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Tesla's Next Auto-Dealer Battleground State: Georgia

Posted by timothy on from the level-boss dept.

cartechboy (2660665) writes [Elon] Musk and Tesla's biggest hurdle in the U.S. has been bypassing conventional dealerships and selling directly to customers. This concept is something that's illegal in many states thanks to a nationwide patchwork of decades-old franchise laws. Tesla's latest battle is taking place in Georgia where dealers allege that the start-up company is in violation of the state's franchise laws. Not surprisingly, Tesla's fighting back. To sell cars in Georgia, Tesla had to agree to sell fewer than 150 vehicles directly to consumers in the state. Last week the Georgia Automobile Dealers Association complained that Tesla sold 173 vehicles. Tesla hasn't publicly commented on how many vehicles it has sold in Georgia. We've seen time and time again how this story ends, and the writing is clearly on the wall for this case. Another bit of writing on the wall, though, as reported by the L.A. Times, is that recent electric car sales in the U.S. have been stagnant.

11 of 157 comments (clear)

  1. Franchise laws = Racket laws by Anonymous Coward · · Score: 5, Insightful

    There is no way in hell those franchise laws were put in place for the benefit of you and me. They were put in place merely to protect a lucrative profit stream for special interests.

    1. Re:Franchise laws = Racket laws by alexander_686 · · Score: 4, Insightful

      It is a bit more subtle than that. Back in the 20s there were over a dozen auto manufactures and many repair shops, so that was not an issue. The issue was one of unbalanced power. The manufactures could bully the franchisors by forcing them to buy more cars than they could sell, yank their franchise after they had built up the brand and sell it somebody else, drive up franchise fees after the initial 10 year contract was over.etc.

      A free market only works when there is a free exchange between 2 parties. The laws were supposed to, and did, redress this balance of power. Of course, what was true 100 years – or even 25 years does not necessarily apply today or to Tesla. The NADA today is about defending locally entrenched business interests and the status quo.

    2. Re:Franchise laws = Racket laws by bigpat · · Score: 4, Interesting

      Originally they were not bad laws, back when there was only 1 or 2 car manufacturers who did not really have to compete, and when there were not many mechanic shops. Now the laws are really just a way to pay middlemen who pay lawmakers.

      I think that is probably backwards. These laws would obviously tend to help larger car companies exclude competition. Like many issues of regulatory capture I would deduce that these state franchise laws were actually bought and paid for by big companies like GM, Ford and Chrysler in order to ensure that all those smaller car companies that didn't have robust dealership networks would either be forced out of business or forced to sell out to the big three. It took some serious capital investment and many years to set up dealer networks for Toyota, Honda and other foreign car companies. But they had the backing of their respective countries and large consumer base at home to leverage. Make no mistake these laws may have been passed at the behest of the local dealers, but those dealers were working from the same game plan as the big three.

  2. Ah, how heartwarming... by fuzzyfuzzyfungus · · Score: 4, Insightful

    Do 'States' Rights' have any applications that aren't kind of embarrassing?

    1. Re:Ah, how heartwarming... by i+kan+reed · · Score: 4, Informative

      Yes!

      Some of them were outright morally repugnant, like slavery.

  3. Stagnant electric car sales by guruevi · · Score: 4, Informative

    The reason they're stagnant is because there is only one brand worth buying them from is Tesla.

    Toyota/Honda has a decent lineup in the upper range with their plugin hybrids but if I'm going to plunk down 50k, it might as well be a Tesla or I can get a gas powered car with identical economy for half that price from better brands.

    Perhaps one of the Germans will start entering the market with a better option but the Chevy Volt is crap, Ford and Fiat publicly state they rather don't do it, Fisker was legislated out of business, the rest of them are simply putting in a model because they have to and it shows; it's the same frame as a gas powered car with some batteries slapped into it.

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  4. Stagnancy bogus. Math is hard. by Jodka · · Score: 5, Informative

    from the summary:

    "...as reported by the L.A. Times, is that recent electric car sales in the U.S. have been stagnant"

    from the LA Times:

    "Sales of electric drive vehicles are stuck at about 3.6% of all new car sales for 2014"

    "And that's during an otherwise robust sales season. Total figures for August were higher than any time in the last decade."

    So the absolute number of electric car sales is increasing but their market share is not. The reporter, one "Charles Fleming," seems not to comprehend that a fixed percentage of an increasing value is itself an increasing value. "Stagnant," is the wrong term to describe an increase in sales. Math is hard.

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  5. Re:They are stagnant by GodInHell · · Score: 4, Interesting

    One of the other articles on the L.A. times is reporting that "U.S. auto sales surge in August to month's highest level in years" so - it's lies, damn lies and statistics time. Electric car sales fell 0.1% as a proportion of total car sales during a period that included the car sales at the "highest level in years."

    Consider also that Tesla is still on back-order status and they are gearing up to release two new models of cars. Other than the Tesla, only Nissan has a pure electric generally available on the market - the Leaf - which sold over 120,000 cars last year. See, Wikipedia. Ford's focus is also out there, but only in select markets.

    Shorter: there's only one mass-market electric car on the market. The Tesla Model S, while definitely a beautiful car, doesn't have the production volume to compete in a market share battle - that's not Tesla's bag - yet. The "stagnation" story is more of the knee-jerk car guy rejection of electrics that has been bouncing around in the media for 30 years now.

  6. Re:What is the Tesla strategy? by hansoloaf · · Score: 4, Interesting

    Because: 1) Dealers sell more than one brand. They will steer the buyers towards other brands if the buyer is hesitant about Tesla. Dealers don't care about one brand loyalty - just want to sell as many as possible in a month. 2) Dealers will definitely try to sell more gas cars as they break down more frequently and the $$$ for dealers is the service dept. They barely make a profit in the sales dept. 3) Tesla has a specific idea on how to do customer experience. Dealers are the worst in this category. Tesla wants to avoid this.

  7. Comment from Tesla by JamieKitson · · Score: 5, Insightful

    Tesla *has* publicly commented on how many vehicles it has sold in Georgia, it says that the 150 maximum is for a calendar year, while the 173 figure is for October to June and it hasn't hit the 150 mark for 2014.

    http://www.autonews.com/articl...

  8. NOT stagnant by zwede · · Score: 4, Informative

    Tesla had a 2 month backlog (time from order to delivery of a car) of 2 months early this year. In the spring it grew to 3 months. Early summer they upped production to address this, but backlog grew to 4 months. Tesla is building more cars than ever, yet the wait keeps increasing.

    "Stagnant" my ass.

    All this for a car that was introduced almost 2 years ago and has had virtually no updates during this time. Shows how far ahead of other manufacturers they were.