After facing a ban on Tesla sales direct to customers in the State of New Jersey this week, Tesla Motors Chairman of Product Architecture and CEO Elon Musk wrote a letter. This letter speaks up on the state of the industry, suggesting that it’s not for “consumer protection” that Tesla has been banned from selling cars in the state, but to promote a monopoly for the gas-dependent auto industry in place today.
In this extensive letter, Musk suggests that “auto dealer franchise laws were originally put in place for a just cause and are now being twisted to an unjust purpose.” Musk notes that auto manufacturers have invested tons of cash into building up dealerships, and that this is “a fair deal”. He notes that, however fair that is, franchise owners were then pressured to sell these dealerships back to the manufacturers are lower costs, resulting in the laws which are being inflicted today – in a way Tesla suggests is inappropriate.
“The intent was simply to prevent a fair and longstanding deal between an existing auto company and its dealers from being broken, not to prevent a new company that has no franchisees from selling directly to consumers. In most states, the laws are reasonable and clear. In a handful of states, the laws were written in an overzealous or ambiguous manner. When all auto companies sold through franchises, this didn’t really matter.
However, when Tesla came along as a new company with no existing franchisees, the auto dealers, who possess vastly more resources and influence than Tesla, nonetheless sought to force us to sell through them.” – Elon Musk
Musk suggests this week that the reason they’ve sold their electric vehicles themselves rather than going through dealerships is a “fundamental conflict of interest”. This is because most of these dealer’s revenue comes from gas or hybrid machines, while there’s only one company that’d be in the dealership with an all-electric car. It wouldn’t be long before the easier-to-promote gas-dependent cars would be the only vehicles promoted by the dealership, and Tesla would be at a loss.
There’s also a suggestion that companies like Coda and Fisker – to name just a couple – have in recent years used auto dealerships and failed as outlined above.
“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, Gov. Christie has a bridge closure he wants to sell you! 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.” – Elon Musk
It’s made clear this week that Tesla will be allowed to sell direct to customers in the state of New Jersey until the 1st of April. Until that date comes around, it’ll be “business as usual” for the car manufacturer in the state. Service centers in the area will go on as usual having nothing to do with sales as such.
All Tesla stores in New Jersey will “transition to galleries”, potential drivers being able to ask any and all questions about the cars of the staff. This staff will not, however, be able to “discuss price or complete a sale in the store.”
At the store in Manhattan over the river in Chelsea or the King of Prussia store near Philadelphia, it’ll still be business as usual for the foreseeable future. The online TeslaMotors.com vehicle order setup will still work as well – you can, online, order a car from Tesla to be delivered from New Jersey to New Jersey, you just can’t literally buy one and drive it off the lot.