Has it dawned on anyone?

[lolachampcar]

Motivations are different from positions. For some, why you do something heavily influences how you do it. For others, the end game is shrouded in a cloud of obfuscation.

Dealerships have a goal, money and the ear of the local community. If their goals are blatantly anti-competitive you can bet that is not how they will argue their case (at least not in public, think Romney and 47% -- true or not, the words did not do him any good). They will find arguments that make sense and are compelling and it is these arguments that we need to understand. They will also be greasing the skids in the background and the only way to address that is public opinion. You either buy your way into the table or you bring enough voting pressure to overwhelm the money. Tesla does not strike me as a company that wants to bribe people to do the right thing.

 

[carogan]

In most of the state laws out there, Tesla is not jumping through a loophole in any way. And there is nothing in most of those laws preventing a manufacturer from selling direct as long as they are not competing with their own dealers.

The exceptions are the new NC law and possibly the Texas law.

The laws (with the exceptions above) are positioned to not allow a manufacturer to sell direct to the public because they don't have the costs involved in a dealership so they would be able to undercut the dealers they have a contract with.

Tesla has no dealerships, so no one is being harmed, there is no one to bring damages or that has standing to sue.

The other manufacturers decided to use the franchisee distribution business model, Tesla is using the direct sales model. Both business models are legal under both state and federal laws.

But the argument that is being used by our competitors is that there is harm by allowing Tesla to implement this model when none of the other competing manufacturers are allowed to adapt in order to compete. It brings harm to everyone else.

And the crux of the issue is that these laws were implemented to protect the dealers from their own manufacturers - so clearly these states do want to protect their dealers, whether they be from their own manufacturers or from a competitor such as Tesla. We can ignore this reality all we want but I think we're only fooling ourselves if we do. We are jumping through a loophole because we know what the intent of the law was (to protect dealerships) but you're suggesting we use a technical argument and ignore what we know is the real intent of that law. I don't think we're going to win if this is the stance we take.

 

[mitch672]

Funny how once politicians start receiving "contributions" to their campaigns, they start "deciding" something is important to "protect."

Solution: Elon needs to make larger contributions to the politicians than the dealers do... We have the best government money can buy, Elon can buy more pols than the dealers, problem solved (if it was only that simple). The problem is, once you start paying ransom, theres no end to it.

 

[Krugerrand]

And the crux of the issue is that these laws were implemented to protect the dealers from their own manufacturers - so clearly these states do want to protect their dealers, whether they be from their own manufacturers or from a competitor such as Tesla. We can ignore this reality all we want but I think we're only fooling ourselves if we do. We are jumping through a loophole because we know what the intent of the law was (to protect dealerships) but you're suggesting we use a technical argument and ignore what we know is the real intent of that law. I don't think we're going to win if this is the stance we take.

By the same token, the Dealerships can choose to ignore the reality of what *the people* want...which is no more Dealerships. I don't think they're going win if that's the stance they take. :wink:

 

[Beavis]

Gotta agree with Mitch on this one. Speech is free but influence is expensive.

 

[Doug_G]

It's pretty clear that Tesla cannot survive without bypassing the conventional dealers. Tesla is building a disruptive technology and the people who manufacture and sell the previous generation product are going to fight against it as hard as they can until they go out of business.

If the USA claims to be the leader of the free world, it's about time they stepped up and proved it.

If the USA claims to lead the world in technology, then why are they trying to shut down the leaders?

This activity is anti-capitalist and anti-democratic. I guess these guys are all capitalists until they're threatened by someone with a better business model, and then they turn socialist.

 

[brianman]

It's pretty clear ....

If the USA claims to be the leader of the free world, it's about time they stepped up and proved it.

If the USA claims to lead the world in technology, then why are they trying to shut down the leaders?

I think it's pretty clear many in our federal government gave up both of these claims years ago. In fact, many of them appear to be actively trying to erode even a 2nd or 3rd place position. But we're getting off-topic a bit.

My main point is that if you expect either of those premises to drive improvements in the Tesla vs. Dealership-Model battle, you probably shouldn't hold your breath while waiting.

