SB 6272 and HB 2524 to prevent new Tesla stores in Washigton state?

[brianman]

I think someone else said it above but...

My bet is that the "concession" to include a grandfathering provision was just a trick.

1. Quiet the Tesla crowd.
2. Leave the non-Tesla EV market at the mercy of dealer control.
3. If any other manufacturer presses for litigation on the grandfathering provision, it will be struck down as Tesla-specific.

In the end, they get the bill they originally wanted where Tesla and the entire EV market are both screwed.

I wonder if I can prepay my Gen 3 before #3 happens....

 

[100thMonkey]

So if my understanding is correct, the amended bill grandfathered Tesla Motors so that they can add more stores, but prevents others from doing the same? Shame on the legislators.

A few weeks ago, I sent emails asking my reps (Ross Hunter, Cyrus Habib) and senator (Rodney Tom) to defeat the bill, but they voted for it anyway. No surprise. Any chance that Governor Inslee will veto it?

Inslee is is quite pro EV and very very pro alternative energy. I believe he could line item veto the entire section that would restrict future direct sales. he would at least be sympathetic to our argument.

 

[ItsNotAboutTheMoney]

I think someone else said it above but...

My bet is that the "concession" to include a grandfathering provision was just a trick.

1. Quiet the Tesla crowd.
2. Leave the non-Tesla EV market at the mercy of dealer control.
3. If any other manufacturer presses for litigation on the grandfathering provision, it will be struck down as Tesla-specific.

In the end, they get the bill they originally wanted where Tesla and the entire EV market are both screwed.

I wonder if I can prepay my Gen 3 before #3 happens....

To be honest, at the point at which other manufacturers would do that, it wouldn't matter. If there's one thing they like about Tesla it's that they're helping to destroy the current model.

 

[100thMonkey]

To be honest, at the point at which other manufacturers would do that, it wouldn't matter. If there's one thing they like about Tesla it's that they're helping to destroy the current model.

it's the state and federal dealer associations that could though. this whole thing was very strategic: drop the bill late, push it up to the cut off, force behind the scene negotiations that can not be scene by constituents before voting... these deep pockets are surely capable of taking the whole thing to court down the line. ...some of the wealthiest people on the planet are not liking how well Tesla is doing and won't go down without a serious game of dirty pool.

 

[adiggs]

The bill was voted on last night; it passed 93-3 in the House and 47-0 in the Senate, and several people that insisted they wouldn’t let the anti-Tesla clause through voted for it. I sure hope that means it was modified; let's look at the bill history...

I see that the notes say that a “floor amendment” was adopted yesterday. The substitute bill as posted still has the anti-Tesla provision in Section 1, saying that licenses and sublicenses are to be denied to manufacturers and their agents if that would put them in violation of 46.96. But it looks like a new section 7-1-g-vii has been added to 46.96.185, which says that any manufacturer that already has a license and only sells their own cars and doesn’t have dealers is not in violation of the law.

That’s great for Tesla; it means they can expand in WA. But Section 1 still means no new manufacturers can use the same direct-sales model. And 7.1.l still says that existing dealers can’t be forced to install service equipment for new vehicles unless ALL dealers are forced to do so, so it could be harder to get new EVs from existing automakers in to the state (maybe not; but it now depends on the dealers more than the manufacturers, and the dealers have traditionally been more reluctant than the manufacturers). Tesla’s mission is to get the whole industry to move to electric, so while Tesla is allowed to expand, and we clearly had a measurable effect on the legislators (thanks everybody who showed up, and submitted comments online!) I still don’t see this as a complete positive.

I wanted to use ChadS' comment as a starting point for an observation. I don't have a different interpretation of the specifics of what's going on in Washington state, though I can admit to a bit of trepidation that it's catching, and that I'm going to find myself in Salem, OR one of these days having some of the same conversations for the same reasons.

The observation is this - assuming ChadS' interpretation is accurate, I will say it stronger - this is an outright bad outcome (given that it goes into law as written). As TSLA investors, which I assume many of us are, it might sound good that we have the dealership lobby writing a TSLA monopoly into law and that sounds good in the short term, but I see no upside in the long term. TSLA with no competition is bad for traditional auto manufacturers, bad for consumer choice, bad for the pace of EV adoption - and I think a dynamic system / long-term argument can be made that it is actually bad for Tesla the company. The latter argument though isn't my point.

