Tesla Wants Texas Auto Sales Regulations Loosened 137
An anonymous reader writes Tesla decided not to build its new $5 billion battery factory in Texas, but the company still wants to sell its electric cars directly over the Internet there. The automaker hopes that the possibility of future investment in the state will be enough to overcome the Texas Automobile Dealers Association lobby and change dealership laws. From the article: "Diarmuid O'Connell, Tesla's vice president for business development admits that getting the law changed won't be easy. 'Does the fact that we didn't site the factory there complicate things? Absolutely,' O'Connell said. 'But we're going to be doing a number of big battery factories in the coming years and we're going to need new vehicle factories as well, and there's a certain logic to doing those in Texas.' He didn't elaborate, but added that the state may not be so attractive if current sales regulations stand. 'If we're banned in Texas, why are we investing billions of dollars here?,' O'Connell asked."
Re:"there's a certain logic to doing those in Texa (Score:5, Insightful)
Namely paying the workers less.
Less than Nevada? Not likely. Tesla certainly pays it's geeks competitively in Silly Valley, though I hear the hours are long. They make a high-margin product anyhow, and need quality more than 1% cheaper wages.
Texas is a great legal climate for business, which is one reason so many people are moving there. But state and local politics anywhere is hugely influenced by car dealers, as they have larger advertising budgets and more name recognition than state senators. Tesla can't even bribe/contribute their way to victory here, because an owner of a large dealership chain can so easily oust a state rep. OTOH, bringing a ton of new jobs, or even finally offering a car for sale that wasn't a rich boy's toy, could change things - give the Texas voter a reason to actually care.
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The Republicans in Texas will fold the Texas Automobile Dealers Association's tent. While that lobby model was good for business at one time, Texas is becoming more and more unregulated including control by anti-competition lobbyists.
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They aren't terribly popular, nor is catering to them a matter of principle(aside from the principle of scratching the backs of those who scratch yours); but crossing them is something that will be rather uncomfortable unless the pressure becomes inevitable enough that they can be deserted by more or less all their allies, all at once.
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Republicans love regulation that keeps them in control. As car dealers are typically conservative, there's little chance they'll give it up, especially not to some eco friendly liberal types like tesla.
"Pro-Business" != "Pro-Free-Market" (Score:2)
Hey, it's those crazy Texas Republicans again, talking about wanting small government that doesn't regulate businesses, but if you actually want to compete with existing businesses, good luck to you.
Re: "there's a certain logic to doing those in Tex (Score:1)
Geeks =/= Factory workers.
And until the price for the way things are done in Texas comes due, lots of people will take it and think they are getting a deal.
Then they learn how they have been screwed.
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Nevada (Reno where the battery plant is going anyhow) is a short truck or train run from the Port of Oakland. Closer to the sea than much of Texas.
How far off the pacific rim is Texas?
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The port of Houston was ranked 2nd nationally [dot.gov] in total tonnage in 2012. The port of Oakland was ranked 34th.
Houston is not far from the Atlantic (via the Gulf of Mexico) or the Pacific (via the Panama Canal).
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Total tonnage affects the discussion how?
The fact remains that Nevada has fine access to ports and a shorter, cheaper trip to Asia vs anyplace in Texas.
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Namely paying the workers less.
This is just errant bigotry against Texas. If you actually knew anything about he state that's creating 75% of the new jobs in the entire US, you'd realize that there is a *very* competitive labor market here.
I definitely have to pay more for talented or skilled software people here (especially in Austin) than in other parts of the country. Hell, if you've got a CDL and can pass a drug test, you can make $100K+ driving an oilfield truck - all due to the economic miracle called fracking - no thanks to the
Re:"there's a certain logic to doing those in Texa (Score:5, Funny)
Re: "there's a certain logic to doing those in Tex (Score:1)
[Company] wants [government] to relax [regulation]
Yup. That's news.
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I think the story here is "man bites dog". Texas, home of the "fuck the people, give businesses ALL the money, regulation-is-literally-Hitler" attitude is resisting innovation with unnecessary regulation. So much for the free(er) market.
