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NY legislation to block Tesla direct sales

Discussion in 'Tesla Motors' started by lorih, Feb 25, 2014.

  1. lorih

    lorih Member

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    Just saw this on Mark Ruffalo's twitter feed. Lets help Hulk SMASH!

    Mark Ruffalo (@Mruff221)
    2/25/14, 11:30 AM
    Join Me Oppose AB7844A- Let Tesla Sell direct in NY-Call 518-455-4100 tell Assembly members Sweeney, Paulin, Lentol – EV’s are good for NY
     
  2. AnOutsider

    AnOutsider S532 # XS27

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    Hard to tell if he's fighting for EVs or the banning of archaic legislation
     
  3. evme

    evme Member

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    Isn't this the same bill that didn't make it in 2013?
     
  4. Seattle

    Seattle Member

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    There must be some kind of nationwide dealer coordination on these bills - we just barely fought it off in washginton state. At the town hall meeting last weekend, my reps were talking about "who the heck were all these tesla owners coming out of the woodwork?". The dealers orgs give a lot of money to the state pols. The overall bills passed almost unanimously. You folks have to band together and hit your leg reps hard on this, let them you know are paying attention.

    My impression of my own reps were that they were idiots, and they can't quite grasp that Tesla has never used a dealer network, so we aren't disenfranchising a stupid middle man class that shouldn't be there in the first place. But they eventually came around. Of course its bad that they want to support unnecessary middlemen, but that's another conversation.
     
  5. AnOutsider

    AnOutsider S532 # XS27

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    Well, that's a tough one. I know a lot of small towns are supported by their local dealers. If, say, GM opened their own "Chevy Outlet" 10-20 miles away from a franchised dealer that obviously can't compete, then that dealer is gone, as is all the "good" they brought the community.

    I feel like there should be a middle option. Maybe buy online and have it shipped to your local dealer? Dealer gets a flat kickback for handling delivery? On the flipside, with us ONLY going through Tesla, we also have no real "sales" like dealers have. My Audi dealer called 2 days ago offering me insane discounts on an upgrade because the snow killed business and they had inventory sitting.
     
  6. bonnie

    bonnie Oil is for sissies.

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    Why should dealers be protected over other types of retail businesses? Do they really support the small town, or is that the story they give out? I'm sure they support a little league team or two ... but 'support a small town'? Nah. They're in it for the money, not to be a charitable organization. If it generates good will that translates to sales, yes, they're involved. Otherwise, no.
     
  7. ItsNotAboutTheMoney

    ItsNotAboutTheMoney Active Member

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    Of course, that view is based on artificial job creation and is, in my view, way too prevalent. Cutting out unnecessary middle-men increases potential wealth by increasing efficiency and productivity. To put it another way: make position redundant, increase available labor; save money, spend it on something else.

    The rest of the effects (change in pay, job conditions) are a matter of government policy.

    Again, this is an artificial benefit. You could gain on the Audi sale only because other people are paying extra on their purchases.

    Cars are buy once, service many. The old dealership model is now wrong and Tesla has it right:
    - Inquiry: Internet, small stores
    - Test drive: small stores (small inventory), special events
    - Sales: Internet
    - Delivery: service center, home
    - Service: service center

    The all-in-one dealership is now an inefficient model.
     
  8. wycolo

    wycolo Active Member

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    > they had inventory sitting. [AnOutsider]

    Priced at $140k there would be a certain amount of ModelS inventory sitting. A $ale price of $128k would definitely get me out of the woodwork and kicking those tires! Can I taste that Kool-Aid you have there?
    --

    I know, my 2nd Kool-Aid reference in as many days.
     
  9. TexasEV

    TexasEV Active Member

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    That's a straw man argument. Regulating franchise agreements between a manufacturer and its dealers has nothing to do with a manufacturer who does not have dealers being allowed to sell directly. The state should not require car manufacturers to have dealers if they don't want to use that business model. Why should any new manufacturer be required to sell through the auto dealers cartel? What makes car dealers think they should have the exclusive right to sell new cars from any future manufacturer in perpetuity?

