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Massachusetts - New bill proposed to prohibit direct sales

Pacheco-sponsored bill would impact Tesla dealerships - Taunton, MA - The Taunton Daily Gazette

A state legislator from Taunton is sticking up for auto dealerships, including those on the Route 44 Auto Mile in Raynham, against potential efforts to skirt a Massachusetts law intended to prohibit car manufacturers from selling directly to customers.


State Senator Pacheco is proposing the bill. Senator Pacheco's contact information is listed in the link below. Time to call/write your representatives again.

Member Profile - Marc R. Pacheco
 
Last edited by a moderator:
I love the last line
“Instead they are spending half million dollars in legal fees to pursue a scheme where it does everything a dealer does, without signing up individual dealer. It’s just generating attention.”
Um, why should they sign up a dealer if they can do everything a dealer does? So the dealer can mark up the price and pass it along to the consumer? Or is it so the dealership service bays can be a profit center? How does that benefit the consumer?
 

Robert.Boston

Model S VIN P01536
Moderator
For those who like to start with some text:

Dear Senator Pacheco:

I strongly oppose your bill that would limit consumer choice in purchasing new automobiles. Are you going to introduce legislation next to close all the Apple Stores?


While I disagree with your bill as written, I completely support clarification in law that would prevent automobile manufacturers with existing franchise dealerships from direct sales to customers. Allowing manufacturers to bypass these established businesses is wrong: dealers have invested heavily in facilities, employee training, and brand advertising, and these investments could be undermined if car companies could open company-owned dealerships in competition to franchise dealerships.


What about going forward, though? Why should a new car company be forced to adopt the business model of its competitors? Apple showed that a new retail concept could enhance the customer experience. Why shouldn't Tesla Motors (and, potentially, other new car companies) be allowed the same opportunity to innovate?


The Taunton Daily Gazette quotes you as seeking to "protect an industry" that creates jobs. It is not the role of government to protect competitors, but rather to protect consumers. Auto dealerships don't create jobs -- consumer do when they buy cars and have them serviced. Just as Apple employs many people in Massachusetts at its stores, Tesla Motors employs people to man its sales and service centers. In my experience as a Tesla Motors customer, these employees are happy, well-trained, and provide the highest level of customer support, providing me with a higher level of customer satisfaction than any dealership I have dealt with in Massachusetts.


Likewise, auto dealers don't pay car sales tax -- again, it's consumers who pay the tax. Of course, car dealers handle that money and remit the taxes, but it's coming out of the pockets of the car buyers, not the dealerships. Tesla also remits sales taxes to Massachusetts for vehicles sold in-state.


In short, there is simply no sound reason to restrict how *new* car companies, without established dealers, interact with its customers. Your bill will not protect any customer, nor will it protect any existing dealer. All it would do is force Tesla to leave the state, taking its jobs with it. You cannot force Tesla to accept a franchise dealership model -- consider Texas, where Tesla has sold thousands of cars directly to consumers through its California office rather than accept a franchise model. Fortunately, the US Constitution protects Tesla's right to make such direct sales.


I am copying my senator, Sal DiDomenico, so that he is also aware of my opposition to this anti-competitive, job-killing bill.


Sincerely,
 

Pollux

Active Member
Supporting Member
Thank you, too, Robert. I riffed on your text.

In case anyone else is interested:

Dear Senator Pacheco:

I write today to voice my strong opposition to your bill that would limit consumer choice in purchasing new automobiles. Your legislation appears to mix the goals of supporting dealerships in their arrangements with their manufacturers and the goal of mandating that all new entrants to the market be forced to sell through dealerships. Forcing new entrants to the market to sell through dealerships is anti-competitive, anti-consumer and short-sighted.


I am a very happy Tesla customer -- I recently purchased a Model S P85+ -- and am at a loss to understand why my access to Tesla should be limited in any way by the State of Massachusetts. I have also started and sold two high-tech Massachusetts companies (Marble Associates, Orca Systems). I regard myself as a capitalist.


Legislators should not be in the business of dictating a company's business model. There are many examples of competitive arrangements in the marketplace that use wholesalers, dealerships and other intermediaries between the producer and the consumer. These arrangements may stand the test of time, or may be reconsidered as technology and society evolve. For example, the rise of the Internet has disrupted the business models of many product and service delivery chains, generally leading to greater efficiency, greater choice and lower cost for the consumer. Yet there are other examples where business and the delivery chain continues largely as usual, e.g., with the growth and creation of food products all the way through various intermediaries and ultimately to the consumer via a grocery store. All of these arrangements are dictated more by the needs of the consumers and the nature of the products and services involved than they are by legislation dictating a particular business model. When unimpeded by legislation, these arrangements can change over time.


If the independently-owned dealership model offers such tremendous value to consumers, then ultimately Tesla itself will have no other choice than to create dealerships to meet its customers' needs. In this regard, legislation to enforce the requirement to have a dealership suggests that perhaps dealerships can't compete on their own. Let the people vote with their feet and their dollars.


Personally, I would be shocked to discover that most people regarded automobile dealerships as places where they receive wonderful sales experiences followed by excellent service. In fact, most people suspect that they are being taken advantage of by the dealership's sales staff, and then choose to use third-party service to keep their costs down. I think that one of the things that people like about Tesla is that the price is the price is the price, and if you don't like that price, you can always buy some other company's car. But no haggling required.


