Didn't see him complaining when the government was subsidizing Tesla's R&D with cheap loans and tax incentives [1]. The government giveth and the government taketh away. Not saying I agree with this decision by NJ, but its somewhat disingenuous to take a moralistic argument (corruption) at face value from a party that possibly stands to benefit financially from the alternative decision. (Yes I'm assuming that pg is a Tesla stockholder).
Or, alternately, Uber ignores local taxi regulations and then is surprised when cities fight back. I haven't been following the Tesla issue closely, but their attitude does not seem similar to Uber's, which, personally, makes all the difference.
We need a Congressional member to introduce a bill to allow direct sales between car manufacturers and consumers, pronto. If it passes, that would trump any state law that bans that practice.
Couldn't agree more. It's amazing anything that isn't corrupt ever happens in New Jersey's government. Or, at least, I assume things that aren't corrupt do happen at least once in a blue moon. I suppose they got tired of selling kidneys and found a new victim.
2) Most cities have small tax bases, where car dealerships are a very large part of the tax base. City managers want a larger tax base to help fund their plans.
3) Thus, car dealerships & local politicians have aligned incentives.
4) So, local laws (zoning, advertising, etc) favor car dealerships.
5) Higher offices are filled from the pool of local politicians, as they move up the food chain.
6) Those politicians remember their contacts @ the dealers, who helped fund/launch their careers, & they remain aligned with them in passing laws empathetic to dealer's interests.
Of course, legitimately, car dealerships have HUGE capital investments (fast aging inventory, large chunks of prime real-estate, staffing costs). Would YC ever want to get into the traditional dealer space? No friggen way. Too risky & doesn't scale.
And, nobody really buys a car without a test drive/showroom. So, nearly any "online" sale is cannibalizing the dealer's investments.
So, we need to have some kind of online buying system where you MUST enter in a dealer showroom code before buying, & they get some commission, as they DO offer real value here folks.
IMO, the whole consumer retail system is going to evolve into "showroom + online buying" in a fair system soon.
So, nearly any "online" sale is cannibalizing the dealer's investments.
I suspect that Tesla would actually prefer to sell cars at dealers (that are owned and operated by Tesla); their online sales are just a hack to get around the fact that their dealerships are banned. So any concern about conflict of interest between the dealer and manufacturer seems like it does not apply to Tesla.
I'm not sure I understood your point. But..., HUGE capital investments does not seem like a valid reason to protect a company. Should we protect Walmart from Costco or Costco from Target?
Another aspect to consider is that big car manufacturers themselves probably support these laws, because even if they could more efficiently sell cars without the current dealership environment, mandating the dealerships vastly increases the barrier to entry from competing car manufacturers.
Lessig / rootstrikers are working on the meta issue of campaign financing. Direct crowdfunding is part of it, the other part is holding reps accountable for their votes.
Hmm, Apple does this just fine, but Apple isn't franchising the stores, they just comfortably run them at a loss. The fact that the dealerships have independent owners may make that more complicated. Your system seems reasonably sensible.
And you wouldn't have to enter a dealer showroom code, your dealer would just give you a code for a "special discount" -- this is how businesses already track which of their ad campaigns are paying off.
I hate dealers, every time I buy a car it is always a stressful experience. Dealers are trying to cheat me on every my step.
Last time I was via PenFed Car Buying Service, got a "guaranteed" web quote:
Got the dealer:
Sure, we will honor the price. But all of our cars have door guards installed - that's $500 extra. We just don't sell the cars without door guards.
Got the contract for the car:
Some extra maintenance plans included for an another $900, forced to remove them. Oh and the dealer made an another mistake for $1000, couldn't add up two numbers together (damn liar). An hour later got a fixed contract.
Got to the financing guy who is trying to sell me extended warranty and gap insurance for about an hour.
And that's over 6-7 hours at the dealership... /vented
Last time I was at a dealership it was to buy a used car. As soon as we started talking numbers I found there was an additional $800 of work that had been done to the car (window tinting and some door guard thing) that I had to pay for. I started by telling him that the sticker price was disingenuous since this was was already done and they knew they had to charge for it.
I ended up negotiating something half-way decent, but that was a very annoying starting point.
