This week, after a long and strenuous battle, the New Jersey Assembly passed a bill that would allow Tesla (as well as other electric vehicle manufacturers) to sell directly to their customers. The bill is now headed to the state Senate in hopes of being officially put in place.
This was not the only major legislation to be passed this week, either. On Monday, New York Governor Andrew Cuomo signed previously approved legislation that would allow Tesla to continue selling its vehicles form 5 company owned stores within the state.
For Tesla, this is a huge victory in their fight to cut out the middle man from their particular operation.
Tesla’s Elon Musk said earlier this year, “Auto dealer franchise laws were originally put in place for a just cause and are now being twisted to an unjust purpose. Many decades ago, the incumbent auto manufacturers sold franchises to generate capital and gain a salesforce. The franchisees then further invested a lot of their money and time in building up the dealerships. That’s a fair deal and it should not be broke.”
Tesla, on the other hand, is a new company that does not wish to engage with current dealerships, as companies of the past have done. For Musk, this is not a political statement or an attempt to undermine current system. It’s all about business and success.
Musk says, “The reason we did not choose to [work with established franchises] is that the auto dealers have a fundamental conflict of interest between promoting gasoline cars, which constitute virtually all of their revenue, and electric cars, which constitute none. Moreover, it is much harder to sell a new technology car from a new company when people are so used to the old.”
In fact, it has been so difficult for emerging companies to work with established franchises, that there has not been a successful new auto company since Chrysler. That was nearly a century ago!
Greenwald says, “Tesla is an innovative company that has produced a top-rated, environmentally conscious product. Their commitment to innovation, job-creation and customer satisfaction is precisely the kind of entrepreneurial spirit we should be encouraging in New Jersey.”
But the real question is: how will this effect the buyers??
Well, there seems to be a split in opinion. Not surprisingly, auto dealerships are claiming that the move could be detrimental to car buyers because it would increase negligence and take away jobs from the local community. The National Automobile Dealership Association (NADA) has even released a propaganda slanted video to elaborate further. (See below)
However, many neutral organizations like the Consumer Federation of American and the Center for Auto Safety disagree with NADA.
John Galandak, president of the Commerce and Industry Association of New Jersey, re-iterated this point when asked about Tesla, “Competition is one of the most powerful market forces that leads to the highest quality goods and service available at the best price.”