Last week, Tesla Motors (NASDAQ:TSLA) suffered a blow when legislation backed by the New Jersey Coalition of Automotive Retailers (NJCAR) passed, effectively banning Tesla’s direct sales to consumer approach in the state. Under the new rules, Tesla has until April 1 to sell its vehicles before its license to do so is yanked; however, its stores in the state will remain in place as galleries, and people will be on hand to answer questions, though no sales may take place.
However, if you thought Tesla would go quietly, you haven’t been paying much attention to the brand — or its passionate and outspoken leader, Elon Musk. On Friday, Musk and company unloaded on New Jersey and its governor, Chris Christie, and said that it would look into ”judicial remedies” in order to retain its right to sell its vehicles within the state.
Tesla called the move “an affront to the very concept of a free market,” among other barbs directed at Christie’s administration. “The rationale given for the regulation change that requires auto companies to sell through dealers is that it ensures ‘consumer protection.’ If you believe this, Governor Christie has a bridge closure he wants to sell you!” Musk quipped in Friday’s blog post, poking fun at the bridge closure controversy that ensnared Christie and some of his top aides.
Naturally, Musk wasn’t done, and took on the NJCAR also. “Unless they are referring to the mafia version of ‘protection,’ this is obviously untrue. As anyone who has been through the conventional auto dealer purchase process knows, consumer protection is pretty much the furthest thing from the typical car dealer’s mind.”
Musk and Tesla maintain that Tesla’s products cannot withstand or survive the traditional dealer model. It’s not so much the sales aspect that’s the issue, but the fact that dealers make much of their money from services which would pose a big problem for Tesla, considering their vehicles don’t need tune-ups, oil changes, transmission services, fuel pumps and filters, spark plugs, coolant flushes, exhaust work, new mufflers, et cetera. Electric vehicles have their own sets of issues, but not enough to keep a Tesla dealer which subscribes to the conventional model that we’re familiar with afloat on service fees alone.
NJCAR’s president Jim Appleton told Automotive News that dealers aren’t looking to put Tesla out of business. “I don’t want to see Tesla close their doors, I want to find a way to keep Tesla in New Jersey. I just want them to operate in a manner consistent with the law.” It’s worth noting that Tesla was working “in a manner consistent with the law” until that law was changed last week.
“The statute in New Jersey plainly allows Tesla to be licensed to sell cars there,” Diarmuid O’Connell, a Tesla vice president, wrote in an e-mail to Automotive News, arguing that Tesla’s licenses were granted legally and are fully compliant with New Jersey’s state laws, and therefore should not be taken.
For now, its “business as usual for Tesla in New Jersey,” the company said, pending further legal implications (a lawsuit, perhaps?) or April 1 — whichever comes first.