New Jersey kills the electric car -- is Ohio next?
The Buckeye State is currently weighing legislation that would ban automakers -- namely, electric-car company Tesla -- from owning a dealership outright.
In a report first seen in The Columbus Dispatch, Tesla and the Ohio Automobile Dealers Association met Tuesday regarding whether Tesla's business practice of having company-owned stores, as opposed to traditional dealerships, should be banned in the state of Ohio.
Tesla is banned from selling directly to consumers in Texas, Arizona and, as of April 1, New Jersey.
Senate Bill 260 is currently up for debate in the Ohio Senate, which states that an auto manufacturer cannot own a dealership outright. The bill was introduced in December, as dealers have become concerned about Tesla's presence in the state.
Palo Alto, Calif.-based Tesla currently has two stores in the state of Ohio, one in Easton and another in Cincinnati. The legislation, as it currently stands, would prevent Tesla from opening any more stores.
Tesla could not be immediately be reached for comment for this story, but company spokeswoman Liz Jarvis-Shean did say the company would have more to say on the New Jersey ban in the coming days.
Shares of the electric automaker were lower in early trading Wednesday, down 1.3 percent to $231.32.
Tesla currently has two stores in New Jersey, one in Paramus and the other in Short Hills. The company also has a service station in Springfield Township. Tesla said in a blog post Tuesday, "This is an issue that affects not just Tesla customers, but also New Jersey citizens at large, because Tesla (will not) be unable to create new jobs or participate in New Jersey's economic revival."
The company held a conference call Tuesday to discuss the pending ban, which was later imposed. On the call, Tesla said it's sold "several hundred cars" in New Jersey, but declined to discuss the exact amount. Tesla's Vice President of Corporate and Business Development Diarmuid O'Connel called the ban "disappointing, if not downright outrageous."
Tesla will have to shut down its operations in New Jersey, O'Connel noted, calling it a "pretty black-and-white issue." It's likely that if the legislation passes in Ohio, it would have a similar affect.
Tesla, run by CEO Elon Musk, does not operate using the traditional local auto dealership model. Instead, it owns and operates its own retail stores, similar to a high-end luxury company or Apple (AAPL).
Consumers walk in to discuss the Model S with a product specialist, set up a test drive for the car, and can then purchase the car on Tesla's website to the consumer's exact specifications, or do so in the store. Tuesday's ban in New Jersey prevents customers from doing that.
Similar legislation is currently being discussed in New York as well.
Nothing stops progress better than regulation to benefit politicians' cronies.
If I were Tesla, I would go to NYC still in view of NJ and open a dealership. In front of the dealership would be a flagpole.... The flagpole would be shaped like a middle finger.....
Lets kill free enterprise so that we can justify our protected jobs in NJ govt......
Henry Ford used to sell cars door to door.....
Eventually Tesla will win out at the Supreme Court level. This violates so many free market laws that Tesla could literally pick it's argument from a dozen previous rulings and win.
So how does this law not effect Apple and a dozen other companies doing the same thing? Do these states honestly believe they can pass laws directed at one specific company instead of others?
One specific lobby literally BUYING a law (and congressmen) to promote their own monopoly.
Rockefeller, Carnegie, and the rest would be proud!!
The auto-dealership lobby is indeed powerful.
What do consumers lose by buying direct from the manufacturer?
The auto dealers must have a pretty strong lobby in those states (stating the obvious). I don't think the argument that this is protecting locally owned business holds water either. The automakers already limit the number of dealers in a particular area. Also, most lots are owned by a large multi-state companies (not small businesses) with multiple dealerships and selling many nameplates.
I thought red states were all for saving people money and allowing the market to work. WTF are they doing pushing through regulations that cost people more money by forcing a company to use a middle man to sell their cars? The only thing that makes sense is the legislation is backed by the oil industry. Because if electric cars benefit from a cost savings of being sold directly to consumers they may become as cheap if not cheaper than gas powered cars.
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Tighter regulations and the end of a lengthy bull market in bonds have changed the landscape forever.
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