Take Tesla's position in WA and extend it across the US. EV adoption in the US just stopped cold, with the possible exception of Nissan. Actually it looks worse than that - who's going to be selling the fuel cell vehicles Toyota is so enamored with? Or any other alternative fuel vehicle?

In the end, I'm gratified by all the comments I've read by people who didn't just advocate for retaining Tesla's option to expand in the state, but to keep the law in a form that others can enter the market and compete. I like to think we're members of the species first, looking out for the environment / national security / oil dependence, and our investment in TSLA second.

 

[qwk]

I wanted to use ChadS' comment as a starting point for an observation. I don't have a different interpretation of the specifics of what's going on in Washington state, though I can admit to a bit of trepidation that it's catching, and that I'm going to find myself in Salem, OR one of these days having some of the same conversations for the same reasons.

The observation is this - assuming ChadS' interpretation is accurate, I will say it stronger - this is an outright bad outcome (given that it goes into law as written). As TSLA investors, which I assume many of us are, it might sound good that we have the dealership lobby writing a TSLA monopoly into law and that sounds good in the short term, but I see no upside in the long term. TSLA with no competition is bad for traditional auto manufacturers, bad for consumer choice, bad for the pace of EV adoption - and I think a dynamic system / long-term argument can be made that it is actually bad for Tesla the company. The latter argument though isn't my point.

Take Tesla's position in WA and extend it across the US. EV adoption in the US just stopped cold, with the possible exception of Nissan. Actually it looks worse than that - who's going to be selling the fuel cell vehicles Toyota is so enamored with? Or any other alternative fuel vehicle?

In the end, I'm gratified by all the comments I've read by people who didn't just advocate for retaining Tesla's option to expand in the state, but to keep the law in a form that others can enter the market and compete. I like to think we're members of the species first, looking out for the environment / national security / oil dependence, and our investment in TSLA second.

I disagree. Even if this law was airtight(any law aimed at monopolizing a market is not going to hold up in court), companies like Samsung don't care about petty laws like this. Once Tesla takes EV's mainstream, in the age of the internet all others have to do is sell them online with a Tesla like delivery, and service model. The dealership age is all but over. Only the stubborn older folks will shop for cars the way their grandad used to.

 

[dfitz206]

Here is one of many replies I received from legislators (I sent many notes last week!), which summarizes from their point of view, what happened on these two bills. Take it for what it's worth :wink: Wish I hadn't been out of town and could have been there yesterday with all of you!

Thanks for your email and good to hear from you. I appreciate you sharing your concerns regarding the impact to TESLA from HB 2524. This bill has generated a great deal of discussion so let me share my view of the issue.

I, like many of the sponsors of the bill, signed onto to the legislation as a way to reaffirm and strengthen Washington's 20 year old statute regulating the relationship between auto manufacturers and their local dealerships. The notion that TESLA would get caught up in the bill was never imagined nor intended despite many of the allegations from rightfully frustrated TESLA owners and supporters.

I can tell you no one here consciously tried to curtail TESLA's business.

The bill was introduced to further protect local dealerships from the unfair advantage manufacturers would have should they try to site their own stores in direct competition with their franchise dealers.
This has been established WA law for two decades.

It was recognized later that the TESLA business model is different and that is why, in the original bill, the two existing showrooms in WA were allowed to continue. As the bill progressed compromise language was finally reached to allow TESLA to not only continue the two showrooms but to grow the number of stores in WA state. The compromise was agreed to by dealerships, manufacturers and TESLA.

TESLA should be contacting its owner base soon to let them know that all is well and TESLA will continue to be an innovative business in WA for the foreseeable future.

Thanks again for your message, let me know if you have any further questions.

 

[Jackyche]

How does it go again?

Q: "How do you know when a politician is lying?"

A: "When their lips are moving"

This is a very very small victory for Tesla. Its a gigantic defeat for direct-sales-business-model for purchasing cars.

I don't know a single person who's actually for protecting current auto dealer business model. They received bunch of emails from us against the bill, and I assume ZERO from the general public supporting the bill. How did the vote go? OVERWHELMING passage. Money talks my friends.

Here is one of many replies I received from legislators (I sent many notes last week!), which summarizes from their point of view, what happened on these two bills. Take it for what it's worth :wink: Wish I hadn't been out of town and could have been there yesterday with all of you!