 

[Zythryn]

...
And the crux of the issue is that these laws were implemented to protect the dealers from their own manufacturers - so clearly these states do want to protect their dealers, whether they be from their own manufacturers or from a competitor such as Tesla. We can ignore this reality all we want but I think we're only fooling ourselves if we do. We are jumping through a loophole because we know what the intent of the law was (to protect dealerships) but you're suggesting we use a technical argument and ignore what we know is the real intent of that law. I don't think we're going to win if this is the stance we take.

The majority of the laws are written to protect the dealers from their own manufacturer, NOT from competition.
The first protection is the law.
The bit you add about protecting them from competition is not part of the law.

There is no loophole Tesla is seeking in the vast majority of cases. That particular law simply doesn't apply to them.

 

[dsm363]

But the issue is that at some point our politicians decided that it was important to protect the dealership framework - and it is the intent of these laws which Tesla supporters are failing to recognize.

Every other auto manufacturer may have wanted to market direct to consumer for years - but the laws kept them from doing so. The legislature cannot now just allow a competitor to walk in and start selling directly when they prevented everyone else from doing it. That would be unfair to these other competing manufacturers, but more importantly, also goes against the intent of the dealership protection laws to begin with - which is to protect auto dealers.

You and I may despise the dealership framework, but we need to recognize that there are powers out there that take a different viewpoint. And we are not going to get there by jumping through a loophole in the wording of the law.

Why would it be unfair? The other manufacturers entered into those franchise agreements voluntarily so if the state wants to protect the local dealers then ok, I'll buy that. Tesla has never had licensed dealers so they are not cheating, going through a loophole or hurting anyone other than possibly having a better product and distribution/sales model. If that is 'unfair' to the other manufacturers then that might be correct but that shouldn't make it illegal. Ford has every right to spend hundreds of millions of dollars buying out existing dealerships if they want, to lobby states to get these laws overturned and to fight the system but they don't want the fight at this point. Tesla should not be penalized for the other companies making and living with these agreements for decades.

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But the argument that is being used by our competitors is that there is harm by allowing Tesla to implement this model when none of the other competing manufacturers are allowed to adapt in order to compete. It brings harm to everyone else.

And the crux of the issue is that these laws were implemented to protect the dealers from their own manufacturers - so clearly these states do want to protect their dealers, whether they be from their own manufacturers or from a competitor such as Tesla. We can ignore this reality all we want but I think we're only fooling ourselves if we do. We are jumping through a loophole because we know what the intent of the law was (to protect dealerships) but you're suggesting we use a technical argument and ignore what we know is the real intent of that law. I don't think we're going to win if this is the stance we take.

By 'harm' do you mean competition? Then yes, you are right. Tesla selling their product in the state will harm them but why is this illegal? Tesla will still have to put a physical store and service center in the various states as just like in the dealerships, test drives and service can't be don't over internet. They must physically employ people to work at the stores and the service centers meaning jobs for people in the state. How is Tesla selling directly to customers (at the detriment of a local dealer because they sell a product people may be less interested in) illegal? I'm really confused by where you are going with this.

What would you say to local newspapers complaining of unfair competition from the internet? If a state passed a law blocking all traffic to internet news sites that don't originate in the state and offer their service for free because it would unfairly harm a long standing member of the community (the 80 year old newspaper for example) would you support that?

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The majority of the laws are written to protect the dealers from their own manufacturer, NOT from competition.
The first protection is the law.
The bit you add about protecting them from competition is not part of the law.

There is no loophole Tesla is seeking in the vast majority of cases. That particular law simply doesn't apply to them.

Exactly! NADA is trying to twist these laws to include Tesla because of the fear it could spread.

 

[carogan]

It's pretty clear that Tesla cannot survive without bypassing the conventional dealers. Tesla is building a disruptive technology and the people who manufacture and sell the previous generation product are going to fight against it as hard as they can until they go out of business.

If the USA claims to be the leader of the free world, it's about time they stepped up and proved it.

If the USA claims to lead the world in technology, then why are they trying to shut down the leaders?

This activity is anti-capitalist and anti-democratic. I guess these guys are all capitalists until they're threatened by someone with a better business model, and then they turn socialist.

See, now here is something that I've been thinking about a lot. What is the definition of a "dealership", and is there a way that this can be defined so that the main decision makers (legislators) are appeased.

