N. Carolina May Ban Tesla Sales To Prevent "Unfair Competition"

nametaken writes with this excerpt from Slate: "From the state that brought you the nation's first ban on climate science comes another legislative gem: a bill that would prohibit automakers from selling their cars in the state. The proposal, which the Raleigh News & Observer reports was unanimously approved by the state's Senate Commerce Committee on Thursday, would apply to all car manufacturers, but the intended target is clear. It's aimed at Tesla, the only U.S. automaker whose business model relies on selling cars directly to consumers, rather than through a network of third-party dealerships. ... [The article adds] it's easy to understand why some car dealers might feel a little threatened: Tesla's Model S outsold the Mercedes S-Class, BMW 7 Series, and Audi A8 last quarter without any help from them. If its business model were to catch on, consumers might find that they don't need the middle-men as much as they thought." State laws imposing restrictions on manufacturers in favor of dealers aren't new, though; For more on ways that franchise operations have "used state regulations to protect their profits" long before Tesla was in the picture, check out this 2009 interview with Duke University's Michael Munger.

Comments

The best part of the article is at the bottom

[LNO]

It's just more money-in-politics. The sponsor is State Senator Tom Apodeca, who received the maximum amount allowed ($8000) in campaign contributions from the North Carolina Automobile Dealers Association. Of course, they are AGHAST at the idea that they've got a financial stake in this...

Robert Glaser, president of the dealers association, told the News & Observer that the law prohibiting Tesla sales isn’t just about his industry’s self-interest. Pointing to the Tesla representatives at a recent hearing, he said, “You tell me they’re gonna support the little leagues and the YMCA?”

If that’s the real issue, then I may have some good news for all concerned: I asked O’Connell, and he assured me Tesla would be happy to support the little leagues and the YMCA if that’s what North Carolina requires in order to do business there. Problem solved! Right, Mr. Glaser?

Re:The best part of the article is at the bottom

[benjfowler]

Looks like a pretty blatant act of political corruption to me.

The only REAL problem here, is that in the US, this kind of corruption is perfectly legal.

Re:The best part of the article is at the bottom

[TWiTfan]

blatant act of political corruption

In the South, we just call that "politics."

Re:The best part of the article is at the bottom

[j00r0m4nc3r]

I really don't understand why we still allow campaign contributions to specific politicians. IMO, this is the single biggest flaw in our political system currently. All contributions should be pooled and divided equally among all candidates. This should have been dealt with decades ago..

Re:The best part of the article is at the bottom

[ArcadeMan]

The word "lobbying" was created to replace "bribery".

Re:The best part of the article is at the bottom

[Holi]

You can support your candidate of choice by voting for them. I personally think all contributions should be banned and campaigns run via public funds. That way all candidates have a level playing field where their policies differentiate them.

Re:The best part of the article is at the bottom

[fuzzyfuzzyfungus]

Looks like a pretty blatant act of political corruption to me.

The only REAL problem here, is that in the US, this kind of corruption is perfectly legal.

It's a great pity. The US Foreign Corrupt Practices Act actually provides fairly robust(by the standards of white collar crime) penalties for companies that do business in the US and also engage in bribery in foreignistan or wherever.

The 'Domestic Corrupt Practices Act', by contrast, does not exist.

Re:The best part of the article is at the bottom

[drinkypoo]

A compromise system might be the best solution. When you contribute funds to a campaign, half of your contribution goes into the fund which is evenly distributed between all candidates with enough petition signatures or whatever to get on the ballot. Getting on the ballot is gamed as it is, but I'm not sure on what other basis you can reasonably and meaningfully disburse funds.

Re:The best part of the article is at the bottom

[ShanghaiBill]

You can support your candidate of choice by voting for them. I personally think all contributions should be banned and campaigns run via public funds. That way all candidates have a level playing field where their policies differentiate them.

Public funding does not create a "level playing field". It creates a strong bias toward incumbents. It takes more money and publicity to mount a challenge than to defend an incumbency. Even the current limits on campaign contributions have greatly increased the percentage of politicians that get re-elected, while also greatly increasing the number of millionaires in congress, since they can just use their own money. This is not necessarily all bad, since rich people may be less corruptible, since they don't need the money.

