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New Jersey Auto Dealers Don't Want to Face Tesla
cartechboy writes "It feels like this story is becoming repetitive: X state is trying to ban Tesla stores, or the ability for an automaker to sell directly to a consumer. Either way, it's all aimed at Tesla. Now it's New Jersey's turn as a hearing today could end up banning Tesla stores in the state. Naturally Tesla's displeased with this and is crying foul. A rule change that is expected to be approved today would require all new-car dealers to provide a franchise agreement in order to receive a license from the state. Obviously Tesla (the manufacturer) can't provide a franchise agreement to itself (the distributor). The proposed rule would also require dealers to maintain a 1,000 square foot facility, the ability to show two cars, and service customer cars on site. Tesla doesn't meet that last requirement at any of its galleries, and most of the Tesla stores are located in shopping malls which mean they are smaller than 1,000 square feet. Tesla's arguing the New Jersey Motor Vehicle Commission is overstepping its bounds. Will Tesla be able to defeat this new rule in New Jersey as it has overcome issues in many other states?" (Also covered by the Wall Street Journal.)
Here's a perfect example of why the federal Constitution has an interstate commerce clause. States are interfering with interstate commerce to protect local businesses. Time for some federal legislation to shut this down.
"National Security is the chief cause of national insecurity." - Celine's First Law
The right wing should be opposed on free-market principles. The left wing should be opposed on environmental grounds. So which politicians should be in favour of this regulation again?
Sure would be great if I can make a law that bans competition from out of country, out of state, or whomever I do not want to compete with me when I negotiate a contract job.
What I could charge? The sky would be the limit.
Of course that is evil damn socialism for me and we can't have that now can we? But if some businesses or corporations do the same thing. Then it is for the good of the economy and ok etc.
http://saveie6.com/
Since we are constantly regaled how awful the Tesla is. - They all burn up, they are stupid, They are too expensive, I can't drive the Trans American Highway in one, electric cars suck - why don't we just let the free market do what it always does, eliminates bad products.
I'm pretty sure at other times, car dealership owners are all about the free market, competition, and the heartbeat of America.
The shepherds did so well protecting the flock that the sheep no longer believed that wolves existed.
The number two is ridiculous and can't exist.
Any sufficiently unpopular but cohesive argument is indistinguishable from trolling.
The solution is to bitch publicly like this for now, but the reality is they need a workaround. They need to set up a separate company much like Coke had a separate bottler. Have them do local service and be the jiffy lube of Tesla and join/kiss ass of all these regional moderately powerful/rich douche bags.
... unless other automakers follow suit.
Because so many states are disallowed.
Have gnu, will travel.
Why can't the Governor of New Jersey act as a bridge between the two parties?
What's wrong with the requirement to be able to service customer vehicles on site? Making it as convenient as possible to buy a car but having to take it to some far off location to actually get it fixed under warranty sounds like lousy customer service.
Many members of Congress own car dealerships or are closely associated with those who do.
Being protected monopolies, they are very profitable.
Surely you've noticed that all the products of technology get cheaper every year except cars?
As someone who once sold cars, TVs, and stereos I wholeheartedly agree. It's taken me years to wash the stink off.
You're making it more complex than it is.
You can get parts for anything and still get it fixed. If there is a market. You have no point.
There are no laws that require dealers to stock 20 years old parts. You have no point.
Tesla doesn't ban service on their cars. You have no point.
If many Teslas are sold, there will be a market for parts. You have no point.
If you buy a Tesla and there are a million of those Teslas sold, you will be able to get service. Even if it's not from Tesla. You have no point.
Yes, quite true. I'll just run down the road to my local (California) MG dealer to get parts for my '71 MG...... Oh wait!
Guess what, parts for my MG usually cost less than than equivalent parts on new cars.
The real "Libtards" are the Libertarians!
Yes, I can come up with a thousand free market answers. And yes, that pretty much answers your question.
Would you buy a vehicle from any company whatsoever if you knew that parts were difficult to acquire? A manufacturer can play a game with parts availability only if they don't plan to stay in business.
Maybe we should go back to renting our phones from ATT as well.
Bruce Perens.
Gouged in ways you can't imagine?
Try this one on for size. I drive a 2003 Acura TL. Several years ago, one of the headlights failed. I took it to a shop where I was told that it needed $700 worth of electrical parts from the factory. Not knowing better, I paid the bill.
Last year, I had the exact same problem with the other headlight, only now, I'm being told that it will cost over $1000. I finally did the right thing and asked for help online. I was directed to a company that had after-market parts drop-shipped to me directly from China for about $50., less than 1/20 of what the stealership wanted. The parts from that company seem just as good as the parts from the dealer, so there's one way I got gouged.
Wh47 d1d j00 541, 31337 15n't t3h r0xor5 ne m0r3???
I'm sure you can come up with a thousand free market answers
So why did you post? There are tens of thousands of free market answers - businesses of all sorts to provide the parts or the repair service.
This isn't the first time that someone has defended a rent-seeking activity on the shady grounds that a widely available service market might not exist otherwise. I suspect most of these laws date from the last time this was tried wholesale in the US, during the Great Depression. I believe such things were a large part of why the Great Depression was so severe and long.
Eventually either you stop getting parts and service for cars after 5 years or your start getting gouged in ways you can only imagine.
You don't have to imagine the gouging. Just get work done at a dealership.
Laws in Texas for example:
http://www.statutes.legis.state.tx.us/Docs/OC/htm/OC.2301.htm#2301.4671
(c) Except as provided by this section, a manufacturer or distributor may not directly or indirectly:
(1) own an interest in a franchised or nonfranchised dealer or dealership;
(2) operate or control a franchised or nonfranchised dealer or dealership; or
(3) act in the capacity of a franchised or nonfranchised dealer.