Do we really understand what the concerns are of legislators in NC and Texas are? Maybe they really do have legitimate concerns about protecting jobs in their states? If this is the case, how can we solve this problem?

(I'm now just pulling ideas out of my ass just to brainstorm, but to give an idea of where I'm going with this)...

Maybe Tesla could set up "dealerships" inside Solar City locations throughout North America. Solar City is also expanding and creating jobs in the marketplace, and is setting up infrastructure throughout the US. The concept of the traditional "dealership" would need to be altered obviously, but at least this way a legislator can go back to their constituents and say that Tesla is not competing any differently than their competitors, and that if Tesla is gaining market share that jobs are not being lost because new ones are being created through employment at Solar City.

Legislators may have legitimate concerns about the direct to consumer model (I think it would be naïve to suggest that there are major issues that can crop up from making a major purchase like this from a company that resides in a foreign jurisdiction, where the retailer is not represented in the purchaser's state where they can be sued under that state's laws, and required to be licensed, etc.). Maybe Tesla, by setting up "dealerships" insider Solar City locations could alleviate these concerns, and allow Tesla to set up sales infrastructure on a much smaller scale than the traditional dealership, but still give legislators the comfort they need that both industry and consumers are protected as their law requires.

These are just ideas thrown out there to make a point, not because I necessarily believe these are the solutions. But I think we need to dig deeper to solve this problem rather than just litigate our way through it.

 

[raymond]

The best approach is to listen to what their concerns are and try to find a real solution.

Not TM's problem to solve. As reasonable as this may sound party A can never solve the problems of party B when party B feels threatened by party A.
As others have said: it's adapt or die.

I've heard it being said as: It's not that people don't want to change, it's that people don't want to be changed.

 

[theganjaguru]

I couldn't disagree with the OP more. Talking to the other party and compromising are acceptable tools when dealing with an existing contract between two disputing parties. Compromising just because the other party is big and powerful goes against everything a democracy stands for. The fact is Tesla does not want and should not be forced to contract with anyone they don't want to. It's literally like the hot girl in school being forced to date the guy she distastes the most.

The fact is that when it comes to cars, people for the most part are loyal. My grandfather drives nothing but Fords and actually disowned me for buying a Toyota!!! People LOVE their Fords, BMWs, Toyotas, or whatever name plate they drive, but I don't know anyone who has the same amount of love and respect for the car dealer from where they purchased their dream machines. - it's why a lot of gear heads refer to dealerships as stealerships - and usually for good reason.

The OP believes that it's the automakers who are tied to big oil, and not the stealerships. If this is indeed fact, then why haven't the NCDA come in to rally automakers and legislators to make and incentivize electric vehicles? The fact is that they haven't, therefore they don't support electrics. - because electric vehicles would drastically cut their profit margins. - and that's why they've come out swinging.

So what if these guys have employees to pay and/or put money back into the community after they ripped someone off to get the only blue, manual transmission new model car in a 500 mile radius. It's robbing Peter to pay Paul and it doesn't make their business model moral. - and what, Tesla won't need employees in local regions?

The fact is that any publicity is good publicity. These car dealers are lopping off their noses to spite their faces. Once Tesla is unable to legally deliver cars to waiting customers, the backlash and free advertising will be massive (that is if the dealers succeed that far). It reminds me of that South Park episode where Cartman buys an amusement park and won't let anyone in, but in doing so, everyone wants to go. It's funny how people are always for a "free market", until their profit is effected.

While the OP does note the deep pockets the stealerships seem to have, he seems to negate the fact that some of the big TSLA investors also have more money than god. Nor does he seem to take into account how bat poop crazy TSLA supporters/fans are, or EV supporters in general.

If TSLA does do the unthinkable and compromise with these stealerships, then what's next? Independent gas station owners coming forward to require that TSLA franchise out Superchargers?!

The whole situation is ludicrous and it's exactly why I have become so deeply disenchanted with our "democracy". - Over and over I see examples where corporate masters buy a legislative ear and pen. Yet when I solicit a senators assistance over predatory student loans, I'm told by her aid that we have a legal problem and should call a lawyer instead!!! <--- true story. Rolling over or compromising will do nothing but enforce the power of the stealerships.

