--- title: "Tesla’s Troubles With Auto Dealer Associations Continue" id: "22173" type: "post" slug: "teslas-troubles-with-auto-dealer-associations-continue" published_at: "2014-03-19T22:26:26+00:00" modified_at: "2026-03-16T03:47:26+00:00" url: "https://associationsnow.com/2014/03/19/teslas-troubles-with-auto-dealer-associations-continue/" markdown_url: "https://associationsnow.com/2014/03/19/teslas-troubles-with-auto-dealer-associations-continue.md" excerpt: "Tesla Motors, which sells its electric vehicles directly to consumers despite laws against it some states, says that working within the dealership model would hurt the company's potential for success. And auto-dealers groups say that they're getting a bad rap..." taxonomy_category: - "Advocacy" taxonomy_post_tag: - "AssociationsNow" - "auto dealers" - "Business" - "electric vehicles" - "Tesla" taxonomy_content_format: - "Article" taxonomy_role: - "Association CEO / Executive Director" - "C-Level" - "Executive Team" - "For-Profit CEO / President / Owner / Partner" taxonomy_persona: - "Industry Professionals" --- [Home](https://associationsnow.com/) » [Articles](https://associationsnow.com/format/article/) » Tesla’s Troubles With Auto Dealer Associations Continue To say this is a charged battle is putting it lightly. Auto dealers have been fighting Tesla and its CEO, Elon Musk, [over the electric car company’s direct sales](http://associationsnow.com/2012/10/auto-dealer-associations-take-tesla-to-court/) —and getting [black eyes (opens in a new tab)](http://www.wired.com/business/2014/03/car-dealers-fear-teslas-plan-end-oil-changes-forever/) in [the press (opens in a new tab)](http://mashable.com/2014/03/17/tesla-dealers-electric-cars/) in [the process (opens in a new tab)](http://jalopnik.com/5949817/car-dealers-attack-teslas-illegal-apple-store-ripoffs) —for years now. But a flare-up of the issue in New Jersey, [where a state agency ruled last week (opens in a new tab)](http://www.bloomberg.com/news/2014-03-18/christie-blames-n-j-legislature-for-tesla-ban-on-direct-sales.html) that the company was violating state law by selling directly to consumers, is drawing new attention to the dispute. And that’s leading to some barbed comments by the parties. Here’s an example: “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,” New Jersey Coalition of Automobile Retailers President Jim Appleton [told The Verge (opens in a new tab)](http://www.theverge.com/2014/3/19/5525544/new-jersey-auto-dealers-respond-to-teslas-elon-musk) . “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.” Here’s a quick breakdown of where the two sides stand: **Tesla’s take:** In response to the New Jersey Motor Vehicle Commission’s ruling last week, [Musk defended his company’s decision (opens in a new tab)](http://www.teslamotors.com/blog/people-new-jersey) not to use the dealer system, writing in a blog post that “the auto dealers have a fundamental conflict of interest between promoting gasoline cars, which constitute virtually all of their revenue, and electric cars, which constitute virtually none.” As Tesla cars require less service than traditional gasoline-fueled cars and many problems can be fixed with over-the-air software updates, he argues, the vehicles also threaten the dealership industry’s business models, which rely heavily on service centers. This, he says, goes against the company’s mission. “I have made it a principle within Tesla that we should never attempt to make servicing a profit center,” Musk wrote. “It does not seem right to me that companies try to make a profit off customers when their product breaks.” Tesla says it may go to court over the New Jersey law but notes that for now its stores in the state will become galleries for its cars, which can still be purchased online. **The dealers’ defense:** [In a Washington Post letter to the editor (opens in a new tab)](http://www.washingtonpost.com/opinions/auto-dealers-provide-an-extra-later-of-accountability/2014/03/16/a9b8ff24-aba7-11e3-b8ca-197ef3568958_story.html) , National Automobile Dealers Association President Peter Welch argued that Tesla’s approach is bad for consumers because it prevents competition on price and would promote monopolistic practices by auto companies. “Cutting out dealers would not lower car prices; a factory-owned retail network requires the same investment in physical assets and the same operating expenses that dealers now shoulder,” Welch wrote. “However, taking dealers out of the mix would have a negative effect. Automakers have an economic disincentive to issue recalls or incur warranty expenses. Dealers earn money by performing safety and warranty work and, therefore, are always on the customer’s side.” He said dealers play a competitive role by handling trade-ins, selling used vehicles, and focusing on servicing. But Musk said the dealership system limits competition by preventing new companies from gaining a foothold on the market. The last automaker to do that successfully was Chrysler, he argued. “Since the founding of Chrysler, there have been dozens of failures, Tucker and DeLorean being simply the most well-known,” he wrote in his blog post. “In recent years, electric car startups, such as Fisker, Coda, and many others, attempted to use auto dealers and all failed.” The controversy extends far beyond New Jersey: The high-flying Tesla faces more challenges at the state level, including in [Ohio (opens in a new tab)](http://www.bizjournals.com/cincinnati/morning_call/2014/03/ohio-auto-dealers-target-tesla.html) and [New York (opens in a new tab)](http://www.timesunion.com/local/article/Tesla-challenges-automobile-dealer-franchise-5329497.php) . (photo by GabboT/Flickr) [Ernie Smith](https://associationsnow.com/author/ernie-smith/) Ernie Smith is a former senior editor for Associations Now. [More articles by this author](https://associationsnow.com/author/ernie-smith/) Tags: [#auto dealers](https://associationsnow.com/tag/auto-dealers/) [#Business](https://associationsnow.com/tag/business/) [#electric vehicles](https://associationsnow.com/tag/electric-vehicles/) [#Tesla](https://associationsnow.com/tag/tesla/) **Stay Informed** [Subscribe to our free newsletter](https://associationsnow.com/newsletter/) , *Associations Now Daily News*, to find out what’s happening in the association world every business day. ## You Might Like - [VideoUrban Land Institute- Project Recovery: Rebuilding Los Angeles After the January 2025 WildfiresSeptember 24, 2026](https://associationsnow.com/2026/09/24/urban-land-institute-project-recovery-rebuilding-los-angeles-after-the-january-2025-wildfires/) - [VideoThe Career Moves Every Association Leader Needs Right NowSeptember 24, 2026](https://associationsnow.com/2026/09/24/the-career-moves-every-association-leader-needs-right-now/) - [VideoNCRA: Safeguarding Cancer Surveillance: An Advocacy Response to FY26 Budget ThreatsSeptember 24, 2026](https://associationsnow.com/2026/09/24/ncra-safeguarding-cancer-surveillance-an-advocacy-response-to-fy26-budget-threats/) - [PodcastAssociations NOW Presents: All for the Love of Chicago: Rethinking the Destination ExperienceSeptember 10, 2026](https://associationsnow.com/2026/09/10/associations-now-presents-all-for-the-love-of-chicago-rethinking-the-destination-experience/) ## Comments **Comments are for ASAE members.** [Learn more about comments on this site.](https://associationsnow.com/comments/) [Log in](https://associationsnow.com/login?redirect_to=https%3A%2F%2Fassociationsnow.com%2F2014%2F03%2F19%2Fteslas-troubles-with-auto-dealer-associations-continue%2F%23comments) to your member account or [join ASAE](https://my.asaecenter.org/select-a-membership-type/) !