When New Jersey governor Chris Christie spoke this spring at the Conservative Political Action Conference, he attacked Obamacare as an example of big government “trying to control the free market.” He also took a jab at Senate majority leader Harry Reid, saying Reid, who has lambasted the Koch brothers for donating millions to conservative causes, “should get back to work and stop picking on great Americans creating great things in our country.” A week later, Governor Christie banned Elon Musk from selling Teslas in New Jersey.
The ban is the result of new language adopted by the New Jersey Motor Vehicle Commission that requires car manufacturers to procure a franchise agreement if they want to sell in the state. The problem is that Tesla, founded in 2003, doesn’t sell its $60,000 luxury electric cars through franchises. The company operates on a direct-to-consumer model, requiring customers to buy their cars online. Although the new language was adopted in March, Christie said the regulation—purported to protect consumers from manufacturers—was always on the books and blamed Tesla for skirting the law.
But the law doesn’t protect consumers. It protects the existing market—that is, of gas-powered cars and the franchises that sell them—by eliminating competition. In defending it, Christie joins other conservative politicians who promote free markets while using regulation to protect industries close to home. Texas, for example, has also banned Tesla, even though the state is rife with politicians who oppose government regulation of businesses. And when it comes to its farmers, Texas is the biggest welfare state. Between 1995 and 2012, farmers there raked in $27 billion in federally funded farm subsidies—more than any other state.
Despite the booming online market, 11 states still banned direct-to-consumer liquor sales in 2012. Nine are red states, including Mississippi, Alabama and Florida, which all benefit from federal subsidies. And Arizona governor Jan Brewer, who bills herself as a free-market advocate, denounced EPA regulation of Arizona power plants, calling it too costly for local businesses and “poor public policy.” Yet Arizona too has banned Tesla.
Thus far, Tesla has benefited from President Obama’s promise to get 1 million electric cars on the road by 2015—but it is the only all-electric-car company to do so. The California start-up Coda went bankrupt last year after failing to secure capital, as did Fisker, which was backed by the government but defaulted on sales goals. Now Tesla’s biggest threat isn’t the lack of sales or capital (the company is worth $30 billion); it’s auto lobbyists who, threatened by a new major player, buy market protection from politicians. A super PAC of auto retailers in New Jersey spent $155,000 lobbying for the Tesla ban.
Elon Musk says he couldn’t sell Teslas in dealerships. Dealers would push gas cars before Musk’s vehicles. And Chevy, BMW, Honda and Nissan dealerships would be reluctant to stock Teslas, since each manufacturer has its own electric car.
Such red tape undermines not just the free market but also innovation and the greater mission to become less reliant on oil. Although one lawmaker in New Jersey introduced an amendment exempting electric-car companies from the ban days before it took effect, it shouldn’t be necessary. Banning online sales of electric cars doesn’t jibe with Republicans’ compulsory attacks on big government. Instead, it exemplifies how conservative free-market politics is not always absolute. Perhaps Governor Christie and other pro-business leaders should leave the markets alone and stop picking on American companies.