With the Citizens United case regarding corporate speech that might be an interesting issue. Given that a certain candidate has rebuked Tesla, I can easily see Tesla claiming their "stores" are political speech in rebuttal. Also, I've never heard anyone complain about the Ferrari Store - Official Ferrari Merchandise Online Shopping which sells all kinds of stuff. Maybe Tesla needs a line of cologne?
-
Want to remove ads? Register an account and login to see fewer ads, and become a Supporting Member to remove almost all ads.
New Blog: The Tesla Approach to Distributing and Servicing Cars
- Thread starter aviators99
- Start date
-
- Tags
- Tesla Inc.
Sounds good, but they can't. If they leave Tesla alone for a few years then one of the major manufacturers decides to open their own store. The result will be that if BMW (or someone similar) uses Tesla as a similar example with the statement "They didn't prevent them from doing it - so why can't we do it too?" Then NADA would be screwed because they allowed Tesla an exemption.
bonnie
I play a nice person on twitter.
The smart thing for them to do would be to agree with Tesla's definition re the gallery locations. Then unless BMW followed that model exactly, the direct sale prohibition would still be in play. But by doing what they're doing, they are playing a game of chicken that they may very likely lose. I have yet to see an online comment supporting NADA's position.
Perhaps they don't want luxury brands to follow Tesla's lead. I can only presume that they're trying to force a cash-limited Tesla into backing down, because this case is just going to encourage changes to laws and publicize the better deals people can get shopping across state lines.
Norbert
TSLA will win
I was reading that companies like BMW wouldn't be able to do the same, since they already have franchised dealers. They are beyond the point of no return.
Johan
Ex got M3 in the divorce, waiting for EU Model Y!
Elon seems to think this too, quote from his blog:
"Automotive franchise laws were put in place decades ago to prevent a manufacturer from unfairly opening stores in direct competition with an existing franchise dealer that had already invested time, money and effort to open and promote their business. That would, of course, be wrong, but Tesla does not have this issue. We have granted no franchises anywhere in the world that will be harmed by us opening stores."
Now, he's not the judge and I'm no lawyer, but makes sense to me.
One of the commenters on ABG posted the MA law and it did seem that Tesla was in violation of the law as it was written. As I posted in response, that just because Tesla and Elon is right doesn't mean that they will win.
Elon Musk explains why Tesla has its own stores, defends service program
State laws cannot trump the interstate commerce clause of the Constitution. I think it should be straightforward to overturn these laws on that grounds, and I'll follow up with a good friend of mine at senior levels in the DOJ.
As Elon mentioned in his blog post, there is a public interest in preventing manufacturers from undermining the investments that franchisees have made to build the brand in a particular geography. A law that required auto manufacturers to choose between a third-party franchise model or a direct-sale model would be perfectly reasonably, IMO. Requiring that all manufacturers choose the franchise model is not.
As Elon mentioned in his blog post, there is a public interest in preventing manufacturers from undermining the investments that franchisees have made to build the brand in a particular geography. A law that required auto manufacturers to choose between a third-party franchise model or a direct-sale model would be perfectly reasonably, IMO. Requiring that all manufacturers choose the franchise model is not.
In the bigger picture Tesla and Elon are correct. The question is whether they are willing to go the distance and pay the price to prove it.
My guess is that NADA will drag its heels but come up with a loophole that they will allow Tesla to use so there isn't a battle that knocks their dealership model on its @ss.
The NADA has a lot more to lose than Tesla does. In the worst case (for Tesla) people that live in certain states will have to purchase the car out of state. The worse case for the NADA is the opening up of their dealership model and facing real competition.
Right now the people who want to purchase a Model S will go to great lengths to get one. When Gen III comes out, people will write to their Congressmen and Senators to demand that the law be changed.
Norbert
TSLA will win
I don't see this so far. The law seems to prohibit "solicitation" in addition to sale, but that's not what the Tesla stores are doing: they are not asking customers to buy. They are only offering information about the car itself. (Of course, they sell t-shirts and so on, hence the name "store", but they don't sell cars or ask you to buy them).
Zzzz...
Member
Every time I visit CNE event in Toronto, GM guys are always there. Showing their cars, promoting them, letting you to test drive...
