New Jersey recently enacted a rule, through its Motor Vehicle Commission, stopping Tesla Motors from selling its electric cars directly to NJ consumers. Governor Chris Christie noted that he was obligated to enforce a long-standing state law that he interpreted as forbidding direct car sales to consumers by manufacturers.
In response, notes the Star-Ledger, two NJ politicians have proposed amending the existing mandatory franchise law to allow electric car makers to sell direct, while continuing to compel gas-powered car makers to sell only through independent dealerships.
The Star-Ledger was speaking "tongue-in-cheek" about a conspiracy, but the paper begged the question: What is really going on in New Jersey? I left these comments:
- Franchise dealerships get government favoritism through a re-existing law forbidding car manufacturers from selling cars directly to consumers.
- Greenwald and Eustace want to carve out a special exemption to that law for electric car makers, a government favor to Tesla.
- Tesla buyers get a special federal tax credit of $7500 that gas-powered car buyers don't get, which is government favoritism for Tesla.
The problem is not "conspiracy". The problem is plain, old-fashioned cronyism. The right solution is to eliminate the pre-existing franchise-mandate, extend equal tax credits (i.e., lower taxes) to all car consumers, and leave car manufacturers, consumers, and franchise dealerships free to contract voluntarily to mutual advantage on a level legal playing field, also known as a free market.
Tesla the Beneficiary of Crony Laws