Thanks for your email and good to hear from you. I appreciate you sharing your concerns regarding the impact to TESLA from HB 2524. This bill has generated a great deal of discussion so let me share my view of the issue.

I, like many of the sponsors of the bill, signed onto to the legislation as a way to reaffirm and strengthen Washington's 20 year old statute regulating the relationship between auto manufacturers and their local dealerships. The notion that TESLA would get caught up in the bill was never imagined nor intended despite many of the allegations from rightfully frustrated TESLA owners and supporters.

I can tell you no one here consciously tried to curtail TESLA's business.

The bill was introduced to further protect local dealerships from the unfair advantage manufacturers would have should they try to site their own stores in direct competition with their franchise dealers.
This has been established WA law for two decades.

It was recognized later that the TESLA business model is different and that is why, in the original bill, the two existing showrooms in WA were allowed to continue. As the bill progressed compromise language was finally reached to allow TESLA to not only continue the two showrooms but to grow the number of stores in WA state. The compromise was agreed to by dealerships, manufacturers and TESLA.

TESLA should be contacting its owner base soon to let them know that all is well and TESLA will continue to be an innovative business in WA for the foreseeable future.

Thanks again for your message, let me know if you have any further questions.

 

[J in MN]

It is very important that legislators understand that this is not about jobs. Almost every service center employee came from a dealership. Over time dealership employees will simply migrate to Tesla stores and service centers.

Rather, this is about access to compelling cars, the ownership experience, and ensuring sustainable transportation.

 

[dsm363]

Regardless of political party it is all about money. Only way to change system is either through voting, funding a challenger or both.

 

[RobStark]

I think someone else said it above but...

My bet is that the "concession" to include a grandfathering provision was just a trick.

1. Quiet the Tesla crowd.
2. Leave the non-Tesla EV market at the mercy of dealer control.
3. If any other manufacturer presses for litigation on the grandfathering provision, it will be struck down as Tesla-specific.

In the end, they get the bill they originally wanted where Tesla and the entire EV market are both screwed.

I wonder if I can prepay my Gen 3 before #3 happens....

Conspiracy on top of conspiracy packaged in another conspiracy?

Tesla did very well not a small victory for Tesla.

Tesla will lead the charge to "normalize" EVs.

Then even dealers will clamor for a vehicle to compete.

Elon has always said the biggest problem with a dealer sales model is getting salespeople to educate the public on EVs. It takes four times the man hours to sell an EV as it does an ICE car.

Once Tesla makes EVs mainstream that will no longer be the case.

In 5 years people shopping for a LEAF will not need their hands held tightly for them to make the jump.

So far the Courts have been quite friendly to Tesla overall and I expect that to continue.

I expect the courts to strike down dealership protection before they strike down the Tesla exemption.

 

[qwk]

Regardless of political party it is all about money. Only way to change system is either through voting, funding a challenger or both.

Or just voting with your wallet. Not patronizing dealerships, makes them obsolete.

 

[100thMonkey]

sorry for out right coppying some of your statements but here is the follow up letter I am sending to my reps. I see no reason not to urge the governor to line item veto the part that prevents direct sales and singles out Tesla.

"Dear representative, I am very displeased with the outcome of HB 2524/SB 6272. With the exception of Tesla Motors, the auto dealer's association secured their anti-competitive, anti-free market, business as usual grip on the larger auto market. The bill outcome is fine enough for Tesla; it means they can expand in Washington state but Section 1 still means no new manufacturers can use the same direct-sales model, which has been key for Tesla's success. No other car manufacturer other than the big three have survived this start up process in over 50 years! I wouldn't even be surprised if a court struck down the clause as favoring a monopoly, making this bill a complete victory for car dealer franchises. All auto manufacturers who choose direct marketing should be allowed to do so in Washington state in the future, not just Tesla, I am therefore left with no other option than to urge Governor Inslee to veto part or all of the bill!"

 

[DouglasR]

Most of the comments about this being a bad outcome are looking in the wrong place. With the possible exception of section 7(1)(l), as noted by Chad, the new law will not make matters any worse than they were before. The real problem is with section 7(1)(g), which expressly prohibits a manufacturer from competing with any dealer by becoming a dealer or owning or operating a dealership. But that language was already in the law. Section 1 of the new bill authorizes the director to deny a dealership license that would cause a manufacturer to be in violation of the chapter, but this is mostly just a clarification of existing law: the director would have denied such licenses even without this language. Only the addition of the phrase "or subagency" added a new wrinkle that would have caught Tesla and hindered its ability to expand. The new language in the amendment adopted last night simply makes it clear that section 7(1)(g) does not apply to manufacturers who already have a license as of January 1, 2014.

