New Jersey Legislature Starts Process To Allow Tesla To Sell Direct

MAR 23 2014 BY JAY COLE 74

Despite March 11 Ruling By The NJ Motor Vehicle Services Banning Direct Sales In New Jersey For Tesla Motors,

A March 11th Ruling By The NJ Motor Vehicle Commission That Forbids Tesla From Selling Directly In The State Looks To Be Trumped By The New Jersey Legislature

On March 11th, Tesla Motors lost a battle with the New Jersey Motor Vehicle Commission that saw the company banned from selling their Model S directly in the state of New Jersey.

Recently A Surprise Change In New Jersey Saw Tesla Banned From The State

Recently A Surprise Change In New Jersey Saw Tesla Banned From The State

However, the high profile nature of that decision (along with not allowing public comment under after the deed was done), put a lot of pressure on lawmakers, and specifically Governor Chris Christie – who selected the members of that very  same New Jersey Motor Vehicle Commission himself.

“I’m not pushing Tesla out; the state Legislature did.  They passed a law, which is still on the books, which says if you want to sell cars in this state, you must go through an authorized dealer. My job is not to make the laws, it’s to enforce the laws. And Tesla was operating outside the law.” – Gov. Christie

As it turns out, the New Jersey legislature has no appetite for keeping Tesla from doing business in their state.  And in an about-face not unlike Arizona’s rethinking of Tesla’s presence in their state, there is now a couple propositions that could reverse Tesla’s fortunes in the Garden State – with no “Giga factory” carrot needed.

A draft of a new bill (A2986), obtained by The Star-Ledger, introduced by a Bergon County official and Nissan LEAF owner – Tim Eustace (D) would let any electric car retailer sell direct to consumers.  The passing of this bill would supercede the NJMVC’s earlier decision.

“What we should be doing is supporting American entrepreneurs and American businesses.” – Tim Eustace

"Sure, We Can Help You With Your Purchase..."

“Sure, We Can Help You With Your Purchase…”

Failing that prop, NJ.com further reports on this development:

“State Senator Raymond Lesniak (D-Union), who introduced dealer-backed legislation (S927) that favors car dealerships in their dealings with manufacturers, said he will offer an amendment that could let Tesla operate independently until electric cars reach a critical mass.”

Senator Raymond has since suggested that “critical mass” for EVs should be set at 4% of all cars sold in the U.S.

While the eventual outcome and stipulations are still not clear when it comes to selling electric cars in New Jersey, it does now appear that Tesla will not be circling April 1st on their calendar as they last day they will be doing business in the state.

Source: NJ.com

Categories: Tesla

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74 Comments on "New Jersey Legislature Starts Process To Allow Tesla To Sell Direct"

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A victory for common sense!

The Dealership cartel is not over yet, some politicians are always for sale, I think we have to wait and see if it gets trought the legislation.

Dealers and car salesmen… We do need to realize that if their model fails, we will have millions more unemployed we have to support with welfare, food stamps and long term disability.

I think millions of jobs lost is being a little melodramatic.

Send them to the EU to fight Putin

Because non-franchise dealers don’t employ personnel?

Why don’t you just state “Billions of jobs lost.” Doesn’t that sound even better?

Plus, won’t they sky fall if this bill passes?

Bonaire, we have shared a lot over the years at GM-Volt. Always enjoy and learn from you.
Your comment on a sudden firery emplosion of the established dealer model is taken as sarcastic wit and thus, hilarious!

“Oh the humanity”

Best-

Thomas J. Thias

Thom, my reply was a bit sarcastic. Of course. From what we read, some loyal followers of the dealership debate want all dealers to go down the tubes and the only car company to be left standing would be Tesla. Of course that won’t ever happen. Laws are written one day and changed the next. So, lets allow for some compromises. Let factories sell directly at MSRP. Then let dealers write local deals. Stuff like that.

This is not common sense.
It is an exemption of an ridiculous law based on another law that only applied to auto manufacturers who CHOSE to go through dealerships decades ago.
It NEVER applied to those who did not; TM was one of the few who did not and the only one of those to be successful.

At high volume, mfrs found the dealership system more functional and economical than full vertical integration – 100 yrs. ago. Is that still true? We shall see when TM gets to a few percent of the market with a few million sales a year.