This is why car dealers can treat their (sales) customers like total dogshit and get away with it; the dealer chain owners are able to afford buying legislators outright, and protectionist laws give the dealerships unreasonable leverage in the manufacturer trying to get ba
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Funny, I see Anti-Corporate Liberals supporting Deregulation! Politics and strange bedfellows indeed
Re: "there's a certain logic to doing those in Te (Score:2)
It isn't that simple, much as the right would like you to think. In this case, competition would be good for the consumer. This is in contrast to the right, who define "competitiveness" as "give us tax breaks and cheap labor that will wreck the economy and bankrupt the states (see Kansas for what lower taxes really do) or we'll pitch a fit, call you anti-business, and close factories just to spite you".
The current car dealership model is bad for the consumer. It's great for the rich that own the dealer c
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Remember that the dealership layer was inserted by the states to PROTECT consumers from the crushing power of the auto manufacturers, and add some local accountability through choice. (Choice that has vanished lately as we've allowed huge dealer networks to replace that local ownership, more or less defeating the original purpose.)
There are certainly significant problems with the current model, but remember that the current dealership model was created to address problems that resulted from exactly what Te
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The dealerships have forfeited any right they might have once had to protection. The current model is an atrocity. Consumers have consistently rated buying a car as one of the most stressful retail experiences that you could have. The dealership model is irredeemably broken. Many consumers have expressed that they would prefer to buy cars directly from the manufacturer and avoid the dealership altogether. I personally would spend thousands more on a car if it meant I didn't have to deal with professiona
Texas Anti-Regulatory Climate (Score:5, Insightful)
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It has nothing to do with conservatives. It has everything to do with preserving the good old boy network. Texas represents a huge sales opportunity for Tesla and much like other states, the laws here mimic the old Dealership mentality. Fishing a battery plant in Texas isn't exactly going to make or break Texas, nor will it probably entice legislative change. It's certainly good for Nevada because high paying jobs, especially in Northern Nevada, are few and far between.
Tesla Wants Texas Auto Sales Regulations LOSED (Score:2)
or LOST. After all, we have to adhere to /. grammar here, right?
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They currently can only sell zero. They'd like to sell at least one. That's a loosening.
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Because "hurr durr" the Republicans passed laws that say that Tesla must use a network of independent middle men to sell their cars.
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> Because "hurr durr" they were lobbied to do so by the car dealers in a big oil state known for its "good old boy" wheeling and deeling.
Fixed That For You.
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Yes, because democracy is setup to be sold... I would be willing to bet that the vast majority of their constituents think these laws are BS.
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There are a lot of rich people in Texas. California is a bigger market for Tesla and New York may be as well. But Texas isn't far behind.
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Actually, representative democracy doesn't account for the lobbyists. That's an indicator of oligarchy and fascism, not a republic or democracy.
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Actually, I don't know why they don't "acquiesce" somewhat to the demands - and offer to sell to the dealers at the same price as they sell in other states.
When the dealers refuse on the basis they won't be competitive with out-of-state sales, they should surely be able to use that to force the hand of the legislature (by advertising in Texas, with the tag line "Not available in Texas because none of your dealers will sell our cars" or something). Truthful. Pins the "blame" where it belongs (the dealers).
If
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Actually, I don't know why they don't "acquiesce" somewhat to the demands - and offer to sell to the dealers at the same price as they sell in other states.
I don't think there is anything stopping a Texas auto dealer from going to Tesla's web site today and buying as many cars as he wants to buy.
The real issue is that the dealer would then want to service and support these cars, which would require a more in-depth working relationship with Tesla; and Tesla (quite reasonably IMO) does not trust dealers to do as good a job with that as Tesla itself can. Without quality service and support, OTOH, there is no reason why a customer should want to buy through a dea
Re:I look forward (Score:4, Interesting)
Bullshit. There's absolutely no reason why Tesla couldn't open a training program to begin certifying maintenance techs for their vehicles. If they are somehow able to service the car in such a "superior" way then they certainly have the ability to codify and document those "superior" procedures, then actually make techs who wish to become certified demonstrate an appropriate level of competency with the maintenance procedures. Then dealers wishing to provide "Tesla Certified" maintenance would simply require their techs to acquire that certification.