Re:The best part of the article is at the bottom

[organgtool]

I really don't understand why we still allow campaign contributions to specific politicians

I really don't understand why we still allow campaign contributions to anyone. You are right in that this is the biggest issue in this country right now because the effect of this is the complete subversion of the democratic process - politicians are creating laws that favor a minority of special interest groups at the detriment of all of the citizens those "public servants" are supposed to represent. This systemic form of bribery taints the vote of every piece of legislation that comes up which is why changing this needs to be our top priority. However, it is not an easy problem to solve since the only way to end private campaign contributions is to pass new legislation, which can only be done by politicians who have won and continue to win elections thanks to private campaign contributions. At this point, I think the only peaceful way to force this change is either directly through the use of a referendum or indirectly via a petition that a majority of the people sign that promises to vote out the current politicians unless they pass legislation that bans all forms of private campaign contributions. For the latter, you could either vote for the "other guy" during the election or vote out the current politician during the primary. One thing is for certain, though: they aren't going to fix this without extreme pressure from the voters.

Re:The best part of the article is at the bottom

[WGFCrafty]

This is not necessarily all bad, since rich people may be less corruptible, since they don't need the money.

Uh, what?

Re:The best part of the article is at the bottom

[fuzzyfuzzyfungus]

I hope for his sake that he's just a lying fuckwad; because if he said that sincerely, then he's dumber than a sack of hammers...

Re:The best part of the article is at the bottom

[MightyYar]

I think by New York or New Jersey standards, Southern corruption is quaint and gentlemanly.

Re:The best part of the article is at the bottom

[fl!ptop]

Money is not speech

Perhaps, but my freedom to spend my money as i see fit, on the candidate or candidates of my choosing, is protected under the 1st Amendment.

corporations are not people

True, but when the government decides to regulate corporations, they have a right to speak, like the individual person does.

Re:The best part of the article is at the bottom

[jellomizer]

It isn't nearly always better to buy directly.
When you buy directly the cost savings of middle man usually goes to the producing company. As the Price the customer pays is often based on Supply and Demand.

Also selling directly without using local vendors, you will need to expand your sales force to cover all the areas, and have to deal with a B2C model vs a B2B model. So your increase your own staff, which then will make your product much closer to the initial cost of selling to an other business at a discount and they mark it up by 10-20%

For example Sun Microsystems, use to sell to vendors who then resold their products often with some sort of value add. Sun Got very popular by the late 90's and Early 2000's so they decided to expand their direct sells, often competing with their own vendors. To get the little extra margin per unit. But what Sun didn't realize was that a lot of the customers were comfortable dealing with the vendors (smaller companies felt like bigger fish, medium to large companies could almost control these guys) So with the Vendors getting hurt by Sun, they changed their tactics to other systems such a Linux or Windows NT as a viable alternative. By just changing their marketing from Suns Balanced TCO vs. Showing how cheaper hardware and OS can lead to faster systems with a different TCO calculation. So Sun popularity began to drop.

I don't see Tesla as being unfair competition with other auto makers for selling directly, it is just their business model they will have to deal with the trade-offs and rewards for their choice. It isn't like the other companies who have independent dealers are suffering from it, as Tesla cars are not super cheap to be hijacking the market.

Re:The best part of the article is at the bottom

[Raistlin77]

blatant act of political corruption

On this planet, we just call that "politics."

FTFAccuracy

FTFTruth

Re:The best part of the article is at the bottom

[Sloppy]

why should I not be allowed to support the candidate I believe in?

Nobody's suggesting you shouldn't be allowed to do that. The proposal is that you shouldn't be able to do commercial business with them, within the narrow context of the re-election business specifically. Support them in all politically-imaginable ways, and even form a corporation with them to sell cars, if you wish. We just want to point a gun at your face and say "stop giving them money." We want elections to become political instead of commercial.

