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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.'"
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.
"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!"
"You want to know how to help your kids? Leave them the fuck alone." -George Carlin
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.
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.
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.
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.
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
jrnl: http://tinyurl.com/c2l8yr / foes: http://tinyurl.com/ckjno5
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.
http://en.wikipedia.org/wiki/Rent-seeking
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.
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.