It is extremely difficult to create a new, viable automobile company. The history of such automotive start-ups is littered with failures. The last thing such a new company needs is an additional, legislated, anti-competitive burden that is unnecessary in this day and age. I would think you'd be extremely supportive of Tesla given that it produces vehicles with zero emissions of any kind -- after all, you are chair of the joint committee on Environment, Natural Resources and Agriculture, and chair of the Senate Committee on Global Warming and Climate Change. Moreover, despite the image that Tesla's current products are luxury vehicles, you should be aware that (a) many Massachusetts voters buy luxury vehicles! and (b) Tesla itself is hard at work on delivering a third-generation compact sedan priced at $30,000. I refuse to believe that you would want to make it harder for Tesla to deliver increasingly inexpensive automobiles of such great benefit for the environment.


Please choose to protect me, the capitalist, voter, environmentalist and consumer. Let the workings of the marketplace decide whether auto dealerships are necessary for new car companies. Auto dealerships don't vote; but I do.


I am copying my legislators, Cynthia Creem and Alice Peisch, to draw their attention to this matter. I am also copying David Linsky, who is sponsoring a pro-consumer, pro-competive bill in this same area (I encourage you to drop your bill and co-sponsor Representative Linsky's bill instead).


Thank you for listening.


Alan Langerman
[USPS Address]
[Direct e-mail address]

 

dsmith2189

Active Member
Aug 18, 2012
1,413
100
Has anyone called for him to step down from his position in
  • Joint Committee on Environment, Natural Resources and Agriculture
  • Senate Committee on Global Warming and Climate Change
due to a conflict of interest.
how can he support the ICE dealers and fight for the environment too?:confused:
 

PeterK

Model X, 3 & Y Owner
Supporting Member
Jan 17, 2013
1,744
730
Cambridge, MA
Here's the email I sent back on September 21. I wasn't in the greatest mood at the time, so my note is not quite as polished and polite as Robert's, but hopefully he got the point. I also neglected to cc: my own State Senator, unfortunately.

Honorable Senator Pacheco -
Are you and your Taunton auto dealer supporters really that afraid of little Tesla Motors, producing all of 21,000 vehicles this year? Why can't you leave them be? The laws were created to keep auto makers from using franchised dealers to build up their brands and customer bases, then compete against them. But Tesla has chosen not to use franchised dealers, so by selling direct isn't hurting any franchisees. Why are the other dealers so upset - because Tesla didn't ask them to dance? Perhaps they're afraid that the next new entrant to the US - a Chinese or Indian auto maker perhaps - might bypass them. Or that their current partners might try to compete against them. The current law prevents the latter. And the best solution to the former is for dealers to demonstrate that they actually add value to a manufacturer, not to fund protectionist legislation. Manufacturers of other products like computers can sell direct, why should auto makers be somehow constrained?

As to why Tesla is not selling through dealers, Tesla CEO Elon Musk has made it clear that existing dealers who are tied to the internal combustion engine have a conflict of interest selling electric vehicles. They're harder and take longer to sell because EV benefits need to be explained to customers, explaining the benefits effectively points out the drawbacks of the other vehicles they sell, and EVs require far less maintenance, service and consumable parts which are profit centers for dealers. So it's not surprising that before Tesla came along, sales of EVs in the US were anemic despite tax and other incentives (though nothing from Massachusetts). See Elon's October 22, 2012 blog for a very clearly stated rationale: http://www.teslamotors.com/blog/tesla-approach-distributing-and-servicing-cars

In the Taunton Gazette article (http://www.tauntongazette.com/news/...-looks-to-put-the-brakes-on-Tesla-dealerships) you complain that Tesla is not a plug-in for the average working family. That is true, but like any new technology, prices and market targeting starts on the high end, then expands to the mass market with volume. Personal computers, flat screen TVs and cellphones started out as luxury items but are now commonplace. See Elon's Secret Tesla Motors Master Plan (http://www.teslamotors.com/blog/secret-tesla-motors-master-plan-just-between-you-and-me) to see how from the start Tesla has planned to move to mass market vehicles, and is using the high end to fund this.

And have you ever visited a Tesla Gallery or Service Center, or rode in or drove the Model S? It's refreshing to learn about a car without facing commission-driven sales pressure. After hearing about the company and car from my MIT grad nephew who works there, and reading articles he forwarded, last November I decided to visit the Natick Gallery. I wasn't in the market for a new car, but was so impressed by the car and the company that I made a reservation online that night, not sure if I would actually buy one but expecting I had until summer in any event. I wasn't able to test drive in Massachusetts due to the then-pending lawsuit, but with the Natick manager's introduction arranged a test drive in New York when I was visiting relatives for Thanksgiving. After that I was sold - and amazed when they asked me to finalize my order in January and it was delivered in early March. The Model S cost twice what I previously paid for a car, but I see it as an investment in a sustainable future.

The service provided by the Watertown Service Center has been exemplary. Two days after I picked it up, my car was hit by a driver who had trouble stopping in a snowstorm. The left rear door needed to be replaced, so I took it to Hollis Auto Body in Ashland. They had some challenges getting the door back together and making the extendable handles work, so the Tesla Watertown sent a technician to Ashland to help them at no charge to them or me. They also arranged to pick up the car from Hollis and take it back to Watertown for some minor warranty repairs, then left the key so I could pick it up late at night upon my return from a business trip. On another occasion when I had them install a hitch receiver on the car, they stayed until 7pm on a Friday evening to complete the work. I've never received such service from Volvo, Audi or Honda dealers.

In summary, I ask that you stop pursuing this bill directed at blocking Tesla from changing the auto industry for the better in multiple ways. I understand you are a supporter of environmental causes - please support an American manufacturer providing US jobs and pushing the industry towards a cleaner future. And if you would like a ride in or even a chance to drive a Model S please let me know, I would be happy to show you my car.

Sincerely,
-Peter

Peter K
Cambridge, MA USA
 

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