Tesla Wants Special Treatment

The problem is, they’ve already gotten special treatment

Tesla Motors, the manufacturer and retailer of electric powered cars, boasts on its website that it is “redefining the way cars are sold.”

They’ve been selling new cars in an unconventional way in New Jersey for one, two or four years, depending on who is telling the truth.  They have a problem now, because the New Jersey Motor Vehicle Commission suddenly adopted what Tesla is calling a “new rule” that is consistent with decades old law allowing only franchised new car dealerships to sell new cars in New Jersey.

Instead of visiting a new car dealership where you test drive a car, haggle with a salesperson, wait for the salesperson to come back from pretending to talk to his/her manager, make a deal, get passed off to the business manager who bumps your interest rate, tries to sell you undercoating, credit insurance and an extended warranty and then wait a while longer to drive home in your new car, you can’t buy a car at Tesla’s two stores in New Jersey.

Tesla’s New Jersey stores are inside the Short Hills Mall in Short Hills and the Garden State Plaza Mall in Paramus.  You can’t get your new electric car at one of those stores.  You can’t even order it at the store.  You can only look at a car and talk about it.  If you want to buy one, you have to order it online and wait for it to be built in California before you take delivery. If you want to test drive one, you have to an request an appointment online.  It might take a day or two for a representative to get back to you with an appointment.  Test drives and new car deliveries are done out of the company’s service facility in Springfield.

Car manufacturers can’t sell cars directly to the public in New Jersey, except in Tesla’s case until the end of this month when their current license expires.  New cars are only sold in New Jersey through independent businesses that have a franchise with a manufacturer; a franchised dealer.  New Jersey has some of the toughest franchise laws in the country that protect dealers and regulate their relationships with the manufacturers.

Somehow Tesla got a license from the New Jersey Motor Vehicle Commission to sell vehicles directly to the public one, two or four years ago, depending on who is telling the truth.  No one is saying how that happened and reports about when it happened are conflicting.

In a post on the company blog, Tesla’s says they been issued two licenses to sell cars in New Jersey.  Dealer licenses are renewed annually in March.

Governor Christie’s spokesperson, Kevin Roberts, was quoted at Bloomberg.com as saying Tesla has been operating in New Jersey for one year, and that during that year they were supposed to work with the legislature to get the franchise law changed.

“Since Tesla first began operating in New Jersey one year ago, it was made clear that the company would need to engage the Legislature on a bill to establish their new direct-sales operations under New Jersey law,” said Kevin Roberts, the spokesman. “This administration does not find it appropriate to unilaterally change the way cars are sold in New Jersey without legislation and Tesla has been aware of this position since the beginning.”

Roberts didn’t say how Tesla got a license in the first place, which was a unilateral change in the way cars are sold in New Jersey without legislation.  He did not return MMM’s phone call on the matter.

MMM asked Telsa’s press office for a copy of its first license.  We’ve yet to get a response.

A Tesla employee who is not authorized to speak to the press told MMM that the company has been selling and delivering cars from the Springfield location for almost four years.

Tesla seems to have a legitimate beef, in that they were granted permission to do business in New Jersey and then had that permission suddenly and unexpectedly revoked.  But their spin that the Christie administration “has gone back on its word to delay a proposed anti-Tesla regulation so that it could be handled through a fair process in the Legislature” is disingenuous.  Unless there is an obscure phrase in the New Jersey franchise law that empowers the MVC to grant waivers or exceptions to the law, Tesla has gotten special treatment that was granted outside of the law. They must know that.

It’s a good thing for whoever authorized Tesla to sell cars directly to the public in New Jersey that Assemblyman John Wisniewski and Senator Loretta Weinberg don’t read this site.

Why someone in the Christie Administration would grant Tesla a license outside of the law makes little sense.  The company does not employ thousands of people in New Jersey.  Their products are sales tax exempt, a fact that they promote on their website as an incentive to buying their cars. What’s in it for New Jersey to make an exception for Tesla without legislative deliberation?  

What is preventing Tesla from partnering with a New Jersey new car dealer?  They could still allow customers to order their cars online, wait for delivery and make an appointment for a test drive.  I can’t think of one new car dealer who would not jump at the chance to have a franchise that does not require them to carry inventory.

Changing the way new cars are sold and serviced might well be a worthy goal.  That’s not the question.

Changing the way cars are sold at the behest of a new company that may or may not survive long term and to do so administratively without regard for duly passed and well litigated law could cause huge disruptions in a multi-billion dollar industry in our state’s economy.

Many of the Republicans arguing that the Christie administration should give Tesla special treatment are also railing against the Obama administration for giving the president’s friends special exemptions ObamaCare.

The auto industry is far more complex than most people realize.  This issue warrants careful consideration.  A rushed exemption that could open the way for Ford, GM, Mercedes, et al to put hundreds of New Jersey companies, their families and employees out of business and make consumers getting their new cars serviced a potential burden is not called for.

In the meantime, someone in the Christie Administration should make Tesla happy before someone sends this post to Wisniewski or Weinberg.

 

 

Posted: March 12th, 2014 | Author: Art Gallagher | Filed under: Christie Administration, Economy, Motor Vehicle Commission, MVC, NJ State Legislature | Tags: Assemblyman John Wisniewski, Loretta Weinberg, Motor Vehicle Commission, MVC, New car sales, Tesla, Tesla Motors | 9 Comments »

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