Consider some so-called politician that you happen to hate. (Please don't tell me you're the one person in this country who doesn't hate anyone.) (Obama? GWB? Reed? Boener?) Now admit it: you don't really think of that person as truly political, do you? You could respect a true sincere adversary, but this guy, he's not quite that. He didn't win over his supporters by showing he knows how to make wise decisions; he used expensive media advertisements to trick a bunch of fools into supporting him, right?

If only Obama were the actual socialist that a certain media company says he is, you might actually hate him less. But he's not: the bastard is corruptly selling his DoJ to the highest bidder in a way that would horrify Marx and Engels. If only GWB were the conservative he ran as, you would hate him less, but at least your cold uncaring government would be cheap. But he wasn't: somehow the dimwit managed to commit to more spending of public funds than LBJ and FDR combined, funnelling it into contractors' pockets at everyone's expense.

Where's the political philosophy?

If only those people actually had to sink or swim on their actual political merits or lack thereof, then maybe your guys would finally crush that party, once and for all, and the country could get back on track. Or at least you'd finally get that fair fight you've always wanted but the country never really has, and then if you lost, well, that opposing philosophy isn't all bad. Even Marx's|Rand's society would have a few nice things about it, as stupid as it would be.

But instead those people buy slick ads, and the sheep in That Other Party keep falling for it, believing the ads and voting for the slickness instead of the politics. And the reason those other people aren't merely polically wrong (if only that were their failing!) is that the ads they use to buy the foolish voters are expensive, so they owe favors. Thus, their misguided conservative|liberal foolishness, goes beyond wrong, into corrupt.

Regulating the election business is one proposed solution to that, for allowing things to get back to politics and allowing democracy, instead of media ad budgets, decide our fate.

Re:The best part of the article is at the bottom

[alexander_686]

Here’s a link to a good story.http://www.npr.org/blogs/money/2013/02/19/172402376/why-buying-a-car-never-changes

It auto makers were being launched today we might see something different, but you have 80 years’ worth of entrenched law that needs to be changed.

The short answer is politics. Back when cars were first being introduced, there was a big power difference between the auto makers and the auto dealers. Auto makers would bully, threaten, and coheres the small business owners, so they struck back, and wrote state laws that tipped the power balance back to the auto dealers.

Auto dealers are a lot like Real Estate agents, small family owned companies deeply embedded in the community and thus in politics. To get the laws changed you are going to need to convince the entrenched power that be to give up their power.

No middle man

[ZeroNullVoid]

Why have a middle man if they cannot offer any better deals or services? I understand it artificially creates jobs, but that seems like a horrible thing to force.

This does not just apply to vehicles.

If there is no value added and only cost added, then it is pointless. If there is value added, then consumers should have a choice for it.
If the only value is creating jobs and expenses, then it is pointless and detrimental to progression, price, and capitalism.

Re:No middle man

[geekoid]

yep, the middle mans job is to offer a service that the manufacture can't or doesn't want to do. Usually due to cost.
If that cost goes away, so do middlemen.
From what I have read, manufacture owned dealers in the past were always better for consumers then private owned dealerships.

This is akin to not allowing digital books because they hurt book stores.

Re:And we don't need the man in the middle indeed.

[phantomfive]

I just had a vision of being able to buy a car at a fair price without having to negotiate. How amazing this could be.

Why cant Tesla create a dealership?

[140Mandak262Jamuna]

Creating a company costs some 150$ or so. Can Tesla Motor Corporation set up a wholly owned subsidiary Tesla Motor Sales and Service Corporation of North Carolina and sell it through them? Corporations are people, but it is lot harder (and more fun) to create real people than corporations.

Re:Why cant Tesla create a dealership?

[citizenr]

It can be owned by Elon himself.

Cherry-picking

[MachineShedFred]

So it outsold the 7-series (top end full-size full-luxury sedan), the S-class (top end full-size full-luxury sedan) and the Audi A8 (full-size full-luxury sedan), which even BMW, Mercedes, and Audi would admit make up a small fraction of their overall sales, and this is a win?

When you outsell the 5-series, the E-class, and the Audi A6, then you'll have something to talk about, as all three manufacturers sell an order of magnitude more of those.

Re:Cherry-picking

[drinkypoo]

When you outsell the 5-series, the E-class, and the Audi A6, then you'll have something to talk about, as all three manufacturers sell an order of magnitude more of those.

