Has it dawned on anyone?

carogan · Jun 21, 2013

Tesla has obviously woken the tiger. Obviously it was easy enough to see that the other oil industry and also the worlds' competing auto manufacturers were always going to be putting up a fight, but Tesla knew what it was getting itself into with respect to these competitors and by all accounts the playing field and rules were known.

I would strongly suggest that Tesla has likely underestimated the effect that its presence - and more importantly, its marketing plan - would have on some other specific players in this industry, which are the individual dealership principles that exist in countless numbers in each and every single community that exists in the developed world.

Make no mistake this is currently Tesla's biggest threat. Auto dealers make more money than god, and as a combined force fighting for one cause with more voices than you could imagine screaming in every legislators' ear in every constituency in this world they will not go away quietly. They are fighting for their lives right now.

Their fight is not necessarily against electric vehicles - and Tesla would be making a horrific miscalculation if their strategies made this assumption. It is the oil industry and auto manufacturers who have picked that fight. Auto dealers have to protect themselves from being made obsolete from their own product suppliers. If Tesla is allowed to sell directly as Elon is pushing, then their existence will cease to exist almost overnight as other manufacturers will have to be allowed to compete with Tesla in the same manner.

That said - has it dawned on anyone that these dealers who have been complaining to their legislators may have legitimate concerns? It is very easy for us as Tesla supporters to just dismiss their complaints as being unreasonable and unjustified simply on the basis that they're afraid of a competitor walking onto their turf and outperforming them.

I think it could be fatal of Tesla to ignore their concerns and attempt to just ram Elon's Master Plan down their throats.

There are countless auto dealers that pay more taxes than most businesses, pay good wages, and are a big part of the social fabric in every community on the planet. And make no mistake - legislators in North Carolina, New York and Texas do not get elected by ignoring their wage earners, their taxpayers, their communities, and their most powerful constituents in favor for a company that bases itself in California.

These dealers have massive investments in real estate, capital, infrastructure, and people. It would be foolish to think that they are just going to let the Tesla's of the world saddle up to their dinner table and take the food that they have been feeding their families for generation after generation. This is a fight to the death for them.

I've heard posters on this forum or in news articles suggest on ways to circumvent some of these laws - attempt to bypass them through loopholes in delivery processes, ordering processes, definitions of dealerships etc. I've also heard Elon say himself that maybe the company needs to take this on at the federal level.

I think this is a mistake. Legislators will close loopholes if they have to. And forcing things down the states throats through legislation is not going to make this company any friends on the state and community level.

The best approach is to listen to what their concerns are and try to find a real solution. This may even require compromise. But to go around and scream that the legislators are idiots who don't know what they are doing and try to impose your will on them is not going to be a cost-effective solution because its going to have to be done in each and every single jurisdiction that Tesla comes across.

mynameisjim · Jun 21, 2013

Businesses adapt or die. Creating legislation that forces their existence is temporary. They need to provide a valuable service and convince people they're worth using. They provide no value to me and I won't miss them at all.

haid · Jun 21, 2013

No amount of talking to dealers will help. There is no compromise. They know they can not compete against company owned dealerships. They fundamentally don't provide value that can not be duplicated by a manufacturer owned store. So while Tesla may not be of interest, their survival depends on avoiding a precedence.

This has to be fought in the courts, legislatures and public. Whatever role they played, they have out-lived their usefulness. And like newspapers being killed by Craig's list and web based news, don't expect them to go away overnight.

carogan · Jun 21, 2013

mynameisjim said:
Businesses adapt or die. Creating legislation that forces their existence is temporary. They need to provide a valuable service and convince people they're worth using. They provide no value to me and I won't miss them at all.

I am not suggesting that what you are saying is wrong at all. I agree with you.

But I am arguing that it would be incredibly naïve to simply ignore the possibility that these legislators/dealers may have a legitimate basis for their position.

For example, dealerships in many jurisdictions are required to be licensed for the sale of vehicles as well as purchasing of vehicles (both on the wholesale as well as retail trade ins). This is done for a number of reasons including for consumer protection. In years past customers had little to no protection and would get ripped off all the time from unscrupulous businesses.

There are issues surrounding licensing and monitoring when it comes to retail financing and the public.

There is also the fact that dealers have been required to spend substantial resources in real estate, infrastructure, capital and people to put in the service infrastructure to ensure that automobile products will be sufficiently supported.

