New Jersey is set to ban the sale of Tesla automobiles in its state starting April 1.
Surprisingly, New Jersey is not the first. Colorado, Texas, Arizona, and Virginia have all prohibited Tesla from selling cars in their states.
The Tesla is universally acknowledged by car experts to be one of the best cars ever made. It was awarded the “Car of the Year” by Motor Trend magazine.
So why are states blocking consumers from buying them? Simple… Tesla is a threat to the current car dealership model. Steve Chapman explains:
The effort to prevent direct sales comes from existing car dealers, who like the arrangement they have. They claim to be trying to prevent “unfair competition,” but the competition they prevent looks unfair only to those who profit from a protected market.
Bob Glaser, head of the North Carolina Automobile Dealers Association, told The Associated Press, “It’s a consumer protection, and why we say that is a dealer who has invested a significant amount of capital in a community is more committed to taking care of that area’s customers.”
Glaser conjured another reason that the people at Tesla should not be allowed to operate as they prefer. “You tell me they’re gonna support the little leagues and the YMCA?” he demanded. Tesla says, actually, it will — not that sponsoring youth athletics is, or should be, required to do business in America.
A more honest assessment came from Bill Wolters, president of the Texas Automobile Dealers Association, who fears that “if they change the franchise laws, it allows every other manufacturer to come in and do what Tesla is going to — compete with our family-owned businesses.”
This is not about protecting consumers or even assuring the survival of Little League Baseball. It’s about established businesses leveraging government power to enrich themselves. They get the express lane to themselves, and consumers get left by the side of the road.
This is not just a problem in New Jersey… it’s a problem all across America, from the highest levels of federal government to the smallest state: Businesses using the power of law to suppress competition.
So how is the law used to eliminate good companies from doing business? In the case of Tesla, it has to do with franchise and car dealer laws that essentially ban direct-to-consumer sales, forcing all cars to be sold through large dealerships.
Tesla currently sells its units to consumers through stores owned by the company, rather than dealer franchises. However, according to Green Car Reports, a proposed rule change has been approved that would require all new car dealers to provide a franchise agreement in order to receive a license from the state. Tesla could not produce a franchise agreement with itself.
Telsa also sells its vehicles in small facilities without service centers. (It’s an electric car, so many issues are software-related and can be done remotely.) The rule also requires that dealers are to maintain facilities of at least 1,000 square feet, with room to display two cars and the capability to service customer cars on site, according to Green Car Reports.
So there you have it.
With a few strokes of a pen, the government protects the profits of car dealerships and blocks consumers from purchasing (or even experiencing) one of the best cars to be invented in decades.
You can thank your legislators next election cycle.