If a dealer tells me "yes, we honor the price but..." and the "but" part is not an obvious add-on like insurance or pre-paid service or anything like that that I can refuse and still get a car - I'd just walk. These people are obviously liars, why would you want to spend so much money with liars? It's not like there's only one place where you can buy a car nowdays. Same for extended warranties, etc. - if the guys can't understand "no" there are always guys who can. I've seen both kinds and the best way to deal with liar kind is to just walk. It stings when you've already invested time with them, but it's just sunk costs fallacy - the sooner you cut your losses the better.
> I hate dealers, every time I buy a car it is always a stressful experience. Dealers are trying to cheat me on every my step.
I had the opposite last time I bought a car. I'm still a bit baffled by it.
The salesman said he could let me have the car for $X. I countered that if he could let me have it for $Y (which was the price a dealer an hour away was offering for people who bought online for pickup, and was the price that my research had said was quite good), I'd write a check right then and there. He said he'd have to talk to the manager about that.
When he came back from his talk, he said that the best he could do was $Z. The odd part: $Z was LESS THAN $Y, by something like $1-2k.
Holy crap. Is this for real? Dealers are one half of the rotten pie that is the car industry, just let the dealer industry die already. Much like the music business tried fighting digital music only for it to completely take over, the car industry eventually will change to a different model that isn't reliant on an industry lubed up in snake oil and shady business practices.
Extended warranties, sneaky extras and premiums added to your contract, the amount of crap you have to endure when buying a new car these days is horrendously deep. If only more car companies sold directly and allowed you to buy online like Tesla does, I know the lobbyist motor dealerships group would never let that happen though.
No wonder the car industry is in the toilet, it's killing itself and Elon Musk is one of few people trying to change things and he's met with resistance: typical.
Tesla has a showroom at Short Hills mall in NJ. You can go in, check it out, test drive the car, and then order online. While it's really telling about NJ's government, I don't think it'll impact Tesla or its customers.
Also, I love how the article title reads "New Jersey Votes", as if the citizens got a vote in the matter.
The article is a bit misleading. It makes it sound like direct sales were legal in NJ (and so presumably the only reason Ford and Chevy and Toyota and the rest did not do them is that they did not want to), and the politicians are now stepping in to make a new law to stop Tesla.
In fact, it looks like direct sales have been illegal for a long time, but the law is poorly worded, and can be read in a way that bans direct sales for Ford, Chevy, Toyota, and most other major car manufacturers, but does not apply to manufacturers like Tesla, who only sell direct.
What the new law is doing is saying that the old law is meant to apply to all car manufacturers, not just Ford, Chevy, and so on.
Whats to stop a NJ resident from going to NY to purchase a Tesla direct? Is their a a big financial penalty for doing so when registering? What is to stop a grey market of NY residents reselling them to NJ consumers if so? This makes no sense.
Why aren't auto manufacturers jumping on the idea of selling directly to the public? Do they get some benefit from middlemen that Tesla doesn't, or is it just because they are so established doing things one way they won't consider other ways?
It's for the same reason that movie distributors don't bypass theaters by selling directly to the public. Originally, it was hard to distribute cars, and car manufacturers didn't want to make the investment to open little retailers everywhere. So they offloaded the risk and capital requirements to third parties, who could customize themselves to the markets they were in (what inventory to carry, where to locate, how to advertise, etc). Then those dealerships became their main (only?) source of revenue. Now they're beholden to their main sales channel. If they started selling cars directly, the dealerships revolt (like a labor strike - what do they have lose here?) and cut them off from revenue for a month. Similarly, theaters very explicitly refuse to show movies that are directly release to the public, which means, for the moment, that those movies won't make any money, and thus movies aren't released that way.
That's a scenario no upstart car company would ever enter into willingly, so Tesla of course didn't. And eventually, companies like Tesla will increase the pressure on all car companies to sell directly, and the dealership cabal will collapse. But in the meantime, that's a lot of tied hands.
Adding legal barriers through lobbying makes all of that worse, of course.
I wonder what requirements are placed upon dealers. In theory, Elon Musk could just open up his own "Elon's Teslas" shop and voluntarily sell the cars for no additional markup. There'd be some additional overhead, but it'd still be a much nicer arrangement overall than the current one I bet.