I guarantee that the rest of the automakers will come through with their own TSLA fighters (powered by TSLA I hope) so the stealerships shouldn't dismay too much. From my view the silver lining in this debacle Is that the stealerships see TSLA as a money maker, and they want in on the cash. - thus reaffirming my decision to go long on TSLA.

 

[NigelM]

However, there will exist laws that (on the surface) are there to supposedly protect the consumer - and it will be argued by our opponents that the dealer framework must stay in place because they have abided by these requirements as legislated.

We (Tesla supporters) view this idea "dealership protection laws" are being "twisted to try to prevent a new market entry...from gaining traction", but what we are failing to recognize is that there is a reason and intent for these laws to be instituted to begin with - which is that legislators deemed it important to protect the dealership framework.

We're turning in circles so maybe I didn't get the point across. Dealership laws have nothing to do with consumer protection. They are there to protect the dealerships from the auto manufacturers. That is a fact, so in light of that I said that those laws are being twisted to prevent Tesla's market entry.

Dealership laws will not protect us end consumers from anything bad Tesla might seek to foist upon us. Consumer protection laws will protect us from Tesla (if we need protection at all).

 

[dsm363]

See, now here is something that I've been thinking about a lot. What is the definition of a "dealership", and is there a way that this can be defined so that the main decision makers (legislators) are appeased.

Do we really understand what the concerns are of legislators in NC and Texas are? Maybe they really do have legitimate concerns about protecting jobs in their states? If this is the case, how can we solve this problem?

The concerns of the legislators are that the state dealership associations that contribute millions of dollars in campaign funds are angry and want their business model protected. Simple, really no need to dig deeper. You can't solve this problem by reasoning with the dealer network. They will not budge anymore than people will on very strongly held social issues would budge (either side of any issue that splits society).

Why do you think Tesla setting up and store and service center in a city and hiring 40 people to run them means people are losing their jobs? As long as the dealerships continue to attract customers then those people will have their jobs along with the 40 or so people Tesla just hired. For example in Austin, there are a number of people working in the 'gallery not store' that have no automotive experience so not a single person was fired from the local Mercedes or Audi dealership because Tesla opened up a gallery. These are new jobs in the area which I think would be a good thing.

A 'traditional dealership' means Tesla sells an exclusive contract for an area (Houston for example) to some independent person or business to sell their cars. This also means that Tesla loses control which they don't want and shouldn't have to do.

 

[raymond]

why not use the collective intellect of the members on this forum to dissect Carogan's points and try to model a successful strategy that is cost effective.

Now that's an interesting angle. I don't think TM could solve this, but a crowd-solution... I have not idea how, but I do like the general direction of this suggestion.

 

[carogan]

The majority of the laws are written to protect the dealers from their own manufacturer, NOT from competition.
The first protection is the law.
The bit you add about protecting them from competition is not part of the law.

There is no loophole Tesla is seeking in the vast majority of cases. That particular law simply doesn't apply to them.

So are you trying to say that this law was not implemented to protect dealers from the direct to consumer sales model in principle? I am arguing that this is the REAL intent of these laws.

You are suggesting that the intent of these laws is ONLY to protect these dealers from their own manufacturers. I am saying that you are taking an extremely narrow view by suggesting that their intent was only to protect dealers from their own manufacturers, but that they are there to protect the existence of these businesses as a whole from direct to consumer sales models. The law may be written that way, but if this was not their intent lawmakers can always correct it.

It is a loophole if that was their intent. You can't just read the law without considering intent - whether that intent was properly communicated in the written wording of the law or not.

 

[dsm363]

So are you trying to say that this law was not implemented to protect dealers from the direct to consumer sales model in principle? I am arguing that this is the REAL intent of these laws.

You are suggesting that the intent of these laws is ONLY to protect these dealers from their own manufacturers. I am saying that you are taking an extremely narrow view by suggesting that their intent was only to protect dealers from their own manufacturers, but that they are there to protect the existence of these businesses as a whole from direct to consumer sales models. The law may be written that way, but if this was not their intent lawmakers can always correct it.

It is a loophole if that was their intent. You can't just read the law without considering intent - whether that intent was properly communicated in the written wording of the law or not.