“Senator Raymond has since suggested that ”critical mass” for EVs should be set at 4% of all cars sold in the U.S.”

4% is ridiculous! Try 33%, when one out of every three cars sold is electric. That’s what I call “critical mass”.

NPNS! SBF!
Volt#671

That’s what I was going to say. I don’t even understand the need to put any % on it. If it’s right, it’s right. “Critical mass” is irrelevant.

Standard politico response: he’s trying to find a way to pleasure both constituencies: car dealers, and everyone else.

I’m cautiously optimistic, as the saying goes, about this development.

If this passes and it contains no bizarre take-backs that effectively cripple Tesla, then I will have to revisit my decision to refer to NJ, the state of my birth, as Sopranostan.

Give it a week Lou!

I hope we see all the manufacturers follow suit and sell directly. Dealerships need to support that as well. What else could they do? Most likely the retaliation is going to happen in the service bay with higher service labor rates and far more headlight fluid replacements for soccer mom’s SUVs.

And I do expect to see BYD cars sold at Walmart any day in NJ after the law is changes. Warren Buffett invested in BYD years ago and could do very well if they pass the no dealership required laws.

You’re so concerned about those poor car salesmen losing their jobs, but what about the millions of American manufacturing jobs that have been lost because of the cheap Chinese crap sold at that very same Wal-Mart? Not trolling for them?

Yes Bonaire, because all other states where no law is blocking Tesla, are being flooded with Walmart-sold BYDs, right?

I’m pretty sure your comment wins the “Genius Comment of the Week” award, hands down.

Actually Bonaire’s comment wins ” Second Most Informed Commentor Award!”
I’ll take 1st prize!
BYD Qui pronounced, Chee – 1st quarter sales thus far- 6,000+!

Look at these stats!

http://www.byd.com/la/auto/qin.html

Now Gen 1.3 Chevy Volt Extended Range Electric Vehicle gets a run for the money!

Best-

Thomas J. Thias

517-749-0532

Twitter.com/AmazinvChevVolt

Oops- Twitter.com/AmazingChevVolt

: )

Thom. You are a dealer and you do realize that it can happen. Dealership laws break down and there is a very viable avenue for BYD many others to create distribution deals with major companies in the USA. Kandi and K-Mart? BYD and Best Buy? There would be no reason not do see that happen. I would never buy one as I also am one who feels our government and industrial leaders sold out our future and send millions of jobs overseas with little quality benefit but they got their labor price. That is not sustainable long term and we must bring back manufacturing.

Bondaire…..are you saying that you think that cars will be sold at Walmart? Seriously?

Never say never. Then again, the type of vehicles that the typical Wal-Marter are interested in are not likely to be EVs. More like busted up Ford Aerostars and jacked up F-150s.

In 1952-53, Sears Roebuck directly sold a sedan (the Allstate) manufactured by Kaiser motors. Dealers didn’t it like it then, either.

EV’s don’t need much in the way of maintenance, but from everything I’ve read about Tesla they go out of their way to take care of their customers. I count 44 service centers in the US with another 22 coming soon. Nice FUD try, though.

I have a Tesla so I can affirm that the customer service is great. I have not had to pay for any service although I did purchase the prepaid service plan. I can attest that the goal of my local service center is to ensure my vehicle runs perfectly and that I remain a satisfied owner.

Bonaire Says: “~and far more headlight fluid replacements for soccar mom’s SUV’s.”

Ok, that does it! Now I’m ROTFLOMCVEREVLOLWRAAFL2FS!

What? What does that mean?

Rolling On The Floor Of My Chevy Volt Extended Range Electric Vehicle Refueling At A Free Level 2 Filling Station

~Rolling On The Floor Of My Chevy Volt Extended Range Electric Vehicle, Laughing Out Loud While Refueling At A FREE Level 2 Filling Station!

There, got it all out that time!

Best-

Thomas J. Thias

Thom. What this means is if GM sold cars direct and you show up at a dealership for service, their service writer can look up your point of purchase and seeing a non-dealership purchase, could write more service than needed. The load balancer wiring harness may need replacement. Or the air intake generator bypass diode. I have heard of Nissan dealers sending Leaf owners oil change notice cards.

