Attempting to keep traditional car dealerships in drive, New Jersey is trying to ban the Silicon Valley juggernaut Tesla–the company busy changing the very perception of the electric car–from opening more stores in the Garden State. (There are currently two.) Unlike the typical auto dealership–a showroom surrounded by parking lots filled with gleaming, fresh-smelling new models you can take home–Tesla stores are stationed in shopping malls* and offer no immediate gratification. The Tesla storefronts are for branding purposes only: to actually buy a Tesla, customers have to go online, which is where NJ–and the dealership lobby–has a problem.
What is it about Tesla’s super-efficient business model–a tiny retail footprint that nevertheless offers lots of choices–that worries traditional car dealerships? The Tesla disruption threatens the status quo: NJ state law requires that all auto sales occur through a dealer–a middleman franchisee. (You can’t just buy a Mustang from Detroit through a catalog, for instance.) Tesla’s retail model takes out the middleman–and your local Chevy dealer doesn’t want to end up like Blockbuster Video. The New Jersey Motor Vehicle Commission claims Tesla is violating the law. Frost & Sullivan’s automobile industry analyst Kumar Saha says: “This [the ban on Tesla] is a disturbing trend and deals a big blow to the future of automotive retailing. It also pushes the U.S. behind the rest of the world. So far the resistance to Tesla and any kind of progressive thinking in auto sales had been relegated to the southern states. New Jersey’s decision could now influence states such as New York and Massachusetts, which have so far been more supportive of Tesla.” You’d think that the Garden State, of all places, would find a way to welcome the eco-friendly electric era. But Tesla is expected to have trouble crossing the bridge–Governor Chris Christie supports the ban.
*NJ, where shopping malls are plentiful, is a real testing ground here. One area in northern NJ has the most shopping malls per square mile in the world, with seven major shopping malls in a 25 sq. mile radius.