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Tesla Motors Inc

SUMMARY: Tesla Motors Inc. Chief Executive Elon Musk says in a lengthy blog post today that the electric car company is "evaluating judicial remedies" in response to a decision by New Jersey regulators to effectively bar Tesla from selling vehicles directly to consumers in the state. In a post headlined, "To the People of New Jersey," Mr. Musk assured would-be Tesla owners in the Garden State that they can still order cars through the company's website, and get them delivered to their homes. The company's two stores in the state will become "galleries" after April 1, where people can look at Model S sedans, but cannot discuss prices or buy a car. Mr. Musk's post is mainly a discussion of the history of franchise laws, and why Tesla is so determined to sell vehicles without using franchised car dealers - whom Mr. Musk says "have a fundamental conflict of interest" in light of their investments in selling gasoline-powered cars. Excerpt from Elon Musk's letter: "Some reassurances are also in order. Until at least April 1, everything is business as usual for Tesla in New Jersey. It should also be noted that this regulation deals only with sales, so our service centers will not be affected. Our stores will transition to being galleries, where you can see the car and ask questions of our staff, but we will not be able to discuss price or complete a sale in the store. However, that can still be done at our Manhattan store just over the river in Chelsea or our King of Prussia store near Philadelphia. Most importantly, even after April 1, you will still be able to order vehicles from New Jersey for delivery in New Jersey on our website."

1. Should Tesla be allowed to directly operate stores and sell to consumers in New Jersey?

2. Is there any defense for franchise automobile dealers in New Jersey that would justify the opposition to Tesla selling directly to consumers?

Solution Preview

1. Tesla should be allowed to directly operate stores and sell to consumers in New Jersey. The justification is that selling cars directly reduces the cost of selling and the customers get the cars at lower prices. The electric cars made by Tesla are environment friendly. They are less polluting and are less likely to leave a carbon footprint. In the ...

Solution Summary

The answer to this problem explains the business ethics of barring Tesla sales showrooms from New Jersey. The references related to the answer are also included.