I don't think you understand the situation. Traditional dealers make a lot of their money selling warranties and overpriced service after the sale. Tesla operates a nationwide network of service centers and charges $600 for annual service. Why should Tesla be any more anxious to give up that service than your local Ford dealer is to recommend you use JiffyLube for oil changes?
Right now, Tesla has a de facto monopoly on the technical expertise required to service their vehicles. You can't take it down to the neighborhood mechanic for work, because they just don't know its systems. You'd have better luck with the local dryer repairman. It's in Tesla's interest to keep as much service in-house as possible, for exactly the same reasons as traditional dealers.
If those procedures don't exist, then the vehicle is not ready for mass market - Tesla WILL NOT be able to keep up with the maintenance work as their sales grow. Can you, for a minute, imagine if every time you needed anything done on your vehicle, you had to ship it to Nevada, and wait a couple weeks? Who's going to buy that shit?
You're not paying attention. Tesla has its own network of service centers, more-or-less equivalent to the traditional network of dealers. Tesla wants to maintain ownership, control, and share profits of those showroom/service centers, where traditional dealerships are legally required to be independent. Tesla is using the facts that their showrooms don't maintain an inventory and that their vehicles don't require exhaust, fuel, coolant, oil, and other extensive support systems to claim these locations are outside the traditional definition of "dealership" and may therefor remain Tesla-owned. They definitely have a scalable architecture for servicing their growing fleet. It's one of the reasons they're resisting the traditional independent dealer model.
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By "republicans" you mean "Democrats" .
... which meant "conservative" for the time period in question.
Texas didn't have a single. Republican governor between 1876 and 1983. These laws were passed in the late 1930s and early 1940s (first in 1937). So that's right in the middle of the Democrats' hundred-year reign in Texas.
So what you're saying is that Texas only voted in a Republican governor after Nixon's Southern Strategy brought all the ultra-conservative pro-segregationists over to the Republican party? What an interesting coincidence.
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Maybe because the parties realigned? Why is that so hard for people to freaking understand? All the old Southern Democrats (like the Texas Democrats) BECAME TODAY'S REPUBLICANS! Read some history, look at their positions. It's so easy to understand and comprehend.
Against big corporations == Republicans? Okay. (Score:2)
So the people who wanted more government regulation to protect the little guy from the big bad corporations from Detroit are now Republicans? Okay, if you say so.
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Anybody up for a game of Texas Hold 'em in protest of this story?
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Commence Texas-bashing!
Well, they are anti-regulation.
Some times.
Probably (Score:2, Interesting)
So he'll probably get his way here eventually.
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Really, if Tesla gets their way, then GM (or Toyota, VW, etc) can force you to get your GM car serviced only through "authorized" GM service centers, under pain of voiding your warranty. Especially in today's world of telematics, they will control your car more than you do. Is that what consumers want? I damn sure don't...
Tesla's model is hideously proprietary and abusive of its customers. The silly thing is that Tesla's customers are such fanboys that they cheer Tesla on in their subjugation of their r
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It's more than just profit margins; Tesla's entire production and sales strategy runs tangential to the dealership model. Tesla banks on being able to easily upgrade its software, have a personal relationship with their customers, and manage the brand. Basically, they're Apple in an automobile. Once they get the $35k cars into production and are known as an energy company instead of a car company, the dealership model might work (just as Apple eventually started selling in franchise stores), but it needs
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The point is though that Tesla does not HAVE to have the laws change to start selling cars in Texas. It just wants to for some reason. Probably increased profit most likely.
Of course the manufacturer-owned showroom/service centers mean more profit for Tesla. Traditional dealers gain a lot from the commodity nature of ICE vehicles - servicing a Toyota is not that much different from servicing a Ford or a Ferrari. Oil change, coolant change, ... the parts may be different shapes or sizes, but they all have fundamentally the same function, and a decent mechanic can do a reasonable job on any of them.
