Need Help: Making the Case to Change Laws In States W/ Anti-Tesla Dealer Associations

[tinm]

This is a thread for collecting the best arguments for ANY state that has anti-Tesla laws to consider changing those laws.

For example, in New Mexico, Tesla is banned from having stores OR service centers. Which makes things stressful for New Mexico-based Tesla owners, let me tell you. If our cars ever break down we have to get a Ranger from Phoenix or Denver, and possibly have car towed all the way to one of those cities. Lately I have begun contacting local New Mexico legislators both in state senate and state house of representatives, and I've now heard back from both my local senator and local rep, and both agree the laws need changing and would be willing to look into the issue further.

What I'd love help on is collecting the best succinct, concise arguments for changing these old-fashioned, protectionist laws, so companies like Tesla can do business in states where they're currently banned. This is not a New Mexico topic; I figure the arguments are the same no matter what state Tesla's banned in.

When I meet with these representatives over the summer, I'd like to be able to educate them as best I can, and give them the concise summary of reasons why the law is unfair and needs modification. Hopefully these arguments can help anyone meeting or corresponding with their own legislators in their own states.

 

[tinm]

The Massachusetts Supreme Court came up with an interesting argument that, while an interpretation of Massachusetts law, is still relevant for any state with anti-Tesla laws: the argument that the laws protecting dealer franchises from auto manufacturers coming into their state and opening up their own dealerships does not apply in Tesla's case because Tesla *has* no franchises... these laws are about franchises and the relationships they have with their manufacturers. It should not be extended to pertain to manufacturers who could not possibly "injure" a franchise that has no relationship with Tesla.

You can read the text of the Massachusetts decision here.

Seems to me that argument works in many states. Thoughts?

 

[jgs]

The Massachusetts Supreme Court came up with an interesting argument that, while an interpretation of Massachusetts law, is still relevant for any state with anti-Tesla laws: the argument that the laws protecting dealer franchises from auto manufacturers coming into their state and opening up their own dealerships does not apply in Tesla's case because Tesla *has* no franchises... these laws are about franchises and the relationships they have with their manufacturers. It should not be extended to pertain to manufacturers who could not possibly "injure" a franchise that has no relationship with Tesla.

You can read the text of the Massachusetts decision here.

Seems to me that argument works in many states. Thoughts?

The Michigan dealers association appears to agree with you, which is why they preemptively paid to have Michigan's law changed to preclude this approach. It formerly was similar to the law in other states including Massachusetts, but now forbids auto sales except through franchises, period.

 

[AudubonB]

In this instance, it might be of use were tinm or other New Mexicans able to amass the relevant NM statutes so that forum members best can contrive - or show from other case studies (a la the Massachusetts example) what could work best in NM.

 

[SW2Fiddler]

An opening line for ya:

"Think back to the last time you needed, or even saw, an elevator operator.
Auto dealers perform an equally important service."

Soon obsolete. But they's got them some lobbyists... there's yer difference...

 

[tinm]

What I'd love to put together is a chart, with spreadsheet-like columns, comparing and contrasting the various Tesla-relevant statues and clauses in the respective Tesla-blocking states, and then add a final column with arguments to point out why these have been either proven irrelevant to Tesla (resulting in relaxation/repeal of law) or should be proven irrelevant to Tesla.

This is going to be an ongoing process. I have a few months before I meet with people in Santa Fe.

I kinda wish Tesla would do this for us. But then, I told the elected officials I reached out to I have no support/backing/involvement whatsoever from Tesla -- this is a grassroots effort from owner(s).

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In this instance, it might be of use were tinm or other New Mexicans able to amass the relevant NM statutes so that forum members best can contrive - or show from other case studies (a la the Massachusetts example) what could work best in NM.

The New Mexico Automotive Dealers Association proudly displays the relevant laws that affect Tesla (and, don’t get me wrong, any other auto manufacturer who might be so bold as to test a different business model than the old auto dealer franchise model). You can find the 2006 New Mexico statues here.