That is not even the real intent of the law, that is how the NADA is using it to block any outside competition though. If that is the real intent, why doesn't it extend to computers, mobile phones, TVs....etc?

Elon brought up a great example at the Texas House hearing. Imagine if Michael Dell (who the Texas legislators applaud rightfully so as being a shining beacon and example of a Texas businessman) was forced to bring his basically kit computer to Office Depot and beg them to sell his product when he was just a college kid starting out. They would have laughed at him and he would never have entered the market and the Austin area would be without thousands of jobs. Why would Office Depot want to buy a computer from some kid when they can buy a 'real' computer from HP or IBM? The fact that Michael Dell could sell directly to the customer and let them decide is how things are supposed to work. The fact that computers weren't forced to be sold through 'licensed dealers' like Best Buy or Office Depot meant he could do that. He had no prior business relationship with Best Buy or Office Depot so he wasn't breaking an agreement. He might have indirectly hurt them people people starting ordering his computer instead of shopping there but that is how things go.

If we are truly to ever reduce our dependence on oil then surprise! That means people will be laid off as well. Does this mean the state should enact laws banning improvements in automotive efficiency (more efficient cars means less gas needed? Every move forward means someone will lose their job. We need to help them find a new one. If that means retraining former ICE salespeople to sell EVs I'm pretty sure they could manage.

 

[ItsNotAboutTheMoney]

Why would it be unfair? The other manufacturers entered into those franchise agreements voluntarily so if the state wants to protect the local dealers then ok, I'll buy that. Tesla has never had licensed dealers so they are not cheating, going through a loophole or hurting anyone other than possibly having a better product and distribution/sales model. If that is 'unfair' to the other manufacturers then that might be correct but that shouldn't make it illegal. Ford has every right to spend hundreds of millions of dollars buying out existing dealerships if they want, to lobby states to get these laws overturned and to fight the system but they don't want the fight at this point. Tesla should not be penalized for the other companies making and living with these agreements for decades.

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By 'harm' do you mean competition? Then yes, you are right. Tesla selling their product in the state will harm them but why is this illegal? Tesla will still have to put a physical store and service center in the various states as just like in the dealerships, test drives and service can't be don't over internet. They must physically employ people to work at the stores and the service centers meaning jobs for people in the state. How is Tesla selling directly to customers (at the detriment of a local dealer because they sell a product people may be less interested in) illegal? I'm really confused by where you are going with this.

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Exactly! NADA is trying to twist these laws to include Tesla because of the fear it could spread.

Under Texas' law a car manufacturer cannot sell their car in Texas . Tesla gets around this by having car information stores and all of the pricing information and the transaction happen online in CA. Tesla wants to change the law so their stores can give a more natural experience and allow the customers to sign. In MA they have a subsidiary company that acts as the dealer.

 

[NigelM]

I agree that NADA is self-preserving. Servicing of vehicles is not their main business - if dealers didn't have to service vehicles and could just sell cars you'd be amazed at how many would get out of the service business entirely. It is not their major profit center.

Sorry, but all evidence is to the contrary. I'll not list a whole bunch of sources but here's just one good one from Forbes in 2012:

forbes.com/the-surprising-ways-car-dealers-make-the-most-money-off-of-you/

As much as people obsess about negotiating the lowest possible price for a new car, that’s not where car dealerships make the most money.

That would be the Service and Parts Department,....

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The problem we need to overcome is that the auto dealers will be some of the largest contributors to politicians in any constituency.

I suspect that no-one here will disagree with the principle of that statement. The issue is that the foxes hold the keys to the hen-house.

 

[carogan]

We're turning in circles so maybe I didn't get the point across. Dealership laws have nothing to do with consumer protection. They are there to protect the dealerships from the auto manufacturers. That is a fact, so in light of that I said that those laws are being twisted to prevent Tesla's market entry.

Dealership laws will not protect us end consumers from anything bad Tesla might seek to foist upon us. Consumer protection laws will protect us from Tesla (if we need protection at all).

But you're missing my point. If you think that the full extent of our opponent's opposition is simply only going to come from consumer protection laws then you're being short-sighted. They are going to draw upon each and every single resource available to them, not only NADA. You've focused on this one issue, but it is not going to be the one single battle to be fought.