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Tesla Wants Texas Auto Sales Regulations Loosened
An anonymous reader writes Tesla decided not to build its new $5 billion battery factory in Texas, but the company still wants to sell its electric cars directly over the Internet there. The automaker hopes that the possibility of future investment in the state will be enough to overcome the Texas Automobile Dealers Association lobby and change dealership laws. From the article: "Diarmuid O'Connell, Tesla's vice president for business development admits that getting the law changed won't be easy. 'Does the fact that we didn't site the factory there complicate things? Absolutely,' O'Connell said. 'But we're going to be doing a number of big battery factories in the coming years and we're going to need new vehicle factories as well, and there's a certain logic to doing those in Texas.' He didn't elaborate, but added that the state may not be so attractive if current sales regulations stand. 'If we're banned in Texas, why are we investing billions of dollars here?,' O'Connell asked."
The good Texas conservatives are committed to fight unnecessary government regulation and would never... Oh, wait.
or LOST. After all, we have to adhere to /. grammar here, right?
Because "hurr durr" the Republicans passed laws that say that Tesla must use a network of independent middle men to sell their cars.
If I have been able to see further than others, it is because I bought a pair of binoculars.
Namely paying the workers less.
Less than Nevada? Not likely. Tesla certainly pays it's geeks competitively in Silly Valley, though I hear the hours are long. They make a high-margin product anyhow, and need quality more than 1% cheaper wages.
Texas is a great legal climate for business, which is one reason so many people are moving there. But state and local politics anywhere is hugely influenced by car dealers, as they have larger advertising budgets and more name recognition than state senators. Tesla can't even bribe/contribute their way to victory here, because an owner of a large dealership chain can so easily oust a state rep. OTOH, bringing a ton of new jobs, or even finally offering a car for sale that wasn't a rich boy's toy, could change things - give the Texas voter a reason to actually care.
Socialism: a lie told by totalitarians and believed by fools.
The Republicans in Texas will fold the Texas Automobile Dealers Association's tent. While that lobby model was good for business at one time, Texas is becoming more and more unregulated including control by anti-competition lobbyists.
It little behooves the best of us to comment on the rest of us.
They'll end up paying twice the difference in bribes to state and local politicians and bureaucrats. Functionaries in India go to sleep DREAMING they lived in Texas. Illinois governors dream that when they get out of prison they'll get elected in Texas.
> Because "hurr durr" they were lobbied to do so by the car dealers in a big oil state known for its "good old boy" wheeling and deeling.
Fixed That For You.
If there's one thing Elon Musk is very good at, it's getting governments to do things for him.
So he'll probably get his way here eventually.
"First they came for the slanderers and i said nothing."
Geeks =/= Factory workers.
And until the price for the way things are done in Texas comes due, lots of people will take it and think they are getting a deal.
Then they learn how they have been screwed.
Tesla needs and is aiming to build lots of high capacity batteries, which are exactly what consumers need to store energy from solar / renewable sources and off-peak rate time periods to be used during more expensive on-peak rate times. Energy companies are among the largest consumers of fossil fuels, and have to be totally against any technology that eats into their profits, no matter what they say or do publicly. Their fossil fuel providers must also be in that camp, as they lose big time if their largest customer quickly becomes much less profitable, and sets the stage for personally owned renewable energy sources which they don't have a piece of.
I'm rooting for Telsa to succeed in spite of Texas, Big Oil, the energy companies, etc.
Actually, I don't know why they don't "acquiesce" somewhat to the demands - and offer to sell to the dealers at the same price as they sell in other states.
When the dealers refuse on the basis they won't be competitive with out-of-state sales, they should surely be able to use that to force the hand of the legislature (by advertising in Texas, with the tag line "Not available in Texas because none of your dealers will sell our cars" or something). Truthful. Pins the "blame" where it belongs (the dealers).
If, OTOH the dealers accept, the customers will demand to know why Texas is 25% more expensive (and Tesla can truthfully say "We sell at the same price to all comers, dealer or private, so any difference is the dealer's margin because your state gov't won't let us sell direct to you".
