NJ Sales “Ban” Not A Stop Sign For Tesla
New Jersey’s so-called Tesla sales ban may have less impact that many think, say cashtaggers. And many are buying on the recent weakness.
— alan goode (@alpagoode) Mar. 17 at 11:59 AM
Tesla shares rebounded 2% Monday after falling more than 4% late last week. Investors were concerned about the impact of a new rule, adopted by the New Jersey Motor Vehicle Commission last week, that prevents Tesla from selling its electric sedans directly to customers at its glossy mall stores. However, cashtaggers and traders now argue that the rule is not likely to hurt Tesla sales or stock. Sentiment is 79% Bullish, according to StockTwits analytics.
Despite the very public war of words between Tesla CEO Elon Musk and NJ Governor and potential presidential hopeful Chris Christie, the rule is not really a ban on Tesla sales. Tesla stores will remain open as galleries where potential car buyers can ask questions about the vehicles, get behind the wheel and check out the computer dashboard. Orders will have to take place outside the store, online. Arguably, that’s not a problem for most Tesla buyers as the car appeals to tech savvy types who may be less likely to need a handshake after the deal.
Tesla could also always open a dealership/service center in the state. Though Musk doesn’t sound particularly amenable to the idea. In a March 14 blog post to “New Jerseyans” he wrote: “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.”
Tesla currently has a service center in Springfield Township. Musk says the lack of service centers are because they are not needed. Tesla’s electric parts don’t wear like the parts in a combustion engine, according to Musk. Also, he said most service updates are provided over the air to Tesla’s on-board computer systems.
Buyers can still purchase a car in Manhattan. And New Jerseyans are used to heading into the city. More people commute to New York from New Jersey than travel between any other states, according to the census bureau. New Jerseyans in the southern part of the state can head to The King of Prussia Mall in Pennsylvania for an in-person sales experience.
$TSLA No big deal really – Just drive to NYC or Philly if you want a Tesla – New Jersey is always good at running customers off.
— Olympia Wash (@Constantine1) Mar. 17 at 01:51 PM
$TSLA If you want a TSLA car and can afford one . Going to another state and get one is no problem. Big dealers are scared .
— Liz B (@lizzyb) Mar. 17 at 02:26 PM
Even if New York adopts a similar rule, which is reportedly on the table, New York buyers can complete their purchase online. And similar rules in Arizona and Texas have not stopped the company from exceeding sales estimates in the past.
$TSLA This thing holds up even with rumors of no New York? if that isn't a buy sign I don't know what is… Bad news doesn't budge this
— Josh (@joshing) Mar. 17 at 01:47 PM
Other cashtaggers expressed confidence that Musk would see success taking Tesla’s case to court.
$TSLA Will not end up banned from many States.. They will fight its not constitutional or free markets or pro consumer choice
— Josh (@joshing) Mar. 17 at 01:48 PM
To be sure, some cashtaggers said Tesla’s valuation of 60X expected 2015 earnings leaves no room for even a hint of bad news.
$TSLA I love this company, but i just believe this stock is really misvalued due to all this speculation.
— BMENOT66 (@BMENPT66) Mar. 17 at 02:08 PM
But the bulls were behind the wheel Monday.
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