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New Jersey Auto Dealers Don't Want to Face Tesla 342

Posted by timothy
from the what-we-need-is-more-regulation dept.
cartechboy writes "It feels like this story is becoming repetitive: X state is trying to ban Tesla stores, or the ability for an automaker to sell directly to a consumer. Either way, it's all aimed at Tesla. Now it's New Jersey's turn as a hearing today could end up banning Tesla stores in the state. Naturally Tesla's displeased with this and is crying foul. A rule change that is expected to be approved today would require all new-car dealers to provide a franchise agreement in order to receive a license from the state. Obviously Tesla (the manufacturer) can't provide a franchise agreement to itself (the distributor). The proposed rule would also require dealers to maintain a 1,000 square foot facility, the ability to show two cars, and service customer cars on site. Tesla doesn't meet that last requirement at any of its galleries, and most of the Tesla stores are located in shopping malls which mean they are smaller than 1,000 square feet. Tesla's arguing the New Jersey Motor Vehicle Commission is overstepping its bounds. Will Tesla be able to defeat this new rule in New Jersey as it has overcome issues in many other states?" (Also covered by the Wall Street Journal.)
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New Jersey Auto Dealers Don't Want to Face Tesla

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  • Feds... (Score:5, Insightful)

    by msauve (701917) on Tuesday March 11, 2014 @05:43PM (#46458813)
    Here's a perfect example of why the federal Constitution has an interstate commerce clause. States are interfering with interstate commerce to protect local businesses. Time for some federal legislation to shut this down.
    • by Anonymous Coward on Tuesday March 11, 2014 @06:29PM (#46459185)

      Many members of Congress own car dealerships or are closely associated with those who do.

      Being protected monopolies, they are very profitable.

      Surely you've noticed that all the products of technology get cheaper every year except cars?

      • by amiga3D (567632)

        Many auto manufacturers own members of Congress it seems. Tucker already tried busting into this business ages ago by out innovating the established companies and he got stepped on. I can't see Tesla succeeding here either. It'll be one rule or regulation after another until they are buried.

      • by TubeSteak (669689) on Tuesday March 11, 2014 @09:43PM (#46460531) Journal

        Surely you've noticed that all the products of technology get cheaper every year except cars?

        After adjusting for inflation, a 1970 VW Beetle with optional AC is about the same price as a 2014 Nissan Versa or Chevy Spark (both come standard with AC).

        That's 34 years of technology (including air bags, ABS brakes, and traction control) for almost exactly the same price as a 34 year old car.

        • The problem is that, adjusting for inflation, it should be dramatically less. That's the trend. The major outlier is for raw materials which are more costly to extract and process for use.

          In the 1950's a decent Westinghouse consolve TV cost about $1000. Inflation adjusted to today, that's about $9000. You'd be hard pressed to spend $9000 on a TV today unless it was a big theater setup or was quite exotic. That's because technology has replaced the need for many expensive raw materials, improved produ

        • by Firethorn (177587)

          Translation:

          Much like houses, cars have gotten fancier as opposed to cheaper. We could make a beetle analog with modern technology and have it be extremely cheap, but instead people have decided that they prefer buying more car.

          • by judoguy (534886)

            We could make a beetle analog with modern technology and have it be extremely cheap, but instead people have decided that they prefer buying more car.

            Yes and no. I recently bought a new car after 15 years in my old one. I really like the tech. BUT, I'd also love the option of buying a 40 year old car (yes, I'm that old) at a 40 year old adjusted price. No more mandated safety and mileage features than were current then, bumper welded to the chassis like the '46 Dodge truck I drove around the country in the '70's, etc. I might not buy one now at this stage of life, but I wish my kids at least had the option.

            And yes, before the flames start, I DO believe

    • Do you really believe that the current administration wants to encourage the use of electricity to power the mass'es vehicles? While half of the world's oil has still to be extracted?

      'Those' people need the populace to stay addicted to oil for as long as possible, at least until 'those' people can get a grasp onto the future tech that did not forsee correctly.

  • Don't get it (Score:5, Insightful)

    by Tanktalus (794810) on Tuesday March 11, 2014 @05:48PM (#46458853) Journal

    The right wing should be opposed on free-market principles. The left wing should be opposed on environmental grounds. So which politicians should be in favour of this regulation again?

    • Re:Don't get it (Score:5, Insightful)

      by Valdrax (32670) on Tuesday March 11, 2014 @05:49PM (#46458867)

      The right wing should be opposed on free-market principles. The left wing should be opposed on environmental grounds. So which politicians should be in favour of this regulation again?

      The pragmatists & cynics who need local, wealthy donors to bankroll their campaigns.

      • by Anonymous Coward on Tuesday March 11, 2014 @07:45PM (#46459851)

        The right wing should be opposed on free-market principles. The left wing should be opposed on environmental grounds. So which politicians should be in favour of this regulation again?