Tesla is different, and general ICE knowledge will not help much. The battery
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Except, that existing dealerships will not be selling Tesla cars. Tesla wants to break the laws requiring independent dealerships. In a world were dealerships were revoked by the Federal Government when it bought out GM, because GM was too big to fail, makes this all the more curious. Dealerships are not as independent as the Manufacturers want to represent.
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Perhaps for the same reasons that allowed society to exit the feudal era? The current rules favor incumbents. The current rules are against progress.
prevents big 3 from controlling. Tesla monopoly (Score:5, Informative)
> the current rules favor incumbents. The current rules are against progress.
The whole point of these laws is to prevent the big three established automakers from controlling the market and bullying the little guy. Anyone is allowd can sell cars in these states, except for the big bad car companies, so you don't have any 800 pound gorillas bullying the individual dealers.
Dealers are local, so they've been able to successfully lobby state lawmakers to slant the law even against the far-away car companies and toward local dealers. That's ANY local dealers, including local Tesla dealers.
Tesla wants the same thing Ford and GM wanted, a type of monoply known as a vertical integration monoply. A vertical monoply is when one company controls the entire chain from manufacturing major parts (Tesla's battery mega-factories), building the cars, the distribution network, sales, and service.
Contrast to a horizontal monopoly, where one company controls all car sales. In the horizontal, they control only one layer, but completely control that layer. In the vertical, they participate in, but do not necessarily control, control all layers.
To combat these vertical monopolies, voters decided in the 1930s and 1940s that the company who manufacturers parts (Tesla), builds the cars (Tesla), and controls wholesale distribution (Tesla) can't also control sales and service. Other companies get to compete to provide the best sales and service. That's the purpose of the law.
Personally, I'm not sure that I need to be protected from this type of vertical monopoly given the strength of Toyota and Honda in the US. If the big three from Detroit don't treat me right, I'll just buy a Toyota.
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Exactly. It's not that such rules were never required, but they are not required now. The current effect is not to protect consumers, but instead, to protect incumbent dealerships. Look at all the states that don't have such rules. The auto market hasn't imploded in those states.
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What exactly is a vertical monopoly going to do against Honda? Note that Honda is free to create one as well, in this situation...
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>For example you buy a $30,000 car
Well not me. I've never spent that much on a car, even though I could if I chose to.
I don't need to have that much invested in a car. I have better things to spend that money on.
Partially. $400 radiator cap. Like Comcast integra (Score:2)
Abusing / competing with dealerships is one issue.
There is another issue with vertical integration, and it's been discussed a lot in relation to Comcast having some vertical integration; both producing and distributing content, running the infrastructure and the value-add services on top of that infrastructure. As mentioned elsewhere, dealers make their money via their service department and extras like upgraded stereos and other options. If the manufacturer is the only dealer, that means for some items th
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Seems like it, not really. Four gigabit providers (Score:2)
Let's have a look at at the capital, Austin, which is 11th largest city in the US and the fourth largest in Texas.
There are about eight car manufacturers:
Chrysler
Ford
GM
Honda
Toyota
Nissan
VW
?
At least four ISPs offering gigabit-class service and there hundreds of other ISPs. For gigabit, you can choose from:
Grande
Google fiber
Time Warner (300 mbps currently, upgrading)
AT&T Uverse
If you don't want gigabit, Earthlink offers 25 Mbps while Exceed, Dish, and Hughes offer satellite at about 15 Mbps. Sprint 4G WiM
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see page title (Score:2)
This article and discussion is about TEXAS law. I'm not quite sure it makes sense to judge TEXAS law by Raleigh, NC.
most or least? (Score:2)
You're absolutely right that Google's plans kicked the other companies into high gear. It made all the difference in the world.
> That's why regulation is absolutely essential for broadband.
Google DID say that the amount of regulation was a major factor in which cities they entered. Did they say they were bringing that huge improvement to the cities with the MOST regulation or the LEAST regulation? What created the local monopolies in the first place, legal franchises granted by regulators?
