The Jersey Way -- Tesla

A Tesla showroom at the Short Hills, NJ, shopping mall

I have not paid much attention to Tesla.  Its sole product, a $71,000 battery-powered car, looks spiffy but is out of my price range.

Probably just as well.  A New Jersey edict this week seems likely to run Tesla out of the state.

The state's Motor Vehicles Commission voted unanimously to toughen up a less explicit state requirement that all new car and truck sales in New Jersey must be done by dealership franchisees.

Tesla current sells directly to customers from single-car displays at two malls in New Jersey.  With only one model to sell and only a few hundred Teslas sold in the state since early 2013, it is hard to see how setting up a franchise network could do anything more than cripple the company with a complex layer of organization and overhead expense.

New Jersey's car dealership owners, the NJ Coalition of Automobile Retailers (NJCAR), have been enthusiastic about the new ruling.   The coalition claims that the independent franchise system protects buyers by offering price competition and greater post-sale service.  (My experience with car dealerships may be the exception, but I generally would prefer more protection from them than from car maufacturers.)

These dealers may not fear Tesla per se, but they seem pretty keen to make sure that no else gets to sell new cars in the state.

In fact, the NJCAR spent more than $150,000 on political lobbying in New Jersey last year.  Individual dealerships also sent more than $60,000 in donations to Gov. Chris Christie's re-election campaign.

Perhaps not coincidentally, Christie's office claims the problem is Tesla's.  A Christie spokesman told the Jersey Journal that Tesla had been informed last year that "the company would need to engage the Legislature on a bill to establish their new direct-sales operations under New Jersey law."

Engaging the New Jersey legislature, of course, is expensive.

This franchise-selling requirement is common in other states and may have frustrated others who wished to form new automobile manufacturing companies.  The last attempt, DeLorean, came 38 years ago; it of course folded for multiple issues.  Previous to that were Tucker, Muntz and Bricklin, none of which survived.  The other firms merged themselves down to the Big Three, and part of their restructuring efforts during and after the Great Recession was to cut the number of franchise dealerships, which of course set off another flurry of appeals to state politicians.

In fact, other states also are challenging Tesla's marketing, no doubt in similar efforts to protect consumers.

Not to go all Milton Friedman here, but I don't get this.  Plenty of established companies, business practices and even industries have disappeared when competitors came up with new ideas that the public preferred.  I don't see why a state government needs to step in to regulate the way cars are sold just because cars have been sold that way for a long time.