        The pragmatists & cynics who need local, wealthy donors to bankroll their campaigns.

        From the movie:

        There is no America. There is no democracy. There is only IBM, and ITT, and AT&T. And Dupont, Dow, Union Carbide, and Exxon. Those are the nations of the world today [in 1976]. What do you think the Russians talk about in their councils of state? Karl Marx? They get out their linear programming charts, statistical decision theories, minimax solutions, and compute the price-cost probabilities of their transactions and investments just like we do. We no longer live in a world of nations and ideologies Mr. Beale. The world is a college of corporations inextricably determined by the immutable by-laws of business. The world is a business Mr. Beale. It has been since man climbed out of the slime.

        https://www.youtube.com/watch?v=zI5hrcwU7Dk&t=2m15s

    • Re:Don't get it (Score:5, Insightful)

      by gandhi_2 (1108023) on Tuesday March 11, 2014 @06:05PM (#46459005) Homepage

      Free market principles? How about plain old freedom?

      How about the enlightenment principle that government can't simply make up whatever laws it wants. There is no such thing as liberty if a local dictator can tell you what lightbulb to make or how to sell cars.

      Why not force the regular car dealers to also bundle horse buggy whips with all car purchases to protect the horse-buggy-whip establishment.

      This is another uber ridesharing story with different players. North Korea only has one dictator at a time. In the US we have thousands, spread across 4+ levels of government.

      • Re:Don't get it (Score:4, Insightful)

        by mi (197448) <slashdot-2014@virtual-estates.net> on Tuesday March 11, 2014 @09:11PM (#46460391) Homepage

        Free market principles? How about plain old freedom?

        Contrary to some economists' arguments, free market originated from freedom. We didn't become a capitalist country, because it was an efficient way to run economy. We've developed the free markets, because we were free — one's only obligations were those, that were spelled out in the contracts one entered into voluntarily (plus family relations and patriotism).

        Sadly, those freedoms have been chipped at for over 100 years now... Today we must feed all the hungry (without subjecting them even to the "indignity" of the Pauper's Oath — forget about disenfranchising), we must pay for other people's education. And shelter. And healthcare. And telephone service...

        Freedom, you say?..

        • Re:Don't get it (Score:4, Interesting)

          by MrDoh! (71235) on Tuesday March 11, 2014 @11:45PM (#46461037) Homepage Journal
          Surely even the start of the nation, throwing Tea into the harbor was a protection racket with Hutchinson not wanting legitimate trade cutting into his smuggling operation. It's not just the last 100 years, it's been there from the start, then with slavery, and continues today with this sort of control. No, those freedoms haven't really ever existed.
    • So which politicians should be in favour of this regulation again?

      The ones in favor of requiring that drivers move towards the left lane when passing roadside maintenance vehicles. From one of the links:

      However, instead of putting the language on the Senate floor as a standalone bill, the ban was inserted as an amendment to Senate Bill 137--an unrelated bill that required Ohio drivers to move to the left while passing roadside maintenance vehicles.

      Sleazy politics at play. Either they're vilified for hampering Tesla or they're vilified for being against safety measures. These shouldn't be an either/or, but the auto dealerships have made it one.

    • Re:Don't get it (Score:5, Insightful)

      by 140Mandak262Jamuna (970587) on Tuesday March 11, 2014 @06:23PM (#46459133) Journal
      Common mistake. You have been used to the "truth in labeling law" "truth in advertising law" etc for so long, you have assumed it applies to everyone. Sorry my dear friend, the politicians are exempted from those laws. They can label themselves "free market loving libertarian right wingers" or "mother earth worshiping tree hugging beer-can-recycling post-cosumer-waste-reconsuming environment loving left wingers". But there is absolutely no guarantee the politician you find under those labels are truly what the label says.
      • Common mistake. You have been used to the "truth in labeling law" "truth in advertising law" etc for so long, you have assumed it applies to everyone. Sorry my dear friend, the politicians are exempted from those laws. They can label themselves "free market loving libertarian right wingers" or "mother earth worshiping tree hugging beer-can-recycling post-cosumer-waste-reconsuming environment loving left wingers". But there is absolutely no guarantee the politician you find under those labels are truly what the label says.

        That's because you're making two straw men and knocking them down. I guarantee you that folks like Alan Greyson on the left and Rand Paul on the right would support Tesla here and they're not the most extreme on either end - however, we're talking about super-corrupt NJ who still think bridgegate-Christie is a decent governor. You know, the one that gave out pieces of the 9/11 wreckage as political gifts to crony mayors (both Dem and GOP)?

