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

Fuck those greedy bastards.

[LeAzzholeChef]

They cant sue under the franchise laws. Because the law is under combustible motors. It never included electric driven vehicles. Therefore this case should be thrown out of court on grounds of greed and control.

Re:Fuck those greedy bastards.

[fustakrakich]

I don't think I would buy a car from Combustible Motors, but to each his own

Re:Fuck those greedy bastards.

[Nerdfest]

Out of curiosity, what was the original intention of the law? It seems a bit pointless.

Re:Fuck those greedy bastards.

[MickyTheIdiot]

"To Help My Corporate Buddies."

When there is only one explaination is possible it has to be true.

Re:Fuck those greedy bastards.

[MickyTheIdiot]

So does it apply to ATVs? Does it apply to Golf Carts? Does it apply to motorized scooters you can get a K-Mart?

Seriously... I don't know the answer. There is a definition somewhere but I doubt that is it.

Re:Fuck those greedy bastards.

[Lunix Nutcase]

Probably to prevent the auto manufacturers from driving the independent dealers out of business and being the only source of buying vehicles.

Re:Fuck those greedy bastards.

[Charliemopps]

Well, franchise laws should be thrown out all together... along with Liqueur distribution laws, and all the other nonsense left over from the 50s that was designed to keep out competition.

Re:Fuck those greedy bastards.

[Anonymous Coward]

I'd say cue the right-wing retards that present a bunch of lies in order to support their failing party, but you already did that.

How about some facts (look 'em up!):
Bush started with a surplus and left with a trillion dollar deficit.
The deficit has been decreasing since Obama took office.
Unemployment has been decreasing since Obama took office.

Instead of just parroting Fox News lies, why don't you present some facts to back up your fucking insane opinions.

Re:Fuck those greedy bastards.

[Anonymous Coward]

Cue all the idiots with their "yeah but republicans do bad stuff too, so there!"

No, cue all the people who want a sane discussion with their "Shut the everloving fuck up about the goddamned election you LOST already, this discussion is about a statewide car dealership law in New York, now stop trying to change the subject, you prosecution-complex-suffering asshole".

So, shut the everloving fuck up.

Re:Fuck those greedy bastards.

[jythie]

I really, really hope they loose due to that element. I utterly loath these car dealers, and their 'but we invested money! we should have the law protect us!' argument just doesn't do it for me....

There are times and places where regulation is useful, but this type of protectionism that forces companies and consumers to go through some cartel of private businesses simply because they got a special law just.. it doesn't do the population any good.

Re:Fuck those greedy bastards.

[MightyMartian]

Raising taxes can most certainly raise revenues. Don't confuse your political ideology with actual economics.

Re:Fuck those greedy bastards.

[Twinbee]

Oh so to avoid the middleman to increase efficiency you mean? I wish more companies would do that.

Re:Fuck those greedy bastards.

[Lakitu]

are you serious? It's the complete opposite.

If manufacturers could sell through dealerships they owned, they would own every dealership. The franchise law is supposed to enable locals to own local, small business dealerships and still have an "in" with the major manufacturers. Without it, the major manufacturers would all just be the 800-lb gorillas they are, leveraging their giant corporate size for the benefits of more control.

It'd be nice if you could spend a moment to actually consider why it might be before complaining, since your argument about political quid pro quo with corporations is actually working against itself here.

Re:Fuck those greedy bastards.

[LordKronos]

Actually, many states have a reciprocal tax agreement that coordinates how taxes are handled when a new car is sold across state lines. I live in Michigan and bought my car in Illinois. Those 2 states have a reciprocal tax agreement. I was originally going to buy from Ohio, and those states also have the same reciprocal agreement.

A reciprocal tax agreement basically says when you live in state X and buy in state Y, you pay state Y the lesser of both state's sales tax. Then when you register it in state X, you pay state X's tax rate but get a credit for whatever you paid to state Y. So, here's 2 examples:

1) State X = 5%, State Y = 6%
You buy in Y, and you pay Y 5% tax. When you register in state X, you've already paid 5% tax (to state Y) so you owe nothing to state X.

2) State X = 6%, State Y = 5%
You buy in Y, and you pay Y 5% tax. When you register in state X, you owe 6% but get credit for the 5% already paid, so you only owe state X an additional 1%.

Re:Fuck those greedy bastards.

[Anonymous Coward]

Both sides can pose a clearly untrue straw-man to demonstrate the righteousness of their position. Increasing taxes to 100% will certainly destroy the economy and reduce productivity and overall tax revenue. Likewise, reducing taxes to zero obviously will result in zero government income.

So the real argument is where between those extremes is government income optimized while maintaining maximum productivity. There are plenty of economist lined up to discuss the subject.

The second argument is more philosophical. How much "should" the government tax. Should it be the minimum required to do the minimal functions that only the government is able to do, or should it be an optimal amount in order to do everything the government can do, or should it be an above optimum amount in order to redistribute wealth even if that is less efficient overall?

Re:Fuck those greedy bastards.

[Anonymous Coward]

I really wouldn't have a problem with that. The byzantine system of distributors, dealers, invoice pricing, dealer kickbacks, rebates, dishonest service requirements and everything else that makes car sales so opaque is not something worth defending. Does it really make a dimes worth of difference to me if the local dealership is owned by a guy on the city council (aka, local small businessman) or the corporation?