How dose it different from what Tesla Galleries are doing? Or you are saying that in States GM etc employes could not showcase and promote vehicles? Really?
Norbert
TSLA will win
I don't quite understand. I was trying to make an argument that the dealership law does not have to be changed (while knowing about it only indirectly, and not very much).
Do you think the court might agree that "talking about" cars is the same as selling them?
Why can't you contact Tesla directly for service? Is this already a fact? And does a Texas law prohibit service centers?
That's what the Ranger told me the last time he was at my house. The laws are messed up here (he could have been mistaken but I believe him since he is very involved with setting up the service centers here in Texas). I didn't follow the whole logic but he said you'd have to call a number (staffed in California) and they'd call the service center. Even if you pulled up to their garage door. I don't believe Texas law prohibits the services centers. Maybe someone with the correct background who has read the law can chime.
The way the laws are written seem to be vague enough that they might be able to find a judge that agrees with their interpretation that just talking about the car and pointing them to the website acts as attempting to sell the car. I'm not saying I agree as I find these laws frankly wrong and against everything people always say they want 'free market' and such.
Johan
Ex got M3 in the divorce, waiting for EU Model Y!
That there is a cool thing to be able to say. One could read it as "I'll check his opinion on the issue", another way to read it is "I'll pull some strings at the highest level"
I'd think that if the courts interprets that the law's intent is to only allow for car sales via franchised dealers, then the Tesla "stores" and "galleries" would be illegal. To argue that "we're merely showing off the car, talking about the car, letting you sit in the car, explaining about the car (and all the good thing about it) - but you can't buy it from us!" won't hold up. It's clear that the whole purpose of the stores/galleries are to promote the sale of the car - to make you a customer.
A kind of parallell example that comes to mind, one that would not protect you in a court of law, is: You're pimping prostitutes, it obvious that you're taking a cut and living off of that. The police arrests you for this - you're caught in the act. Your defense is: I was just talking to the guy about how nice Candy is, what she can do
frown, what "she" usually charges -BUT you're not "selling" something, just "informing" about it. I think you'd not get anywhere with that. The analogy to the stores is that they are operated by Tesla and do not generate merely enough profits from the sale of T-shirts and cofee mugs to support their cost (prime real-estate with high rent, staff, extended opening hours etc.) but the are in fact indirectly funded by the sales of the very cars they are "just informing" about.The reason I think Tesla may get away with this anyway is that it seems the intent and purpose of the law is to protect franchise holder from unfair competition directly from the manufacturer and seeing how there are no franchises holder there aren't any to get hurt.
Read Johan's posting above this one and you can see that it's possible to interpret the stores as "selling" the car. The law definitely tries to stop that from happening. It will be up to the courts to decide. Or NADA will allow some sort of Tesla exemption and the suits will be dropped. I wouldn't count on it.
Ultimately the dealerships aren't afraid of Tesla and probaly have no problem with them except that one of their manufacturers could try and adopt Tesla's method and cut them out. That's why they are taking on Tesla, not to stop Tesla, but to stop GM, Ford, BMW, or Mercedes from copying what Tesla is doing.
Norbert
TSLA will win
"Possible to interpret"... perhaps. However I don't see it directly written, there. See my upcoming response to Johan.
Possible, but there is a difference which is that all these companies already have franchised dealers which they would compete with.
- - - Updated - - -
Two reasons why that doesn't mean what it might seem to mean:
Reason 1:
Here is a corresponding definition of "promote", Merriam-Webster (2c):
Promoting is more like advertising... which the manufacturers do in those states as well (it seems).
Reason 2:
In so far as it promotes a sale, it promotes a californian sale, not a local sale. (Which again makes it more like advertising, PR activity.)
A kind of parallell example that comes to mind, one that would not protect you in a court of law, is: You're pimping prostitutes, it obvious that you're taking a cut and living off of that. The police arrests you for this - you're caught in the act. Your defense is: I was just talking to the guy about how nice Candy is, what she can do
So we're all Tesla pimps then?:smile:
Johan
Ex got M3 in the divorce, waiting for EU Model Y!
Adm
Active Member
More like match-makers, setting up friends on dates. We're not paid.
What if you accept Tesla goodies as compensation?
:-DSimilar threads
