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Dealing from the Bottom of the Deck

honeymooners1Old habits die hard. About 100 years ago, as General Motors was gearing up to start mass-producing buses, the automaker decided to give itself a leg up by clearing the field of competition. So GM bought up most of the trolley lines in U.S. cities and closed them down, paving the way for diesel-belching behemoths driven by the likes of Ralph Kramden.

In the 21st century, GM and the other auto giants apparently are still flummoxed by a competitor that runs on electricity–and they still need to tilt the playing field to win the game.

By all accounts, Tesla is an automotive game-changer. What else can you call a car without an engine that goes from 0-60 m.p.h. in four seconds or less? The all-electric supercar, the brainchild of PayPal founder Elon Musk, has earned the highest consumer and safety ratings ever recorded. Even at a stratospheric price of $60,000, there’s a waiting list to take delivery on Musk’s sleek creation.

Musk is doubling down on his gamble: He’s getting ready to build the world’s largest lithium battery plant, which will enable Tesla to bring the price of its cars within range of the lion’s share of the automotive market. Throw in free solar-powered charging stations and you can understand why he’s got Detroit’s Big Three (and every other carmaker) shaking in their hubcaps.

So are the old-line carmakers busy getting ready to rush out their own all-electric entries so they can go head to head with Tesla?

No, they’re busy lobbying state legislatures to keep ancient laws on the books to prevent Tesla–which offers its cars directly to consumers (online and even in shopping malls) rather than through dealerships–from selling its cars in most of the country.

The dirty little secret is that the Big Three became the Big Three years ago by forcing everyone to buy cars through dealerships that are regulated by the states. Whoever had the biggest dealership network ruled the market.

The automotive dinosaurs are pulling out the stops to keep the new kid off the block. This week, they convinced the New Jersey Motor Vehicle Commission to endorse a measure that will require all automakers to sell their vehicles through franchise dealerships, closing down Tesla’s direct sales in the Garden State, effective in June.

This back-door fix was welcomed, of course, by the New Jersey Coalition of Automotive Retailers (NJCAR), the car dealers’ lobbying association. According to NJCAR’s president, James Appleton, this issue is not about protecting car dealers but rather about protecting consumers.

“[It is] for the same reason you and I can’t go out and start selling stocks and bonds on the street corner,” Appleton told the Asbury Park Press. It’s the dealers who “push automakers to make sure warranty and safety recall work is undertaken and paid for,” he added.

Yeah, like all those GM dealers who insisted the automaker stop selling sub-compact cars when they discovered the ignitions were falling out, which may have caused dozens of fatal accidents.

Musk responded in a blog post.

“If you believe this, Gov. Christie has a bridge closure he wants to sell you,” he wrote.

 

 

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