I live in a small town and see nothing but the bad side of local ownership. One of the local dealer is so bad that they have refused to do warranted service on cars not purchased locally and had a horrible reputation. Eventually they were threatened by corporate with losing the franchise and improved a little. Eventually the old coot that owned the place retired and passed it on to someone slightly less insane.

IMO the local ownership creates far more negative local influence than corporate ownership would have.

Re:Fuck those greedy bastards.

[Anonymous Coward]

I don't see it that way.

Look at the petroleum industry. There are corporate locations and there are franchise locations. Both exist side by side, and most consumers can't tell the difference.

GM, Ford, Chrysler etc. sell through dealerships because they move more product. If they wanted to sell it themselves, I am sure they could muster the political clout to get the laws changed in their favor.

I haven't researched it, but I am guessing these laws are the result of a few politically connected dealers who slid them in. I am sure the politicos didn't just decide to pass a law.

I hope Tesla wins the lawsuit.

Re:Fuck those greedy bastards.

[Khyber]

No, it only applies to MOTOR VEHICLES which meet certain definitions. One of those definitions is that it must BURN or Combust, by the definitions of fuel in that chapter (60? 61?) and pursuant to definitions further found in chapter 90.

Electric motors are not even counted, even under the "Alternative Fuel Vehicles" section, because, again, electric cars do not meet the definition of a fuel-burning vehicle.

Re:Fuck those greedy bastards.

[Khyber]

And yet you failed to read the mentioned other chapters, which link again to even more chapters, which shows that you're totally fucking wrong, because electric motors don't even fall under the 'Alternative fuel Vehicles" because the legal definition of FUEL in the state.

Try again when you can read all of the laws and understand them, and not take just one into account, eh?

Re:Fuck those greedy bastards.

[AF_Cheddar_Head]

Do you seriously believe Gore would have invaded Iraq after 9/11?

A clear cut case where it made a difference who was elected.

Re:Fuck those greedy bastards.

[matunos]

Except there's still more than one car manufacturer.

Re:Fuck those greedy bastards.

[Lakitu]

Gas stations are completely different, because gas is largely the same between all of them, making it fungible. It's also incredibly cheap. The giant corporations like ExxonMobil wouldn't gain much from pushing local owners out of the market, since other oil corporations can compete with them on the exact same product across the street. They would gain comparatively nothing in exchange for the hassle of directly running tens of thousands of gas stations each. Indeed, some of the major oil corps have gotten out of directly owning local gas stations because of the negligible benefit.

Automobiles are hugely expensive and, while they perform similar functions (travel), they are not interchangable like gallons of gasoline are. On top of that, there are relatively few car manufacturers, especially when adjusting for price brackets.

The margins, markups, and volume are entirely different. Oil Company A can open up stations selling gasoline across the street from every location where Oil Company B has a station in a given region, but Ford can't open up a dealership across the street from a GM dealership and start selling GM automobiles, and they wouldn't be able to undercut for the same product. The profit margins for automobiles are determined by huge production costs and are much more static.

Consumers who can go to any gas station in any given area would be forced to put up with only a few manufacturers dealing. The effects on maintenance and repair are a lot less clear, but they would be similar or slightly more consumer-friendly at best, while being much, much worse on the downside.

That said, I agree with the spirit that Tesla should win the lawsuit. Ideally they could be exempted, or the laws could be modified to ensure they still existed for their intent, rather than pushing a newcomer out of the competition or punishing locally-owned dealers. Or Tesla could offer the local dealers the opportunity to sell Tesla cars as well.

But that doesn't make the laws a political favor to the auto industry!

Re:Fuck those greedy bastards.

[Jane Q. Public]

Precisely. Since they passed such regulations in the U.S. (see my Wikipedia link above), the number of MAJOR native manufacturers has gone from 14 to 9 (if you count CMC as one, which you probably should).

Not only that, in the last year listed, 1998, not one of them sold a million cars. Foreign competition is largely responsible. And it would not be possible without restrictive regulations.

People need to think before they start spouting this "Oh my god, let's kill the monopoly" B.S. And maybe look at some actual numbers. Because not only was there not a monopoly in the U.S. at the time, there are fewer manufacturers now than then! And they have been less profitable.

Re:Fuck those greedy bastards.

[Fred Ferrigno]

It benefits some corporations at the expense of other corporations and consumers. That's not quite "the complete opposite".

Re:Fuck those greedy bastards.

[CapOblivious2010]

Wait, how can adding mandatory middle-men NOT be at the consumer's expense?

Re:Fuck those greedy bastards.

[iCEBaLM]

If manufacturers could sell through dealerships they owned, they would own every dealership.

Would they?

Apple has their own stores, but they aren't the only place to buy Apple products.

And who cares if they were? What's wrong with companies selling their own products retail if they want?

Re:Fuck those greedy bastards.

[guises]

Not only that, in the last year listed, 1998, not one of them sold a million cars. Foreign competition is largely responsible. And it would not be possible without restrictive regulations.

You're complaining that unspecified regulations make the market too free? The cars designed in Japan (but manufactured here) were cheaper and better made than the American designed ones... Americans love crappy rust buckets, if only regulations had let us buy them instead of those functional and competently designed cars (::spit::) from foreign competitors.

What nonsense. I searched through your comment history looking for the Wikipedia link you mentioned and couldn't find it. I did notice you talking about how Obama's birth certificate is faked.