I believe the specific section of the law that blocks Tesla is here: 57-16-5, which NMADA also displays… here is the text:

“It is unlawful for any manufacturer, distributor or representative to:
V. be licensed as a dealer or perform warranty or other service or own an interest, directly or indirectly, in a person licensed as a dealer or performing warranty or other service; provided that a manufacturer or distributor may own a person licensed as a dealer for a reasonable time in order to dispose of an interest acquired as a secured party or as part of a dealer development program;”

Pretty sure that what is preventing Tesla from selling cars or even servicing existing customers’ cars within the state of New Mexico.

 

[cpa]

I am neither lawyer, judge or legislator, but sometimes you can glean what the legislators were contemplating (and their thought processes) when they passed the legislation by looking into the legislative history and committee reports (if such things exist.) Sometimes this information can provide insight into any compromise or conceding position taken by the minority.

 

[evme]

The New Mexico Automotive Dealers Association proudly displays the relevant laws that affect Tesla (and, don’t get me wrong, any other auto manufacturer who might be so bold as to test a different business model than the old auto dealer franchise model). You can find the 2006 New Mexico statues here.

I believe the specific section of the law that blocks Tesla is here: 57-16-5, which NMADA also displays… here is the text:

“It is unlawful for any manufacturer, distributor or representative to:
V. be licensed as a dealer or perform warranty or other service or own an interest, directly or indirectly, in a person licensed as a dealer or performing warranty or other service; provided that a manufacturer or distributor may own a person licensed as a dealer for a reasonable time in order to dispose of an interest acquired as a secured party or as part of a dealer development program;”

Pretty sure that what is preventing Tesla from selling cars or even servicing existing customers’ cars within the state of New Mexico.

Looking at it from a logical standpoint, I see some loop holes right of the bat. The law is saying that a manufacturer could own a dealership license for a reasonable time to dispose interest of or as part of a dealer development program. There are 2 ways Tesla could approach that.

1 - Make a dealership claiming it is for a limited time and they plan to sell it. But set the conditions to be impossible to attain. So one can argue that as long as they have no buyer, it is a reasonable time.

2 - Tesla can just claim they are doing a dealer development program. Is there any hard definition for what that is? Because is not building your own dealerships a development program?

Obviously if Tesla goes those routes, the franchised dealers will sue. But in a court case, the chance of the dealers winning has so far been 0.


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Though overall, I think the best argument to your politicians is this, the law does not seem to enforcing franchising and it seems the intention is to prevent manufacturers from competing with their dealers, not to grant a monopoly on sales to 3rd parties to a manufacturer who has no 3rd parties as sellers. Bringing up the MA court ruling something similar may also help to point out this fact. Since NM was in the running for the gigafactory, I might throw that in too saying that it played against NM in the running.

Now the most import part is not just explaining to your politicians on why they should do this but also dismantle the arguments of NMADA before they make it. Because you can bet NMADA is going to make their case and it will be their word with $$$ vs yours. So it is vital that you break down their 2 most common arguments.

1 - They will claim how this will hurt jobs in New Mexico

It is important to remind them that what Tesla wants is to open up local stores and local service centers and create more jobs. All that will change is who owns the stores, the jobs would still remain.

2 - They will claim that they support the local community

With local stores, Tesla will also participate in local events to sell cars and PR.

3 - They will claim safety and consumer protection

Remind them that Tesla would be subject to same safety rules, handle recalls, warranty and etc at their local service center. And that consumer advocacy groups support direct sales. It is also important to note that dealers are not going to just reopen factories and start building parts if anything happens.

4 - They will claim monopoly

I would bring up that there is nothing wrong with a manufacturer having a monopoly on his own product, in same way a person has a monopoly on their personal property. Because it is their product, that said, Tesla also has a 3rd party certification program allowing 3rd parties to compete on repairing the vehicles. I would also bring up the DoJ study on how the monopoly granted to franchises actually brings up costs.


It is important that you dismember their arguments before they even make them. Because you are not likely going to be doing a back and forth with the politicians and what NMADA will tell them. NMADA will have a lobbyist there in their office daily dismembering your arguments. Which means you need to not only break down the law but break down NMADA's talking points. Not sure if you can give them printed material with information they can reference if need be or not.