    If a consumer wants to buy a car a dealer sells, fine. Buy an Audi if you like "sales". If that consumer prefers a car a manufacturer sells directly, also fine. Think of computers-- I can buy a PC direct from Dell, or one of several other brands at the local electronics store. Would you require Dell to sell through local stores too? Cars sales should not be regulated differently than any other consumer product.
     
  10. dsm363

    dsm363 Roadster + Sig Model S

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    Cars no longer deserve special protections. Maybe nationally these agreements should sunset. Give them twenty years heads up to recoup their investment then have them compete like everyone else.
     
  11. evme

    evme Member

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    Is this the bill?

    Bills

    As far as competition goes. Generally speaking, there should be a legally binding contract between the manufacturer and the dealer which should have a non-compete clause. Having laws for these kind of things makes no sense. On top of that, the other car manufacturers chose to use the dealership networks, why should Tesla be forced into their choices? This is no different then colluding where you force all the new guys to play by your rules or they won't do business.
     
  12. AnOutsider

    AnOutsider S532 # XS27

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    Whew. Who knew folks felt so strongly about dealerships? Mine must be a fringe case.

    Perhaps, I'm referring to the "view" or image. Near me Tom Masano has a large network of dealerships and most folks love shopping there, and they regularly get involved in community events.

    Not sure what you mean there.

    OK... How do you explain that in owning my Model S for 1 year and 3 months I've effectively spent more on "maintenance" with it than my wife's A6? I've said this many times, but Audi Care covers maintenance for longer than Tesla's 4 year plan and costs signifiantly less. Her car is in for service now (which is why the dealer called to offer getting out of it) and aside from a new tire replacement (recommended, not performed) the service cost nothing and was covered under the ~$590 Audi Care plan we paid for when we got it.

    As for "service many", my Model S has been in for service more times than our A6 and we've had it for 2 years less. I love my Model S, but all these pro-Tesla arguments seem to put blinders on and ignore the rest of the world.

    Actually, I'd argue that I seem to be one of the few people here drinking water. Thanks for insulting my intelligence, but I know what a car costs when I go to shop for it. I know what invoice price is on a car I shop for, and I know when I am getting a deal. Not that I really have to explain myself here, but yes, the deal(s) offered were on NEW cars significantly BELOW invoice.

    Let's stop pretending Tesla is the ONLY car manufacturer or "dealer" that gives a hoot about their customers.

    Actually sir, YOUR post is the straw man argument. If you re-read what I said, I was NOT comparing anything to Tesla. I was speaking out regarding the general idea that laws prohibiting manufacturers from competing with their dealer networks are wrong. Obviously Tesla has no dealers to compete with, so the debate there is non-existent. With that error in comprehension out of the way, the rest of your post is arguing something I never stated (and in fact agree with).
     
  13. ItsNotAboutTheMoney

    ItsNotAboutTheMoney Active Member

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    It's easy to be involved and sponsor local community activities when you're raking in excess on every transaction. It's just an additional cut coming from the pockets of locals.

    And, where Tesla has employees they can do the same thing. Tesla isn't eliminating any step, it's just more streamlined and appropriate.

    The manufacturer and dealership have to make money. In order to make up for the discounting of inventory, prices have to be higher. You might feel you could have got a good deal, but not everybody can get the good deal.

    I think you misunderstand what I'm writing about. I'm saying that the traditional "monolithic" franchise dealerships are now a very inefficient way of doing business because an Internet-centered direct model eliminates the need for most of the space and employees in a dealership.

    The key point about "buy once, service many" is that there are vastly different needs before and after the sale.
    - Buy once: with the Internet you can now learn most of what you need to know about a car in advance, so you can pretty much just turn up at the "store" to take a test drive. This means there need to be fewer "stores", because there is less customer time to deal with. And, if you have a friend with the car, you may even be able to eliminate the whole test drive thing because they'll let you test drive their car. Or if you are in a multi-car household and want to buy the same car it could be completely unnecessary.
    - Service many: you'll still need to take your car to be serviced and repaired. You'll probably do this many times during ownership, so you need more "repair shops" than "stores".
    Given the different needs, why would you have the same number of "stores" as "repair shops" and co-locate them?

    Then, on top of all this, Tesla uses an Internet-based direct, pre-order, fixed-price model, which lowers the cost of the sales process and eliminates the inventory overhead. Tesla's stores just have a few example cars to test.

