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Auto dealers fire back at Tesla CEO: ‘This Musk guy, he wants all the profits for himself’

Last week, New Jersey announced that it would begin enforcing a ban on the direct sale of automobiles by manufacturers, a change that will cripple electric-vehicle maker Tesla’s business in that state. The company’s CEO, Elon Musk, responded with a fiery blog post accusing state legislators of cutting a backroom deal with traditional franchised auto retailers — retailers with which Tesla has consistently refused to do business — and playing by “mafia” rules. It was tough talk from a brilliant and powerful billionaire, but the Garden State’s car salesmen aren’t taking the criticism lying down.

“”He needs to stop and take a breath.””

“He needs to stop and take a breath,” said Jim Appleton, the president of the New Jersey Coalition of Automobile Retails, or NJ CAR. “If you’re an internet billionaire, maybe you think the world revolves around you, and the world springs from your laptop. Well, I got news for him. This is not a new law, Tesla is operating illegally, and as of April 1st, they will be out of business unless they decide to open a franchise.”

Appleton is right that New Jersey had a law on the books banning direct sales from manufacturers, but that was a relic of a bygone era before dealerships were a firmly cemented incumbent. The state’s motor vehicle commission had issued two licenses to Tesla to operate its own stores in New Jersey. Given the recent rule change, however, those licenses will not be renewed when they expire on April 1st.

This may set a painful precedent for Tesla: state legislators in New York and Ohio are also considering an updated ban on direct sales, and byzantine rules in Texas prevent the company’s corporate-owned dealerships from even iscussing pricing with potential customers. Tesla recently escaped a similar fate in North Carolina by offering state legislators free rides around the capitol.

“New York and Ohio are also considering a updated ban ”

Tesla has steadfastly refused to work with franchised dealers and has promised it will continue to sell direct. Musk says this is necessary to survive, arguing that dealers will always prefer to sell gas-powered cars over electric, which he claims require fewer repairs and thus drive less recurring revenue to the dealership. He points to the failures of Fisker and Coda, two American electric-car companies that worked with dealers, as evidence.
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