It may be very difficult for legislators to simply drop any of these requirements.

Do not get me wrong - I despise the dealership culture of today's auto industry and I'd be more than happy to see it disappear. But there is more than meets the eye to many of us on the street that do not necessarily consider every angle of these issues and I think it would be wise to maybe dig in a little deeper and really listen and find out what the real issues are.

markwj · Jun 21, 2013

I understand the argument, and the reason they are fighting, but just because they have been doing it that way for generations doesn't mean it can or should continue that way.

Artificially supporting an unnecessary middleman is not sustainable. If it was, Amazon would have been legislated away by now.

The cheese has moved. Adapt or die, just like any business.

Todd Burch · Jun 21, 2013

Definitions:

A free market is a market structure in which the distribution and costs of goods and services, along with the structure and hierarchy between capital and consumer goods, are coordinated by supply and demand unhindered by external regulation or control by government or monopolies.

Capitalism is an economic system characterized by private or corporate ownership of capital assets and goods. In a capitalist economy, investors are free to buy, sell, produce, and distribute goods and services with at most limited government control, at prices determined primarily by a competition for profit in a free market.

If Americans truly believe in free market capitalism, then it doesn't matter whether dealers would lose their jobs, or tax revenue would be lost, etc. As mynameisjim said, adapt or die.

iTunes brought about changes to the entire system of music distribution in the U.S. The record companies--after initial resistance--finally adapted.

The internet/iPad/Nook/Kindle brought about the demise of newspapers and bookstores. Many newspapers did not adapt or adapted too late, and died. Some bookstores did not adapt, and died.

This is how the US economy works--or how it should work. The threat of becoming obsolete is the very thing that spurs innovation.

No law stopped the internet from killing many newspapers. No law should stop Tesla from being able to sell directly to the consumer.

Look at it this way: Imagine being told that instead of buying groceries from your local grocery store, you were now required to buy your groceries from a designated "food provider" in your neighborhood. That "food provider" would buy the food from the grocery store, and then re-sell the food to you (after increasing the price to pay himself). Does that seem right to you? What value is the "food provider" adding to the process?

SCW-Greg · Jun 21, 2013

Notice how gas prices are coming down lately? Wanna play hard ball? If the oil companies really got nervous, they could affect the whole market and economy in a big way. I don't know, by mysteriously, say coming up with excuses on new refinery efficiencies, plentiful reserves in hold, refinery repairs being wrapped up, refineries coming back online, etc. etc. etc. and voila prices really come down - and hold - for awhile.

Of course there's still rising demand in China and India. But watch OPEC and crude to see how nervous they get globally, and watch locally at the pump for domestic oil concern.

Then think about the big three, Germany, Korea, and Japan. Everybody's got a stake in this.

There is more than one tiger in play, and only perceived consumer sentiment will influence an decide the shorter term responses.

We have to win the hearts and minds of the public, change the mindset, change the tide of acceptance. Once that momentum is in motion, it will be hard to stop or slow. Tesla is doing a good job of getting this to go viral. We all help, everyday we talk and share.

carogan · Jun 21, 2013

haid said:
No amount of talking to dealers will help. There is no compromise. They know they can not compete against company owned dealerships. They fundamentally don't provide value that can not be duplicated by a manufacturer owned store. So while Tesla may not be of interest, their survival depends on avoiding a precedence.

I am not suggesting there be negotiations with dealerships. Rather, I am suggesting that we clearly understand the concerns of our legislators.

Just because one model does not meet our standards for "value" does not mean that it doesn't meet the standards for other consumers, an economy or a community. If deciding in Tesla's favor wipes out the economy of a community then I can guarantee you that lawmakers will not necessarily side with you no matter how "fundamentally" sound your argument might be.

SCW-Greg · Jun 21, 2013

Todd Burch said:
Definitions:

A free market is a market structure in which the distribution and costs of goods and services, along with the structure and hierarchy between capital and consumer goods, are coordinated by supply and demand unhindered by external regulation or control by government or monopolies.

Capitalism is an economic system characterized by private or corporate ownership of capital assets and goods. In a capitalist economy, investors are free to buy, sell, produce, and distribute goods and services with at most limited government control, at prices determined primarily by a competition for profit in a free market.

If Americans truly believe in free market capitalism, then it doesn't matter whether dealers would lose their jobs, or tax revenue would be lost, etc. As mynameisjim said, adapt or die.

iTunes brought about changes to the entire system of music distribution in the U.S. The record companies--after initial resistance--finally adapted.