“Senator Raymond has since suggested that ”critical mass” for EVs should be set at 4% of all cars sold in the U.S.”

This kicks the can down the road for many years.

With U.S car sales at 15.4 Million for 2013, EV sales will need to reach 600,000 annually before dealers need to be involved. For 2013 BEV(excluding plug-in hybrids) sales were about 46k for 2013. Adding in plug-in hybrids we are still looking at about 8-10 years.

At 4% you’re not giving the $35K Model E an opportunity to gain traction.

NPNS! SBF!
Volt#671

Model X not priced yet. Gen III still years away from an official price.

Why even kick the can. Just get rid of the can.

Before the NJ Legislature grants Tesla, or any manufacturer, a monopoly on sales and service, the NJ Legislature needs to carefully examine why Tesla charges so much for routine, scheduled service.

When a manufacturer has exclusive rights to service a vehicle, does that increase prices for consumers?

Would allowing independent dealers compete for service lower the cost of service for consumers?

Some have compared Tesla’s direct sales model to Apple, but even Apple additionally allows sales and service through factory authorized “dealerships” i.e. Best Buy, Staples, etc. Tesla is not asking for what Apple does, they are asking for a complete monopoly on the sales and service of their product.

Allowing multiple sales and service venues increases competition and benefits the consumer. There is no reason direct and independent dealerships can not coexist in the marketplace. When it does, the consumer benefits.

The way I see it, the free market would still be working just fine. If you don’t like Tesla’s maintenance prices, you are free to buy a Ford, GM, Toyota, etc.

+1

Totally correct.

The notion that Tesla has some sort of ‘monopoly’ is absurd.

What is even more absurd is the forcing of a certain business model onto a car manufacturer. Afaik such an anomaly doesn’t exist anywhere else in the world, except for one country that aspires to be the free market champion.

“…the NJ Legislature needs to carefully examine why Tesla charges so much for routine, scheduled service. Do you have a specific accusation you’d like to make against Tesla, or are you just spreading FUD again? I mean you are a known anti-EV hate troll. “When a manufacturer has exclusive rights to service a vehicle, does that increase prices for consumers? ” Useless slick talking middlemen increase the cost to consumers. Case in point – Fiat advertised a $199/mo lease deal on their EV, but when readers of this site went to lease they were told the price is actually a lot higher. You see the dealers were keeping the “dealer cash” sales incentives. You know, to “protect” us and all. Also, you seem to equate the sales and service of a vehicle. Nobody is asking for a monopoly of servicing, so why are you implying this? “Would allowing independent dealers compete for service lower the cost of service for consumers?” Well so far almost all work has been done under warranty. I don’t follow your logic where allowing Tesla to sell you car directly makes it illegal for a 3rd party to repair your car, should it need repair, though… Read more »

This business model happens in the machine tool industry all the time. Some manufacturers are direct and some are through dealerships. The market is constantly changing the decision of each manufacturer. Sometimes it is driven by the economy, sometimes by the manufacturer increasing or decreasing their performance and products, sometimes by the dealerships increase or decrease in performance.

To your model, it is possible for the manufacturer to control the price based on supply and demand. You always have the right not to buy. I still prefer this model over the dealership for once they have the right to control the pricing after the purchase you are forced to do so.

Why not let the market decide like the machine tool industry and every other industry including automotive in every other country in the world.

The buyer knows that Tesla needs to provide the service and the costs are readily available. As a newly developed product, I see no problem with Tesla having exclusive service rights. As time goes on, service options will increase, just as they have for body damage and accident repair (many shops are now “Tesla certified”).

Buyers know the limitations and can make up their own mind as to whether to purchase or not.

The Magnuson-Moss Warranty Act prohibits Tesla or any automotive manufacturer from having “exclusive service rights.”

“carefully examine why Tesla charges so much for routine, scheduled service.”

Tesla often sends updates to their customers wirelessly and there is no “routine maintenance” besides checking brake fluid and tire pressure. Tesla customers have far greater satisfaction with the customer service provided by Tesla than any dealership.

Regarding price, Tesla wants to sell cars so they price their cars competitively. There is a huge amount of new technology that they had to create for their car and battery technology is still expensive. Adding dealers would simply create a middle man who would want his cut and would increase the price.