Re:Fuck those greedy bastards.

[Jane Q. Public]

"Monopolies don't exist in a free market system."

Even Adam Smith, who pretty much defined the concept of a free-market "system", disagreed with you. Try reading his book.

Even 230+ years ago, Smith wrote that a free market could lead to monopolies, and so a reasonable body of antitrust laws would be required to keep everybody playing within the rules.

"Absolutely free" markets, with no antitrust, is not a recent idea but it is a destructive one. Such a market would either fail or become fascism in short order.

Re:Fuck those greedy bastards.

[WaywardGeek]

Since down below there's a bunch of PO-ed Romney supporters bashing Obama rather than talking about Tesla being sued, I find replying to Combustible Motors more on-topic!

Getting back to TFA, Tesla does not have stores selling Telsa's in those states. Instead, you buy them over the Internet. All Tesla has is showrooms where they can explain their story to people, but they can't sell cars. Tesla believes, and I agree, that this avoids running afoul of dealer franchise laws. Frankly, I don't see how these dealers can explain why it is illegal for people in New York to buy a car over the Internet, or why it is illegal for Tesla to have showrooms in malls. Laws to protect car dealers could only have been sold to state legislatures by used car salesmen. I hope these lawsuits crash and burn.

Re:Fuck those greedy bastards.

[Tanktalus]

I'm not so sure. I recall that at the time that Dubya was trying (and more or less failing from what I could tell) to make a public case for the invasion of Iraq, Clinton actually commented that he was in favour of it.

The reason I remember this so clearly is because it made an impression on me. Here is the current and previous presidents (and one of them being the son of the previous president to this lineup) who, among them, seem to have 12 years or so of knowledge of something (I'm assuming that Dubya had some insight to the matter from his father, and that Clinton, upon taking office, would have had access to the same intelligence as his predecessor, so that's where I come up with 12 years from). What that something is, I don't know, but it was leading both Dubya and Clinton to the same conclusion. Even more odd was that both men, of different parties, were suggesting a conclusion that was not considered popular.

My conclusion from that was that there was some extra top-secret intelligence or something that, as President, both men would have been privvy to, but the rest of us peons were not which would seem to otherwise intelligent men (and, yes, Dubya was intelligent, whether you agreed with him or not) to justify this unpopular position. Maybe they both saw the physical receipts the US had for the sale of chemical weapons to Saddam. We all know he had them, the US did the selling in the first place, and we all know Chemical Ali used some of them on the Kurds, we just may not know how much he had left (and only after invasion of Syria will we find out).

So then you bring up Gore. Well, I hate to break it to you, but Gore would have had the same information, and, because he was the Vice President under Clinton, he would have known that information even during the election. (Dubya might have as well, depending on how much his father shared with him, but we don't know if that sharing happened before or after election. Gore absolutely knew prior to the election, as it was part of his job.) If Clinton was in favour of such an unpopular position, I would have to imagine that this information was compelling, and Gore would likely have been forced to the same conclusion as well.

The only difference might have been the timing. But if the CIA was sending up the same intelligence reports, I remain utterly unconvinced that there would have been significant difference here.

Of course, we're all playing what-ifs on a global world stage with very insufficient information. It'll take 50-75 years for this stuff to be declassified, if ever, and only our great grandchildren will have the ability to tell what's going on. And, by that time, Dubya will be remembered as a President, and Gore, as a former VP, will likely be largely ignored. Whether rightly or wrongly, VPs just don't make it in the history books, which may mean the entire question of whether Gore would or wouldn't have done the same as Dubya would be uninteresting. It'll merely be a question of whether Dubya was justified or not, with a lot less vitriol than is spewed at him today (the vitriol, of course, being reserved for the candidates of their day, not ours).

Re:Fuck those greedy bastards.

[Lakitu]

You're pretty obviously not all that great at following discussions, so you can drop the attitude. I just looked again and the only things I found are more people mentioning that you never linked it and yourself linking to your own slashdot post. Not to mention your inability to see the name of the person you're replying to, where you confused myself for someone else who was actually supporting your larger arguments. Who you disagreed with, and reiterated you disagreed with, when I pointed it out.

First, I clearly stated that I was referring to the effects of this regulation AND similar regulations in other states across the U.S. Then you say we're talking about THIS regulation... then you say if it was bad there would be no dealerships across the whole U.S.

No, you've made an argument multiple times that this regulation has directly led to fewer major American automobile manufacturers. You've also said you've had reasons to believe this, although the only time you've tried to explain it you just hinted that sometimes correlation actually does mean causation, even if there's no reason to be sure about causation. You even make it again in this post:

But whether the current situation is the same is irrelevant to my argument; it was about changes caused by the regulations in question, which were not made yesterday. In fact similar legislation has been in force in my own state at least since I was a child.

"Just how many of the major American car manufacturers do you think no longer exist because of franchise laws?"

That question was already answered in that link you have been having so much trouble finding, and repeated in another comment I made here to someone else.

The link which you say shows the total decline in American car manufacturers over the last 50 years? That means you think every major American car manufacturer that has gone out of business in the last 50 years has done so because of franchise laws. okay, buddy.

Re:Fuck those greedy bastards.

[Jane Q. Public]

"I don't think your appeal to authority matters."

I wasn't "appealing to authority". I was simply pointing out to you that causes of monopoly were widely recognized more than 230 years ago... and they aren't always what you say. Although sometimes they are.