This entire chapter deals with the relationship between manufacturers and their franchisees. Section 7(1)(g) stands out because it is the only section that purports to regulate manufacturers that have no franchisees. It is clearly a restraint on competition. That it is a restraint of trade does not mean, however, that it will not stand up in court. There is a well-developed exception to the antitrust laws for restraints of trade that are created pursuant to "state action." Where the state clearly intended to restrain competition as part of a comprehensive regulatory scheme, the Sherman Act generally does not apply. Challenging section 7(1)(g) on antitrust grounds would be far from easy.

Even the changes to section 7(1)(l) that Chad raised are not necessarily that detrimental to the introduction of new EVs. This is, again, because most of the bad language was already in the statute. Without going into great detail, it is my view that the new language simply makes a bad section more clearly bad.

In short, I believe we should be happy that the bill was changed to permit Tesla to expand its sales and service facilities. As to the development and sale of EVs generally, the damage was done before this new bill was introduced. And while a legal challenge might be worth pursuing, it is my view that the best way to reverse that damage is via state and federal political action.

 

[dsm363]

Or just voting with your wallet. Not patronizing dealerships, makes them obsolete.

I agree. That is a long term solution though. In the short term the dealerships are still vastly wealthy and politically powerful so finding a way to make politicians understand there are political consequences to pushing protectionist laws is the way to go. Not easy unless you throw a bunch of money at it unfortunately. The dealerships have a multi decade head start.

 

[100thMonkey]

thanks for the clarification Douglas!

For whatever it's wroth, I spent a little more time to fashion a letter to our governor. I wanted to add my "feather" to the scale while it was fresh in my mind and before the bill gets signed into law in the coming weeks just in case there is something that can be done to make the bill better. I'm no lawyer so I'm sure there are technical flaws in my wording.

"Dear Governor, I am a fan of yours, have read your book, have put solar on my home, sold both my gas cars and replaced them with solar powered zero emission electric vehicles (Tesla Model S and the Nissan Leaf). I am writing to you today because I am very displeased with the outcome of HB 2524/SB 6272. I urge you to consider vetoing part or all of the bill! the bill was dropped late in the session, forcing last minute amendments without constituents having a chance to weigh in on them. With the exception of Tesla Motors, the auto dealer's association further secured their anti-competitive, anti-free market, business as usual grip on the larger auto market. The bill outcome is fine enough for Tesla with the striker amendement, it means they can expand in Washington state but Section 1 still means no new manufacturers (even ones' with no franchises aka sub agencies) can use the same direct-sales model, which has been key to Tesla's success. No other car manufacturer other than the big three have survived this start up process in over 50 years! All auto manufacturers who fit the definition of sub agencies who choose direct marketing should be allowed to do so in Washington state in the future, not just Tesla. The dealership franchise model is awful for the consumer, it drives up costs and makes the process of buying a car stressful and often down right sleazy. How refreshing it was to purchase a Tesla on line, no haggling, no pressure, all from the comfort of my living room. There was plenty of time to research and pick exactly the features I wanted with the car. Franchise dealers add a lot of pressure and several thousand dollars to the price of a car. It's notable that for just a few thousand dollars Tesla was able to fund a nationwide, free for life, super charging network. It's remarkable, the difference between franchises and no franchises meant free fuel for owners of Tesla vehicles for life! You are well aware of the dire need for dramatic change in the direction that the auto industry has been going in for far too long and I hope you see the need to assure that the future of direct sales for manufacturers (at least the ones who meet the definition of sub agencies) in Washington state is key to future innovation and is persevered. I'm no lawyer, but it appears to me that the only way to achieve this is either vetoing the bill in it's entirety or if you are able, striking the portion that limits direct sales by "sub agencies". thank you for your consideration!"

 

[v12 to 12v]

The end result has provisions that interfere with the real goal, which is sustainable transport and getting other manufacturers and dealers to step up to the plate.