I'm very interested, with Tesla apparently coming to Oz next year, to see what happens here.
Yes, because democracy is setup to be sold... I would be willing to bet that the vast majority of their constituents think these laws are BS.
When you cant win, ad hominem.
General Motors reports Tesla is still dead...
Wicked Early News, do you still exist and want this story?
Anybody up for a game of Texas Hold 'em in protest of this story?
Except when they aren't.
The shepherds did so well protecting the flock that the sheep no longer believed that wolves existed.
I wouldn't bet on it, at least not in the near to medium term. Car dealers have a surprising amount of local and state clout and skew heavily republican.
They aren't terribly popular, nor is catering to them a matter of principle(aside from the principle of scratching the backs of those who scratch yours); but crossing them is something that will be rather uncomfortable unless the pressure becomes inevitable enough that they can be deserted by more or less all their allies, all at once.
Commence Texas-bashing!
Well, they are anti-regulation.
Some times.
The shepherds did so well protecting the flock that the sheep no longer believed that wolves existed.
I recall way back in the mists of time car manufacturers in the UK sellimg kits of parts to avoid the high sales tax on cars.
I'm sure Elon could come up with a similar work around. Wheels sold separately.
The Constitution reserves to Congress the power “to regulate Commerce [...] among the several States.” Art. 1 Sec. 8 Para 3. SCOTUS interpretation: * includes the power to preempt state law (express or implied) by the enactment of federal law * denies states power to unjustifiably discriminate against or burden the interstate flow of articles of commerce even if Congress has not enacted a preemptive federal law.
By "republicans" you mean "Democrats" .
... which meant "conservative" for the time period in question.
Texas didn't have a single. Republican governor between 1876 and 1983. These laws were passed in the late 1930s and early 1940s (first in 1937). So that's right in the middle of the Democrats' hundred-year reign in Texas.
So what you're saying is that Texas only voted in a Republican governor after Nixon's Southern Strategy brought all the ultra-conservative pro-segregationists over to the Republican party? What an interesting coincidence.
Maybe because the parties realigned? Why is that so hard for people to freaking understand? All the old Southern Democrats (like the Texas Democrats) BECAME TODAY'S REPUBLICANS! Read some history, look at their positions. It's so easy to understand and comprehend.
....and lucrative contracts to one's brother-in-law are how it is done in Texas government. It is the same as it ever was. Crony capitalism at its finest.
> the current rules favor incumbents. The current rules are against progress.
The whole point of these laws is to prevent the big three established automakers from controlling the market and bullying the little guy. Anyone is allowd can sell cars in these states, except for the big bad car companies, so you don't have any 800 pound gorillas bullying the individual dealers.
Dealers are local, so they've been able to successfully lobby state lawmakers to slant the law even against the far-away car companies and toward local dealers. That's ANY local dealers, including local Tesla dealers.
Tesla wants the same thing Ford and GM wanted, a type of monoply known as a vertical integration monoply. A vertical monoply is when one company controls the entire chain from manufacturing major parts (Tesla's battery mega-factories), building the cars, the distribution network, sales, and service.
Contrast to a horizontal monopoly, where one company controls all car sales. In the horizontal, they control only one layer, but completely control that layer. In the vertical, they participate in, but do not necessarily control, control all layers.
To combat these vertical monopolies, voters decided in the 1930s and 1940s that the company who manufacturers parts (Tesla), builds the cars (Tesla), and controls wholesale distribution (Tesla) can't also control sales and service. Other companies get to compete to provide the best sales and service. That's the purpose of the law.
Personally, I'm not sure that I need to be protected from this type of vertical monopoly given the strength of Toyota and Honda in the US. If the big three from Detroit don't treat me right, I'll just buy a Toyota.
Nevada (Reno where the battery plant is going anyhow) is a short truck or train run from the Port of Oakland. Closer to the sea than much of Texas.
How far off the pacific rim is Texas?
John McAfee 'It was like that time I hired that Bangkok prostitute; to do my taxes, while I fucked my accountant'
those rules would involve an expensive physical buildout and/or sharing profits with a lot of middlemen.
