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No Teslas Allowed: New Jersey, Christie Bows To Dealership Lobby

Tesla Motors CEO Elon Musk has one message for the state of New Jersey:

“Legalize it.”

I’m not confusing messages with Colorado and marijuana legislation. Musk wrote an open letter to the people of New Jersey sharing his concern over the recent law, passed by state Congress and signed by Gov. Chris Christie, that bans the direct sale of automobile from manufacturer to consumer–the model under which Tesla operates.

The new law follows Arizona, Texas, Virginia and Maryland who all carry the same legal restrictions. The laws don’t outlaw Tesla Motors specifically. They’re based off clauses and precedents set between dealerships and manufacturers that have existed for decades. The intent was to protect dealerships from the big producers, like General Motors or Ford from undercutting dealers by selling directly to consumers for lower prices.

There was a time when manufacturers needed dealerships, so the rules were mutually beneficial to both sides. Fifty years ago, buying a Mustang directly from Detroit would be difficult, impractical and expensive if you lived in, say, California. So, the manufacturers sold to the dealers in bulk and agreed not to engage in direct sales. In turn, dealers were (and in New Jersey, still are) required to maintain a minimum square footage and have an attached service center. But in 2014, buying a car directly from the source is easy, and that’s why Tesla wants to skip the middle man.

Direct sales aren’t just for Tesla’s bottom lines. Musk notes in his letter to New Jersey that unless you’re working with the Big Three (GM, Ford and Chrysler), selling through a dealership is a great road to nowhere. DeLorean, mostly recognized for its tenure in the Back to the Future trilogy, is a notable example of an American auto startup that couldn’t cut it within the confines of Big American Auto.

So what does this mean for Tesla? The electric motor company has two stores inside high-end malls in New Jersey that must close since they don’t meet the square footage requirement and don’t have service centers. Tesla vehicles don’t need oil changes and regular maintenance like gasoline vehicles, so Tesla isn’t relying on service centers as part of its business model (even software updates are done over the air).

Photo by Phil Denton via Flickr

So who’s getting screwed by this new law in New Jersey? Not Tesla, really. Residents who want the hot new electric vehicle can simply cross the state border, buy one, and drive it home. Such is the case in Arizona where some affluent buyers even pay someone else to drive a new Tesla home from California. Used car dealerships don’t win or lose in this deal since there’s always a market for pre-owned vehicles. Companies like DriveTime, who offer pre-owned vehicles and financing in-house, can fully operate with or without the law.

The real losers in this battle are the people of New Jersey who must continue to buy cars through the conventional, outdated system now legally enforced in the Garden State. Tesla’s are still available in 42 states, but Musk’s company is currently fighting new legislation in Ohio and New York that mimics the law in New Jersey.

Christie’s $32.1 Billion Budget Counts on Rising Tax Revenue

By Terrence Dopp, BusinessWeek.com

New Jersey Governor Chris Christie proposed a $ 32.1 billion spending plan, the biggest in five years, that counts on tax revenue increasing the most since before the recession began.

The budget, which is $ 2.4 billion more than the plan enacted last year, would reduce income and business taxes while making a $ 1.1 billion pension payment, the highest in state history. It would increase school aid by $ 213 million and cut funding for distressed cities.

“Today, we will both maintain our fiscal discipline, and drive New Jersey into a new era of growth,” Christie said in a speech to lawmakers. “Today, it is time to put the New Jersey comeback into high gear.”

Christie, a 49-year-old first-term Republican, is calling for a 10 percent income-tax cut over three years. He predicts state revenue will rise 7.3 percent in fiscal 2013, which begins July 1. He has said his tax cuts, which will cost more than $ 500 million next fiscal year, will spur the economy.

Democrats, who control the Legislature, say Christie’s income-tax cut proposal favors the wealthy and that he should focus on easing the property-tax burden. Christie has accused Democrats of ignoring taxes and job creation while spending the past month on a gay-marriage bill that he vetoed Feb. 18.

Slow Recovery

Rising pension costs and a slow recovery from the longest recession since World War II led Standard & Poor’s, Moody’s Investors Service and Fitch Ratings to lower New Jersey’s credit grade last year. While revenue in the first half of this fiscal year rose 3 percent compared with the same period of 2010, it was $ 326 million less than targets.

RE Tea Party » Taxes

Christie’s New Jersey Tax Cut Imperiled by Increase in Debt, Pension Costs

New Jersey Governor Chris Christie will say next week how he’ll pay for the first phase of a 10 percent income-tax cut for the second-wealthiest U.S. state’s residents even as he deals with as much as $ 1.3 billion in higher costs for pensions and debt.

Christie, a 49-year-old Republican who’s set to deliver his third budget on Feb. 21 in Trenton, declined to offer specifics of the spending plan for the year starting July 1. He’s expected to call for $ 150 million in income-tax cuts as a “down payment” on his pledge to cut the levy across all brackets.

While revenue for the six months through December rose 3 percent compared with the same period in 2010, it was still $ 326 million less than projected in the current $ 29.7 billion budget. Rising pension costs and a slow recovery from the longest recession since World War II led Standard & Poor’s, Moody’s Investors Service and Fitch Ratings to lower the state’s credit grade last year.

RE Tea Party » Taxes

Christie’s New Jersey Tax Cut Imperiled by Increase in Debt, Pension Costs

RE Tea Party » Taxes

Chris Christie won’t run for president in 2012

By JONATHAN MARTIN & MAGGIE HABERMAN & ALEXANDER BURNS | Politico

New Jersey Gov. Chris Christie formally announced that he wasn’t going to join the presidential race on Tuesday, saying he’d come back to his original feeling about staying out despite reconsidering in recent days.

“In the end, what I’ve always felt was the right decision remains the right decision today. Now is not my time. I have a commitment to the people of New Jersey that I simply will not abandon,” Christie said, speaking to reporters in Trenton. “People sent me to Trenton to get a job done, and I’m just not prepared to walk away.”

Christie repeated that he believed that Obama has “failed the leadership test.”

But he pledged to stay focused on his job as governor: “New Jersey, whether you like it or not, you’re stuck with me.”

Christie said he’d felt obligated to reconsider after being approached by so many people in recent weeks, but his decision is final, explaining, “I think they understand that this was a longshot for them to change my mind in the first place.”

Christie left the door open to a possible endorsement of another candidate, but made no commitments. He also brushed off talk of running for vice president, saying: “I don’t think there’s anybody in America who’d say my personality is best-suited to being a number two.”

RE Tea Party » 2012 Elections

Is Christie conservative enough for Tea Party?

By Mark Egan, Edith Honan and Steve Holland, Reuters

NEW YORK/WASHINGTON – Is tough-talking Republican Chris Christie tough enough for the Tea Party?

Christie’s potential entry into a 2012 White House race dominated by conservatives would electrify the campaign but trigger scrutiny of his record as a Republican governor in heavily Democratic New Jersey.

Hailed by conservatives for staring down public employee unions in New Jersey, he may face questions about whether his beliefs on such hot-button issues as illegal immigration and climate change match up with the conservative Tea Party movement expected to play an important role in choosing the Republican nominee.

“I think there is an interesting possibility that the more people look at him, the more people will have concerns,” said Ryan Rhodes, chairman of the Tea Party in Iowa, a key early voting state.

“A lot of people see everybody as Superman until they get in the race, and all of a sudden they are just Clark Kent,” Rhodes said.

After ruling out a presidential run for months, Christie is now said to be wavering under pressure from Republican donors unhappy with the current field. The New York Post said he might announce his candidacy as early as Monday.

RE Tea Party » 2012 Elections