The internet/iPad/Nook/Kindle brought about the demise of newspapers and bookstores. Many newspapers did not adapt or adapted too late, and died. Some bookstores did not adapt, and died.

This is how the US economy works--or how it should work. The threat of becoming obsolete is the very thing that spurs innovation.

No law stopped the internet from killing many newspapers. No law should stop Tesla from being able to sell directly to the consumer.

Look at it this way: Imagine being told that instead of buying groceries from your local grocery store, you were now required to buy your groceries from a designated "food provider" in your neighborhood. That "food provider" would buy the food from the grocery store, and then re-sell the food to you (after increasing the price to pay himself). Does that seem right to you? What value is the "food provider" adding to the process?

+100 on this!

Todd Burch · Jun 21, 2013

carogan said:
I am not suggesting there be negotiations with dealerships. Rather, I am suggesting that we clearly understand the concerns of our legislators.

Just because one model does not meet our standards for "value" does not mean that it doesn't meet the standards for other consumers, an economy or a community. If deciding in Tesla's favor wipes out the economy of a community then I can guarantee you that lawmakers will not necessarily side with you no matter how "fundamentally" sound your argument might be.

But that's just the thing. Lawmakers should not be siding with EITHER side. Free market.

I'm a registered Independent, but historically have voted Democratic. And yet I believe strongly in free market capitalism--that the government should not interefere in the free market. It's the foundation of the American economy. Legislators shouldn't be taking ANY side.

carogan · Jun 21, 2013

Its all fine and dandy for everybody here to argue that the rule of "free market" must win out.

But you are all making one incredibly massive assumption, which is that you have limitless resources with which to take on this fight.

Its been said that much of this technology has been out there for a century. Why is it that we aren't all already driving in electric cars?

All I am saying is that if you want to pick a fight, its always good to know for sure that you can win it. If you go in blind, you just might find out the hard way that there is always someone out there that is bigger and badder than you are.

The opponent we are discussing here is a formidable one and the fight will not be cheap.

Bubba · Jun 21, 2013

There is nothing stopping those dealers from lobbying their partners, the auto manufacturers, to make a compelling EV with a 200 mile range.

If there was a Mercedes EV with a 250 mile range, it would have a market.
if there was a BMW EV with a 250 mile range, it would have a market.
if there was a Cadillac with a 250 mile range, it would have a market.
if there was a Lexus EV with a 250 mile range, it would have a market.

it might be too early for the technology to produce a low priced 200 mile EV. But the market in the luxury area has been proven.
The dealers should be demanding EV development from their manufacturing partners.

Trying to eliminate competition via state laws is doomed to fail. This beast is already out there. A few misc states won't be able to shut down Tesla.

carogan · Jun 21, 2013

Todd Burch said:
But that's just the thing. Lawmakers should not be siding with EITHER side. Free market.

I'm a registered Independent, but historically have voted Democratic. And yet I believe strongly in free market capitalism--that the government should not interefere in the free market. It's the foundation of the American economy. Legislators shouldn't be taking ANY side.

Of course lawmakers "shouldn't" be siding with either side. But to suggest that they don't is naïve to put it gently. We know that this is not the way of the world we live in, so we need to choose our fights wisely and know we can win when we do.

PeterW · Jun 21, 2013

markwj said:
I understand the argument, and the reason they are fighting, but just because they have been doing it that way for generations doesn't mean it can or should continue that way.

Artificially supporting an unnecessary middleman is not sustainable. If it was, Amazon would have been legislated away by now.

The cheese has moved. Adapt or die, just like any business.

Agreed, unfortunately they do not want to have to adapt, hence the fight. They just want to hem and haw.

carogan · Jun 21, 2013

Bubba said:
Trying to eliminate competition via state laws is doomed to fail. This beast is already out there. A few misc states won't be able to shut down Tesla.

But this is where I'm getting at.

The laws that are being argued is that there is some implied necessity for dealerships. The arguments are being perceived by Tesla supporters as being anti-Tesla, but I am suggesting that we (Tesla supporters) could be being very short-sighted by simply making this conclusion. There may be more substance to their concerns than what many of our supporters make it out to be.

Todd Burch · Jun 21, 2013

carogan said:
But you are all making one incredibly massive assumption, which is that you have limitless resources with which to take on this fight.

