Regulation

New Jersey Bans Tesla Showrooms, Doesn't Even Need a Law

Whatever's not permitted is prohibited, apparently

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not for long
The Mall at Short Hills

From the school of "anything not permitted is prohibited" comes news that today New Jersey's Motor Vehicles Commission has unilaterally banned electric car showrooms operated by companies without franchised dealerships from the state of New Jersey. Via Bloomberg:

"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, a spokesman for [Republican New Jersey Governor Chris] Christie. "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."

Tesla says it didn't even know about the proposed rules change until yesterday. The Commission, which passed the rule unanimously, is chaired by a Christie nominee, and includes three members of Christie's cabinet. Tesla has been fighting similar control-freak/cronyist nonsense around the country. After all, these kind of laws and rules prohibiting Tesla from selling cars directly to consumers are generally intended to defend car dealerships, and are lobbied for by them. Even Texas, whose governor insists his state is "wide open for business," passed a protectionist law against electric car direct sales. Tesla did win a battle in New York, where a bill denying registration for cars not brought through a dealer failed to pass the legislature. Last year, Tesla's CEO, Elon Musk, said his company had two options to secure its ability to sell cars directly to customers, lobby Congress for federal legislation or file a federal lawsuit.

Tesla's status, meanwhile, as a recipient of the fruits of crony capitalism on the federal level means it's given an unfair advantage by the federal government and then saddled with unfair disadvantages by state governments, as A. Barton Hinkle noted last year.

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  1. Try selling beer directly to a retail outlet?

    Okay, in a number of states you can, but franchise laws exist in them all, its just not 100% mandatory in them all.

    1. Other than obvious cronyism I’ve never understood the rational behind those laws. I used to work at an Irish pub (owned by an Irishman) and he went nuts when a Fado–an “Irish” chain bar–opened up in the same city. Diageo/Guinness doesn’t [i]quite[/i] own Fado, but it has a big financial stake in it. Later, when I started brewing my own beer, I started to look into the details of selling it (for shits and grins) and was a little shocked to find that I couldn’t open up a lemonade stand for beer. Which is pretty stupid when you think about it.

    2. so just because some jack-ass put managed to get a law on the books means that law is automatically indemnifies said law from ever being challenged for it’s face value stupidity? the only purpose government serves any more is to stifle new business startups by making it nearly impossible to start a business in an established industry because the established industry has lobbied and gotten laws passed that are protectionist to themselves, and since they’ve given everything but hand-jobs to the politicians to get that law on the books, it becomes practically murder to have the law nullified and/or removed, and in the mean-time the cost to the economy because jolly joe shmoe can’t just get into the business for himself and fight for a piece of the pie by offering a quality service at a lower price (because he doesn’t have the overhead)… problem with government these days is there is ZERO common sense and they serve only to protect ONLY those who have paid them their bribes (taxes, fees, licenses…etc)

  2. Tesla doesn’t seem to have any problems selling here in Seattle. The South Lake Union dealership is going strong.

    1. Lot of people driving their Teslas almost all the way home, huh?

      1. They look nice in the showroom across from Uptown Espresso…

      2. (Rim shot!)

      3. I’ve never driven one but all the reviews I’ve read were absolutely glowing. I thought they were the private industry good guys to the Chevy Subsidy Volt dark side, with the added bonus that they’re quick as hell and actually reliable. Is that not the case?

        1. Since all their “profits” come from California state carbon subsidies and the feds give rich folks generous income tax credits to buy the cars, I’m not sure why they are the private industry good guys.

        2. same subsidies for their rich customers, same immature battery technology, and a $465 million low-interest loan from the Department of Energy.
          They do look cool, though.

          1. And they’re chick magnets, simultaneously signalling that you’re rich AND you care about the environment.

          2. They don’t even look cool. They look about as awkwardly styled as a Cadillac.

            1. “They look about as awkwardly styled as a Cadillac.”
              From the front, I’m always fooled that it’s a Ford. From the side, they’re so damn big, I rarely confuse them with anything else.

  3. “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.”

    Hmmm …..sounds like greasing a few chubby mitts and this problem could go away in a hurry.

    1. Oh, Hell No! New Jersey auto dealers and their trade association have been greasing those mitts since before Ford started selling Model Ts ( assuming NJ is like every other state) If Jersey grants a franchise exception to even one manufacturer it could threaten the whole business model. Car dealers are a very powerful political force in state legislatures.

      1. Car dealers are a very powerful political force

        Should I laugh or cry about that?

  4. This strikes me as a flat-out violation of the dormant commerce clause. NJ is banning a form of interstate commerce. This sounds to me an awful lot like a version of “local processing ordnance” that SCOTUS has rejected time and again.

