Tesla Motors Electrifies, Disrupts the Auto Industry

Tesla Car

More than 70 years after the death of Nikola Tesla, that name is still scaring the pants off of the establishment. Maybe even more so today, as leagues of traditional auto dealerships and service shops are cringing at the possibility that Tesla Motors could someday put them out of business.

Recently, the state of New Jersey effectively banned Tesla Motors from operating in the Garden State by approving regulation forbidding auto makers from operating under a direct-sales model. Passed unanimously by the state’s Motor Vehicle Commission, the new regulation requires all new auto sales that take place within New Jersey to involve a franchise agreement, a ruling that stands in direct opposition to Tesla Motors’ retail-store approach to selling cars.

It’s not all gloom and doom for Tesla Motors, however. In Ohio, the Ohio Automobile Dealers Association recently came to an agreement with Tesla Motors that would allow the electric vehicle manufacturer to continue direct-sales operations in its Columbus and Cincinnati stores with the approval to open a third retail location in Cleveland. That victory aside, Tesla Motors has still found itself facing an uphill struggle, having been banned in four other states aside from New Jersey: Arizona, Texas, Virginia, and Maryland. Colorado and Georgia have also imposed restrictions on Tesla Motors car sales.  Here’s a map of Tesla’s restrictions by state.

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Why the resistance? Among other reasons, proponents of Tesla Motors – in particular, those who see its zero-emissions vehicles as the new frontier in auto mechanics – say much of it boils down to the fact that it may render service shops obsolete. Described as “an app on four wheels,” the Tesla Model S sedan is a self-diagnosing machine that connects to the internet and runs routine performance reports and downloads patches and updated software. This is a never-before-seen, revolutionary approach to auto technology that only requires physical inspection every 12,500 miles. Service plans start at $600 per year and include standard part replacement, like windshield wipers and brake pads.

For die-hard Tesla fans living in restricted states, they can always just buy a Model S online.  But with a starting price of $70,000 per car, it’s not likely that any of us will wake up any time soon to a world where every car on the road bears the Tesla badge, despite the fact that Elon Musk’s new auto brand has won award after award (after award after award) for Car of the Year. According to Car and Driver, people still love their combustion engines, and that’s not likely to change any time soon. Recent reports show that U.S. sales so far have been low and slow, causing investors and analysts to question the viability of Tesla Motors’ growth.

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