" Let's look at the data instead... Every single monopoly to in existence today is a government granted monopoly."

Cherry-picking your data does not impress. Even if you were correct (and you aren't), it wasn't always that way.

For example, Standard Oil was not a "government-granted monopoly"... although it definitely became a near-monopoly. It was the government that helped to break their monopolistic hold. Ignore history all you want, but as I say, it doesn't impress.

"Railroads... Granted Right-of-way everywhere they wanted by the Federal government."

Not all of them. Read what historians actually have to say about the matter, like Thomas E. Woods, for one example. The railroads that were NOT Federally subsidized tended to do better and be more profitable. Not all of them, but many. Same with ferries, and other transportation companies. In fact, in some cases the private, non-government-subsidized businesses drove the Government-sponsored ones out of business.

Another example: the American Letter Mail Company, run by Lysander Spooner, was kicking the government-sponsored United States Postal Service's ass until Congress passed a non-compete law in 1851 that put them out of business.

"Granted perpetual copyright monopolies."

Not really. If you want to make a good argument, don't exaggerate so much. Yes, the terms are ridiculously too long. But they are not monopolies. You are welcome to get your own copyrights on your own original works, and they would last just as long.

I will grant you that cable companies and other conglomerates are getting to the point that we are in danger of having worse than just monopoly (oligopoly actually), but horizontal ones as well: companies that control, content creation AND distribution AND communication. A very bad situation indeed. But the fact that these are being allowed by government does not prove that all all.

Here's an example on my side of the argument: Microsoft. At one time, it controlled approximately 90% of the OS market around the world. But their monopoly was not created by government... on the contrary: the free market has helped to bring them down. There's another example where the government (rather ineffectually) actually fought their monopoly rather than "allowing" or "creating" it. European governments were somewhat more effective in that regard.

"However, if it decides to take advantage of it's status as a single provider, in a free market it becomes beneficial to everyone around that company, before and after in the supply chain, to force it back in line or bypass it."

But that's not an argument against monopoly. It's an argument against unfair trade practices. Not (quite) the same thing.

I'm not trying to be snide or sarcastic, but if you want to make the kind of argument you are making here, you should really read up a bit on your history first.

Re:Fuck those greedy bastards.

[fsterman]

George W's administration stopped listening to the pentagon, CIA, and NSA started going over all of the "intelligence information" personally. They read a bunch of crappy intel, got their own people to get more of it, and then backwards rationalized to attacking Iraq.

Yes, Bush thought there was a legitimate threat. Yes, Bush and his administration read scary intelligence reports. But, as the saying goes, garbage in, garbage out. They went on a fucking marketing blitz to make their case and went to great lengths to end public and silence their critics. They fooled themselves.

Gore is a scientist at heart, he would not have gotten rid of people that knew torture produced shitty intelligence.

Re:Fuck those greedy bastards.

[aardvarkjoe]

No, it only applies to MOTOR VEHICLES which meet certain definitions. One of those definitions is that it must BURN or Combust, by the definitions of fuel in that chapter (60? 61?) and pursuant to definitions further found in chapter 90.

Well, I'm not a lawyer, but the definition here straight from chapter 90 doesn't seem to say anything to that effect:

âoeMotor vehiclesâ, all vehicles constructed and designed for propulsion by power other than muscular power including such vehicles when pulled or towed by another motor vehicle, except railroad and railway cars, vehicles operated by the system known as trolley motor or trackless trolley under chapter one hundred and sixty-three or section ten of chapter five hundred and forty-four of the acts of nineteen hundred and forty-seven, vehicles running only upon rails or tracks, vehicles used for other purposes than the transportation of property and incapable of being driven at a speed exceeding twelve miles per hour and which are used exclusively for the building, repair and maintenance of highways or designed especially for use elsewhere than on the travelled part of ways, wheelchairs owned and operated by invalids and vehicles which are operated or guided by a person on foot; provided, however, that the exception for trackless trolleys provided herein shall not apply to sections seventeen, twenty-one, twenty-four, twenty-four I, twenty-five and twenty-six. The definition of âoeMotor vehiclesâ shall not include motorized bicycles. In doubtful cases, the registrar may determine whether or not any particular vehicle is a motor vehicle as herein defined. If he determines that it should be so classified, he may require that it be registered under this chapter, but such determination shall not be admissible as evidence in any action at law arising out of the use or operation of such vehicle previous to such determination.

Where does the law say that it applies only to vehicles that burn fuel?

Re:Fuck those greedy bastards.

[LongearedBat]

If manufacturers could sell through dealerships they owned, they would own every dealership.

You mean like Apple does in the electronic gadgets industry? Yet, somehow, other brands still seem be quite successful at selling their products.

So, why should the car sales industry work differently from the electronic gadgets industry?

Re:Fuck those greedy bastards.

[chrismcb]

No, it only applies to MOTOR VEHICLES which meet certain definitions. One of those definitions is that it must BURN or Combust,

Where do you read that a motor vehicle must burn or combust?
93B chapter 1 says

“Motor vehicle”, any motor driven vehicle or house trailer required to be registered under chapter 90 regardless of curb weight ...

Chapter 90 defines a motor vehicle:

“Motor vehicles”, all vehicles constructed and designed for propulsion by power other than muscular power...