Also, current car dealers have no idea how to sell an electric car. I have visited 5 dealers in the area and they won’t sell you an electric car unless you come in asking for one. Even then, they will try to talk you out of it sometimes. Adding dealers to the equation only hurts the consumer.

#CherylG: Every consumer group has sided with Tesla in this fight. Every economist interviewed has said the ‘monopoly’ argument being thrown about by the dealers is completely bogus. Less than 1% marketshare doesn’t a monopoly make. Tesla is very upfront about how much service plans are. Let consumers decide if the price is fair or not. If Tesla isn’t charging a fair price for the car, consumers have lots of other choices.

CherylG, it would sure be interesting to hear your true ‘disclosure’ on the subject of Tesla in relation to your interests.

But, that won’t happen.

Why do you try to make it sound like Tesla is or will be the only car manufacturer selling cars?

NPNS! SBF!
Volt#671

Yeah you right I did not think about that, thank you for enlighten me. Well if GM change the way they offered warranty I don’t think your dealership will be against them and fight for you and keep giving you the warranty for free. Fisker Karma was sell by dealers and after the bankruptcy they drop services the Karma even if the owner want it to pay from his/her pocket, they did not care about those owners.

In the state that bans self-service gasoline stations, is any of this a surprise?

+1

+1

Hey, wait a minute ….
We LOVE not having to pump that smelly stuff here in Oregon!

I think we need cut the Tesla service model some slack. You are contractually obligated to get service from Tesla. Tesla, in my view, did this to prevent poor outcomes that could result if less qualified mechanics serviced their vehicles. The question of being overpriced or legal are really moot. Though personally I don’t think they are making much on the service contracts. They are probably designed to pay for themselves eventually, the service centers that is, through the receipts from the contracts. The fact that NJ is waffling is good. Christie is really hyper sensitive to criticism atm, so any criticism, which smacks of cronyism or smoke-filled room deals, would be something to be avoided. He will back out and let the legislature fight it out.(I wash my hands of this). A win for Tesla would be the second precedent reversing decision after Arizona’s. I think that this is an indicate that the freight train of electrification is gathering steam. Other states states considering bans or limitations on Tesla’s direct sale model will take notice and try to avoid being run over by that locomotive barreling down on them. I expect we may see some pretty good fights coming… Read more »

For those with short memories, Tesla is the company that tried to enact two controversial policies that had negative implications for consumers.

Per AutoBlogGreen, Tesla tried to mandate the following before they were forced to backtrack.

1. Make a $600/year service policy mandatory or forfeit the warranty.

2. Any service outside a Tesla service shop would void the warranty.

Hopefully the NJ Legislature will take these failed Tesla requirements into account so legislation can be adequately written to protect the consumer from abuses.

http://green.autoblog.com/2012/10/15/tesla-model-s-requires-600-annual-service-plan-to-keep-warranty/#continued

cherylG – So you state that the $600 maintenance warranty was mandatory then, “pulled back.” So what is the point of posting a link to an old, now vaporware story?

Addressed and revised- Not an issue!

http://www.greencarreports.com/news/1083800_tesla-tunes-up-model-s-warranty-loaner-cars-service-plan

Best-

Thomas J. Thias

Twitter.com/AmazingChevVolt

What is the point of reminded legislators about Tesla’s original plans regarding mandatory maintenance contracts and voiding warranties for service outside a Tesla dealership? For the simple purpose of illustrating Tesla’s original plan and for demonstrating how big companies can work unless they are held in check.

I’m glad you acknowledge the existence of those original plans, along with the blow back the company received.

I’m also happy that you and I can agree that allowing big business to run over consumers rights is an undesirable outcome.

In that light, I hope the legislators in NJ keep the consumer first and foremost in their plans and not allow the whining and foot stomping of a billionaire to trump the rights of consumers and their ability to get service where they want (without fear of having their warranty voided) and for allowing full and open competition for consumer’s service needs.

***mod edit/removed***
please be careful with personal attacks
***mod edit/removed***

What you are implying here is that the US people need the dealers to fight for their rights. Very naive.