That sounds like a good explanation of why the rules are fundamentally flawed.
Actually, I don't know why they don't "acquiesce" somewhat to the demands - and offer to sell to the dealers at the same price as they sell in other states.
I don't think there is anything stopping a Texas auto dealer from going to Tesla's web site today and buying as many cars as he wants to buy.
The real issue is that the dealer would then want to service and support these cars, which would require a more in-depth working relationship with Tesla; and Tesla (quite reasonably IMO) does not trust dealers to do as good a job with that as Tesla itself can. Without quality service and support, OTOH, there is no reason why a customer should want to buy through a dealership and pay extra for inferior support.
I don't care if it's 90,000 hectares. That lake was not my doing.
Great opportunity for Oklahoma.
I had a friend years ago whose family owned a dealership in Texas. More cutthroat politics are hard to imagine: among the dealerships, the car manufacturers and the government (local and state), some of it pretty clearly out-and-out corruption. Just as an example, they built a new showroom, but the building kept failing some inspection or other. The inspector would write up faults, they would fix them, he would write up new faults...eventually he lost patience and let it be known that the real problem was that he hadn't yet found a blank envelope filled with cash.
This is yet another industry deserving of some serious deregulation. There's no better way to put corrupt bureaucrats out of business.
Enjoy life! This is not a dress rehearsal.
The port of Houston was ranked 2nd nationally in total tonnage in 2012. The port of Oakland was ranked 34th.
Houston is not far from the Atlantic (via the Gulf of Mexico) or the Pacific (via the Panama Canal).
Bullshit. There's absolutely no reason why Tesla couldn't open a training program to begin certifying maintenance techs for their vehicles. If they are somehow able to service the car in such a "superior" way then they certainly have the ability to codify and document those "superior" procedures, then actually make techs who wish to become certified demonstrate an appropriate level of competency with the maintenance procedures. Then dealers wishing to provide "Tesla Certified" maintenance would simply require their techs to acquire that certification.
I don't think you understand the situation. Traditional dealers make a lot of their money selling warranties and overpriced service after the sale. Tesla operates a nationwide network of service centers and charges $600 for annual service. Why should Tesla be any more anxious to give up that service than your local Ford dealer is to recommend you use JiffyLube for oil changes?
Right now, Tesla has a de facto monopoly on the technical expertise required to service their vehicles. You can't take it down to the neighborhood mechanic for work, because they just don't know its systems. You'd have better luck with the local dryer repairman. It's in Tesla's interest to keep as much service in-house as possible, for exactly the same reasons as traditional dealers.
If those procedures don't exist, then the vehicle is not ready for mass market - Tesla WILL NOT be able to keep up with the maintenance work as their sales grow. Can you, for a minute, imagine if every time you needed anything done on your vehicle, you had to ship it to Nevada, and wait a couple weeks? Who's going to buy that shit?
You're not paying attention. Tesla has its own network of service centers, more-or-less equivalent to the traditional network of dealers. Tesla wants to maintain ownership, control, and share profits of those showroom/service centers, where traditional dealerships are legally required to be independent. Tesla is using the facts that their showrooms don't maintain an inventory and that their vehicles don't require exhaust, fuel, coolant, oil, and other extensive support systems to claim these locations are outside the traditional definition of "dealership" and may therefor remain Tesla-owned. They definitely have a scalable architecture for servicing their growing fleet. It's one of the reasons they're resisting the traditional independent dealer model.
I think the story here is "man bites dog". Texas, home of the "fuck the people, give businesses ALL the money, regulation-is-literally-Hitler" attitude is resisting innovation with unnecessary regulation. So much for the free(er) market.
This is why car dealers can treat their (sales) customers like total dogshit and get away with it; the dealer chain owners are able to afford buying legislators outright, and protectionist laws give the dealerships unreasonable leverage in the manufacturer trying to get bad (well, worse than the rest, which is beyond horrible) dealerships to change their practices. Revoking a dealership's franchise is only slightly less hard than getting a Buick through the eye of a needle.
Never underestimate the power of stupid people in large groups.