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Abusing / competing with dealerships is one issue.
There is another issue with vertical integration, and it's been discussed a lot in relation to Comcast having some vertical integration; both producing and distributing content, running the infrastructure and the value-add services on top of that infrastructure. As mentioned elsewhere, dealers make their money via their service department and extras like upgraded stereos and other options. If the manufacturer is the only dealer, that means for some items they are the only service center, and can charge $400 for a radiator cap which should cost $4.
The irony here is that dealers are the ones that are notorious for overcharging for parts and labor now. I understand the intent of the original laws, but they don't work. Having dealers has not worked out in the best interest of consumers. Times have changed and we don't live in the era of two or three big automakers. There are about a dozen major automakers selling cars in the US so there is plenty of competition in case a few "behave badly." This is the exact opposite of the cable industry.
Dealers bas
Good points. Tesla==Comcast. Fairness is right. (Score:2)
That's very perceptive.
The problem* with Comcast:
They have the fiber infrastructure, the ISP service run over that infrastructure, and the video-on-demand service layered on top of that. Since they have all the layers, they can do anti-competitive things.
Tesla:
They make the parts (battery mega-factories), the cars, control the distribution, the sales, and the service over the life of the car. When auto manufacturers controlled the whole stack, they did anti-competitive things.
> because business like to
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The difference between Comcast and Tesla is bigger and more profound than you have indicated.
1) Comcast has local monopoly on CABLE, Tesla is not advocating a monopoly on Cars, roads, gas stations ....
2) Comcast Monopoly is sanctioned by the local municipality (typically at least), Tesla is only wanting to open up Factory Stores in the states.
3) Telsa customers will be buying Teslas regardless, while Comcast Customers cannot get Time-Warner or COX cable, even if they wanted it.
Those are three big difference
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Because the current rules are written specifically to favor the incumbents.
It's what all businesses do - break the lower rungs of the ladder they climbed up.
Why can't a customer decide to buy a car without a dealer? Once it's 2 minutes old, they can purchase the same car from a private individual.
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Bingo. While I understand the agenda they have, a push for favorable business conditions just like any other business would pursue, why does Tesla not think they can compete on equal terms as the competition? Sounds like they feel they need help being competitive.
Sure, and if they wanted to they could sell gasoline-powered cars, too.
Tesla is taking a shot at modernizing the car industry, and not just with their choice of powerplant. The dealer system made sense when you needed local expertise, but information is much easier to distribute today. Dealers are an anachronism -- and they know it, which is why they're fighting so hard to retain the regulatory restrictions on direct sales.
There are lots of practical reasons why Tesla doesn't want to go the franchise ro
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Citation Needed
Easy. Go add up all the money government has given him. Now go look at all the tax breaks he's gotten, and special favors. I don't know if you were paying attention to the battery factory negotiations, but he basically had the states fighting to give him more. He knew how to work the situation.
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Anyway, i bet loads of business men/women got the same or similar deals so it doesn't make the deals etc unusual./quote? You 'bet,' therefore it's not unusual? Do you always have such a keen grasp of the facts of a situation?
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well, yeah. if you read a spectrum of news sites, you do notice sweetheart deals being done by industries new and old to either claim subsidies of some kind or cheap loans etc so no need for specifics
Yes, you don't strike me as someone who has a need for specifics. Boring details of reality and all that.
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Sure, sure, companies get tax breaks and benefits from the government all the time, but not many do it as well as Elon Musk.
Good luck! To bad Big Oil already owns Texas (Score:3, Interesting)
Tesla needs and is aiming to build lots of high capacity batteries, which are exactly what consumers need to store energy from solar / renewable sources and off-peak rate time periods to be used during more expensive on-peak rate times. Energy companies are among the largest consumers of fossil fuels, and have to be totally against any technology that eats into their profits, no matter what they say or do publicly. Their fossil fuel providers must also be in that camp, as they lose big time if their largest customer quickly becomes much less profitable, and sets the stage for personally owned renewable energy sources which they don't have a piece of.