    1. Yes… if there ever was something that the commerce clause actually covered, I would estimate this is it.

      1. And the barriers to selling health insurance across state lines, of course.

  5. Tesla-Gate?

  6. This strikes me as ironic.

    1. “This strikes me as ironic.”

      Rent-seeker screwed by gov’t! Losers all the way around.

    2. Right? Poor Tesla, they wouldn’t even exist without cronyism, and now they are up against cronyism! Don’t those State SOB’s realize that Tesla is one of the cronies?

      1. It’s cronies all the way down

  7. Also, they had a Tesla displayed at the Detroit Autorama last weekend. It’s more-bitchin’ in the flesh. Nice looking car. I have NO interest owning or subsidizing the ownership of them, but it’s definitely cool.

    1. My coworker has a fully loaded Model S, and it is pretty damn nice. Loads of torque at any speed.

      I’d buy one in a heartbeat for $60K, just not for $110K. But it helps that I live in CA and could drive all over the state using the free supercharger stations.

      1. The electric motorcycles intrigue me. Didn’t think they would, but they do. Cars? Not so much. The hybrids I’m kind of starting to like. Finally drove a hybrid Ford Escape – very impressive. It became a game to see how long I could go and not make the gas engine run. Plus, 40+ MPG v 22 or so for our last gas one.

        I think my next car is a Lincoln MKZ hybrid. Sexy looking.

      2. …”the free supercharger stations.”

        I’ve yet to see how the taxpayers are paying for those, but I don’t doubt they are.

  8. [Republican New Jersey Governor Chris] Christie. “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.”

    GOP Rising Star!

    1. Oh man, I wish Chris Christie would run against Hilary Clinton so I could vote for a Libertarian candidate, have someone ask me why I “wasted” my vote, scream maniacally, and then go live in a compound in the mountains.

      1. uh… compounds tend to be dangerous places to live when a Clinton is in the White House…

        1. Fair point. I was counting on the confluence of idiocy to summon the Elder Gods and begin a nightmarish eternity of madness and bloodshed a la the end of In the Mouth of Madness. Maybe I should make everybody wear AmeriCorps t-shirts, though, just in case.

          1. or a keffiyeh

            1. oh no, wait, a Clinton will still lob missiles at your compund

      2. I already live in a compound in the mountains. Good luck guessing which compound I’m in this week.

  9. But how wil this affect Musk’s hyperloop?

    1. Giant. Sucking. Sound.

    2. Sure pissed off moonbeam.

  10. “…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,”

    In other words, bribe the local rent-seeking politicians.

    1. Good luck with that, dealerships own *every* state legislature.

  11. speaking of cars…
    Sanctimonious liberal douchebag yells at man who drives a diesel engine truck

    Without looking, guess what the bitch drives…. GUESS!

    Will be reposting in the AM Links.

    1. A diesel engine Mercedes C-class?

    2. In all fairness, although she is an obnoxious idiot, it looks like her original complaint was some jackass sitting there with his very loud truck idling, disturbing the quiet. Not excusing her actions, but there are such things as quiet diesels in the year 2014, and big truck owners can’t even try the BS line bikers do, about the noise being for safety. Some people just like being loud and annoying: some by being self righteous idiots, and some by driving unnecessarily loud vehicles. These people deserved to run into each other.

      1. She’s still a common scold for whom the dunking stool used to be the proper response.

  12. Thank goodness the New Jersey state government intervened! Think of the dangers to children if they wandered into an unfranchised electric car showroom and one of those batteries exploded and burned!

  13. What cronyism giveth it also taketh away

  14. There are a few things wrong with this post.

    First, New Jersey law has banned the direct sale of automobiles by manufacturers since at least 1985. N.J.S.A. 56:10-27 and 28 prohibit manufacturers from offering to sell or selling motor vehicles in new Jersey “except through a motor vehicle franchisee,” and also from owning or operating “a place of business as a motor vehicle franchisee,” except in certain limited circumstances.

    Second, it’s not clear that showrooms, as such, are going to be affected. The law prohibits selling, not showing. It’s possible Tesla may be able to do the same thing it does in Texas, having galleries where employees are not permitted to discuss how potential customers can purchase a Tesla.

    Third, Tesla DID know about the proposed rules change, proposed in October of last year, before yesterday, and even submitted comments on the proposal, which the MVC responded to, here: http://bit.ly/1iBcMRA.

    Finally, I’m not aware of any Texas bill that banned the direct sales of electric vehicles specifically. Since 1999, a Texas statute (currently, Tex. Occ. Code ? 2301.476) has prohibited direct sales of any automobile. During the 2013 legislative session, two bills were introduced–one in the House and one in the Senate–that would have carved out an exception to that 1999 law which would have permitted Tesla to sell directly to consumers. Neither bill was enacted.

  15. NJ needs a middle man for EVERYTHING….even pumping gas. Try doing something as simple as that in NJ…

    1. Or try buying a car on a Sunday…

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