LMOL I didn't realize lobbyists were constituents. Nice one Potsy.
So you're saying Rick Perry and George W Bush were powerless to change those laws with a Republican majority in the state capital. Got it...
So the people who wanted more government regulation to protect the little guy from the big bad corporations from Detroit are now Republicans? Okay, if you say so.
There are a lot of rich people in Texas. California is a bigger market for Tesla and New York may be as well. But Texas isn't far behind.
Abusing / competing with dealerships is one issue.
There is another issue with vertical integration, and it's been discussed a lot in relation to Comcast having some vertical integration; both producing and distributing content, running the infrastructure and the value-add services on top of that infrastructure. As mentioned elsewhere, dealers make their money via their service department and extras like upgraded stereos and other options. If the manufacturer is the only dealer, that means for some items they are the only service center, and can charge $400 for a radiator cap which should cost $4.
In general, this is another case of every argument we've seen about why it is bad for Comcast to own the fiber, provide the ISP service, have a video service, and deliver the videos over the fiber they control. Same thing - when an automaker (or ISP, or any company) controls the whole stack from top to bottom, they can do things that are not in the interest of consumers.
That's very perceptive.
The problem* with Comcast:
They have the fiber infrastructure, the ISP service run over that infrastructure, and the video-on-demand service layered on top of that. Since they have all the layers, they can do anti-competitive things.
Tesla:
They make the parts (battery mega-factories), the cars, control the distribution, the sales, and the service over the life of the car. When auto manufacturers controlled the whole stack, they did anti-competitive things.
> because business like to point to precedents in other industries to justify actions in their own.
Businesses and PEOPLE. It's the first rule of fairness. "They are allowed to do it, I should be allowed to as well" is often heard, and normally correct. That's not wrong - it's so fundamentally right that it's one of the most-quoted and most important phrases in our supreme law, the Constitution:
nor shall any State ... deny to any person within its jurisdiction the equal protection of the laws.
* "alleged problem?". Not everyone agrees it's a problem.
Funny, I see Anti-Corporate Liberals supporting Deregulation! Politics and strange bedfellows indeed
Agent K: A *person* is smart. People are dumb, stupid, panicky animals, and you know it.
The difference is that there's about 10 major car companies selling in a given city and only one or two (if you're lucky) media content distributors.
Republicans love regulation that keeps them in control. As car dealers are typically conservative, there's little chance they'll give it up, especially not to some eco friendly liberal types like tesla.
While I'm sure Tesla would face the same kind of stupid auto dealer protectionism in any state where they do business, I wish they'd come to Indiana, which has a great deal of experience building RV's.If they took hold of a midwestern state, it would have a greater positive impact on the region than down in Texas.
Remember kids, if you're not paying for the service, YOU ARE THE PRODUCT THAT IS BEING SOLD.
Actually, representative democracy doesn't account for the lobbyists. That's an indicator of oligarchy and fascism, not a republic or democracy.
It isn't that simple, much as the right would like you to think. In this case, competition would be good for the consumer. This is in contrast to the right, who define "competitiveness" as "give us tax breaks and cheap labor that will wreck the economy and bankrupt the states (see Kansas for what lower taxes really do) or we'll pitch a fit, call you anti-business, and close factories just to spite you".
The current car dealership model is bad for the consumer. It's great for the rich that own the dealer chains, but at the consumer level, it's a model of sleazy sales tactics and outright lies. Liberals, contrary to what the echo chamber would like you to think, are not out to destroy businesses and pass regulations just for their own sakes. These laws are bad laws. Removing them gives new business models a level playing field, instead of one that's drastically slanted in favor of the status quo.
Never underestimate the power of stupid people in large groups.
You're a fucking idiot. It is on every fucking car they sell. The name is itself exactly what you're whining about. Piss off
Agent K: A *person* is smart. People are dumb, stupid, panicky animals, and you know it.
Let's have a look at at the capital, Austin, which is 11th largest city in the US and the fourth largest in Texas.
There are about eight car manufacturers:
Chrysler
Ford
GM
Honda
Toyota
Nissan
VW
?