This definition is quite long, but I see nothing that talks about burning or combusting.
Perhaps chapter 60/61 discussing burning and combusting, but that chapter is related to taxes, and not the franchise laws in question.

Re:Fuck those greedy bastards.

[Genda]

Okay let's just deal in solid 24 carat facts;

1. Clinton warned the Bush cabinet of Bin Laden in no uncertain terms including he was up to something big from day 1
2. The Bush cabinet pissed the first 8 month of the Presidency clearing brush on the ranch, and trying to rejump-start the star wars missile defense initiative, in the fervent hopes of pumping billions into Cheney's company Halliburton.
3. After the attack, instead of chasing Bin Laden into Afghanistan, we went on a snipe hunt so Cheney could play a hat trick, nail an oil country, put a U.S base next to Iran, and pump billions into Halliburton
4. Gore was fully briefed on Bin Laden, there would have been no 9/11, no stand down of the automatic air defense that should have had fighters scrambled within 7 minutes to dog those birds. No cause for a CIA, FBI cabinet intelligence snafu. No duplicity, dirty deeds done behind closed doors and certainly no suspension of the Geneva Conventions or gutting of the Bill of Rights and Habeas Corpus.
5. Clinton is a very good friend of the Bush Family. He has worked hard to protect Dubyah's reputation and has said that he agrees on George's foreign policies for the most part publically. Honestly, this is not consistent with a number of reports that came out early after 9/11 but I will respect Bill's friendship.

figure Gore would have expanded investment in technology a la Clinton, no Dotcom crash. Gore would have pushed renewables and by now we might have been competitive with the Chinese in solar. So you're right, Gore would have had the same information, but because he wasn't humping big energy's leg (you do remember Bush flying to his campaign locations on an ENRON jet don't you?), looking to shove half a trillion dollars into Halliburton, or trying to show up his Father regarding Iraq or piss away the largest Presidential vacation in history (clearing brush at the ranch), its a fair argument that things would have gone a wee bit different. There would most likely not been a 9/11, a Dotcom crash, War in Iraq, or subsequent housing bubble and crash (the money in play would have remained in high tech) , though that part is speculative on whether Gore would have had any success in reigning in the banks and forcing greater trade balance with our trade partners (a key issue that Clinton has been hammering since NAFTA passed, it only works if Congress forces trade balance to prevent our economy from becoming a national wealth purge.) Face the facts, there is absolutely NOTHING redeemable from the Bush term, he was a figurehead, and the real men in charge (Karl Rove aka Turd Blossom and friends) were evil bastards in every sense of the word.

Re:Fuck those greedy bastards.

[Genda]

We are dangerously close to a chicken or egg conversation here. Clearly a number of these companies are monopolies or virtual monopolies because the bought the government power necessary to get the laws in their favor. So you point at the beast and say bad government, and I look at the exact same beast and say evil corporation, and it occurs to me that it is perhaps the inherent dangers of large corporation in collaboration with a corruptible government that grows these nasty beasties.

Do corporations exist in your free market? Patents protecting first comers to a given technology or business space? Mergers? Hostile takeovers? Sorry but that monopolies won't happen because the business fairy won't let happen sounds a wee bit like a superstition. Have you built real world game models and tested this hope against real human behavior? There is nothing morally superior about a free market. Free markets have no problem with slavery, or secretly pouring toxic waste into a stream that ends up in someone else's drinking water. How do you prevent the collapse of the middle class in a race to the bottom of the free market? In fact how do you protect the human rights of workers at all in your free market, and we have some pretty bloody examples of free market employers in the 1800s working children to death and putting hundreds of people in life threatening work conditions leading in a number instances to terrible tragedies, In your free market how are you actually going to prevent collusion, price fixing, banking havoc and general lawlessness? The international black market is the closest thing we have to free market, and how do you stop people from trading in atomic bombs and weapons of mass destruction? Human trafficking? Trafficking in products from highly endangered animals? Dangerous, tainted or poisoned products. The Chinese market is in some ways much freer than the American markets and disasters perpetrated against consumers is common place. We got here by greedy people doing bad things to society in the name of free market. I guess I'm saying, in a truly free market, how do you avoid the most reprehensible, wicked, despicable behavior humans can muster from becoming common place in your market?

Re:Fuck those greedy bastards.

[Anonymous Coward]

In Mass. it looks like Part I Title XV Chapter 93B might apply here.

It appears to be about protecting fair dealing between car manufatcurers, dealers, and customers.
Part of this fairness is manufacturers honoring their franschise agreements with dealers.

Interesting sections:
  Section 1 defines a dealer as someone seling cars under a franchise agreement.
  Section 4 (c) 10 Manuf can't own dealerships.
  Section 11 Whole chapter relates to franchise agreements
  Section 14 Any dealer, can ask AG to enforce the law.

If Telsa has no dealers and no franchise agreements, I'm not sure how they can be unfairly dealing with their dealers.
    Maybe someone can claim that they are being unfairly prevented from their entitlement to be a Tesla dealer?
    Maybe a dealer for another car company can claim unfair competition?

If there are not franchise agreements, maybe section 11 is a get out of jail free card for Tesla?

Even without standing does section 14 allow any dealer for any car company to ask the AG to go after Tesla?

Seems like there is a wording bug in the law.
    Section 4(c)10 should be limited to manufacturers that have franchised dealers in the state.
        I suspect Section 11 says as much, but it looks like it needs to be clearer one way to the other.

