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Elon Musk Addresses New Jersey's Tesla Store Ban
An anonymous reader writes "On Tuesday, we discussed news that New Jersey is trying to ban Tesla stores, which would force the company to sell through car dealerships instead. Now, Elon Musk has prepared a response: 'The reason that we did not choose to do this is that the auto dealers have a fundamental conflict of interest between promoting gasoline cars, which constitute virtually all of their revenue, and electric cars, which constitute virtually none. Moreover, it is much harder to sell a new technology car from a new company when people are so used to the old. Inevitably, they revert to selling what's easy and it is game over for the new company. The evidence is clear: when has an American startup auto company ever succeeded by selling through auto dealers? The last successful American car company was Chrysler, which was founded almost a century ago, and even they went bankrupt a few years ago, along with General Motors. Since the founding of Chrysler, there have been dozens of failures, Tucker and DeLorean being simply the most well-known. In recent years, electric car startups, such as Fisker, Coda, and many others, attempted to use auto dealers and all failed.'"
They'll make you an offer you can't refuse.
Chris Christy isn't the only one with machinations.
A feeling of having made the same mistake before: Deja Foobar
when will we learn?
And then, gee, they used GASOLINE, so maybe Tesla shouldn't be making electric cars? nah...
http://www.youtube.com/watch?v...
And not from a silicon valley company :)
- Products do not break
- Never charge for servicing
- Big company software / hardware alliance agreements are bad for startups
Car dealerships are an anachronism. They offer no real added value. If it weren't for state laws protecting them, they would have been gone years ago - especially with the creation of the Internet.
The sales people are a nuisance, the parts section is to be avoided at all cost - and it really pisses me off when there are parts that are dealer only on rare occasions.
Warranty work? That could be streamlined too by having a tech of your choice do it.
I was hoping the Elon would take his billions and his cult of personality and crush the industry, but I guess that was a dream. I have the same dream for the elimination of Real Estate agents- another pointless middleman that just adds unnecessary costs to the consumer.
New Jersey isn't very large, and nobody is forcing Tesla to sell there. I'm sure a neighboring state would love to allow a showroom near it's border to collect all that tax revenue that NJ clearly has enough of, right?
In Soviet style USA, corrupted governments decide who stays in business and who goes under.
No one's selling a car here.
Mostly random stuff.
I used to feel the same way about opticians, then I found http://zennioptical.com . I was able to get a pair or progressive glasses for less than the optician wanted to drill holes in their lens to use my frame.
"when has an American startup auto company ever succeeded by selling through auto dealers?" I thought Saturn was doing okay for a while, but looking briefly at wikipedia, I guess as GM took more control, it was doomed.
Are you saying that Chris Christy is machinima? Move over Max Headroom, that's really good shit! Where's the Kickstarter for their next digital marionette?
I feel the same about realtors and opticians (or whatever title in your area for the incredibly skilled people that put a thin metal frame on your face and charge 400$ for 5$ worth of plastic lenses that could be CNC fitted in-store in half an hour by a monkey.).
Oh yeah, eyeglasses! Talk about a markup!! Just because there's some old guy's name on the side - even though the design has been around for years and years? Just look at old NASA pictures during the Moon shots. All the techs had those horned rimmed glasses back then and now, with some designer name on them they go for a couple of hundred dollars when they're made in China for less $2.
Even the shit at Walmart is too expensive.
Online can be good like ZenniOptical, but if there's a problem, then it's shipping back and forth (at your own expense).
Imagine if you wanted an Apple computer you had to buy it through Best Buy or Radio Shack, and dealing with their personnel. The companies that do business this way are maddening. Elsewhere, companies like Cisco choose not to sell directly to buyers, making them go through a partner or reseller. This may have been an acceptable model years ago, but these days it's tedious and I think people expect more; they don't want to deal with a third party whose interests are not wholly aligned with their own. At least when you're talking about tech vendors, you can opt to deal with someone else who does business differently. Government enforcement of a given model is quite wrong-headed and needs to be stopped. It smacks of protectionism to me.
Don't know the particulars, but I thought they succeeded? Maybe they did not start with dealers but with the military.
The rationale given for the regulation change that requires auto companies to sell through dealers is that it ensures “consumer protection”. If you believe this, Gov. Christie has a bridge closure he wants to sell you! Unless they are referring to the mafia version of “protection”, this is obviously untrue. As anyone who has been through the conventional auto dealer purchase process knows, consumer protection is pretty much the furthest thing from the typical car dealer’s mind.