> Tesla has won recent legislative battles in states like Washington, Ohio, New York and Minnesota, but states such as Texas, Arizona and Virginia have retained or added laws limiting the company’s ability to operate stores.
Here we have a new industry everyone wants, a US product people want that gets high awards, innovative, inspirational and lawmakers go and block easier ways to sell it. Is this how we are going to compete on new industries and alternatives?
This is the same middle man battle going on in other industries, years of legacy middle men. Dealerships will still exist and Tesla won't kill them, let them play.
That's the state where it is considered too dangerous for you to fill up your own car with gas, right? So one's expectations of that place's lawmaking sanity should be already pretty low, and these expectations are now confirmed.
They should open up internet cafes next door. Who just happen to have computers that only go to the Tesla website, and are full of Tesla marketing materials and helpful staff who can assist you navigating the only website available.
I would do this just to create press and get people to come and see the free-internet-cafe-next-to-showroom that caused such a fuss.
[+] [-] oskarth|12 years ago|reply
Banning Tesla is an index of the corruptness of state governments as banning Uber is of city governments. (https://twitter.com/paulg/status/443469758369767425)
A very astute observation, as usual.
[+] [-] sheetjs|12 years ago|reply
[+] [-] victoro|12 years ago|reply
[1] - http://online.wsj.com/news/articles/SB1000142412788732465940...
[+] [-] npizzolato|12 years ago|reply
[+] [-] pg1598|12 years ago|reply
[+] [-] joesmo|12 years ago|reply
[+] [-] unknown|12 years ago|reply
[deleted]
[+] [-] johnvschmitt|12 years ago|reply
1) Money buys political influence (duh!)
2) Most cities have small tax bases, where car dealerships are a very large part of the tax base. City managers want a larger tax base to help fund their plans.
3) Thus, car dealerships & local politicians have aligned incentives.
4) So, local laws (zoning, advertising, etc) favor car dealerships.
5) Higher offices are filled from the pool of local politicians, as they move up the food chain.
6) Those politicians remember their contacts @ the dealers, who helped fund/launch their careers, & they remain aligned with them in passing laws empathetic to dealer's interests.
Of course, legitimately, car dealerships have HUGE capital investments (fast aging inventory, large chunks of prime real-estate, staffing costs). Would YC ever want to get into the traditional dealer space? No friggen way. Too risky & doesn't scale.
And, nobody really buys a car without a test drive/showroom. So, nearly any "online" sale is cannibalizing the dealer's investments.
So, we need to have some kind of online buying system where you MUST enter in a dealer showroom code before buying, & they get some commission, as they DO offer real value here folks.
IMO, the whole consumer retail system is going to evolve into "showroom + online buying" in a fair system soon.
[+] [-] wmf|12 years ago|reply
I suspect that Tesla would actually prefer to sell cars at dealers (that are owned and operated by Tesla); their online sales are just a hack to get around the fact that their dealerships are banned. So any concern about conflict of interest between the dealer and manufacturer seems like it does not apply to Tesla.
[+] [-] greggman|12 years ago|reply
[+] [-] baddox|12 years ago|reply
[+] [-] ballard|12 years ago|reply
[+] [-] MBlume|12 years ago|reply
And you wouldn't have to enter a dealer showroom code, your dealer would just give you a code for a "special discount" -- this is how businesses already track which of their ad campaigns are paying off.
[+] [-] free652|12 years ago|reply
Last time I was via PenFed Car Buying Service, got a "guaranteed" web quote:
Got the dealer:
Sure, we will honor the price. But all of our cars have door guards installed - that's $500 extra. We just don't sell the cars without door guards.
Got the contract for the car:
Some extra maintenance plans included for an another $900, forced to remove them. Oh and the dealer made an another mistake for $1000, couldn't add up two numbers together (damn liar). An hour later got a fixed contract.
Got to the financing guy who is trying to sell me extended warranty and gap insurance for about an hour.
And that's over 6-7 hours at the dealership... /vented
[+] [-] B-Con|12 years ago|reply
I ended up negotiating something half-way decent, but that was a very annoying starting point.