If it's the other, then it's just a good ole' boys law for the established dealer system.
      Which is a bit embarasing for the state.

Looks like the lawyers will have a great time sorting it out.
    (Nothing above should be construed as legal advice, a random reading of one statue is no substitute for a lawyer.)

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:

[Ostracus]

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

Re:Translation:

[MickyTheIdiot]

wow. Now THAT'S naive.

Re:Translation:

[fafaforza]

You really think this is a petrol engine versus electric thing?

You don't think this is a "I want to make money as a middleman, and don't want this 'direct to customer' sales model to take off" thing, instead?

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:

[Ostracus]

For that my new business model is patenting making snarky comments, and making a fortune off of people like you.

Re:Translation:

[timeOday]

I don't think there's any question there must still be dealerships; only whether they are independently owned, or owned by the manufacturer.

The two models seem to compete OK with restaurants, so I'm curious what the history of the law is. (Maybe because there are so few auto manufacturers?)

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:

[bmo]

Bullshit.

The manufacturer could sell the car direct to the customer. They could sell it for the same price as the dealer pays them.

The dealer is just a middle-man skimming off the top. The dealer offers service too, but independent certified garages could too. This is anti-consumer and anti-independent repair.

--
BMO

Re:Translation:

[__aaltlg1547]

Nope. Those laws were made for the protection of the franchise contracts, so the manufacturers couldn't make a franchise agreement with a dealer and then establish another franchise within the franchisee's territory or go into direct competition with their franchisees. In the case of a company store opening in an area where there are no dealers for the brand. It's essentially protecting the value of the franchise contract from being undercut by the manufacturer. But if there is no franchise contract covering the territory... who is hurt? Dealers for OTHER BRANDS? Who the hell cares? Those dealers have no contract with Tesla and no interest to protect.

It sounds like New York and Massachusetts are trying to apply the law outside its scope.

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.

Re:Translation:

[Jeremi]

It sounds like New York and Massachusetts are trying to apply the law outside its scope.

Note that it's not New York and Massachusetts who are suing Tesla, it's the car dealership associations.

Re:Translation:

[qbel]

You missed a post a few parents up.. Yes, there wouldn't be any non-manufacturer dealerships for the manufacturers to compete with. Instead, they would be competing with other manufacturers.

Re:Translation:

[phoomp]

All that the dealers offer a discount on is the middle man markup. Remove the requirement to have independent dealers, and you remove their markup.

Re:Translation:

[Solandri]

He's got a point though. The dealers act like a union. By aggregating the purchasing power of multiple car buyers, they can negotiate for better pricing from the big corporate manufacturer than if everyone bought from them as individuals.

What's getting you upset is that the dealer-union, instead of passing on the same better price to everyone, plays a negotiating game and rewards those who are better at it with a better price. It's like haggling in moira. A lot of players hated having to haggle in the store to get the best price on loot they got from the dungeon. They requested over and over for a flag to turn it off. One of the developers answered, "There is no need for a flag. If you don't like haggling, then simply don't haggle. Accept the first price the store offers you."

That succinctly revealed that the problem wasn't the haggling itself. The problem was knowing that you weren't getting the best price if you didn't haggle. Likewise, if a manufacturer has no-haggle pricing, then everyone pays the same price. By preventing others from getting a lower price via haggling with a dealer, you create for yourself the artificial peace of mind of knowing that you got the "best" price. Even if that "best" price is significantly higher than what you could have gotten if there were dealers you could haggle with.

Re:Translation:

[hjf]

Slashdotters are just short-sighted employees (with a guaranteed paycheck at the end of the month), that only care about the smaller price. They don't run a retail business and they don't know what the "game" really is. They only see a store owner as a "greedy middleman". And they think it's ok (simply because it's not illegal) to walk into a store and get advise and try a product, only to run home and buy it on amazon. (OH but they do CRY when they are outsourced by someone in india who gets paid less!)

I have a comic book shop. The comic distributor actually has a shop too and they sell, at the same price I do. Does that seem fair? They make more profit than me, and the publisher won't sell directly to me because they aren't interested (unless I'm willing to buy by the tens of thousands).

On the other hand, I also sell trading cards (Magic the gathering, yugioh). They have a "tiered" system where a shop, to have organized tournaments needs to have a certain "level". So, I put money into them and I have at least a small guarantee that the shop across the street won't be taking all my customers overnight simply undercutting me (after I spent months, maybe years, promoting the product and building the local market).

Re:Translation:

[David_Hart]

As far as independent garages go, why would they need to be certified?

Oh, right, otherwise they don't have access to the manufacturer's diagnostic codes and meanings!

One of the good things that came out of this election cycle in Massachusetts is that voters voted Yes for the "Right to Repair" ballot. This essentially forces car manufacturers to provide "proprietary" diagnostics information to independent garages.

Re:Translation:

[hjf]

Oversimplify much?
You think you just sit around and wait for people, to just BUY a car? Just take your share and go on your merry way?
You have to SELL. Selling is a job. We storeowners are not "middlemen". We wake up every day, go to work, pay taxes, have debts. We WORK.

And unlike you, we actually have risks. You? You're clearly an employee. you have an assured check at the end of the month. Me? If I don't sell, I have to touch the "rainy day fund". Something you only do when you're fired.

Following your logic, you have no argument to get mad when the company you work for replaces you for an indian working for a fraction of your salary. Do you?

