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TESLA: A unique company being punished by US legislators

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Tesla Motors is a producer of automobiles with unique qualities and it is a company with a vision to change the automotive industry completely. Its vehicles are entirely battery powered, producing no emissions. This in itself is not new, but what is a radical change is that Tesla has been able to produce a battery which can completely outperform traditional batteries, producing vehicles with much higher ranges and performance data, even in advance of its petroleum powered counter parts.

This technology has seen Tesla leapfrog the traditional giants in the global automotive industry and they have been unable to produce a competitor product as yet, instead buying Tesla batteries for their own models while they attempt to catch up. However the future is not necessarily completely rosy for the new auto manufacturer. There has been a spate of incidents where its vehicles have caught fire and this has caused a depression in its previously unstoppable share price growth.

The main US automotive manufacturers have been fighting back and using their leverage and large resources to cause Tesla problems. For instance today (March 12th) it has been announced that Tesla’s sales model, of selling directly to consumers rather than using a national dealership network is to be banned in New Jersey, which is the third state to implement such a ban. This announcement caused an immediate drop in the company’s share price and the move has been dubbed the “anti- Tesla legislation”.  Customers will be able to leave the states where this has been enacted and buy the product in a neighbouring state, but the inconvenience of doing so to counteract this seemingly punitive measure, may put off potential new customers. The automotive lobby has been blamed by some commentators for using its leverage to create an unfair playing field.

Tesla is understandably disappointed by this ban and wrote a statement on its blog to discuss the subject:

“Neither Tesla nor the taxpayers of New Jersey have been able to participate in any of the analysis or been granted a hearing as requested last year when this was first proposed. Despite being the subject of the regulation, we were only able to obtain information about today’s meeting with less than 24 hours’ notice and in direct contravention of assurances by the Governor.”

Tesla suggests that it has been left out of the decision process and no formal suggestions or arguments for why the ban is necessary have been put to Tesla. It does seem an unusual step for states to punish a company which is creating jobs and growth and it remains to be seen whether this will cause any serious problems for the company.

Take a look at our Tesla: The Californian start-up that made head way on the automotive giants – Case Study.

Tesla’s blog piece on the subject can be found here.

Posted in Automotive.

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