Ow, that's gotta hurt!
[John]
Shit better not happen!
Oregon too. Other states also, I imagine.
My wife loves it. I (usually) hate it. Well, yesterday the man actually washed my windshield. And I have to say, that the pumpers have stopped doing that deal where they squeeze in another 25 cents worth after your car's auto-shutoff has turned off the pump. Now they actually ask you, "does 7.5 gallons sound about right?"
So, what do the service stations in New Jersey do? You have to pay them "protection" or else they pump from the tank that has molasses in it instead of gasoline?
There's already a White House Petition for this. If this reaches it's target this will be the second time a pro Tesla petition has reached 100k plus signatures - https://petitions.whitehouse.gov/petition/inform-new-jersey-markets-should-be-free-tesla-motors-and-everyone/ptHTHYMP
[rant]
I want to click a button and get a new car delivered to my location of choice, with the ability to shop around for the best price and with fair single-state taxation (at most). Car showrooms can be for viewing and test-driving. You could even charge a membership fee to be able to go look at physical products at a place that ISN'T actively trying to rip you off buy selling them to you at the highest price they can trick you into paying.
I want to be able to refinance my mortgage without spending umpteen hours shuffling paperwork (often FAXes for craying out loud), sitting down at a notary, again at a title insurance company, pay hundreds for yet another useless "appraisal" where they usually don't even look at the actual house, signing 900 papers, and paying thousands for the privilege while every single person or group involved takes their own cut (even if they try to lie about how it's "free" because all the excessive fees are used to increase the balance of the loan). The worst part is, this applies even if I try to re-fi with the bank I already have the loan at. If I can log in to my bank and pay my mortgage and manage my account, I should be able to click through a few online forms and voila, I've got a new loan term with a lower interest rate. It's not really much (if any) additional risk to them; I already owe them the money and I'm the same person I was when the loan was originated...
[/rant]
Forgive me if this is answered somewhere else, but why can't Tesla open their own Tesla dealerships? Have the incumbents rigged that too?
None of them can see the clouds; The polished wings don't care.
According to the New Jersey MVC (PDF), if you purchased a vehicle in another state and paid sales tax on the vehicle, you provide MVC with the receipt. If you paid 7% or more sales tax in the other state, you pay no sales tax to New Jersey. If you paid less than 7%, you pay the difference to New Jersey. In practical terms, if the purchaser buys in the states neighboring New Jersey, there is no additional cost — New York State sales tax is 4%, Pennsylvania sales tax is 6%.
For example: Alice, who lives in Atlantic City, buys a Tesla in middle-of-nowhere Pennsylvania (6% rate) for $60,000. Alice pays Pennsylvania sales tax on that vehicle in the amount of $3600. If she had purchased the vehicle in New Jersey, she would have to pay $4200 in sales tax. So when registers her vehicle with the MVC, she'll owe the difference ($600), plus title fee ($60) and registration fee ($59 assuming it weighs under 3,500 pounds, see here), and possibly, if Christie is really an a-hole, a 0.4% Luxury Surcharge ($240). Keep in mind, if she purchased the vehicle in New Jersey, she'd pay the same sales tax, but all of it would go to New Jersey. If she purchased the vehicle in New York (4% sales tax), she would pay $2400 in tax to New York and $1800 in tax to New Jersey.
But, I could be missing something. If so, please let me know.
Finding God in a Dog
Yeah I agree. Kinda. Sorta. Maybe.
As a seller, yes. THey will say+do just about anything to get your listing.
But as a buyer? Well, I guess your mileage will vary. For example, real estate markets across the country are all heavily based on local customs. Who pays for what, buyer or seller? So when you move to a new city, it can be very helpful to find someone who knows all that stuff. It happened that in my last real estate transaction, I found a really good agent who did some hardball negotiations on my behalf, got some major work done and paid for by the seller, plus she knew tons of people in town, inspectors, contractors, etc who do good work and who are not flakes. For those things, she absolutely performed an invaluable service to me, and I didn't pay for any of it. The seller paid her commission, which as you know is split between the two agents.
It's like anything else I suppose: you have to search around, check references, get testimonials, and do interviews to find someone who will do the job.
However, I do agree with your general sentiment, that buying+selling real estate should not be so utterly complicated that you need to inject a middle tier just to sort out the complexity. Yeah I can get on board with that thought.
