Breakout

Tesla ban in New Jersey an opening salvo in war with automakers

Breakout

Yesterday’s vote by the New Jersey Motor Vehicles Commission to block direct manufacturer auto sales in the state is likely only the beginning of a much larger and national effort to prevent Tesla (TSLA) from selling its innovative electric cars.

Chris Christie looks like he’s in the back pocket of the New Jersey Coalition of Automotive Retailers (and its president Jim Appleton) which donates regularly to political operatives in the state and its their explicit business as a lobby to influence legislation in the automakers’ favor.

The Tesla dealership in the Garden State Mall in Paramus New Jersey serves as a perfect example as to why the automakers are worried about Tesla. The dealership, a large storefront in the mall, is an evocative commercial for every single consumer who happens to walk by. Tesla is not just selling cars there, it is promoting its brand image for a future when it will be selling less expensive automobiles to a much wider base.

Next stop, Ohio, where there is also recently introduced legislation pending that would ban the direct sales model affecting Tesla in that state as well.

On a national level, the automakers’ lobby has deep pockets and significant leverage and they will go to great lengths to protect business as usual regardless of the how it affects consumers.

Ultimately, this is a sign of weakness by the automakers, that they need to resort to politics to prevent an innovative competitor. A coordinated nationwide effort will threaten Tesla’s direct-to-consumer sales model and will at least slow disruption in the industry.

A more novel approach, and one that would benefit competition and car buyers, might be for the automakers to focus instead on innovation in their own right.

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