The Ohio Compromise: Or the Buckeye State Allows Tesla's Direct Car Sales While N.J. Shies Away

By Jacob Brown | March 27, 2014
Much a brouhaha has been made over Tesla Motors' sales practices, electing to hold privately held showrooms and offset service centers over franchised dealers and the rigmarole normal automakers use to sell cars. Recently, New Jersey chose to ban its Tesla dealers from selling cars only to have one lawmaker propose an exception to the rule. The claim was that New Jersey shoppers would seek Tesla cars from Pennsylvania or New York, taking their tax dollars elsewhere. Remember, Tesla buyers are affluent, and they can usually do whatever the heck they need to get an electric car home. In Ohio, a compromise was made to allow Tesla to keep three sales centers open. They would allow customers to purchase the cars on-site and take delivery at their homes. Obviously, major metropolitan areas--Columbus, Cleveland, and Cincinnati--would reap the rewards of such a decision.
In New Jersey, an eight-member panel of lawmakers, some chosen from Gov. Chris Christie's cabinet, voted unanimously to ban Tesla's direct sales methods from being used in the Garden State. Tesla's spokespeople say that Christie reneged on his promise to delay the ban so that they could find some compromise. Florida Senator Marco Rubio has also weighed in on the decision, saying that the ban disallows a free-market economy from working. While the Florida Auto Dealers Association has taken no action against Tesla because of its size, they say franchise laws were created to protect consumers. In reality, franchise laws were created after automakers didn't have the ability to distribute their cars nationally and they were worried that the now-powerful automakers would start undercutting their franchises at direct prices. This is the first time Rubio and Christie, both potential 2016 presidential candidates, have drawn stark differences from one another. As for Tesla, consider the Ohio Compromise a small victory if nothing else. Sources: Automotive News (Subscription required), Bloomberg