Politics, oil, lobbying, oil, nuthin' changes. Sell it all now, when I'm dead who gives a fuck if it poisons the air, the water and the ground you stand on, it doesn't put dollars in my pocket today. Maybe electric isn't the answer, but if we don't make allowances now then technology AND marketing, that should embrace development, will never find a way out of this morass. Profit, as it has been ordained. All hail the mighty dollar.
You can't be serious, making an insinuation like that on a good man.
Governor Christie is just concerned about the changes in traffic patterns that would be triggered by allowing electric cars to enter the state's vehicle markets unimpeded. Christie has a vision for the future of New Jersey and it is deeply important to him that municipal leaders across the state share his enthusiasm and goals. Enforcement along these lines would be impeded. Specifically, if the governor were to block off lanes to a bridge within a mayor's district, and everyone was driving electric cars, the smog wouldn't be as good for intimidating or disciplining the mayor. Clearly the traffic issues need more study.
Is anyone actually dumb enough to believe that car dealerships would band together to protect the public from a new brand? Just what status do car dealerships have to complain about sales by another organisation? And why are our laws so useless that Tesla can not sue these dealers into the dark ages along with the state of New Jersey for using such tactics to try to sabotage a new company?
They are making a 3-wheeled car, which doesn't make it a car anymore, but a Motorcycle or "autocycle" -- which will exempt it from a lot of the legal wrangling that forces most car makers to give up trying to sell in the American Market.
Elio Motors. Google 'em.
If telephones are outlawed, then only outlaws will have telephones.
This is an issue of allowing car companies to sell their own cars, I don't see how it matters whether or not those cars are gas, electric or nuclear powered.
There is an established (quite possibly corrupt) system, and Tesla is trying (possibly reasonably) to break it. I'm sure the dealers are happy to sell whatever makes them a profit, and of course resist any rules changes that will reduce that profit.
Anyone know the motivation behind the original law? Presumably GM would also like to be allowed to sell its own cars.
... maybe he should have called his company "Edison" ... maybe that way, he'd be facing less problems ... ... Edison was in part responsible for Tesla's failure in the end, even though Tesla had far more impressive inventions ... though many falsely aren't attributed to him ...)
(check out the history of Edison and Tesla
How quaint.
Funny thing is, it actually IS a conspiracy, factually and demonstrably so. They publicly claim to "protect" consumers while acting in ways that are unequivocally harmful to consumers.
conspiracy noun \kn-spir--s\
: a secret plan made by two or more people to do something that is harmful or illegal
If you approach a gas station in New Jersey and the guy standing next to the pump is 300 lbs overweight, be careful- it could be an ex-governor. Make sure to pull in slowly, give him some clearance, and fill up with 93. He may give you a strange piece of metal as a "gift". If it doesn't enter your skull at high velocity, take it (WTC steel, baby!). Then hand him a nice tip. Otherwise you might have to put the gas cap back on yourself a few blocks up the road- i.e. "self-service".
California and New York have lost probably near 1.5 million people over the last 15 years.
New Jersey has lost probably about 0.5 million people who moved out with Michigan & Illinois a bit higher over the same time.
When are state governments going to realize they are killing the golden goose?
The motivation was to provide a place for middle men which are always looking for a place to contribute nothing while taking a cut.
The excuse was to provide independence of maker and service organization, so there could be "competition" for service and availability of service in the event the car maker stopped providing service and/or went out of business.
MOST laws affecting commerce exist for ONE reason only: to protect big businesses that contribute money to the politicians who write the laws.
Think about it. How many laws that regulate commerce actually leave you, the citizen, better-off than you'd be without those laws? Have you ever noticed that nearly every set of regulations imposed on any sector of business serve to supress any new upstart businesses, while having not existed to hamper the rise of the current giants of the industry? Ford and GM were able to start and grow without any of the regulations that now apply, but a new innovator like Musk must pay the price to comply with those regulations from day-1 ... before he can make money selling his first car. This protects the big corrupt car companies from having to truly innovate and compete. Boeing was able to start building airplanes with NO regulations on its activities, but any new upstart wanting to make an airliner would have to spend decades and BILLIONS of dollars to clear the hurdles before being allowed to sell a first plane; this prevents them from having to truly innovate and compete. Apple was able to start selling home computers with essentially no regulation at all, but any new computer company must pass things like FCC emissions tests, deal with RoHS regulations and restrictions, a tidal wave of new labor laws and taxes that did not exist in 1975, etc while worrying about thousands of patents (particularly software patents - which did not exist when Apple and Microsoft were starting-up). Even with things geeks rarely think of, like railroads, this trend exists: When the railroads started, any group of investors could start a railroad by buying/building trains and rails and securing the required "right-of-way" for their rails... NOW, however, all railroads face a mountain of laws, including the legal problem of being under the regulatory thumb of Amtrak (the government's incompetent passenger rail service which gets to approve and regulate any potential competitor)
The voters are continually tempted by government promising to "protect them" with all manner of lobbyist-written and bribed-politician-sponsored laws and regulations - but the truth is that most of this junk is to help big business, big labor, and big government "scratch each-others' backs"... and "We the People" need to learn to see-through the propaganda and oppose all of it. Each of us needs to resists the urge to support the new garbage we think we might like or that we think might hurt people we don't like, and realize that WE are the ultimate targets of ALL of it.