I'm rooting for Telsa to succeed in spite of Texas, Big Oil, the energy companies, etc.
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What a dumbshit. What state in the US has the largest wind farm generating capacity? California? No. It's Texas. Get your facts straight.
http://www.awea.org/Resources/... [awea.org]
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Generalissimo Francisco reference (Score:2)
General Motors reports Tesla is still dead...
Wicked Early News, do you still exist and want this story?
Go Texas! (Score:5, Insightful)
Except when they aren't.
Re:Go Texas! (Score:4, Insightful)
We lecture other nations about free trade, but fucking Canada is freer than the US for some farm goods and other stuff.
And don't even get Australia started. For that matter, our sugar is 2-3x world price inside the US because, umm, you know, we love free trade. It's been pointed out Congress is holding 310 million Americans hostage to about 7000 farmers.
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Well, since you hate the free market so much you must be happy that this government regulation is keeping things as they should be.
Huh? No, I don't have a problem with the free market inasmuch as it can't exist in a pure form. Without some regulation, the biggest will eventually stomp out everyone else. You need just enough regulations to stop that.
As to what I hate, it is hypocrisy, and Texas is a superior conservative god fearing homo hating Jesus loving, Republican reddest of red states. On a mission from God to show them yankee heathens how to do it right.
Who are taking a very Socialist like interference of Government in tryin
Lesson from the past (Score:2)
I recall way back in the mists of time car manufacturers in the UK sellimg kits of parts to avoid the high sales tax on cars.
I'm sure Elon could come up with a similar work around. Wheels sold separately.
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I'm sure Elon could come up with a similar work around. Wheels sold separately.
The problem is then licensing it for use on a public roadway. Some states have a mechanism by which it might be possible, but only if you actually put it together.
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Violates Interstate Commerce Clause (Score:2)
Good ol' boy politics... (Score:3)
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OK (Score:1)
Great opportunity for Oklahoma.
Ah, auto dealer politics (Score:2)
I had a friend years ago whose family owned a dealership in Texas. More cutthroat politics are hard to imagine: among the dealerships, the car manufacturers and the government (local and state), some of it pretty clearly out-and-out corruption. Just as an example, they built a new showroom, but the building kept failing some inspection or other. The inspector would write up faults, they would fix them, he would write up new faults...eventually he lost patience and let it be known that the real problem was t
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The inspector would write up faults, they would fix them, he would write up new faults...eventually he lost patience and let it be known that the real problem was that he hadn't yet found a blank envelope filled with cash.
This is Texas after all - a call to the Texas Rangers might well have ended that kind of corruption for good - most inspectors are state-licensed, and it's hard to make a living if you've lost your license. I'm not saying we're corruption-free here, but in my experience, the level of comm
Tesla should come to Indiana (Score:2)
While I'm sure Tesla would face the same kind of stupid auto dealer protectionism in any state where they do business, I wish they'd come to Indiana, which has a great deal of experience building RV's.If they took hold of a midwestern state, it would have a greater positive impact on the region than down in Texas.
common sense makes good news (Score:1)
State blocks the sales of a companies product. Company employs a newsworthy amount of common sense and does not put 5 billion dollars into the state by building a mega factory for a product that is blocked in the state it would be constructed in. It also fails to contribute the jobs that would be needed to build and staff the mega factory to the overall employment of that state.
I for one am thrilled. I think bad things should always happen to vindictively stupid people and then be thoroughly reported in the
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So, Tesla is the niche-elitist-greenies car because it costs too much; but it doesn't want to 'play by the rules' because those rules would involve an expensive physical buildout and/or sharing profits with a lot of middlemen.
At best, these are two unrelated issues (Tesla's product line vs. their distribution model). At worst, this is internally cont
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those rules would involve an expensive physical buildout and/or sharing profits with a lot of middlemen.
That sounds like a good explanation of why the rules are fundamentally flawed.
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You're a fucking idiot. It is on every fucking car they sell. The name is itself exactly what you're whining about. Piss off