Well no, when they accomplish that then they won't need to say anything. But they have something to talk about now, because the Tesla vehicle is outselling its competition. They're not yet outselling cars out-of-class, but give them time.

Re:Cherry-picking

[Anonymous Coward]

Yeah, when Ferrari and Lamborghini outsell the 5-series and A6, then those companies will truly be something meaningful.

Re:Cherry-picking

[organgtool]

So it outsold the 7-series (top end full-size full-luxury sedan), the S-class (top end full-size full-luxury sedan) and the Audi A8 (full-size full-luxury sedan), which even BMW, Mercedes, and Audi would admit make up a small fraction of their overall sales, and this is a win?

The Model S is a top-end full-size full-luxury sedan. It makes complete sense to compare it to the top-end full-size full-luxury sedans of the incumbent manufacturers.

When you outsell the 5-series, the E-class, and the Audi A6, then you'll have something to talk about, as all three manufacturers sell an order of magnitude more of those.

The fact that they were able to outsell any manufacturers in any series during their first attempt at a car in this class still says a lot. Given that this is their second success (the first being the Roadster), and that each success is building on the last, I think that the future of Tesla Motors is very bright and judging by the stock price, so do many others.

Re:Moral of the story

[SirGarlon]

News flash: cosmopolitan urban centers are also full of greedy, stupid people. I know because I live in one. You can't escape them by changing your location.

Re:And we don't need the man in the middle indeed.

[fuzzyfuzzyfungus]

That's crazy talk! How are you going to replicate the experience of good, honest, high-pressure salesmanship in a browser window? Or prevent the consumer from opening a second tab for comparison shopping purposes?

About Taxes and State Revenue

[EXTomar]

One of the biggest sources of revenue comes in from sales and licensing of new vehicles where over time dealership industry is powerful on the state level due to this relationship. When dealers make money, the state gets serious revenues. So when a new type of car comes along with a company who can't afford the high barrier of entry to setup a dealer network the whole thing turnes into market protection in the guise of customer service. If you are interested in buying a Tesla and living in a city with a center, you can go there but it is like bizzaro land because they are forced to operate as a "service center" instead of a "dealership" subject to fees and zoning that are often waived or offset for "real dealerships".

It is stuff like this that makes me wish the market would be dragged into the 21st Century. Shopping for a car is one of those tasks that is slightly higher than "doctor visit". There is little to no value added for going to the dealership so I would rather just order directly from maker themselves than to sit through the junk you need to do for a purchasing a car.

Re:Moral of the story

[benjfowler]

The difference here, is that in rural areas, you have a Dead Sea effect... anybody with any brains and talent leaves. Guess who stays behind?

Nobody I grew up with with any talent or prospects whatsoever, bothered to hang around for long.

Pointless Summary

[fermion]

This has nothing to with anything other than historical laws to solve past problems. These laws are essentially set up to protect local 'small business' from corporate interests. It sound quaint, but one must look at this in the context of selling cars in the 1940's and 1950's, and even the entire climate at the time. There was no Walmart killing main street, there was no Costco cutting deals with the consumer, and no Starbuck serving corporate consistent coffee. And there few if any sophisticated auto consumer. So laws were past in most states that protected the local dealership from the larger auto manufacturing companies.

So the auto manufacturers created the franchise system, essentially to get around the laws. This is little different from McDonalds. The manufacturers pretty much control the operations, and in return offer kickbacks. The only way around this is the used market. It is probably, in the current climate, inefficient. It is probably one factor that makes american car makers less competitive, having to support the dealer network. OTOH, it is good for the manufacturer and consumer because you can go to any dealer who sells new fords and know you will get basically the same thing as any other dealer.

The thing is we probably should not change laws for an individual, which is what Tesla is asking some states to do. If there is good reason to make the change, then make the change general. What is happening is that in some states the law is changing so that only Tesla or a company very similar to Tesla will benifit. THis is probably a not good thing.

Why Buying A Car Is So Awful

[brit74]

A few months back, NPR's Planet Money did an episode on the car dealership business and how entrenched they are with the government. It goes back for decades. It's worth a listen.