Re:Translation:

[Anonymous Coward]

Just go into the dealer, ask how much they want and pay it.

Just because people don't like to haggle, doesn't mean they don't know they're getting ripped off if they pay the dealer's price.

Re:Translation:

[radish]

I'm a consumer. I buy things not because of salespeople but despite them. Buying a car is one of the least pleasant things I ever have to do, and that's entirely because of the salespeople and the dealer model. I would almost certainly buy more new cars (thus boosting the economy and helping to employ more people who actually, you know, make things) if I didn't have to go to a dealer to do it. Just let me browse & compare online, with accurate prices, and pick what I want for delivery. You know, like I do for EVERY OTHER DAMN PRODUCT I BUY. The dealer adds precisely zero value, in fact the dealer removes value, and does so at a high cost to me. Shut em all down.

Re:Translation:

[Attila Dimedici]

Except that currently the way pricing is structured, I don't actually know what the price of two cars from different manufacturers are until I go to a dealer for each one and spend several hours haggling over the price. So manufacturers don't really compete with each other over price. They compete over much more intangible properties, properties that are subjective and thus able to be influenced by effective marketing campaigns. For the most part, the Chevy dealer does not compete with the Ford dealer, by the time most people start to think about what dealer to visit they have already chosen what brand they are going to buy.

Re:Translation:

[tibit]

It's a made up, unnecessary job. It was only needed when it was hard to get information. These days, I can look at any car I want online, often it means a 3D walkthrough is available as well. There are reviews available as well. I don't need someone to sell anything to me. I want, perhaps and occasionally, a showroom to go to and see a car. Not BUY a car, just see it and feel it. This can be provided by the manufacturer, or a third party -- I'd gladly pay for the privilege, say $10 per entrance to a showroom, just so that nobody would bother me with sales pitches or naughty looks if I don't seem to look like a ready buyer. Then, if I need to, I can shop for a loan. And then buy. Nowhere is there anyone selling me anything until I actually click the buy button.

Re:Translation:

[Lawrence_Bird]

Sorry, but if the comic book distributor model is the more economically viable, then your firm should go out of businesses. Nothing personal at all, its just the economic reality of it and you state it yourself. The publishers do not want to be bothered selling small numbers of copies to stores like yours as it inflates their costs and reduces their margins, thus they sell to the distributor/wholesaler. If that does not leave enough additional margin for a further downstream seller (and I'm not talking just comic books now), then that is where things stop and end consumers by from the distributor.

Good! Maybe they strike the stupid laws over this.

[ezakimak]

The car dealer franchise laws began in California w/Reagan helping a buddy's business. Soon Bush did similar in TX, then lobbyists picked up the ball and rolled it to the other states.
I can think of no other industry where it's in fact *illegal* for a manufacturer to sell their own product directly to consumers.
It makes it so that it is no longer a free market. Who knows what options and colors people actually want--dealers order speculatively what they think they can sell, then sell them--people wind up choosing between the existing inventory, usually none having exactly what they want. You'd think on big ticket purchases people would be more picky about getting exactly what they want--but we wind up with millions of same-colored cars on the road anyways.

Strike down these laws and it should be possible to actually order a vehicle that you customized on a manufacturer's "build-your-own" website--rather than it directing you to a bunch of local dealers that have their heads up their asses and don't actually have one in stock like you just spent 20 minutes configuring.

Furthermore, right now, if you want to place a custom order, you *have* to do it through a dealer--who is now an unwelcome middleman that *hasn't* made a sale yet thinks they still deserve MSRP markup for merely printing out the paperwork even though you beat a path to their door with no other option.

I truly hope Tesla wins.

Re:UNLEASH CAPITALISM

[loganljb]

I'm not a big supporter of complete Laissez-faire capitalism, so don't take this the wrong way... But this story is about exactly the opposite of what you seem to think it is. The problem in this case is the franchise law -- which is government interference in the free market, which is anathema to true capitalism -- not with capitalism. Of course dealerships are going to sue -- they've got a nice racket going on, with government backing.

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

[MickyTheIdiot]

Again.. these people are *not* free marketers. They are opportunists. They are fine with the free market as long as it benifts them. When they are on the losing end they're absolutely fine with the government intervening in every possible way.

But Tesla isn't breaking any laws

[Culture20]

Tesla motors sells suped-up golf carts, not cars. No need for franchises.

Re:But Tesla isn't breaking any laws

[Ol Biscuitbarrel]

I'm confused. Tesla don't provide any options at all for their EV? How about clarifying this with a car analogy?

Elon Musk made a blog post about all this

[Anonymous Coward]

http://www.teslamotors.com/blog/tesla-approach-distributing-and-servicing-cars

Elon Musk made a blog post about all this legal turmoil last month. Worth a read.

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.

Simple Work Around

[Anonymous Coward]

The Tesla "Dealers" are show rooms and advertisements only, you cant test drive, you cant get the keys, They may not even be owned by Tesla at all in some states to get around Franchise laws. BMW does the same thing, as do a lot of non-US car builders. They advertise a trip to some place where the car is built and you then buy the car in Europe.

In this case they advertise the car in a mall or other location, and then provide you internet access to the Tesla plant to place an order. The show room makes no money and sells no car.

Ford cant do this because its contracts with dealers would require Ford to pay the dealer if it somehow sold a car in that state. Tesla has no such contract with its advertisers.

