Utah Supreme Court Ruling Bars Direct Sales of Teslas Through a Subsidiary (arstechnica.com)

The Utah Supreme court has ruled on Monday that the state's regulators could prohibit an auto manufacturer from having ownership interest in a dealer. "In what the court called 'a narrow, legal decision,' it said that it wouldn't weigh in on whether allowing the state's Tax Commission to prohibit direct sales from Tesla's wholly owned subsidiary was the best policy for residents of Utah," reports Ars Technica. "Instead, the court said its job was simply to determine whether the commission could legally make that prohibition." From the report: Tesla created its subsidiary, Tesla UT, to be able to sell new cars in Utah, but the State Tax Commission ruled that the subsidiary needed a franchise agreement. Tesla UT entered into a partnership with its parent company, but the commission said Tesla couldn't have a financial interest in Tesla UT's franchise. According to the Salt Lake Tribune, "Attempts were made in 2015 and 2016 to change Utah law to accommodate Tesla, but the car dealers and other automakers rebuffed the efforts." A Tesla spokesperson told Ars, "The Utah ruling is disappointing for Tesla and all Utah consumers interested in consumer choice, free markets, and sustainable energy. We will pursue all options to ensure that Tesla can operate in Utah without restriction. In the meantime, we will continue to provide service and limited sales activities (through our used car license) at our location in South Salt Lake City."

Comments

Wheb you can't beat 'em

[Ol Olsoc]

Make them illegal.

Thank God that the deep red state of Utah, is showing how the free market is supposed to operate.

Re:Wheb you can't beat 'em

[El Cubano]

is showing how the free market is supposed to operate

Well, the court decision in this case shows how a court should function: rule on the merits of the case and the letter of the law, not on what they think the legislature meant, or on how they would prefer to see things.

That said, the law in this case is clearly anti-consumer, but that is a matter for the voters and their elected representatives.

Re:Wheb you can't beat 'em

[ArmoredDragon]

I say that a court should look for JUSTICE and not the letter of the law. If a law is just 90% of the time, then a case should be dismissed 10% of the time. Because it is not just in that case. Strict interpretation is wrong.

That's not how courts work, and it's certainly not how they should work. Anything else is altering the laws with complete disregard for the process that they were created to begin with, and you may as well not even have judges and just let legislators both write laws and interpret them. Furthermore, you'd end up with highly inconsistent rulings and your legal system more or less would fail to serve any useful purpose.

Not that I agree with this particular law.

Re:Wheb you can't beat 'em

[mi]

the deep red state of Utah, is showing how the free market is supposed to operate.

Government sucks everywhere — the less of it, the better. Free people ought to be able to sell stuff to each other at will. The list is long... Deep blue New Jersey, which first prohibited and then allowed sales of Tesla is not any better in this regard.

It is not a right, if you need a permission (license, permit, approval) to exercise it.

Re:Wheb you can't beat 'em

[Imrik]

A court as a whole should seek justice, but a judge (or group of judges) should rule on the merits of the case and the letter of the law, not what they think the law should be.

If the legislators write (or let lobbyists write) laws that are inadequate, it is on the legislature to fix them. At most, a judge might strike down such a law until it is fixed, but should not under any circumstances try fix it themselves.

Re:Wheb you can't beat 'em

[mwvdlee]

Some courts do work that way.
In my country, the Netherlands, judges are supposed to rule on intent.
In the US, judges are supposed to rule on the letter of the law.
It may seem like a small distinction, but it affects how laws are written and is deeply ingrained in the large body of existing laws in both systems.
Both these legal systems would crash to a halt if switching between intent and letter of law.

How much does a Utah legislator cost?

[dltaylor]

If we know that maybe we could crowd-fund the purchase of enough to get any law we want passed.

Re:How much does a Utah legislator cost?

[littlewiggler]

Utah is only ~65% LDS (Mormon), but holds more than 80% of the state legislature. Salt Lake City is close to 76% non LDS, but gerrymandering and just flat out population distributions make it so that outside of Salt Lake City and Park City any year with voter turn-out of more than 65% guarantees the Republican candidate wins.