The Tesla Approach to Distributing and Servicing Cars | Blog | Tesla Motors

The Secret Tesla Motors Master Plan (just between you and me) | Blog | Tesla Motors

 

[DouglasR]

I don't want to tell you what to write, but here are a few thoughts. I believe the Governor's line item veto power does not permit him to veto less than a full section of the bill. Thus, a veto of section 1 would remove the provision allowing the director to deny a dealers license or subagency based on a violation of the chapter. I'm not sure how far that gets you, however, inasmuch as it would still be unlawful for a manufacturer to own or operate a dealership (a subagency is simply the right to operate a new facility under an existing license, which what Tesla Motors has used to open new facilities). I don't believe that the elimination of section would permit any manufacturer other than Tesla Motors to own or operate a dealership, and without a dealership, they would be unable to have a subagency. The governor cannot veto existing law. I don't really see any way around this.

thanks for the clarification Douglas!

For whatever it's wroth, I spent a little more time to fashion a letter to our governor. I wanted to add my "feather" to the scale while it was fresh in my mind and before the bill gets signed into law in the coming weeks just in case there is something that can be done to make the bill better. I'm no lawyer so I'm sure there are technical flaws in my wording.

"Dear Governor, I am a fan of yours, have read your book, have put solar on my home, sold both my gas cars and replaced them with solar powered zero emission electric vehicles (Tesla Model S and the Nissan Leaf). I am writing to you today because I am very displeased with the outcome of HB 2524/SB 6272. I urge you to consider vetoing part or all of the bill! the bill was dropped late in the session, forcing last minute amendments without constituents having a chance to weigh in on them. With the exception of Tesla Motors, the auto dealer's association further secured their anti-competitive, anti-free market, business as usual grip on the larger auto market. The bill outcome is fine enough for Tesla with the striker amendement, it means they can expand in Washington state but Section 1 still means no new manufacturers (even ones' with no franchises aka sub agencies) can use the same direct-sales model, which has been key to Tesla's success. No other car manufacturer other than the big three have survived this start up process in over 50 years! All auto manufacturers who fit the definition of sub agencies who choose direct marketing should be allowed to do so in Washington state in the future, not just Tesla. The dealership franchise model is awful for the consumer, it drives up costs and makes the process of buying a car stressful and often down right sleazy. How refreshing it was to purchase a Tesla on line, no haggling, no pressure, all from the comfort of my living room. There was plenty of time to research and pick exactly the features I wanted with the car. Franchise dealers add a lot of pressure and several thousand dollars to the price of a car. It's notable that for just a few thousand dollars Tesla was able to fund a nationwide, free for life, super charging network. It's remarkable, the difference between franchises and no franchises meant free fuel for owners of Tesla vehicles for life! You are well aware of the dire need for dramatic change in the direction that the auto industry has been going in for far too long and I hope you see the need to assure that the future of direct sales for manufacturers (at least the ones who meet the definition of sub agencies) in Washington state is key to future innovation and is persevered. I'm no lawyer, but it appears to me that the only way to achieve this is either vetoing the bill in it's entirety or if you are able, striking the portion that limits direct sales by "sub agencies". thank you for your consideration!"

 

[100thMonkey]

I don't want to tell you what to write, but here are a few thoughts. I believe the Governor's line item veto power does not permit him to veto less than a full section of the bill. Thus, a veto of section 1 would remove the provision allowing the director to deny a dealers license or subagency based on a violation of the chapter. I'm not sure how far that gets you, however, inasmuch as it would still be unlawful for a manufacturer to own or operate a dealership (a subagency is simply the right to operate a new facility under an existing license, which what Tesla Motors has used to open new facilities). I don't believe that the elimination of section would permit any manufacturer other than Tesla Motors to own or operate a dealership, and without a dealership, they would be unable to have a subagency. The governor cannot veto existing law. I don't really see any way around this.

thanks Douglas, sounds like there is little that can be done at this point. your input did help me qualify my comment, rather than flat out urge a veto.

 

[v12 to 12v]

When I was at my Senator's office, I was told that we need to put together an organization or PAC so that we are recognized and organized. (It is hard to be organized if you are blindsided.)

Apparently a small donation from an identifiable PAC moves mountains but individual contributions towards efforts do not go nearly as far. Identifiable groups get more bang for the buck.
If we can't beat 'em I guess we have to join 'em.

Anyone know how to set up a PAC? It seems that volunteer efforts and contributions would go further but, I'm learning otherwise.