"Plan B" Thoughts/Proposals for Mixed (i.e. franchise/factory) Dealer Model

[igotzzoom]

I see a work-around through even the most draconian North Carolina law. On the Teslamotors.com site, simply say, "North Carolina residents, please call 800-4A-TESLA, and a concierge representative will help you through the purchase and delivery process. Unfortunately, by North Carolina law, we cannot process orders or requests made online."

If the NCADA wants to be especially douchebaggy, they could claim that even phone transactions would be a violation of the law, since many calls are made by digital VOIP means, making even voice calls "by internet." If they were to go that far, I expect there would be major blow-back, and would almost certainly trigger a federal lawsuit by Tesla on obstruction of interstate commerce.

 

[Mycroft]

IMO, Elon has decided to go the federal route. Since it's the most draconian, he's probably going to challenge NC as unconstitutional in the federal district court. Or he might go after multiple states in multiple federal courts.

 

[igotzzoom]

I see Musk and Tesla taking a "pull out all the stops" offensive at this point. I would. NADA and its state associations have been completely antagonistic and hostile toward Tesla, so I don't blame Musk for having no love lost between them. I think NADA is effectively digging its own grave by being so strongly and irrationally opposed to Tesla's expansion. Sure, they will be around for years to come, but they'll morph from being a powerful lobbying organization to just an annual convention where the "good ol' boys" get together and talk shop over cocktails.

 

[Mycroft]

Agreed. NADA doesn't have a leg to stand on wrt constitutionality. Given what happened to Fisker's customers, there is NOTHING about the franchise system that protects them.

 

[neroden]

I know for some this may sound like capitulation to the strong-arm tactics of NADA and its state associations, but rather than fight these tedious and cumbersome legal battles state-by-state, I've thought of a few scenarios that might be perceived as less antagonistic by the dealers, and radically expand the potential distribution channels for Tesla.

No can do.

Let me explain. New York's motor vehicle franchise law allows Tesla to operate manufacturer-owned stores -- but only if Tesla has no franchised dealerships. The same appears to be true in Massachusetts. At least it isn't true in California...

Open one franchise, and you have to shut down the manufacturer-owned stores even in several of the places which allow them. This is not worth it. Just stay out of the states with the silly laws, and let people order online.

The North Carolina law which attempts to prohibit online purchases is almost certainly a violation of the interstate commerce clause, being interference in the federal government's exclusive powers.

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Well, VA is out, but in another thread, I suggested, somewhat as a joke, that Tesla setup a delivery center on the SC side of Carowinds.

The District of Columbia code is reallly hard to read, but after digging through it, I am pretty sure that getting a dealership license in DC itself is very straightforward; DC has NO laws restricting motor vehicle dealerships, apart from the lemon law. You just buy a license to operate a business, and get a "motor vehicle endorsement" for $30/ year.

Therefore I believe Tesla should move its sales and service for the VA/MD area straight into DC proper. I realize the land is expensive, but find someplace with the right zoning, and Tesla is set.

 

[bollar]

The North Carolina law which attempts to prohibit online purchases is almost certainly a violation of the interstate commerce clause, being interference in the federal government's exclusive powers.

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The District of Columbia code is reallly hard to read, but after digging through it, I am pretty sure that getting a dealership license in DC itself is very straightforward; DC has NO laws restricting motor vehicle dealerships, apart from the lemon law. You just buy a license to operate a business, and get a "motor vehicle endorsement" for $30/ year.

Therefore I believe Tesla should move its sales and service for the VA/MD area straight into DC proper. I realize the land is expensive, but find someplace with the right zoning, and Tesla is set.

My comment was related to the NC problem -- if out of state delivery is required for NC, I think it'll have to be in SC.

Tesla already has a store on K street, so that's not a problem to have sales there and galleries in MD and VA.

 

[brianman]

Open one franchise, and you have to shut down the manufacturer-owned stores even in several of the places which allow them. This is not worth it. Just stay out of the states with the silly laws, and let people order online.

As I understand it, this is indeed the right strategy for now at least. I hope Tesla stays the course. It will be interesting to see if California starts touting how much additional tax revenue they are getting for out-of-state vehicles with stupid laws in their states. Both voters and politicians tend to notice when they're giving money away to other states.

"We're all in this together (nation) but only to a degree (states)."

As an example, I'm pretty sure there are influencial folks in Texas that are having "stern conversations" already about "why are we giving tax revenue to California?" There's not a lot of cross-state love there from a political perspective.

 

[bollar]

As I understand it, this is indeed the right strategy for now at least. I hope Tesla stays the course. It will be interesting to see if California starts touting how much additional tax revenue they are getting for out-of-state vehicles with stupid laws in their states. Both voters and politicians tend to notice when they're giving money away to other states.

"We're all in this together (nation) but only to a degree (states)."

As an example, I'm pretty sure there are influencial folks in Texas that are having "stern conversations" already about "why are we giving tax revenue to California?" There's not a lot of cross-state love there from a political perspective.