"Episode 435: Why Buying A Car Is So Awful"
http://www.npr.org/blogs/money/2013/02/12/171814201/episode-435-why-buying-a-car-is-so-awful

Re:Sign We the People Petition

[Chris Mattern]

Let's get a boilerplate acknowledgement from the White House that doesn't accomplish anything at all! *That'll* show 'em!

Re:And we don't need the man in the middle indeed.

[Skater]

In return for opening the dealership with a brand, you are the exclusive dealer and service center for that brand within a certain distance. If you have a Ford dealer, I can't open another Ford dealer next door. You're relying on Ford to enforce that provision, but they know what would happen if they screwed over their dealers - lawsuits, and suddenly no one to sell your cars any more.

Leadership should be about ideas not bankrolls

[sjbe]

why? why should I not be allowed to support the candidate I believe in? why should my money be pooled and given to politicians I dont agree with??

For the same reason your money shouldn't go (solely) to a candidate *I* agree with. Because the debate should be about ideas and leadership, not who has the biggest bankroll. It is well established that special interest funding causes politicians to listen disproportionately to certain parties. If you fund a specific candidate then he is (potentially) obligated to you but he has to govern everyone. Why should he listen to your needs more than any other constituent just because you happened to fund the winning candidate?

Money gives people a disproportionate voice in the political system. I think the Supreme Court erred greatly when it said that money = speech. One should not prohibit people from spending money on political activities but one should not give someone a bigger voice simply because they have access to more money either. While I don't think you can take money completely out of the equation, we don't have to let it dominate the conversation the way we have either. Our congressional representatives spend virtually all their time fundraising instead of thinking about how to make this country a better place. As soon as they win one election they start fundraising for the next. That cannot possibly be good for the country as a whole.

Re:And we don't need the man in the middle indeed.

[jader3rd]

I don't understand the dealership model anyway

It's basically a legalized pyramid scheme, that was created in the hopes of ensuring that the local municipality has some "good" jobs. Episode 435: Why Buying A Car Is So Awful is a very informative listen.

Incumbents always have the advantage

[sjbe]

Public funding does not create a "level playing field". It creates a strong bias toward incumbents.

There ALREADY is a strong bias toward incumbents. Re-election rates pretty much never drop below 90% for House seats and rarely below 75% for Senate seats. Public funding could not possibly make this situation significantly worse than it already is.

Even the current limits on campaign contributions have greatly increased the percentage of politicians that get re-elected, while also greatly increasing the number of millionaires in congress, since they can just use their own money.

The data I linked to above does not agree with your assertion. Re-election rates haven't changed appreciably since 1980 and there ALWAYS have been a large number of wealthy candidates. George Washington was among the richest Americans of his day and adjusted for inflation was the wealthiest president ever with an inflation adjusted net worth of over $500 million. Jefferson, Jackson and Madison were in the top 5. Mitt Romney by way of comparison would have been the 2nd or 3rd richest ever had be been elected.

Oh that is not the issue

[SmallFurryCreature]

That is basically company owned dealerships, they have existed for a long time and the decent ones were a FAR better deal if you just wanted a good car for a fair price with good service.

BUT it ties the car company to the vagaries of the local car market including having to worry about brick and mortar store issues like location.

For a very common large scale car maker, it is barely do-able. For a niche market? There is in Holland 1 Ferrari dealer. But that is not the issue because people in the market for such a car don't have an issue traveling a bit in their luxury car and are in any case likely to be living in the west part of Holland (the store used to be in Utrecht, which is almost dead center for the economic heart of Holland).

But it is FAR FAR easier to serve all you need to serve with a web site and a service van. If Tesla has to open a shell company in every state, in every country in every county/province, that is a LOT of shell companies. And why should it? Amazon doesn't have to do it. Why should car dealers not face pressure from web stores? Especially since dealers COULD have a unique location issue, fixing your car.

This is clearly bought law. The US has the right to bear arms. Stop killing kids with your guns and kill yourselves some politicians instead. Or are the guns you carry just to compensate for your small penisses. Come on US, show us why you got more guns then citizens.