Dealers stock parts and provide a distribution network for said parts. This is why my '94 Honda Accord still runs
As someone who has spent quite a bit of time keeping older cars on the road, I feel compelled to ask: what in the WORLD are you talking about?
The right wing should be opposed on free-market principles. The left wing should be opposed on environmental grounds. So which politicians should be in favour of this regulation again?
The pragmatists & cynics who need local, wealthy donors to bankroll their campaigns.
From the movie:
There is no America. There is no democracy. There is only IBM, and ITT, and AT&T. And Dupont, Dow, Union Carbide, and Exxon. Those are the nations of the world today [in 1976]. What do you think the Russians talk about in their councils of state? Karl Marx? They get out their linear programming charts, statistical decision theories, minimax solutions, and compute the price-cost probabilities of their transactions and investments just like we do. We no longer live in a world of nations and ideologies Mr. Beale. The world is a college of corporations inextricably determined by the immutable by-laws of business. The world is a business Mr. Beale. It has been since man climbed out of the slime.
https://www.youtube.com/watch?v=zI5hrcwU7Dk&t=2m15s
Perhaps you're too young to remember what he's alluding to.
In the "old" days (way back in the 60's and early 70's), your phone bill came with an extra charge that was MANDATORY called "phone rental." You were required to pay for renting the actual phone that sat in your house. You were barred from using any phone that was not provided by the phone company. There were lawsuits, and it was eventually ruled that a common carrier could not tether their service to rental of equipment that only they were allowed to provide.
In more recent times, the shift from government protecting consumers to government being bought by corporations has led to the whole locked cell phones and ISP's charging rental for modems they require you to rent from them.
Fascism: An authoritarian and nationalistic right-wing system of government and social organization. See also: NAZI's
This is a complete mischaracterization of what's going on. It's not that they don't want to compete with Tesla, it's that they want a cut. Right now, it's illegal for automakers to own car dealerships in most states, because when cars were in early adoption the state government didn't want to allow a situation where a car manufacturer pulled out of a state completely because it was unprofitable, leaving the citizens of that state unable to buy cars easily. So dealerships are independent from the manufacturers. Tesla is bypassing this 100 year old, out of date system, because it no longer makes sense, but the dealers aren't afraid of electric cars, they just want to make Tesla "play by the rules" and let the dealers sell (or not) the Tesla cars, so that they an make a profit off them like they do every other car manufacturer.
Don't go there. It's not about politics it's about money. I'm as far right as anyone around but I can't see where it's any government's business to regulate to this level. The only possible purpose this law has is to squeeze one business out to protect the established ones. I'm tired of these so called "conservatives" pushing more government regulation. He's not conservative he's a monopolist.
Because so many states are disallowed.
Partner with Koingesseggessegesgeg... Because eventually they'll have to fill out a form to block them and no-one will be able to spell it.
Calling someone a "hater" only means you can not rationally rebut their argument.
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"Are the dealers afraid that the majors are going to copy Tesla's model and cut them out of the business?"
Yes, precisely. Just as Amazon reduced the number of bookstores by a pretty wide margin. Dealerships suck up a lot of the profit, GM could sell direct for a lot less than current prices *and* make more $$.
The "term of art" for this is disintermediation. And the dealers are well advised to fear it. But its unclear to me why in the world government should protect them from it. Customers outnumber dealers by a wide margin at the voting booth.
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Or you know, you could look at what Tesla actually does...
It's a combination of the fact that Teslas require only a minute fraction of the service of a normal internal combustion engine car, and that Tesla already provides better service than any dealership in existence. They have service centres all over the place (who cares if it's in the same place as the store if it's no further away) and you don't even have to go to the service centre because they will either send a mechanic to your doorstep, or pick up the car from your home or office for you (and replace it with a loaner if service will take longer than you can wait)
So why would I want to force their stores (best located in high foot traffic areas like malls) to be co-located with their service centres (best located in low rent areas like industrial parks) when it doesn't do anything to help me as a consumer? The only thing that it would do is either increase costs (paid in the end by the consumer) or decrease convenience (again at the expense of the consumer)
This law doesn't look at what the most advantageous model is for the consumer, it looks at what the existing business model is of the dealerships and forces everyone in to that mould effectively prohibiting any improvement to it.
And this is EXACTLY why the dealers are in an uproar. You notice that it's the dealers, not the manufacturers, that are going nuts? Why hasn't Chevrolet, Chrysler, Ford, et. al. jumped into the fray to support their dealer networks? Because they want to do exactly the same thing, but don't dare alienate their dealers! They are already excersizing their power by killing off a lot of dealers, in order to discourage price shopping and leveraging between dealerships. The surviving dealers love this, because now they can run their pricing wherever they want and not have to worry about pesky competition and empowered customers.
The real story here is Tesla success is making everybody else look bad.
They are a threat to much more than the car dealers. They are a threat to the innovate at a snails pace mantra of Detroit. They are a threat to big oil companies. Electricity is about 1/4 the cost of gasoline mile per mile (even comparing a Model S with a Prius, even considering the Model S is a large premium sedan, versus the Prius being a mid size). And they got this far in less than two years of Model S sales. Give them another 5 years and the auto industry will be undergoing an earthquake of innovation with Tesla at the forefront and few companies with enough agility to try to follow.
It won't take long until a few of those state representatives don't get re-elected for their Tesla actions.
Tesla adoption is spreading like wildfire. If Tesla had twice the li-ion battery supply, they would be delivering twice as much.