Do you really believe that the dealers are saints? They are in it for the money and the countless stories of dealers cheating on and ripping off their consumers proves people need protection from the dealers rather than by the dealers.

And in case you missed it: car manufacturers compete with each other. So if they screw their customers, they lose their customers. You know, free market, competition, etc?

Don’t like Tesla’s service model/plans. Don’t buy the car.
End of argument.

Cheryl what brands your dealership has contract with?

So the NJ legislature had decided to fix their dumb law, and now everything is looking swell. Yet when Governor Christie suggested the same a few days ago, he was labelled a typical corrupt EV-hating Republican thug. Here is some of your best verbal venom: “the Republican party is rapidly adding EVs to its Enemies List” “Corrupt MFers.” “One step closer to Ukraine!” “Corruption, USA style.” “So much for government by the people and for the people.” “So not proud of being a New Jersey resident today. just another reason to leave this state, I will add to my list.” “shamelessly corrupt politicians laughing in people’s faces” “what you can expect from a state where the governor blocks bridge lanes just to flex his political muscles” “There is so much graft, corruption, collusion, political thuggery, in the New Jersey statehouse as to be legendary” “This is totally unfair! Way to go NJ, I’m sad to say I live in this state, I wonder how much they where paid off by the dealerships.” “Republicans just make me laugh when they claim to love free enterprise and competition.” “Christie supports protectionism and government interference in markets” “Tesla is doing something different and… Read more »

Nice to be exposed to freedom of speech on the internet isn’t it.

NPNS! SBF!
Volt#671

Free-speech does not justify hate-speech. Such is the opposite of “nice” and the best way to lose a debate.

The GOP’s media darling, Sarah Palin did just that when she crowed “Free speech for us but not you!” When she came to the aid of that Duck Dynasty redneck.

But we get it. The Republican Party is the purest, most ethical, and white as the driven snow party that Earth has ever seen and could not possibly do any wrong, and even if they do, Bill Oh’Really will make sure the rest of us know it’s all the fault of the Democrats.

There are a bunch of corrupt democrats too. Maryland any one?

I didn’t say there wasn’t. Dems just don’t go into extreme denial and “Look at them instead.” “Well they do it too!” Mode when one of their own gets caught in the cookie jar.

Besides, Democrats can actually be adults about the name of our opposition party. Republican Party. See how easy it is? We’re not arrestedly developed 10 year olds that need to resort to schoolyard taunts like “Democrat Party” or my favorite “Demonrat Party” to bolster our arguments.

Full grown men saying “Hopey Changey” after that ding bat from Wasilla told them to… Yeah, I’m going to take those people seriously.

Christie is a liar. There absolutely is NO law on the NJ books today that prevents car manufacturers from selling direct. The law that keeps getting trotted out actually is a restriction on franchisers from selling direct. Tesla is not and has never been a franchiser.

The political appointees on the commission were doing nothing more than creating a ban on Tesla direct sales when they had no authority to do so.

Luckily, if the legislature makes it clear with a new law then there’s no need for the slower court-related process to be used.

My guess is Christie read those comments and realised he had to right this wrong. 😉

Watch Christie veto it. Then he won’t have any of this this “law and order” BS to hide behind. It will be pure unadulterated sell-out to his lobbyist buddies.

A veto would be very stupid on Christie’s part since Musk has a pretty huge PR platform now. Guess we’ll see.

“There is so much graft, corruption, collusion, political thuggery, in the New Jersey statehouse as to be legendary.”
I won’t apologize for that, and stand by it.
Even NJ politicians will scurry, like rats, for cover, when lights are shined on their shenanigans.

Sorry I misinterpreted your comment as being purely directed at Christie.

It’s funny that it seems as if the states who are most actively working against the Tesla sales model are also states with conservative, Republican governors. Not sure why, as this seems to go against the mantra of the GOP, less government interference, blah, blah, blah. Cetainly, selling cars should not be a political hot potatoe, and all states should be pushing US manufacturing, especially of automobiles.
Lou

Oh, thanks for that qualifier Open-Mind, and actually for compiling all those comments. I admit sometimes we all tend to go a bit overboard with vituperation.
Good point Lou. Personally I think it is all about money. Despite their protestation to the contrary, no one wants competition if they are the ones owning the business that will be competed with.