New York Bill Attempting to ban Tesla Sales

The current laws were put into affect to protect franchise dealers, that the auto makers already licensed, from manufacturer own stores that got product at a discount and didn't have franchise fees. Imagine a corporate owned McDonalds selling at half the price of the franchise restaurant down the street. That's basically want pre-existing franchise car dealers were, or felt they were, facing when these laws came to be in the years after WWII.

There aren't any pre-existing franchise Tesla dealers to be threatened by Tesla corporate. So these laws should have no bearing on them. When the dealers associations attempt to force Tesla into franchising, which is the same as forcing Wendy's into it, Tesla fights back because they don't want to franchise. Forcing them to is anti-Capitolism. When that doesn't work, the dealers get laws passed that ban Tesla.

The dealers are afraid of Tesla stores leading to other manufacturer stores opening up. They are being short sighted though. If they had just let Tesla be, at most the only other direct manufacturer car stores that would happen are from other new car company start ups or new to the US ones like BYD or Tata. The biggies already have franchised dealers which would be protected by those laws.

Of course, they didn't want to lose the possiblity of getting their own Tata or BYD dealership. So they are choose to fight Tesla. Which meant fighting Musk, who has said he will take these cases to the Federal courts. There, the laws banning Tesla should be struck down as violating the interstate commerce clause. The old Franchise protection laws may also face judicial review then. Which could be bad for the dealers.

 

Excellent summary Trollbait!

 

Troll part of it is Tesla is very successfully selling into the luxury car space above 80K outselling MB, BMW and Porsche. If dealers who are losing sales to Tesla an eliminate the competition they will try. Remember DeLoren

 

Or a closer state that allows Tesla sales. Time for RI to step up

 

At most only one dealer is needed per state . . . with a flat bed car hauler and even that can be contracted from a repossession company. Sell the car; deliver fully charged; pickup repairs with a Leaf loaner.

Bob Wilson

 

IANAL, so take the following with a grain of salt: I am reminded of stories of nasty-corporate suing little-suzy's OJ stand for patent infringement. It turns out that IP protection relies on precedent, so that if Suzy is left alone that leaves an opening for more serious (to nasty-corporate) patent loss.

 

The test will be if NYS will collect all the registration, other fees and taxes as NY residents import their own Teslas.

The franchise laws serve a purpose, mainly to protect local businesses within the state, and to some degree the consumers within the state. Auto dealerships have traditionally been one of the most prolific local business spenders, buying lots of local advertising as well as supporting lots of youth programs. Let's not forget that local business is good for the community.

 

When you register a car in New York it doesn't matter where you bought it; you have to pay the sales tax for your locality along with all the other fees.

And if Tesla is forced to sell through dealers, someone has to pay the dealer's profit on the deal.

Guess who that would be...

 

I have heard Mafia and Drug dealers say the same.

 

Hmmm. let's me see...
A Tesla dealership being a internet terminal kiosk in the shopping mall?


Why the political backlash?

Local car dealerships are often some of the biggest local advertisers for TV, radio, and newspapers. Owners of local car dealerships are often some of the bigger political campaign contributors and often they are one of the big money sources for local charities too.

The other issue is Lemon Laws and the leverage a state government has over an auto maker if something goes wrong with a car - local dealership represent something state government can go after via state courts using common law. An internet purchased car means that federal court would be required via remedy because it would be an interstate commerce dispute sooo having a corporate agent registered locally in that state changes the legal remedy procedures.

An internet Amazon-like outsourcing of a local oligopoly monopoly
is a major money-power shift paradigm - This is big money!

Yet.. battery electric vehicles (BEVs) require much less maintenance than a convention vehicle so an EV only dealership service center would only be required mainly for repairing accidents and doing factory recall work... I can't help thinking that a Tesla mechanic would be more like that lonely Maytag TV commercial Repairman - except the Tesla mechanic would more likely be a lonely robot instead.
Since Tesla is already planning on a nation wide network of supercharger station in the near future, Tesla supercharger stations could double as the regional dealerships!

 

Yeah that's the ticket! Every three to four years - a Tesla dealership will be selling these a new more powerful battery pack with software upgrades ( with a customer choice of applet for either Apple OS or Google Android or Microsoft Windows OS) - so Tesla S owners will be trading up their old power pack for the newest and more powerful pack every three or five years... Tesla will be making money by the bucket loads...