A typical Republican State House race, is around $7-$10k for actual 'needed' expenses in a race. Democratic candidates usually struggle to raise more than $4-$9k.

State Senate is around $40k-$50k, but few Democratic candidates reach that amount.

Most Utah House Republicans get between $20-$30k from 'fundraising' depending on their committee assignments. They usually have enough to fund their next re-election before they even start fundraising for the next cycle.

Even if you are able to buy one, but there is the invisible guiding light from Temple Square about how and what bills will be brought to a vote and how they pass/fail. Add to the part-time nature of the legislature and lax conflict of interest laws there is also the inherent corruption for each elected representative to make sure the bills benefit themselves or their employers (both R's and D's)

The big problem for Tesla is that the wealthiest family in Utah, the LH Miller family, owns most of the auto dealerships for all manufactures and are LDS. They also control most of the entertainment venues and professional sports teams.

They lobby well and pretty much control what/how/when cars are sold. The Miller family shut down legislation proposing Sunday car sales a few years ago and have been successful in stopping legislation that would change the # of car dealers in a geographic area.

Dealers are Leeches

[number17]

Here are the benefits of a dealer network as provided by the National Automobile Dealers Association:

1) Better pricing when there are lots of dealers in your location. Bad pricing when there few. 2) Manufactures gain free distribution channel that they would otherwise have to pay for themselves.

All I see is a non-efficient layer that extracts profits by jacking up prices.

Devil's Advocate?

[WhatsGoodman]

Does anyone actually believe, or at least legitimately understand the position, that auto manufacturers should not be able to sell directly to consumers? I'm genuinely curious. There are many cases of seemingly anti-consumer regulation where I can at least comprehend the logic of the other side (net neutrality being the first that comes to mind), but in this case I don't see anyone benefiting from this regulation other than entrenched dealership groups.

Re:Devil's Advocate?

[Narcocide]

The amusing thing is that it was originally intended to prevent exactly this type of abuse. What happened that (apparently) nobody honest was able to both foresee and prevent was that the manufacturers would find a way to gain implicit control over what the dealerships do and say anyway.

Inter-state Commerce

[Luthair]

I'm not an American, but couldn't this be considered interstate commerce which would be federally regulated?

Re:Inter-state Commerce

[Mr.CRC]

Certainly not. The criteria for what constitutes "interstate commerce" are strict and narrow, and the federal .gov usually errs on the side of caution rather than venturing into uncertain legal territory. ;-)

Democracy???

[johnnys]

Quote: "Attempts were made in 2015 and 2016 to change Utah law to accommodate Tesla, but the car dealers and other automakers rebuffed the efforts."

I know Utah is weird, but the "car dealers" and "automakers" have a veto over state government and the media reports this as though it's somehow normal? What part of "democracy" do Americans not understand?

Re:Kudos

[rahvin112]

Dealers add a minimum of 3% to the cost of every vehicle at a minimum. How it works is that the Dealer will generally take the wholesale price and add anywhere from 5-10% to the cost depending on popularity and supply. Then you can negotiate that percentage down to a minimum of 3%. Generally the 3% (called dealer holdback) is non-negotiable. Even if you buy 1000 cars a month they will NOT negotiate that extra 3%, they will cut the 10% down to that 3% but no matter what you are paying 3% more than you would if you could purchase it direct.

Dealer laws do NOT protect competition, they protect dealer profits and insert a middleman into a sales that 50 years ago was needed but today is no longer needed at all. What's ironic about the Tesla decision and the law behind it is that Utah was one of the trial states for Ford when Ford experimented with buying out all the dealers and selling cars at fixed prices direct. So not even 10 years ago it was legal in Utah for the manufacturer to sell direct as long as their name was Ford and they paid the dealers a shit ton of money to buy out their franchises.

Make no mistake, this law is about the Larry Miller family preventing this, they own the Jazz a ton of real estate and are some of the wealthiest people in the Utah and they have a vested interest (they control more than 50% of all the dealers) in preventing manufacturer direct sales. This is crony capitalism at it's highest level.