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Some states blocking Tesla from selling cars through stores

Tesla has a different business model when selling cars. Similar to Microsoft and Apple, they are opening up their own stores in states to sell cars. No dealerships. Of course, car dealer organizations and their lobbyists don’t like this “cut out the middle man” approach, so they want states to ban the stores from selling cars.

Now there are plenty of things to write about when it comes to electric and hybrid cars, but this post is not about that. It’s about government bureaucracies that wield so much power businesses, unions and individual groups hire lobbyists to influence politicians and bureaucrats to get states like New Jersey, Arizona, and yes Texas to ban Tesla from selling vehicles.

Hat tip to AP at Hot Air, pointing to a post at CNET.

The New Jersey Motor Vehicle Commission (NJMVC) met today to approve a new regulation banning Tesla from selling its Model S in the state. The ban will take effect on April 1. Two other states, Arizona and Texas, enforce similar rules that prevent auto manufacturers from making direct sales to consumers.

As CNET covered in an earlier story, Tesla had been in talks with New Jersey administration officials and the NJMVC over the rule change. On Monday, the NJMVC abruptly notified Tesla that it would meet to approve the rule change at a session today, bypassing a legislative process.

The rule change means that Tesla will not be able to sell cars through its two stores in New Jersey after April 1.

I was wondering about the “where do you get service” question. As it turns out, they have service centers throughout the country, so the business model offers different locations – in many instances – for showrooms and service centers.

Why do states feel they need to regulate this? Years ago the government felt the need to protect consumers ensuring they had a place to get their car serviced after they bought it. Really? I’m totally offended the government thought I was so dumb I did not know I may need occasional service for my car.

But it’s not about that. It’s more closely associated with political donations – both cash and resources – that flow from organizations to politicians and government bureaucrats because we have permitted them to have the power to pick winners and losers.

I have no issue with groups of people or businesses getting together and lobbying government. Again, the problem is we’ve given the government power they do not need … the disease from which all symptoms are derived. If the government had less power and influence to regulate by fiat, you’d see a lot less lobbyists out there. I’m NOT saying there must be zero regulation, just as little as possible.

The answer New Jersey, Texas and Arizona should have given to lobbyists for auto dealers is “suck it up, the business model seems to be changing and you’ll have to figure it out.”

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4 Responses to "Some states blocking Tesla from selling cars through stores"

  1. Dimsdale says:

    Ensuring that they have a place to get service??  What about all the independent mechanics that the manufacturer/dealerships try to lock out of essential tune up data, forcing consumers to go to the expensive stealer, er, I mean, dealer instead of a cheaper local guy you trust?  Who protects the consumer from the service manager, whose “essential” role at a dealership is to dial up the estimates of work done, frequently including work that really doesn’t need to be done?
     
    Dealers are the most egregious abusers of the consumer that you will come across, but they are protected by well greased politicians.  
     
    Nice.

  2. Lynn says:

    This reminds me of the Tucker car. The big three wanted to stop production of the Tucker because it was a great car and built by an entrepreneur so they appealed to the government to stop it. The SEC embroiled the company and Preston Tucker in totally unreasonable actions. The media stepped in and Shazam! Bankruptcy. http://en.wikipedia.org/wiki/Preston_Tucker. Ok not exactly the same, but darn close.

  3. bien-pensant says:

    Why can’t Tesla just set up a store and sell their product. I could buy a motorcycle franchise and sell two-wheeled conveyances without having to belong to any auto-type dealers group. It might be to my advantage. Tesla has to follow all of the state and federal laws, why do they have to be a member of particular group? Is this a Democrat thing?
    They have a product to sell, let the market place decide if that vehicle will make it. I don’t know anyone who likes having to buy a vehicle from a dealership, get screwed on the purchase and then get hosed for years on the financing. It is a real racket.
    The initial capital outlay, insurance, fuel, maintenance and continuing cost of personal transportation are some of the reasons why many, including the Text Generation, increasingly want to live in cities and be carless.
     

  4. WagTheDog says:

    This flies in the face of free market – how about Harley Davidson?  They sell direct as well as dealers, right?  Hum – double standard going on here?

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