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Idea on how Tesla Motors can get around state bans

Discussion in 'Tesla Motors' started by Chris TX, Nov 17, 2014.

  1. Chris TX

    Chris TX Active Member

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    Driving to drop my kids off at school today, I had an idea on how Tesla could get around this whole "Franchised Dealers" thing.

    What if "someone" started a dealership network that ONLY sells Tesla vehicles.
    What if that dealership network only sold Tesla vehicles for the exact same price as Tesla's internet order page as a pass-through with no markups.
    What if that dealership network was a non-profit company?
    What if Tesla Motors donated on a quarterly basis to that non-profit company to help cover employee salaries, leases, utilities, etc.

    Does anyone see anything wrong with that thinking?

    Some might say it's sneaky, but what NADA and local state dealership networks do to prohibit Tesla sales is downright crooked.
     
  2. santana338

    santana338 Member

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    I would take it another step and have the non-profit company look to out-do local car dealers in sponsoring things like youth baseball and soccer teams. It is one of the things the dealers have said they can do that a manufacturer wouldn't do. Then I recall Tesla saying "OK, we can do that". This would be their way to live up to their statement and take one more argument away from the dealers.
     
  3. MikeC

    MikeC Active Member

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    I think to do what you suggest would make them a "franchisor" and subject to franchise laws in all the other states - not just the corrupt states that somehow managed to change the definition/interpretation of "franchisor" to include a company that doesn't even have franchises.
     
  4. mkjayakumar

    mkjayakumar Active Member

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    What are the franchise laws do you think will come back to hurt Tesla later, if they follow the model as described by Chris in every state ?
     
  5. Chris TX

    Chris TX Active Member

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    I'm just proposing to do that with the states that have ridiculous "dealership protection" laws. The other states can operate modus operandi.
     
  6. bollar

    bollar Disgruntled Member

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    I guess the question is how do you find "someone" who will run things Tesla's way 100% of the time. In Texas, a dealer can't have direct or indirect control of the franchise, so how would Tesla prevent the franchise from doing things "the old way?"
     
  7. Chris TX

    Chris TX Active Member

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    Maybe a former Tesla Motors exec, or a friend of Elon? It sounds like it would be a relatively easy job with no quotas or sales pressure.
     
  8. yobigd20

    yobigd20 Well-Known Member

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    it's not sneaky. what you're describing is a franchise. and Tesla doesn't want a franchise business model.
     
  9. Reykjavik

    Reykjavik Member

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    Anything Tesla does to get around it will either give up ground, grant franchises to someone independent, or if they maintain control, the dealerships will go after it. If they have an independently owned franchise, the owners then have an actual case to make for forcing Tesla to continue to honor the agreement, which is the basis of the dealership franchise laws that aren't completely stupid, and it will enable dealership associations elsewhere to demand that Tesla stop treating them differently than the state they conceded in. On the other hand, if they maintain control, the dealership associations will go after them and try to shut it down, and that legal battle is likely to be as costly and as difficult as just getting the laws changed in the first place.

    Not to mention that the laws preventing Tesla from selling cars are bad, they are bad for companies other than Tesla too, including existing manufacturers and any future startups. I just don't see how sidestepping the law is any more effective than complying with it while arguing for it to change.
     
  10. Saghost

    Saghost Active Member

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    I'm not a lawyer, but I think there's another option. Indian reservations are federal land not subject to state laws, right? What if Tesla made a deal with certain strategically placed tribes to open sales/service centers on the reservations?

    I'm not quite sure what would happen if Tesla started thumbing it's nose at state legislatures like that, but it works certainly bring attention to the subject, and I think it could work out well for both Tesla and the tribe.
    Walter
     
  11. ItsNotAboutTheMoney

    ItsNotAboutTheMoney Active Member

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    No. A franchisee has legal protections that guarantee independence.

    Tesla will not use a franchise model unless CA law changes. If Tesla gets anywhere near their target pricing for Model 3/Y increased demand and the prospect of Model 4 will give Tesla the volume to get independent certified repair where they don't have service centers, as well as a larger angry middle class putting pressure on legislators.
     
  12. Robert.Boston

    Robert.Boston Model S VIN P01536

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    I agree with others will not consider changing its sales model anytime soon. There simply are no advantages to test in caving in, and a lot of disadvantages.Tesla is not the only consumer brand available only at company stores.this is fairly common in the clothing industry; just try buying L.L. Bean gear except directly from L.L. Bean. Once Tesla has a mainstream product in the Model 3, there will be huge pressure on each state to change its laws to allow citizens to buy from Tesla directly. Just imagine if Texas at a law prohibiting Apple from selling at Apple stores.
     
  13. Chris TX

    Chris TX Active Member

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    I also agree the reservation idea is great. There was some discussion about a possibility of utilizing a reservation in central Michigan, before Snyder signed the anti-Tesla bill into law.
    In Texas, the only one that makes sense (of the three) would be the Alabama-Coushatta reservation northeast of Houston.
     
  14. mdevp

    mdevp Member

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    This is a great idea. States that were super anti-gambling had indian casinos get around those laws, I don't see why Tesla couldn't do the same. And it would help, albeit a little, with the job scenario on many reservations.
     
  15. ReversePolarity

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    I can think of one scenerio..... I buy a "Tesla Franchise" for a certain territory, say Florida and I open Telsa showrooms at the shopping mall.

    - I take orders at strict MSRP, no discount as usual. My "profit" is set percentage of the purchase, say 5%
    - When customers in my territory make a order directly online, I get a commission from for that percentage.
    - I deliver vehicles sold within the state.

    Two separate entities, just like Fedex Ground and its independent contractors bidding/buying delivery territory, buying truck and uniform for Fedex.

    You just need enough lawyers to talk the talk and fight the fight with the government :)
     
  16. Johan

    Johan Took a TSLA bear test. Came back negative.

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    Indian reservations are a good idea. Any other idea which means Tesla somehow complies with franchaise laws must be avoided alltogether: you choose your side and stick with it.
     
  17. mdevp

    mdevp Member

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    I agree, because if Tesla decides to have even one franchise, wouldn't the laws in other states that currently allow Tesla, force them into franchising?
     
  18. Johan

    Johan Took a TSLA bear test. Came back negative.

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    Yes, it could affect them legally in other states but the biggest thing is it would be a form of capitulation which sends the wrong message.
     
  19. dsm363

    dsm363 Roadster + Sig Model S

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    That's the issue. Maybe they'll play ball for a few years but how about ten or twenty years from now? Once you create the monster you can't always control it.
     
  20. Phoster

    Phoster Member

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    I concur with the Indian reservation idea, but recommend Tesla start with a Service Center in a reservation in Michigan. This says that Tesla will do whatever it takes to take care of their customers. Make sure the press highlights Tesla's philosophy that Service Centers are not intended to make a profit. This will shine a light on Michigan dealers' hidden agenda and the real reason behind the protectionist laws; to keep the OEMs out of the service arena. It is common knowledge that dealers make huge profits on maintenance, but even so the MADA will not want this fact brought into the conversation.
     

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