        Yeah, that's one corrupt state. I'm certainly not surprised they'd

    • by mi (197448)
      New Jersey legislature has been in Democratic hands forever — they'll find the rhetorics. We have this pseudo-Conservative Governor today, which makes for occasional fireworks, but it is legislature, that writes these laws. And the Governor will sign it — because he does not care enough to put up a fight.
  • by Billly Gates (198444) on Tuesday March 11, 2014 @05:50PM (#46458869) Journal

    Sure would be great if I can make a law that bans competition from out of country, out of state, or whomever I do not want to compete with me when I negotiate a contract job.

    What I could charge? The sky would be the limit.

    Of course that is evil damn socialism for me and we can't have that now can we? But if some businesses or corporations do the same thing. Then it is for the good of the economy and ok etc.

  • hehe (Score:5, Insightful)

    by Ol Olsoc (1175323) on Tuesday March 11, 2014 @05:51PM (#46458881)
    If you can't beat 'em, ban em.

    Since we are constantly regaled how awful the Tesla is. - They all burn up, they are stupid, They are too expensive, I can't drive the Trans American Highway in one, electric cars suck - why don't we just let the free market do what it always does, eliminates bad products.

    I'm pretty sure at other times, car dealership owners are all about the free market, competition, and the heartbeat of America.

    • Re: (Score:2, Informative)

      by Anonymous Coward

      - why don't we just let the free market do what it always does, eliminates bad products.

      Yeah, that really worked well with Microsoft.

  • by Ichijo (607641) on Tuesday March 11, 2014 @05:52PM (#46458903) Homepage Journal

    The proposed rule would also require dealers to [have] the ability to show two cars...

    The number two is ridiculous [wikipedia.org] and can't exist.

    • Actually, it doesn't say that, since they aren't programming a computer, but nice unrelated reference in an atttempt to sound smart!
  • by Anonymous Coward on Tuesday March 11, 2014 @05:54PM (#46458917)

    The solution is to bitch publicly like this for now, but the reality is they need a workaround. They need to set up a separate company much like Coke had a separate bottler. Have them do local service and be the jiffy lube of Tesla and join/kiss ass of all these regional moderately powerful/rich douche bags.

    • by Anonymous Coward on Tuesday March 11, 2014 @07:12PM (#46459583)

      Laws in Texas for example:
      http://www.statutes.legis.state.tx.us/Docs/OC/htm/OC.2301.htm#2301.4671

      (c) Except as provided by this section, a manufacturer or distributor may not directly or indirectly:
      (1) own an interest in a franchised or nonfranchised dealer or dealership;
      (2) operate or control a franchised or nonfranchised dealer or dealership; or
      (3) act in the capacity of a franchised or nonfranchised dealer.

  • it's the president/precedent/prescience/whatever
  • by PPH (736903) on Tuesday March 11, 2014 @06:02PM (#46458977)

    ... the Bohr.

    Because so many states are disallowed.

    • by mjwx (966435)

      ... the Bohr.

      Because so many states are disallowed.

      Partner with Koingesseggessegesgeg... Because eventually they'll have to fill out a form to block them and no-one will be able to spell it.

  • bridge (Score:4, Funny)

    by Anonymous Coward on Tuesday March 11, 2014 @06:04PM (#46459001)

    Why can't the Governor of New Jersey act as a bridge between the two parties?

  • Keep up your valiant defense of the free market. :S
  • by Experiment 626 (698257) on Tuesday March 11, 2014 @06:11PM (#46459051)
    What's wrong with the requirement to be able to service customer vehicles on site? Making it as convenient as possible to buy a car but having to take it to some far off location to actually get it fixed under warranty sounds like lousy customer service.
    • Re:So what? (Score:5, Insightful)

      by Nethemas the Great (909900) on Tuesday March 11, 2014 @06:34PM (#46459233)

      Since when does the quality of customer service become the purview of law? There are no dishonest dealings going on. Customers enter into these purchases fully aware of the requirements of ownership. No one expects Walmart to provide a service center for the electronics they sell, nor a seamstress for their clothing.

      This is protectionism and corrupt politics as can only be done at the local level pure and simple.

  • NJ has demonstrated time and again that corrupt politics rule the day. The state car dealer association controls a substantial amount of kickba...er...political contribution budget.

    Hopefully, Tesla doesn't knuckle under and just encourages NJ purchasers to head over to NY or PA and buy their cars there.

    • by Wolfrider (856)

      --You may have something there. If politicians can show "attack ads" during elections, Tesla should be able to air commercials detailing EXACTLY what is going on - and encourage people to buy their cars in !Jersey. More than one way to skin a cat, so to speak.

  • Companies do not like change and competition.

    • by Ol Olsoc (1175323)

      Companies do not like change and competition.

      Once a company gets large enough, they hate the free market, and will do anything to destroy it.

      That's the problem now. The biggest proponents of the free market are also the biggest proponents of the industries that want it destroyed.

