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New Jersey Is the Latest State to Try to Run Tesla Off the Road

Tesla and New Jersey

New Jersey Governor Chris Christie may be in hot water over who knew what when regarding the bridge lane closures on the George Washington Bridge last September, but it is the latest transportation-related maneuver by his administration that has people protesting from Fort Lee, NJ to Fremont, Calif.

Gov. Christie’s administration expedited a rule proposal this week that would curtail Tesla Motor’s ability to sell directly to customers through its stores.

“Since 2013, Tesla Motors has been working constructively with the New Jersey Motor Vehicle Commission (NJMVC) and members of Governor Christie’s administration to defend against the New Jersey Coalition of Automotive Retailers’ (NJ CAR) attacks on Tesla’s business model and the rights of New Jersey consumers. Until yesterday, we were under the impression that all parties were working in good faith,” Tesla wrote on its company blog.

Tesla’s approach to sell directly is critical, the company maintains, because it is selling a new technology. “This model is not just a matter of selling more cars and providing optimum consumer choice for Americans,” the blog states, “but it is also about educating consumers about the benefits of going electric, which is central to our mission to accelerate the shift to sustainable transportation, a new paradigm in automotive technology.”

New Jersey is not the first state to make it difficult for Tesla to operate outside the domain of traditional auto dealerships. A two-month effort to pass bills in the Texas legislature that would allow Tesla Motors to sell electric cars directly to consumers failed last summer after lawmakers failed to vote on the issue before adjourning.

The bills would have created an exemption to the current law that prohibits factory-owned dealerships. The two Tesla-backed bills did not even make it to the floor, which could mean a long wait before Tesla can try again in the Lone Star State, as the legislature will not meet again until 2015. In the meantime, Tesla has devised a complicated work-around in the state.

Tesla has fought and won in other states, with favorable court decisions in Massachusetts and New York, according to Automotive News. The EV upstart has also won a round of court battles in Minnesota.  

Last year, a bill was introduced in North Carolina that would prevent Tesla from selling its luxury vehicles in the state. Instead of unleashing just lawyers, Tesla took its Model S to the state capitol, according to the Charlotte Observer. After Republican House Speaker Thomas Tillis took a spin in the car, his chamber never voted on the bill.

In New Jersey, Tesla won’t have a chance to take lawmakers in Trenton for a test drive to win hearts and minds. Instead of allowing the Proposal PRN 2013-138 to be taken up by the legislature, the Christie administration expedited the law via the NJMVC on Tuesday.

Tesla slammed the move on its blog, noting that the sudden move came after nine months of unexplained delays for a new sales license for Tesla. “This is an issue that affects not just Tesla customers,” Tesla writes, “but also New Jersey citizens at large, because Tesla would be unable to create new jobs or participate in New Jersey’s economic revival.”

The new ruling will require Tesla to use third-party dealerships, which all of the companies Tesla competes against use. The change will essentially mean that Tesla has to stop selling cars at its current dealerships in the state starting on April 1.

The effort by car dealerships to shut down Tesla could be just the first of many battles that the disruptive technology company faces as it expands beyond the domain of luxury vehicles. Its planned Giga factory will also likely bring more pushback from incumbent carmakers of all stripes, and maybe even traditional power generators, as the lower cost of energy storage could take more people off-grid.

For now, deep-pocketed New Jerseyans will have to head over to New York or Pennsylvania to score a coveted Model S. And not all dealerships in the Garden State are cheering the move by Christie to give Tesla the boot. At least one dealer is hoping that Tesla will want to start using dealerships, starting with his, according to this tweet:

Photo Credit: New Jersey and Tesla/shutterstock

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Katherine Tweed's picture

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Bob Meinetz's picture
Bob Meinetz on March 16, 2014

Katherine, last year Bill Wolters of the Texas Autmobile Dealers’ Association made this comment:

“I tell people that franchised dealers have a greater presence in our state of any significant organization except the public school system…you don’t find major retailers or major businesses in these towns of less than 15,000 population and the reason they exist there is a lot of our citizens [with transportation needs] live there.”

http://www.hybridcars.com/why-auto-dealer-associations-oppose-tesla/

Perhaps the presence of automobile dealers in Texas rivals the public school system not because of “transportation needs”, but laws which prohibit any other arrangement.

 

Bob Meinetz's picture
Bob Meinetz on March 16, 2014

N Nadir, if we operate under the assumption that in most non-urban areas American car culture is here to stay, wouldn’t a combination of affordable, long-range EVs powered by nuclear energy do more than anything to lower our transportation-related carbon emissions? Although manufacturing cars in itself generates carbon, they last a long time, use fewer parts, and require less maintenance.