In Texas, we give nothing to CA, so long as the car isn't picked up in CA. If it's delivered and registered here, we pay the sales tax directly to the county tax assessor. It the car was previously registered in another state, we get a credit for how much we paid to the other state. Most states have similar reciprocal agreements, so there's no reason a new Tesla owner would take delivery in another state unless it was a personal reason.

So, you can rest assured that nobody in Austin, Raleigh, Richmond or Annapolis is having that conversation. We'll need a different argument to appeal to the government.

As an aside, I would be interested in picking up the car at Fremont, but CA won't waive the sales tax for cars that will be directly taken out of state. The ~9% CA charges is quite a bit higher than we pay.

 

[brianman]

I think I mixed up the TX legislation with the NC or other legislation. Mea culpa.

Thanks for the correction, bollar.

 

[bollar]

I think I mixed up the TX legislation with the NC or other legislation. Mea culpa.

Thanks for the correction, bollar.

I'm sure this situation depresses Tesla sales. While at the Austin store on Friday, I watched a fair number of people frustrated by the Tesla's employees' inability to answer seemingly basic questions, exacerbated by Tesla owners' overzealous attempts to fill in the blanks.

For the S and X, I think there are plenty of us in Texas willing to run the gauntlet despite the barriers, but I worry about the Gen III buyer who will want a straightforward experience that includes accepting trade-ins, as well as financing registration and taxes.

 

[ggies07]

I'm sure this situation depresses Tesla sales. While at the Austin store on Friday, I watched a fair number of people frustrated by the Tesla's employees' inability to answer seemingly basic questions, exacerbated by Tesla owners' overzealous attempts to fill in the blanks.

For the S and X, I think there are plenty of us in Texas willing to run the gauntlet despite the barriers, but I worry about the Gen III buyer who will want a straightforward experience that includes accepting trade-ins, as well as financing registration and taxes.

Really? They get to answer all the tough questions, like how the car is made. I would think with you guys there everything would be covered.

 

[bollar]

Really? They get to answer all the tough questions, like how the car is made. I would think with you guys there everything would be covered.

I would think so as well -- but I live in Dallas, not Austin and have never been to the store before, so I don't know if it was an everyday experience. From what I could tell, the help/education was sometimes offered when it wasn't wanted. I have no clue if this is the way things usually are, or if it was just a bad combination of clueless looky-loos being met by overzealous fanbois, or what.

 

[purplewalt]

I'm sure this situation depresses Tesla sales. While at the Austin store on Friday, I watched a fair number of people frustrated by the Tesla's employees' inability to answer seemingly basic questions, exacerbated by Tesla owners' overzealous attempts to fill in the blanks.

For the S and X, I think there are plenty of us in Texas willing to run the gauntlet despite the barriers, but I worry about the Gen III buyer who will want a straightforward experience that includes accepting trade-ins, as well as financing registration and taxes.

Bollar:
I concur.
There is a LOT to do to purchase a Tesla (in Texas): All the telephone calls, e-mails, running around, arrange one's financing, disposing of current vehicle/trade-in, my own sales taxes, my own registration, my-own-tags, etc.
Gen III Buyers will need better hand-holding and guidance to get all that outlined/stream-lined, and it WON'T be face-to-face with someone in the Gallery, because they can't talk about the financial stuff.
And the Gallery staff can SHOW the sitting car, but they can't let someone do a test-drive from the Gallery.
A true conundrum.
The sales will be handled via phone and over the internet by people OUT-OF-STATE, and people will just need to be excited and patient watching U-Tube videos of the latest offerings.

IF the current sales and demonstration rules remain intact (as in Texas), it is going to be a LOT to educate and convince the next generation of Texas Tesla buyers to have some faith....

 

[Rodolfo Paiz]

But this is a fight based on the principle of the thing, and it is absolutely worth fighting. Right now.

 

[renim]

My feeling is that these dealership organizations are deep pocketed and don't want to lose as much as Elon wants to win, Am I right?

I guess my question is will Tesla have to continue to fight this battle when they begin to sell more and more cars overseas? Do they have similar laws?

its not the small dealers, its the large listed dealers that are the trouble makers ie Autonation http://investors.autonation.com/phoenix.zhtml?c=85803&p=irol-irhome
Their perspective is that Elon is merely a front man, with Toyota and Mercedes controlling it from behind the curtain.

so don't expect any Kumbaya here, The dealers see it a core threat.

 

[jeff_adams]

I hate to say this, but the best thing for Tesla in the long run would be for NC to pass their strict law. Once they do that, a couple of smart attorneys from NC can get together and one can represent the other in a Federal lawsuit against the state. I bet they both end up with new Teslas paid by the state when they destroy NC and NADA in court. Once case law is established in that case, it's open season on all the other states with anti-Tesla laws. Game over NADA

 

[igotzzoom]

Looks like the über-Draconian bill proposed in NC is essentially dead:
http://www.newsobserver.com/2013/06/25/2989207/nc-legislators-drop-bid-to-curb.html

 

[elecblue]

Good news!