In the end, all sales are done out of California, cars are built there, and shipped to the person, the show room has no additional involvement in the process.

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

[fafaforza]

Do you know if they have a similar system in Europe? I believe you can order direct from Audi and actually go over to their factory to pick the car up.

And yea, the dealer only option sucks, as when, for example, you're looking to buy a V8 VW Tuareg, mainly for its compact size and towing capacity, you have to buy one with *all* the options, because that's the only thing that was imported. Very anti-consumer.

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:Regulatory capture, crony capitalism

[phantomfive]

Regulatory capture, crony capitalism, etc is one of the biggest problems in America today.

It is easily something that both the left and right in America can agree on. It is unfortunate that politicians tend to agree with each other, in opposition to the public.

Re:Regulatory capture, crony capitalism

[istartedi]

I'm sure there are some deregulators who honestly want to eliminate crony capitalism like this. I'm also sure there are a lot who just want free reign to do whatever they like, the rest of us be damned.

The state

[kelemvor4]

The state of NY isn't going to be happy if they have to lose out on all that tax revenue because consumers have to go to jersey or some other state to buy cars. Maybe that isn't the case right now, but as time progresses I think combustion engine cars will become less and less desirable.

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.

Dealers are a textbook case of rent-seeking

[realinvalidname]

http://en.wikipedia.org/wiki/Rent-seeking

Change the law then

[Bodero]

Under the law, these dealers are absolutely right. Chrysler was forced to sell a company owned Chrysler Dodge Jeep Ram store in LA for this exact reason.

If Tesla doesn't like it, then lobby to change the laws. You can't just ignore them.

Re:UNLEASH CAPITALISM

[shellster_dude]

I think you missed the point of the OP. That was precisely what he was saying.

This is a government backed monopoly (in my opinion, the only true use of the word "monopoly"). It needs to be shut down. The same way utility providers currently get to exercise monopolies, enforced by government. Tesla ought to succeed or fail on their own merit (and I think they will fail, but they deserve the chance).

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

[nedlohs]

Picking a heavily restricted special case product that was so special the constitution got changed twice due to entirely to it and applying it to "almost every product" does not a reasonable argument make.

I can buy pumpkins from a local farmer who grew them. I can buy a computer made by Dell from Dell. I can buy ink for my printer directly from the manufacturer. I can pay a local carpenter to build me a table directly. I can buy a house from the builder.

I don't get it?

[__aaltlg1547]

Where is the section of the law that says that a new manufacturer with no existing franchisees in the service area can't open factory stores that would compete with other makes?

New car dealerships

[EmperorOfCanada]

What tesla should do is to give out non exclusive franchises for $0.01 online. Anyone can get one: corner stores, private people, my cat, just saturate the market. Then when you want to buy a car you would buy it online through some "local" dealership. Technically bob down the street would sell it to you but Tesla would handle the transaction for Bob and then pass bob his $0.02 commission.

There are few organizations that I detest more than car dealerships.

A better end run of the law would be to go federal and try to slip in an online sales rule that overrides any local laws. That would be a 21st century way to go. I don't care where Amazon's HQ is and I certainly don't want a stupid local law getting between me and Amazon.

Historical problem

[Animats]

Auto dealer franchise laws reflect a long history of auto manufacturers screwing dealers. Auto dealers were traditionally small businesses with one supplier, which put them firmly under the thumb of the manufacturer. Many dealers still are, although some are big mufti-manufacturer chains.

After looking at the New York and Massachusetts laws, it's not clear that they prohibit a manufacturer from selling entirely through their own stores. What the laws clearly prohibit is a manufacturer competing with its own dealers. If a manufacturer doesn't have any independent dealers, the law probably doesn't apply. The dealers are trying to stretch the law by arguing that the manufacturer is unfairly competing with their dealership, but that may not work.

California prohibits a manufacturer from opening a company store within 10 miles of a dealer, so Tesla has no problem there.

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

[Pulzar]

I haven't found a VW or Audi dealer who won't place a factory order with fewer options than anything on their lot

I've had a completely different experience with VW. The dealer said that he could order the car with options I wanted, but would not consider anything less than MSRP. That's for a car that they were selling for anywhere between $3000 and $4000 off of MSRP for the ones on the lot.

In practice, it was equal to a refusal to order it. I ended up getting a Nissan...

Re:Fuck those greedy bastards..

[kqs]

Let me translate that for you:

  "During a recession, things suck. During the worst recession since the Great Depression, things suck more than during a regular recession."

Bush raised the deficit and grew government during growth years. Obama lowered spending each year he was in office and shrank government during a recession. I know you won't actually look this stuff up; Fox News discourages independent research. But you should.

Re:UNLEASH CAPITALISM

[phoomp]

You are aware that there is more than one auto manufacturer? And, they already compete with each other on price? There is no need for another layer whose only purpose is to compete on the middle man markup.

Car dealer franchise laws need to go...

[Ritz_Just_Ritz]

Personally, I'd be tickled if GM/Ford/Chrysler/Tesla/whoever could open their own dealer network. That would rid us of the thousands of smarmy dealerships (many with horrid BBB records) that prey on folks who just want to buy and maintain a car. Then consumer complaints could be handled more centrally and dealt with at the source. In theory, this would be financially better for the consumer since you'd be removing an extra profit center between the manufacturer and the consumer.