I'm not sure that anybody's making that assumption. Why do you say that?

carogan said:
Its been said that much of this technology has been out there for a century. Why is it that we aren't all already driving in electric cars?

I think most of this technology has been out for about a year. Certainly batteries with 300 mi range haven't been around for a century, or sophisticated computer-controlled thermal protection systems, or complex power controllers to deliver controllable, massive torque smoothly...

carogan said:
All I am saying is that if you want to pick a fight, its always good to know for sure that you can win it. If you go in blind, you just might find out the hard way that there is always someone out there that is bigger and badder than you are.

I guess I disagree with you here. Tesla's not picking the fight. NADA is. I can assure you that Tesla would very much prefer to be left alone. Not to mention the fact that you shouldn't choose to only fight fights that you think you can win. You fight because you believe in the principle. If we only fought fights we thought we could win, we'd probably be speaking with a British accent right now.

carogan said:
The opponent we are discussing here is a formidable one and the fight will not be cheap.

Perhaps. I'm hoping Tesla takes this up the federal judiciary chain as soon as it can, because I can see this turning into a Supreme Court case--and the Supreme Court ruling in Tesla's favor.

What are you suggesting? Are you suggesting that Tesla give in, close up shop, and say "oh well, we tried."?

markwj · Jun 21, 2013

Bubba said:
There is nothing stopping those dealers from lobbying their partners, the auto manufacturers, to make a compelling EV with a 200 mile range.

I suspect what is worrying the dealers is that they make their money from after-sales service. What happens to that revenue, long-term?

Todd Burch · Jun 21, 2013

carogan said:
Of course lawmakers "shouldn't" be siding with either side. But to suggest that they don't is naïve to put it gently. We know that this is not the way of the world we live in, so we need to choose our fights wisely and know we can win when we do.

I think everyone recognizes that legislators get bought by lobbyists. That doesn't mean you give up. I'm not sure I see what you're suggesting that Tesla do? Accept that they can't sell cars in 5 states? What next?

I'm not sure that the NADA is particularly anti-Tesla. I believe they are, because they feel threatened. But--sure, they might just be anti-direct-factory-to-consumer. But it doesn't matter.

carogan · Jun 21, 2013

Todd Burch said:
Perhaps. I'm hoping Tesla takes this up the federal judiciary chain as soon as it can, because I can see this turning into a Supreme Court case--and the Supreme Court ruling in Tesla's favor.

What are you suggesting? Are you suggesting that Tesla give in, close up shop, and say "oh well, we tried."?

What argument are you going to take up the federal judiciary chain? It appears that everyone replying in this thread is assuming that if the Supreme Court makes a positive ruling in favor or Tesla on the basis of fair market and "anti-competition" that this will solve the problem.

But if you look closer to the complaints being lodged, they are not necessarily "anti-competition" complaints. Dealers and manufacturers have been required to adhere to specific laws presumably for the safety and health of both the consumer and the businesses in the industry - and now they are simply stating that these laws ought to continue to be enforced for the reasons that they were implemented to begin with.

Todd Burch · Jun 21, 2013

carogan said:
What argument are you going to take up the federal judiciary chain?

I'm not a lawyer, but I've heard that the Commerce Clause of the Constitution could be argued here--that attempts by states to restrict Tesla's ability to do business is an unlawful attempt by a state to regulate interstate commerce. I'll leave the rest up to the lawyers in the crowd.

carogan said:
It appears that everyone replying in this thread is assuming that if the Supreme Court makes a positive ruling in favor or Tesla on the basis of fair market and "anti-competition" that this will solve the problem.

It will, in that it will allow Tesla to sell directly in the states in question.

carogan said:
But if you look closer to the complaints being lodged, they are not necessarily "anti-competition" complaints.

Of course not--it would look silly to file a complaint arguing that Tesla shouldn't have the right to compete with them.

carogan said:
Dealers and manufacturers have been required to adhere to specific laws presumably for the safety and health of both the consumer and the businesses in the industry - and now they are simply stating that these laws ought to continue to be enforced for the reasons that they were implemented to begin with.

Certainly not for the safety and health of the consumer. And by the way, those laws apply to franchises--and protect the franchisee from the possibility of the manufacturer skipping them and selling directly to the consumer. Which, in itself seems like a silly rule on its own.

Tesla, not having franchises, does not apply in this case. They have no franchises they could be circumventing by selling cars to consumers.

So carogan, are you a dealer?

Has it dawned on anyone?

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