  • Mischaracterization (Score:5, Interesting)

    by ildon (413912) on Tuesday March 11, 2014 @09:09PM (#46460371)

    This is a complete mischaracterization of what's going on. It's not that they don't want to compete with Tesla, it's that they want a cut. Right now, it's illegal for automakers to own car dealerships in most states, because when cars were in early adoption the state government didn't want to allow a situation where a car manufacturer pulled out of a state completely because it was unprofitable, leaving the citizens of that state unable to buy cars easily. So dealerships are independent from the manufacturers. Tesla is bypassing this 100 year old, out of date system, because it no longer makes sense, but the dealers aren't afraid of electric cars, they just want to make Tesla "play by the rules" and let the dealers sell (or not) the Tesla cars, so that they an make a profit off them like they do every other car manufacturer.

    • by David_Hart (1184661) on Tuesday March 11, 2014 @11:04PM (#46460883)

      This is a complete mischaracterization of what's going on. It's not that they don't want to compete with Tesla, it's that they want a cut. Right now, it's illegal for automakers to own car dealerships in most states, because when cars were in early adoption the state government didn't want to allow a situation where a car manufacturer pulled out of a state completely because it was unprofitable, leaving the citizens of that state unable to buy cars easily. So dealerships are independent from the manufacturers. Tesla is bypassing this 100 year old, out of date system, because it no longer makes sense, but the dealers aren't afraid of electric cars, they just want to make Tesla "play by the rules" and let the dealers sell (or not) the Tesla cars, so that they an make a profit off them like they do every other car manufacturer.

      If you follow the logic a bit further, what the dealers are truly afraid of is that if Tesla gets an exception, the other manufacturers will also want the same exception. Once Manufacturer's own showrooms and sell online they will be able to undercut dealerships, putting them out of business. Either they stand up for the current rules that created their business market or it dies.

      • by danheskett (178529) <danheskettNO@SPAMgmail.com> on Wednesday March 12, 2014 @12:18AM (#46461161)

        And in the end, car dealerships do deserve to undergo a radical change in their structure. They are inherently bad for customers.

        For one - they make money in ways that customers are not aware of. The most insidious being "point spread". You walk in, buy a car, and they make money selling the car (fair), future service either under warranty or direct to the consumer (fair), and more importantly, on the financing. You might qualify for a certain rate, but they get a big chunk of the difference between your best qualifying rate and what they convince you to pay. So you qualify for a 3.5% rate, but they get you sign on the line for 9.9%, and they get roughly 50% of the point spread between 3.5% and 9.9%, which on many financing arrangements, is far more than the profit involved in selling the car to begin with.

        Second, they do an only okay job with service. They do not typically do as a good job as independent shops, and for warranty work, face little competitive price pressure.

        Finally, they are effective local monopolies and do not always respond to market pressure. Because of brand monopolies, there is not as much competition as they would have you believe. The car market is deeply segmented, and so there are not as many brand choices in a price/demographic band as you might think. On paper there are 15 manufacturers selling through dealerships in a market. But for a single random consumer, there are likely 3 or 4 options that meet the basic criteria of type and price range.

        In many small towns or areas, the local car dealer is the wealthiest person in town. There is a lot of profit standing between the car maker and the consumer. And in the end, this excess is needs to be wrung out of the system. Manufacturer's should not be able to prevent car dealers from selling and servicing cars, but long-term, the concept of a franchised car dealership needs to be scaled back. Channel conflict is inevitable.

  • Telsa's sales are a drop in the bucket compared to most makes. Are the dealers afraid that the majors are going to copy Tesla's model and cut them out of the business?
    • by khb (266593)

      "Are the dealers afraid that the majors are going to copy Tesla's model and cut them out of the business?"

      Yes, precisely. Just as Amazon reduced the number of bookstores by a pretty wide margin. Dealerships suck up a lot of the profit, GM could sell direct for a lot less than current prices *and* make more $$.

      The "term of art" for this is disintermediation. And the dealers are well advised to fear it. But its unclear to me why in the world government should protect them from it. Customers outnumber dealers

  • by macpacheco (1764378) on Wednesday March 12, 2014 @11:50AM (#46465299)

    The real story here is Tesla success is making everybody else look bad.
    They are a threat to much more than the car dealers. They are a threat to the innovate at a snails pace mantra of Detroit. They are a threat to big oil companies. Electricity is about 1/4 the cost of gasoline mile per mile (even comparing a Model S with a Prius, even considering the Model S is a large premium sedan, versus the Prius being a mid size). And they got this far in less than two years of Model S sales. Give them another 5 years and the auto industry will be undergoing an earthquake of innovation with Tesla at the forefront and few companies with enough agility to try to follow.
    It won't take long until a few of those state representatives don't get re-elected for their Tesla actions.
    Tesla adoption is spreading like wildfire. If Tesla had twice the li-ion battery supply, they would be delivering twice as much.

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