. Similar rhetoric has been present in each case; it’s not the car or company, but the business model that’s the problem.
GNYADA is also in the process of appealing a New York court ruling from last April, which threw out the group’s lawsuit against the New York Department of Motor Vehicles, accusing it of violating existing laws by giving Tesla approval to sell its own cars.
Bob Vancavage, of the New York State Automobile Dealers Association, says that dealers are open to compromise, but “doesn’t think the outspoken billionaire Musk will give even an inch,” the Post said. “I think a lot of billionaires got there by being a certain way,” he said. “He’s not used to people saying no.”
Vancavage’s personal beliefs aside, the issue at hand is more a fundamental battle between the conventional dealer model — one ingrained in American society to the point that it’s become just the way things are done. The upstart — which is not happy — is seeking not just to revolutionize the electric vehicle market, but the entire way that cars are sold overall.