Your comment seems to be more of a class statement against Tesla and the people who buy them than against the technology, which is by most accounts remarkable. Musk didn’t set out to price the American public out of buying his cars; the technology did that for him. To survive in a cutthroat industry which was sitting on its hands with respect to EVs he had to appeal to a blue-blooded market, and he’s done a pretty amazing job at it.

I have no doubt that in coming years Tesla will be a leader in lower-priced electric vehicles for the rest of us.

 

John Miller's picture
John Miller on March 16, 2014

One major issue or question not addressed in this post is: “Why Tesla wants an exemption from a long standing New Jersey law that requires Independent Automobile Marketing Dealerships?” (A regulation established well before Christie entered office; and required for all other Automobile Manufacturers).  The answer is possibly the fact Tesla currently receives about seven California ‘Zero Emission Vehicle Credit’ (ZEVC) for each EV it builds and apparently must directly sell to qualify for or keep ownership to the ZEVC revenues.  Each ZEVC is currently valued at about $5,000 each, which means for each Tesla Model S built/sold creates about $35,000 in ZEVC revenues.  Add to this the $7,500 Federal EV tax credit that yields about a total of $42,500 of Government influenced credits paid (directly and indirectly) to Tesla for each $80,000 Model S sold (or total subsides equivalent to over 50% of the total Model S retail cost).

Who pays for these subsidies?  First, to comply with California’s Zero Emission Vehicle (ZEV) standards those Manufacturers who do not build and sell ZEV’s must purchase the ZEVC’s (largely from Tesla) in order to do business within California.  And, of course, Tax Payers pay for the Federal EV tax credits.

Tesla has definitely been one of the most successful EV manufacturers in the U.S.  It will be interesting to see if their Corporate ‘business model’ can be sustainable without the perpetual massive Government subsidies in the future. 

Paul O's picture
Paul O on March 16, 2014

Bob,

The point is that Musk’s car is not relevant to the environment, and is in fact a luxury vehicle. He should therefore comply with existing state law like any other automobile seller.

If EVs do come to become significant environmentally, there is no guarantee that the technology used by Tesla would power those EVs.

Bottomline is that not every state will change its laws to accomodate every well meaning innovator (note the word is not in quoates).

Bob Meinetz's picture
Bob Meinetz on March 16, 2014

Paul, electric vehicles’ relevance to the environment is confirmed by the GREET model (well-to-wheels emissions analysis of Argonne National Laboratory) and three acts of Congress, which offer a $7,500 tax credit on the purchase of all EVs including Teslas. States also offer credits, Colorado the highest with $6,000. If you’re not familiar with GREET I urge you to download it (it’s available as an  Excel spreadsheet) and run some models yourself. The average carbon savings for electric vehicles are significant.

I don’t believe anyone would dispute that the Tesla Model S is a luxury vehicle, but Musk should therefore comply with existing state law? Again, maybe this case should be judged on some less trivial metric than class warfare. I certainly can’t afford one, but there’s no doubt that Tesla has broken ground – not only in being the first modern, commercially-available electric car, but with innovative technology.

The bloated, sclerotic U.S. automotive establishment, dying a slow death after thirty years of being innovation-free, would like very much for this six-year-old upstart and their Motor Trend Car of the Year to go away. Maintaining status quo, and a lousy one at that – that’s the purpose of these regressive, industry-specific laws which are probably unconstitutional but have grown enough roots into some states’ economies to be accepted without question.

Paul O's picture
Paul O on March 16, 2014

Bob,

Yep, I am not up on GREET, however….I think my point stands regarding The Tesla.

The Gov’t may give away $7500 in Tax credit all they want, BUT if you count all the Teslas sold and tally up their contribution toward overall CO2 reduction, factoring  in the CO2 present in the source of the electric power used to charge the Teslas, it is hard to not think of The Teslas as irrelevant, as far as their contributions.

I am not saying or trying to say that electric vehicles per se are, or will always be irrelevant.

Bob Meinetz's picture
Bob Meinetz on March 17, 2014

N Nadir, I have respect for your knowledge and insight, and I no less than anyone would like to see civilization defy consumption, convenience, and vanity in the name of humanity. Where we differ is the best road to get there. I see the Tesla Model S as an essential step between the Hummer and a compact electric car, or electric buses – not as a goal. And if millionaires feel good about creating less carbon, that’s ok with me.

I don’t completely follow your discussion of chemical looping and cascading energy reactions, but it’s intriguing. In the interest of shortening energy chains I once calculated that using a 1-inch cube of Polonium-210 in a radioisotope thermoelectric generator one could power a minivan for about 10 months. No fillups, no exhaust (just the messy problem of a spy agency cracking into the P210 and poisoning someone’s soup with it).

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