At least four ISPs offering gigabit-class service and there hundreds of other ISPs. For gigabit, you can choose from:
Grande
Google fiber
Time Warner (300 mbps currently, upgrading)
AT&T Uverse
If you don't want gigabit, Earthlink offers 25 Mbps while Exceed, Dish, and Hughes offer satellite at about 15 Mbps. Sprint 4G WiMax is 10+ Mbps.
Just as certain car makers are not well matched to certain consumers, certain internet services are not well matched to certain consumers. Overall, there are ~8 car manufacturers available and 8 major ISPs who own their networks, plus many minor ISPs.
Total tonnage affects the discussion how?
The fact remains that Nevada has fine access to ports and a shorter, cheaper trip to Asia vs anyplace in Texas.
John McAfee 'It was like that time I hired that Bangkok prostitute; to do my taxes, while I fucked my accountant'
Abusing / competing with dealerships is one issue.
There is another issue with vertical integration, and it's been discussed a lot in relation to Comcast having some vertical integration; both producing and distributing content, running the infrastructure and the value-add services on top of that infrastructure. As mentioned elsewhere, dealers make their money via their service department and extras like upgraded stereos and other options. If the manufacturer is the only dealer, that means for some items they are the only service center, and can charge $400 for a radiator cap which should cost $4.
The irony here is that dealers are the ones that are notorious for overcharging for parts and labor now. I understand the intent of the original laws, but they don't work. Having dealers has not worked out in the best interest of consumers. Times have changed and we don't live in the era of two or three big automakers. There are about a dozen major automakers selling cars in the US so there is plenty of competition in case a few "behave badly." This is the exact opposite of the cable industry.
Dealers basically have a geographical monopoly. We'd be better off if GM, Ford, Chrysler, Honda, Suzuki, Mercedes, BMW, Hyundai, Mitsubishi, Tesla etc were competing for return customers.
Some privacy policy Slashdot.
You're absolutely right that Google's plans kicked the other companies into high gear. It made all the difference in the world.
> That's why regulation is absolutely essential for broadband.
Google DID say that the amount of regulation was a major factor in which cities they entered. Did they say they were bringing that huge improvement to the cities with the MOST regulation or the LEAST regulation? What created the local monopolies in the first place, legal franchises granted by regulators?
OK, now let's not choose one of the largest cities in the US/Texas. I've been living in various cities in North Carolina for 10 years now and never had anywhere close to 8 choices for broadband. Even in the capital, Raleigh, there was Time Warner Cable, slow DSL, and *maybe* U-Verse (if you were lucky enough to live in the right neighborhood, I wasn't). I have a feeling this is much more representative than Austin TX where Google has set up shop.
This article and discussion is about TEXAS law. I'm not quite sure it makes sense to judge TEXAS law by Raleigh, NC.
State blocks the sales of a companies product. Company employs a newsworthy amount of common sense and does not put 5 billion dollars into the state by building a mega factory for a product that is blocked in the state it would be constructed in. It also fails to contribute the jobs that would be needed to build and staff the mega factory to the overall employment of that state.
I for one am thrilled. I think bad things should always happen to vindictively stupid people and then be thoroughly reported in the news. Thinking of all of the non-Tesla cars not being bought by all the people not employed building or staffing the factory not constructed in Texas makes me feel warm and fuzzy.
Thinking of the talented, hardworking, unemployed people in texas who having suddenly found themselves deprived of this opportunity can suddenly divert their time to forming a lynch mob to go after the legislators responsible. I'd PVR that lynching when it make it to the news and watch it on loop.
Namely paying the workers less.
This is just errant bigotry against Texas. If you actually knew anything about he state that's creating 75% of the new jobs in the entire US, you'd realize that there is a *very* competitive labor market here.
I definitely have to pay more for talented or skilled software people here (especially in Austin) than in other parts of the country. Hell, if you've got a CDL and can pass a drug test, you can make $100K+ driving an oilfield truck - all due to the economic miracle called fracking - no thanks to the US Government, which has tried its best to kill the strongest economic engine still running in the US... That said, there are a LOT of programmers who aren't worth what they're getting paid, and when the next bubble burst in the mobile/social software space, there are going to be many people out of work and with suddenly unmarketable skills.