Give me a break, Coda would have failed under any circumstances.
Musk, if you want to keep credibility, don't say incredible things.
http://lkml.org/lkml/2005/8/20/95
...having multiple family members across multiple generations work for Chrysler in its various incarnations, I thought they should have folded. They were the weakest of "The Big Three", and the one with the least-relevant product line. I saw the dealership my grandfather was head mechanic at close, I saw all of the truly great products get morphed into "nostalgia-mobiles" for the mullet crowd.
The existing car market is a convoluted mess - the more agile imports have forced the industry to shift. Even the major players have 'fooled around' with bypassing the dealer system, ironically usually with alternative-energy vehicles (EV-1, Prius Gen 2's original launch, Leaf's original launch, etc.) That system worked well.
And nothing even says that Tesla will stay direct-only! If they expand to true "big player" status, they will probably be compelled to adopt a dealer strategy at least in part, to help their expansion!
Tesla is crying that it must obey the same rules that every one else in the industry.
Stinks!
Just plain stinks.
Can not buy anything from the manufacturer.
WHY?
So that the warranty is damn near unenforceable.
"Dealerships" refuse to implement the warranty "in good faith".
Manufacturers refuse to provide direct "service" of any kind.
Adequate documentation for doing maintenance and upkeep is impossible to obtain.
It is NOT just the transportation "industry", it is every damnable corporation owned and operated "industry" hiding behind the Limited Liability Corporation status.
LOL!
Let's see... Well, the obvious counterpoint to your argument is that PayPal *did* succeed. I happen to hate what it's become (all the abuses of banks, plus a few others, but even less regulation), but back when Musk was starting it up the idea was pretty revolutionary. Even further back, though, there's his startup Zip2, which was sold for over $340 million back in 99.
Since then, his *three* companies (people always forget SolarCity...) all seem to be doing fine. SpaceX has huge contracts, Tesla can't manufacture fast enough to keep up with demand, and SolarCity is one of the top installers of photovoltaic panels in the USA. Sure, they *could* fail, but so could IBM or Google or Coca-Cola. None of them are *likely* to, though. In fact, in the last decade Tesla is just about the only US-based car company that hasn't gone bankrupt...
As for whether the NJ law is aimed at Tesla, you'd have to be a worse nutjob than you claim Musk is to not see it. Let's see, a proposed bill that prohibits a car sales model which happens to be used by exactly one company in the world, right as that company is getting hugely successful? Yeah, there's no evidence at all that this is aimed squarely at Tesla... </SARCASM>
There's no place I could be, since I've found Serenity...
I'd go even further. It's not "every EV", it's more like "every new automaker" that wants to set up business in the US market. It's difficult enough designing and being able to produce a vehicle no matter what the powertrain, from safety compliance and testing, emissions, etc., then add being forced to start a dealer network because you can't sell and service directly. I'm sure quite a few Indian and Chinese automakers would love to see the franchised dealer-only model go away.
Tesla is crying that it must obey the same /stupid, outdated, protectionist, anti-competitive, anti-consumer/ rules that every one else in the industry (has to).
Fixed that for you.
I don't see why a dealership would rather sell a gasoline car rather than an electric car. They are not a gas station and Tesla is rather expensive, presumably resulting in a larger sales commission. On the other hand, buyers would benefit from having multiple options for returns, resale, repairs and bargin shopping for older models. Also, if Tesla goes belly up, there is still hope of multi-brand dealerships offering at least some continued services.
Find the state with the least taxes. Sell each car bound for NJ to a buyer there. Let them sell it in the mall in NJ as a used car.
If you want to get the low-down on how car salesman work: http://www.edmunds.com/car-buying/confessions-of-a-car-salesman.html
Summary: Don't go in to buy a car until you've done a thorough amount of research.