 

the franchise laws might get in the way of selling/upgrading packs as well. The supercharger's are a free service to properly equipped Tesla's so there isn't a "sale" so far. Swapping battery packs probably crosses the line.

Tesla has the challenge of reshaping the automotive world as part of introducing their EV. There is an entire eco-system built upon the old industry.

In Texas, a couple of legislators suggested a reasonable work around to Tesla but that seems to have been dismissed. I suspect the problem is that Tesla would like to operate in a uniform manner throughout the US, if not globally, and having unique operating methods in each state would open another Pandora's box for a manufacturer. Think about having an Oregon consumer protection office suing Tesla because Tesla gives Florida owners more supercharging stations for the same vehicle sales price.

 

Barbershops and Hairdressers as well.

 

Telsa's "dealership" issue is one IMHO that state dealers want a slice of the pie. Koons here in the DC area owns most of the market, along with Rosenthal....they don't like it one bit that a company wants to set up sales rooms to sell cars direct from the manufacturer. Cuts in to their profits for after the sales.

My fiancé took his Yaris to Koons Tyson for the recommended service about 6 months ago. They failed in rotating the tires as they charged for! I marked his tires beforehand. They also charged for an cabin air filter. That seems to be have done, yet on his last oil change at Jiffy Lube hey noted that a non– standard sized filter was jammed in there!

And in buying my Prius, they tried to screw me over on thir 20% over "bluebook" trade in offer. Got over $9k for my 2001 Baja at CarMax Laurel MD - verses a max offer as I was signing at CarMax from Koons of $7k! All sort of lies during the process from Koons.

I will say so far I have been treated well by AutoNation Leesburg.. Putting them on notice that I am watching did wonders. I point out the level over oil when I bring it, as well as the color. And I check it after driving it around their local area.

 

At this point the bill is just a proposal?

Let's hope some type of common sense prevails.

What I don't like recently, with stories like this and others, is the seeming growth of Anti-Alternative automobile mandates.

Seems to me like in one breath, and often even in action- local and federal government and politicians will support the idea of Hybrids, Electrics and Alternative Automobiles but with the next breath undermine their sales by creating hoops and barriers to their success.

So in one turn to the camera we get "Look at this wonderful infra-structure of charging stations we are creating!" But with the next turn to the camera it's " We need to tax hybrid owners because they aren't paying their fair share of road taxes". Or in this case, we need to make sure nobody in NY can buy a Tesla.

It's not really the specifics, because I think it can all be worked out. It's more just the general attitude that seems to be rising up.

Instead of looking for reasons Tesla's shouldn't be sold, or making their purchase more difficult, and/or instead of making efficient or alternative automobile ownership more expensive, shouldn't everyone be striving to make it an easier more convenient choice to make?

 

Yeah, letting Tesla go might mean a manufacturer with franchise dealers might try to set up direct to customer sales. But Tesla didn't have any pre- existing franchise dealers, so I don't see how those other makes can use it as a precedent.

 

"new" GM briefly argued that they didn't have any pre-existing franchise dealers as well after their restructure.

 

I was thinking about GM too. They tried to shut down (? 1/3rd) of their dealers and encountered furious opposition. In the end some closed but no where near as many as GM wanted.

I have never understood why GM cared if a dealership was profitable or not, but the point for this discussion is that the franchises wield considerable political power.

 

There are no high minded principles in play here. It's all about the profitability of monopolies. If you want to see one of the biggest perversions of the distributor franchise, look at Southeastern Toyota. The short story is Toyota got stuck into giving "Southeast Toyota" (Southeast Toyota Distributors - Wikipedia, the free encyclopedia) a distributor monopoly for all of the southeast. This removal of all local competition allows them (not Toyota USA) to tack on at least $500 more than most of the rest of the Toyota's sold in the country.

Elon Musk realizes that a distributor network can kill off his company. The dealers will always steer customers to their most profitable cars, not their best cars. Tesla is not going to give in on this since their existence is at stake.

 

Having read the entire thread there has been much great discussion, especially dealing with the dollars and cents. I think that is very true, but for a guy like Elon Musk I think the thought of giving up control would be just as important. With a direct sales model Tesla can control the experience for sales and warranty service and giving that away to a 3rd party would kill Musk. How many times have their been rants about dealers here on PC and at some point it always boils down to the fact that the dealer is not controlled by Toyota?