[+] [-] smsm42|12 years ago|reply
[+] [-] tzs|12 years ago|reply
I had the opposite last time I bought a car. I'm still a bit baffled by it.
The salesman said he could let me have the car for $X. I countered that if he could let me have it for $Y (which was the price a dealer an hour away was offering for people who bought online for pickup, and was the price that my research had said was quite good), I'd write a check right then and there. He said he'd have to talk to the manager about that.
When he came back from his talk, he said that the best he could do was $Z. The odd part: $Z was LESS THAN $Y, by something like $1-2k.
[+] [-] beachstartup|12 years ago|reply
[+] [-] DigitalSea|12 years ago|reply
Extended warranties, sneaky extras and premiums added to your contract, the amount of crap you have to endure when buying a new car these days is horrendously deep. If only more car companies sold directly and allowed you to buy online like Tesla does, I know the lobbyist motor dealerships group would never let that happen though.
No wonder the car industry is in the toilet, it's killing itself and Elon Musk is one of few people trying to change things and he's met with resistance: typical.
[+] [-] bane|12 years ago|reply
[+] [-] denverpeterson|12 years ago|reply
Middlemen gotta get theirs.
Big Oil, Big Auto. Why would they have a problem with electric cars?
[+] [-] dfxm12|12 years ago|reply
Also, what does this have to do with this issue?
[+] [-] EGreg|12 years ago|reply
[+] [-] bodyfour|12 years ago|reply
[+] [-] unknown|12 years ago|reply
[deleted]
[+] [-] lkbm|12 years ago|reply
[+] [-] rsobers|12 years ago|reply
Also, I love how the article title reads "New Jersey Votes", as if the citizens got a vote in the matter.
[+] [-] freshyill|12 years ago|reply
[+] [-] tzs|12 years ago|reply
In fact, it looks like direct sales have been illegal for a long time, but the law is poorly worded, and can be read in a way that bans direct sales for Ford, Chevy, Toyota, and most other major car manufacturers, but does not apply to manufacturers like Tesla, who only sell direct.
What the new law is doing is saying that the old law is meant to apply to all car manufacturers, not just Ford, Chevy, and so on.
[+] [-] cyanbane|12 years ago|reply
[+] [-] DrStalker|12 years ago|reply
[+] [-] icambron|12 years ago|reply
That's a scenario no upstart car company would ever enter into willingly, so Tesla of course didn't. And eventually, companies like Tesla will increase the pressure on all car companies to sell directly, and the dealership cabal will collapse. But in the meantime, that's a lot of tied hands.
Adding legal barriers through lobbying makes all of that worse, of course.
[+] [-] jvm|12 years ago|reply
Relevant Planet Money: http://www.npr.org/blogs/money/2013/02/12/171814201/episode-...
[+] [-] voidlogic|12 years ago|reply
[+] [-] andrewfong|12 years ago|reply
[+] [-] akulbe|12 years ago|reply
[+] [-] nickff|12 years ago|reply
[1] http://en.wikipedia.org/wiki/Public_choice
[+] [-] 0x0|12 years ago|reply
[+] [-] cm127|12 years ago|reply
> Tesla has won recent legislative battles in states like Washington, Ohio, New York and Minnesota, but states such as Texas, Arizona and Virginia have retained or added laws limiting the company’s ability to operate stores.
[+] [-] drawkbox|12 years ago|reply
This is the same middle man battle going on in other industries, years of legacy middle men. Dealerships will still exist and Tesla won't kill them, let them play.
[+] [-] rhizome|12 years ago|reply
[+] [-] ryen|12 years ago|reply
[+] [-] NDizzle|12 years ago|reply
[+] [-] smsm42|12 years ago|reply
[+] [-] tdiggity|12 years ago|reply
If you sell direct, no dealers. If you have dealers, you can't sell direct
In all of Tesla's battles, I haven't seen this brought up.
[+] [-] xophe|12 years ago|reply
[+] [-] tnuc|12 years ago|reply
I have to admire Tesla for standing up to this corruption.
[+] [-] nickff|12 years ago|reply
[+] [-] brc|12 years ago|reply
I would do this just to create press and get people to come and see the free-internet-cafe-next-to-showroom that caused such a fuss.
[+] [-] DrStalker|12 years ago|reply