Tesla Motors Sued By Car Dealers

An anonymous reader writes "Car dealers in New York and Massachusetts have filed a lawsuit that seeks to block Tesla from selling its pricey electric vehicles in those states. The dealers say they are defending state franchise laws, which require manufacturers to sell cars through dealers they do not own. Robert O'Koniewski of the Massachusetts State Automobile Dealers Association says, 'Those dealers are investing millions of dollars in their franchises to make sure they comply with their franchise agreements with the manufacturers. Tesla is choosing to ignore the law and then is choosing to play outside that system.'"

Comments

Translation:

[Local ID10T]

"Stop them! They are competing unfairly, by selling a product that will one day make ours obsolete!

We have engineered a law to protect ourselves from competition, and since we choose not to sell their product, we can use this law to keep them from selling their product either!"

Re:Translation:

[ShanghaiBill]

Is it? I thought it was," we have to obey these government imposed laws, you should too".

Except these laws were not "imposed" on the car dealers. The car dealers lobbied and bribed to get these laws passed. They are anti-consumer and anti-free-market. They are a result of sleazy special-interest politics.

Re:Translation:

[Anonymous Coward]

Except these laws were not "imposed" on the car dealers. The car dealers lobbied and bribed to get these laws passed. They are anti-consumer and anti-free-market. They are a result of sleazy special-interest politics.

Think it through. You get discounts off MSRP because the franchisee dealers compete with each other. If the manufacturer is also the only dealer, you will see the same price at every dealer; full MSRP. This law is pro-consumer, not anti.

Re:Translation:

[Anonymous Coward]

Except that consumers actually prefer no-haggle pricing. Many people, including me, find the dealership experience unpleasant. With manufacturers competing with each other vs dealers, it's more likely that each manufacturer will try to give you the best price, or at least appear to do so. With dealers, you just expect to have your wallet pillaged.

Re:Translation:

[Jeremi]

If the manufacturer is also the only dealer, you will see the same price at every dealer; full MSRP.

... and then the manufacturers would have to compete against each other on price, and the MSRPs would drop. I don't see a problem there. It's not like there is currently a lot of benefit to the consumer in having every car labelled with an irrelevant MSRP price that only suckers actually pay. Wouldn't it be nicer if the MSRP was actually a reasonable price, and you could just go in and buy a car at that price without haggling for hours? That's how most consumer purchases work, and it makes buying a lot less stressful.

Regulatory capture, crony capitalism

[timothy]

Whatever you do, please don't attribute this to actual "capitalism" or "the free market." When people talk about deregulation as a horror, realize this is the kind of horror that the deregulators seek to undo -- complacent vendors with a cozy layer of protection against new entrants.

Also, consider how much like these state franchise laws resemble gerrymandering district agreements -- both rely on passing in secret -- or at least in relative obscurity, in a process that regular folks rationally stay away from -- agreements to use the force of law to keep things tidy, stable, and predictable (and profitable, for those who've done the manipulating), rather than dynamic, risky, interesting, innovative, and other nice adjectives.

The laws that give special privileges to state-sanctioned franchise owners are bad, even if they have some small silver linings, whether the franchise is for transportation, banking, legal services, auto sales, gambling, or Dixie cups. Not that their history in the auto industry isn't interesting -- this podcast is enlightening on that topic: http://www.econtalk.org/archives/2009/06/munger_on_franc.html

Re:Good! Maybe they strike the stupid laws over th

[purpledinoz]

America is so focused on blaming republicans/democrats, that they don't realize that they both follow the same principal: Laws are for sale. Stop this blame game and wake up. Your government has been taken over by big business, and it is the American people who are getting screwed to ensure that the wealth trickles to the top 0.1%. It's so ironic that America's ideal is to spread democracy, while its own democracy is a corrupted mess.

Re:Elon Musk made a blog post about all this

[drinkypoo]

I suspect this is Tesla Motors trying to keep the entire supply chain under control (and thereby not allowing third parties to add a little margin on top of the sales price).

No shit. The question is, what's wrong with that? If you buy a car from them, you're free to resell it, as you own it.

The real problem with EVs from the perspective of the dealers of gasoline vehicles is that they are sold under an entirely different model. A gasoline vehicle is intended to produce a certain amount of service revenue. An EV is intended to minimize service. We had a bailout because people weren't buying American cars because they were shit. By all accounts they are somewhat better now, which has severely impinged on service revenues. Dealers get the service money and massively pad parts prices in most cases, and the automaker also pads the part prices, which is their prerogative (though sleazy) since they signed the contract for Delphi or Hitachi or JECS or Bosch or whoever to make sixty hojillion fuel injectors or whatever. If you make an EV designed to produce service revenue you can only do it in ways that will make the car unsafe (suspension defects) or ways that will make it look like shit and be immediately detectable even on a good test drive (interior flaws.) So basically, the problem with EVs from the standpoint of the major manufacturers is that they cannot intentionally make some of them pieces of shit in order to differentiate their other products which are made as well as they can make them, and which are still crappy compared to the imported competition. All you have to know about that is that the six-figure Ford GT had typical shitty Ford interior.