BTW, it's not like the laws here are hurting Tesla any - Here in Austin, you can't swing a dead cat without hitting one of the things. I know one thing - I'd sure hate to own a Mercedes or BMW dealership, since that demographic has made the Tesla the currently trendy car for show-off poseurs.
"The future's good and the present is nothing to sneeze at." - Roblimo's last
Hey, it's those crazy Texas Republicans again, talking about wanting small government that doesn't regulate businesses, but if you actually want to compete with existing businesses, good luck to you.
Bill Stewart
New Fast-Compression-only CPR http://preview.tinyurl.com/dy575ks
Remember that the dealership layer was inserted by the states to PROTECT consumers from the crushing power of the auto manufacturers, and add some local accountability through choice. (Choice that has vanished lately as we've allowed huge dealer networks to replace that local ownership, more or less defeating the original purpose.)
There are certainly significant problems with the current model, but remember that the current dealership model was created to address problems that resulted from exactly what Tesla is asking for - direct control of the customer relationship by the manufacturer, especially during the rapid consolidation of brands in the first three decades of the 20th century. That means we should at least THINK about what we're doing here before we make reactionary policy changes either for or against what Tesla's asking for. I'm no big fan of the dealership model, but I am skeptical that if Tesla gets what they want, that it won't be a huge win for the big manufacturers at the expense of local power and control, and ultimately, at the expense of buyers. (Dealers who regard customer service as a possibly necessary evil aren't exactly helping themselves here, of course...)
State government policy should first serve both the people and the corporations (which are just legally "embodied/corporeal" groups of people empowered to act as a single person) of the state. The best ironclad principle of true libertarian conservatism is that government power and control must be kept as local (at as low a level) as possible, as the higher it rises, the more corrupt and evil it will eventually become. Neither big government nor big business is a good thing, but the two of them "working together" is pretty much always a very bad thing...
"The future's good and the present is nothing to sneeze at." - Roblimo's last
The dealerships have forfeited any right they might have once had to protection. The current model is an atrocity. Consumers have consistently rated buying a car as one of the most stressful retail experiences that you could have. The dealership model is irredeemably broken. Many consumers have expressed that they would prefer to buy cars directly from the manufacturer and avoid the dealership altogether. I personally would spend thousands more on a car if it meant I didn't have to deal with professional slime buckets in order to get something that I need to maintain my lifestyle and provide for my family.
If it's bad for dealerships, it's a good thing. Remember, also, that in this case, we're talking about removing regulation that is stifling innovation. The Tesla model is the better mousetrap. I would have thought that a free(er) market would be something that libertarian conservatives would be in favor of, and that the original protectionist nature of the laws that the current dealers are hiding behind would be anathema to the libertarian conservative philosophy, as it makes government larger. My understanding of the philosophy is that the more laws there are, the less free the society. Getting rid of these laws would therefore make the society more free.
I think what is really being defended here is the right for dealership owners to shamelessly swindle consumers out of their money, with no recourse for the consumer. If any other business treated their customers as poorly, they 1) would be out of business in weeks, and 2) would get pressure from the parent organization to fix their shit, lest they lose their ability to sell their product. I had a dealership blackball me for asking too many questions about a particular fee on the worksheet. After getting no action from the owner of the chain the dealership was owned by (I think they actually hung up on me at one point), I went to the national marketing organization for that manufacturer. They, to their credit, at least acted like they agreed that what had happened was unacceptable, and contacted the dealer on my behalf. A couple of weeks went by with no response from the dealer. I called again to check on the status, and what the rep told me was that the dealer had told them they contacted me on a particular date. I checked my phone records. There was no such call. The dealer lied to the manufacturer. Currently, the manufacturer basically has no recourse to affect the way their product is sold. That this acceptable in this industry but not another is because of these laws. They're bad laws. They need to go.
Never underestimate the power of stupid people in large groups.