Tesla Motors had no stand, no personnel and no vehicles on display at the 2014 New York International Auto Show.
Tesla’s absence at such an important exhibit of the auto industry’s latest offerings may have seemed odd to some, but when looked at from a different perspective, it is more understandable.
American auto shows, like the one in New York, are put on by auto dealers. Tesla, as a manufacturer, attempts to sell its cars directly to consumers, without going through dealers as middlemen. So, existing franchise dealers and Tesla often find themselves in conflict.
To make a Bibical analogy, for Tesla to be exhibiting at the New York auto show, it would be akin to Daniel venturing into the lion’s den.
But a spokesman for the show said Tesla would not be prevented from venturing into that lion’s den, if the company desired to do so.
“Tesla has never exhibited at the New York Auto Show. It’s always been their choice not to,” said Chris Sams in an email.
Tesla, for its part, through spokeswoman Shanna Hendricks, said, “We chose not to participate based on our own marketing plans for the year.”
The New York show specifically is staged by the Greater New York Auto Dealers Association, an organization that recently reached a rather uneasy truce with Tesla Motors over its right to do business in the state.
Under an agreement reached late last month between Gov. Andrew Cuomo, legislative leaders, Tesla Motors, the GYNADA and the New York State Automobile Dealers Assocation, Tesla would be allowed to continue to run its five existing stores in the New York City area. But Tesla would be prevented from opening any additional locations unless it goes through a strengthened franchise law intended to require Tesla to sell its cars through a franchised dealership.
While that might seem rather Draconian, Tesla is receiving greater accommodation in New York than it is currently receiving in New Jersey, where as of April 15 Tesla stores had to stop selling cars. The Paramus location, for example, remains open for vehicles displays, information, test drives and service; actual sales, transfer of money, and vehicle deliveries are referred to the nearest Tesla-owned store in New York – in Manhattan’s Chelsea area.
What, exactly, is Tesla’s beef with dealers?
Elon Musk, Tesla’s chief executive, stated in a March 14 blog post concerning the New Jersey situation that ever since Tesla began selling cars in 2008, dealers have “sought to force us to sell through them.”
He added, “The reason that we did not choose to do this is 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. Moreover, it is much harder to sell a new technology car from a new company when people are so used to the old. Inevitably, they revert to selling what’s easy and it is game over for the new company.” He also said “an even greater conflict of interest” exists in dealers making “most of their profit” from selling parts and service from new cars that break down.
In response, Lou Roberti, a Westchester dealer who is president of NYSADA, said the franchised dealer system “serves the public well.”
He added, “Franchised dealers provide price competition, a ready source of trained technicians and parts for repairs and recalls, and create a market for trade-ins. Franchised dealers also provide thousands of good paying jobs in communities throughout the state.”
When the New York the show opened to the public on Friday, Mr. Musk was not in attendance; he was, in fact, in Hawthorne, Calif., presiding over the successful launch of a rocket by another of his companies, SpaceX, with supplies for the International Space Station.
If there was a wound that salt could be rubbed into here, it was that Mr. Musk then jetted off to Auto China 2014, the competing auto show in Beijing the same week; there he announced Tesla would not only be inaugurating sales of its Model S in the Chinese market for the first time – but also that Tesla would soon would build a manufacturing facility in China.
April 22, 2014