How Has NJ Direct-Sales Ban Impacted Tesla?

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April 17 (Bloomberg) -- Tesla Vice President of Business Development Diarmuid O’Connell discusses New Jersey’s Tesla direct-dales ban on Bloomberg Television's “In The Loop.” Jalopnik.com Editor-In-Chief Matt Hardigree and Bloomberg’s Matt Miller also speak. (Source: Bloomberg)

Impact at all from the new jersey dan?

Too early to tell.

We just went into a new model of upgrading our former stores as of yesterday.

I cannot tell you if there has been in effect.

There has been affected as far as public opinion is concerned and anecdotally, the reaction of our customers in the broader market to the idea of the ban.

And it came to be.

You are going head-on with various auto dealer associations around the country but you are eventually going to have to become rent if you want to be a bigger car company?

I do not know.

The answer to the question will be revealed by the market over the course of time.

If we become so big, that it makes sense to explore a more hybrid model, then that will become self evident as we received signals from the market that we need to expand more quickly geographically or we need to move more volume through the channel.

Right now, what we're doing did not require independent deals in terms of a volume of distribution.

We believe firmly our success is driven by the fact we are representing the new technology to the public ourselves.

I do not think it is a surprise to anybody that this happened in a state like new jersey.

But it is a surprise it happened in a state like texas, which you expect to be a free-market capitalist state.

What is going on in the southwest?

You are right that there is a deep irony and probably the clearest loss of regulations, with respect to car sales are defined in california, a state which has a represent -- reputation as overregulated, and texas, known for deregulation, is a place where we find ourselves with the most are tony and retail prohibitions.

A lot of history here probably not worth going into here.

Let me be clear.

I have had a tremendous and very positive reception in texas from legislatures and policy makers and that is a big market.

We have got -- customers have to jump through hoops.

It is one of our better markets.

We would like to invest more in texas.

I was in austin last week at the airport and they have a charges nation for free.

There were like eight teslas there at 6:00 in the morning.

A quick question, texas is one of the states in the running for a giga factory.

How much does this play into your ultimate decision of where to put that.

I will leave my comments to what has been reported to other channels in the past.

We are seriously pursuing the giga factory site locations.

It is a separate process from what we are doing right now.

Are you just saying it is the press's imagination?

No.

i would refer you to my comments several weeks ago, where i said the two issues our business matters and separate processes the -- but we are all one business.

You cannot completely divorce the two issues from one to the other.

Something to the effect of, where we do business going forward is intimately related on where and how we can sell our cars.

Your position now is this is a development for tesla but you used to work for the state department.

One of the more interesting things we've said about the giga factories, you will produce way more batteries then you need for cars but the military can be a huge fire of american-made battery systems.

If that part of the long-term plan, to sell to other people?

My brief experience in government and military aside, the production of giga factories will find its way into a number of applications principally as we discussed more recently, stationary storage applications who facilitate energy generation and storage.

That is a huge potential.

Batteries we developed our extraordinarily robust and have to be because they live in that environment.

They are energy dense and have an excellent cost profile which will only improve when the go to scale in the giga factory.

The opportunity in the market to give further life to wind and solar is fantastic and tremendous.

It is something we have not spent a lot of time on, but i have from prior experience, i am aware of some potential applications.

The scale is in the consumer market.

This explains supercharger locations.

Looks like tesla is up to a little bit more than just holding cars and selling them, but a bigger picture energy play.

One of the main complaints these dealership franchise unions make is that the service of the vehicle will be a real problem.

But you have said, you want to have something like to service stations for every store you have got him a country.

As matt points out, in a lot of cases, you will just drive out to somebody's car and deal with issues you know about a lot of times before the user does.

What do you say because it seems to be the only real complaint the unions have.

I hope you meant dealers.

Franchise unions here they are dealerships really.

Ok.

just so we're clear.

I'm not trying to pick anymore fights then i need to.

I have lost the ball on all the arguments they have had.

With respect to service, it is incontrovertible with many mechanical moving parts, a well designed and manufactured -- it will have a much lower service profile than a combustion vehicle.

Coming from and should point in the market, we've developed a system for all sorts of service.

The one that has gotten the most press is our ability to diagnose and service remotely many functions of the vehicle.

When that is not possible, we want to take care of our customers where it is most convenient for them.

You have service centers building on a 2-1 ratio.

Might get bigger than that.

Why can you not do both.

Why can you not sell to dealers as well.

He already touched on that in your first question.

In the far-off future, who knows, when we have a high-volume product.

Why can't you do both now?

Look at apple.

They sell directly and through best buy.

It is not necessary given the volumes we're doing.

You have to go back to our mission.

Our mission is electric vehicles.

We are not yet there.

There are fundamental disincentives in the dealer system for them promoting electric vehicles as they need to be promoted in the market to get traction and drive the technology into the masses.

We believe there is ample evidence for it in the market.

We will pursue this with energy for the future until we are confronted with the market reality we talked about.

Thank you for joining us.

Great to talk to you.

The vice president of business development.

Also joining us is the bloomberg news auto editor, jamie butters.

In his latest new column, he wrote that though tesla is attacking the franchise's most rectally, it is hardly a loan and pushing for changes, must we do well to reach out to other players.

What do you recommend he do?

Who else should he reach out to?

There has been a lot of effort to change how retail is done.

It goes back to the early 90's

This text has been automatically generated. It may not be 100% accurate.

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