The evidence is clear: when has an American startup auto company ever succeeded by selling through auto dealers? The last successful American car company was Chrysler, which was founded almost a century ago, and even they went bankrupt a few years ago, along with General Motors. Since the founding of Chrysler, there have been dozens of failures, Tucker and DeLorean being simply the most well-known. In recent years, electric car startups, such as Fisker, Coda, and many others, attempted to use auto dealers and all failed.
Tucker's failure had to do with problems with the SEC and his own board of directors. Not because of anything having to do with dealerships but initially about selling accessories for cars he never produced. He had sold over 2000 dealerships at up to $30,000 a pop and it generated revenue, net inflow but because of these other problems he could never deliver the cars. The Dealerships weren't even a factor.
The DeLorean failed because of questions about the financial stability of DMC again by the SEC and selling a piece of crap that had reliability, quality and pricing problems. The DMC 12 had an MSRP of $25,000 which was pricey territory considering you could buy a full on European sports car for about $5,000 more that didn't have all of the problems the DMC 12 had. That and the fact that John DeLorean was caught up in in a drug scandal in 1982 didn't help the cause either. Ultimately DeLorean Motor Corp failed because nobody would invest in them because of these problems. The dealerships were actually on the side of consumers because they got tired of fixing problems that left the factory, so again, dealerships contributed to DeLorean's failure? No.
Fisker is recent history and it wasn't the failure of having dealerships. It was again, a $100,000 pile of crap that broke down and that coupled with the Obama Administration pushing green solutions (remember Solyndra?) agreed to loan money to Fisker so they kept expanding. When Solyndra blew up on the administration they stopped pumping money into Fisker citing delays. Fisker ran out of money because no more investment money was coming in and nobody was buying what they had because of the quality issues.
CODA failed because they built an ugly, overpriced vehicle that nobody wanted. Using an existing cheap Chinese car and making it electric while pricing it ridiculously high wasn't what the consumer wanted so it failed because of that. Were dealerships to blame for that strategy? No.
Given the author's dubious linkage to dealerships being a root cause of failure for these companies is disingenuous and it would seem more likely that:
1) Government Interference by Scrutiny/Questions about financial condition or impropriety and also including pushing your company to grow faster than you can.
- or -
2) Horrible/Overpriced Product with bad quality or lousy design that nobody wants to buy.
Are the more likely culprits here. We all agree Dealerships give people a licensed, well regulated licensed, way to print money by inflating costs to consumers. They don't really serve in the consumer's best interest and that's why all states have very strict laws governing how dealerships must operate and things like lemon laws should a vehicle become so deplorable that the consumer has a way out. In this day and age they are more outmoded considering other mechanisms for purchasing things that have evolved over the past 10 years however the guys who own dealerships have money and that money buys political influence. To a politician, a guy who gives you regular, large campaign contributions is somebody you'
Harrison's Postulate - "For every action there is an equal and opposite criticism"
We bought our LEAF from a Nissan dealership in in NJ (after much hassle finding a Nissan dealer that had a car to test drive / made an effort to sell the LEAF) and paid $0 in Sales Tax.
http://www.ncsl.org/research/energy/state-electric-vehicle-incentives-state-chart.aspx#nj
He might as well...
This *is* New Jersey we're talking about... a statist, socialist shithole that should be ejected from the union.
In NJ, the government is master over, not servant of, the people and the people there seem to like it that way.
You do realize that New Jersey was the last state in the union to end slavery, in 1875! It took them 10 full years after the Civil War was over to finally do that.
Hell, you can't even pump your own fucking gasoline still to this day in NJ.
It's New England. Can't someone just walk to the next state and buy a Tesla there?
Studebaker was at least as popular as Tucker.
Car dealers are not scum sucking bottom feeding hagfish. Neither are lawyers, banksters, coin dealers, or gun brokers. I have a philosophy, it's called BAD: If the person you are dealing with has Broker, Agent, or Dealer in their title, hang on tight to your wallet!!!! ;-D
Dear Microlimp: I give you 2 valid product keys for win7 and you reject both of them. Piss off you wankers!!!
Back in the 80s(? maybe?) Porsche tried to do the same thing. (Surveys frequently report that customers rate the dealer as the worst part of buying a car). The dealerships ganged up and stopped them them, too.
Hey, remember when Daewoo tried to get student sales reps to sell their cars on university campuses? That worked well...
Star Trek transporters are just 3d printers.
and yet apple is more than willing to sell their products at bestbuy which sold about 25% of all the ipads so far.
tesla could learn something about selling from apple