The New Jersey Motor Vehicle Commission (NJMVC) met March 11 to approve a new regulation that bans Tesla from selling its popular Model S to consumers through direct sales. State officials are now forcing the manufacturer to sell their cars through franchised car dealerships.
In a CNNMoney article published the same day, Tesla attorney James Chen told members of the NJMVC that the regulation will force Tesla to close its two current boutiques in the state, located in Paramus and Short Hills, and lay off 27 employees.
April 1 marks the deadline, after which Tesla will be prohibited from selling cars through its two New Jersey boutiques.
This is an affront to the very concept of a free market. – Tesla Motors
Benefits of a direct sales model include bypassing dealership costs and fees, resulting in a more direct and economic relationship between the automaker and the consumer. With only two boutiques in the entire Garden State, Tesla is quite exclusive in its consumer accessibility.
However, according to a CNET article from March 11, the NJMVC acted in order “to ensure that consumers [have] a local dealer to which they [can] turn for maintenance.” Certainly, the convenience of a dealership in closer proximity is attractive to many car consumers. The lifetime of a car does not begin and end with the mere act of purchasing the car; a large part of a car’s life includes periodical maintenance. But then we have to ask, will this ultimately deter a serious Tesla enthusiast? Or any other specialized enthusiast, for that matter.
On the defense, Tesla said in a March 11 press release, titled Defending Innovation and Consumer Choice in New Jersey, “Indeed, the Administration and the NJMVC are thwarting the Legislature and going beyond their authority to implement the state’s laws at the behest of a special interest group looking to protect its monopoly at the expense of New Jersey consumers. This is an affront to the very concept of a free market.”
Unless the company makes changes to its current sales model, it is likely that New Jersey consumers will have to cross state lines in order to purchase a Tesla vehicle.
(Source: CNNmoney, CNET, Tesla)