    Tesla's identified the weakness of the current model, ignored it and build the most cost-efficient model they could.

    As for Tesla's maintenance prices, I put a lot of that down to having a single product with low volume. It's possible that operating through intermediaries could be more efficient, but the problem is that the current laws around car dealer franchising simply do not allow for a truly effective model, because the franchises have guaranteed independence that limits the ability for the manufacturer to manage the process. As Tesla builds volume the unit overhead should get lower. I think Tesla will follow their model in other areas and consider servicing as a cost to minimize instead of a revenue stream to maximize.
     
  14. lorih

    lorih Member

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    The interesting thing here is that when other states like NC and Oregon tried to block Tesla selling direct, Tesla owners and supporters went out to the capital in person to show Tesla support. I know that there is an active group of Tesla owners in NY, and I wanted to post to the local group. I chose this particular twitter post because it had the local phone number and representatives to call. Other postings discussed "why".

    I couldn't find any links to a local NY group, so I just made a general posting. I am really surprised that Tesla selling direct is even controversial to the audience. Elon has spoken often about the benefits to both a disruptive startup (a dealer can not affectively discuss the benefits of a EV without comparing to ICE, and most dealers will not and can not educate themselves about Tesla technology when more than 95% of their sales are ICE, not to mention that 80% of their profits come from service not sales).

    Tesla has said that the dealership model has never worked for ANY car startup in history, and Tesla's success depends on selling direct to customers. And Tesla's success is important if we want to change to sustainable transportation (that is afterall Tesla's stated goal as a company).

    I am so surprised there is any backlash here. I just assume that TMC people want Tesla to succeed, and want EV's in general to eventually replace most if not all ICE long term.

    I know we are a diverse group, but I assumed on a Tesla EV enthusiast forum we would have some collective enthusiasm about the one focus of the actual group, Tesla EV's.
     
  15. AnOutsider

    AnOutsider S532 # XS27

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    Fair enough.

    To be clear, there's no backlash here from me re: dealers locking Tesla out of sales. My post was merely stating #1 that I can see why the laws were what they were (and as discussed with others here, I agree that they should be CONTRACTS between franchises and franchisees instead of LAW) and #2 that not all dealerships are evil as seems to be the immediate position taken whenever this comes up.

    I'm, obviously, 100% for Tesla being able to sell wherever they want. They have no dealerships to compete with, and their model works for them (I'm not even sure they could've gone the fisker route with dealers and still done as well).
     
  16. TexasEV

    TexasEV Active Member

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    AnOutsider, sorry for misinterpreting what you were saying. I thought your repetition of dealer talking points meant you agreed with them that Tesla should be required to sell through dealers.

    When Elon testified at a Texas legislature hearing last year he said something to the effect of if supporting Little Leagues is required in order to be allowed to sell cars in Texas, tell me how much it costs and where to send the check. That didn't help-- the bill to allow Tesla to sell in Texas never made it out of committee.
     
  17. Robert.Boston

    Robert.Boston Model S VIN P01536

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    The state laws that protect franchise dealers from predation by automobile manufacturers has a solid basis in history. Before these state laws, there was a substantial history of automakers forcing inventory on dealers and other non-competitive acts.

    I have yet to hear any convincing argument, though, why an auto manufacturer with no franchise dealers should be forced to create such a dealership arrangement. Should Apple be forced to close its Apple Stores? Should magazines be required to sell only on racks of local stores, rather than directly mailed to subscribers?

    The "dealers creates jobs" argument is a canard. Tesla employs people, too. No politician would try to enact laws to prohibit Amazon from delivering product in their state, citing reduced employment at local retailers. Why is Tesla different?
     
  18. dsm363

    dsm363 Roadster + Sig Model S

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    Exactly. Tesla is mainly different because they don't have the lobbying clout (yet) needed.
     
  19. qwk

    qwk Model S P2681

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    The Dealers Associations are no different than the Mob. "Either we get a cut, or you will not do business here". The contracts that other auto manufacturers signed with dealers are their business. Forcing it on Tesla is criminal.
     
  20. brianman

    brianman Burrito Founder

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    How is this different from a bribe again? Or a mob tactic?
     

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