Tesla Motors, a car manufacturing company based in Palo Alto, California, is an up and coming player in the automotive industry. The company is making waves in automotive technology by mass producing a fully electric car capable of going 300 miles on a full charge, according to Tesla. The Los Angeles Times reports that this year the company is set to take another large step in becoming a major car manufacturer by building a five billion dollar, 500-1000 acre battery factory that would employ about 6500 workers. But not all things are coming easy for this young company.
As of April 1, Tesla will no longer be able to sell its cars directly in New Jersey. Following a ruling by the state of New Jersey under Christie’s administration this week, Tesla will no longer be able to directly sell its cars in the Garden State. If Tesla wants to sell its cars in New Jersey, the company would need to do so by abiding to state law and selling through dealerships, or by getting special exemption from the state. Obviously, this ban has many car companies up in arms against New Jersey, especially Tesla Motors. New Jersey, the second richest state reported by 247wallst.com, is a huge market for Tesla as each car comes in at about $100,000 right now. Tesla needs a market that can afford those kinds of prices, and New Jersey fits the bill perfectly.
This ban on Tesla Motors is not only dumb, but also hypocritical on Governor Chris Christie’s side. According to Bloomberg, at the Conservative Political Action Conference on March 6, Governor Christie said, “We need to talk about the fact that we are for a free-market society that allows your effort and ingenuity to determine your success, not the cold, hard hand of the government.” If New Jersey truly is a free market, why is Christie’s administration passing laws that restrict Tesla’s ability to sell in the market?
The law requires that all cars be sold with the “help” of car dealerships. Not surprisingly, the New Jersey Coalition of Automotive Retailers (NJCAR) strongly backed this bill to ban Tesla Motors’ direct sales. Tesla Motors does not account for any of that money as they do not sell through dealerships and they also do not donate much to politicians anywhere. But what is the importance of NJCAR? With a deeper look down, nj.com reports that NJCAR spent more than 150,000 dollars in lobbying efforts last year. NJCAR, along with many automotive dealerships, also donated about $60,000 to Governor Christie. The connection between Governor Christie and NJCAR is undeniable. NJCAR backs the state’s decision to support the bill by saying that taking dealerships out of the sale would threaten consumer protection. But people who are buying Teslas don’t really need protection. Purchasing a car of any kind is usually not an impulse buy. Usually the purchase is carefully thought over weeks, if not months. The customer usually comes into the dealership after doing a substantial amount of research, knowing exactly what he or she wants. Additionally, a run of the mill dealership will not have the substantial knowledge necessary to educate the consumer about Teslas. Selling a Tesla is more than selling a vehicle; it is about showing the world a new way of travel.
Apple’s stores have become an icon on their own, with the glass store fronts, white walls, blue employee shirts, wooden tables and every product imaginable laid out. It seems every Apple store is always packed with people just looking, not even thinking about buying. The foot traffic of Apple stores is what other stores dream about. This is what a great customer experience can accomplish and that is what Tesla is aiming for. Dealerships’ fear that this new technology is skipping their showrooms is understandable. But retailers such as Best Buy and Amazon still seem to be doing fine despite Apple using direct sales and having great success. Tesla will continue to fight against the ban as it suffers restrictions from other states as well. According to Forbes, Tesla is looking into a federal challenge as Tesla’s direct sales continue to be either banned or restricted in about nine states.
Written by TYLER DOAN