Julian, that was a fine letter that you wrote to Indiana legislators. I read the whole thing, but I have to wonder if they will. Regarding intra-brand competition, is that not regarding dealer markups rather than the wholesale price charged to dealers? In effect, Tesla is selling something resembling wholesale to consumers. Tesla and the other manufacturers are selling to their actual buyers for what the market will bear. If Tesla charges too much to inspire demand, they would have to either charge less or go out of business. They don't have a monopoly in automobiles. Although perhaps Tesla is not charging enough, since they have a long backlog of orders. In any event, in supposedly free America it should be the filter of the marketplace and its customers that select winning products and business models, not legislators.
Meanwhile, I’ve always suspected that Tesla was waiting for the departure of Justice Scalia before going to federal court regarding the states that legislate contrary to the US Constitution’s interstate commerce clause. Scalia preferred a soft interpretation of the clause as a bow to a state’s right to legislate commerce as it sees fit. The FTC sees the clause in a more absolute sense.
General Motors should be pleased if Tesla wins in federal court. It would be to the benefit of all manufacturers. Perhaps Barra may be trying to force Tesla to do just that.
Thank you, I want to say that you're sort of correct about Tesla selling wholesale to consumers to return a compliment, but I can't because strictly it isn't true by any definition. Tesla is definitely retailing to consumers and just like dealers have done for their businesses, Tesla has invested independently for its own business to succeed in brand building and all the necessary infrastructure and systems and staffing required to address the consumer market. Dealers can reasonably expect to benefit from their investment so long as consumers value it in exactly the same way that Tesla expects to. Neither should have to deal with anti-competitive obstruction either from one another or from any third party. These are simply competitors like any two businesses independently seeking to attract similar customers.
The big distinctions really come out by looking at it from the reverse angle. For example: What possible right or justification does a dealer have to demand a cut of Tesla's business against Tesla's will?
Secondly, you are of course right in saying that that intra-brand competition over dealer to consumer markup on cars ignores the wholesale markup that the consumer must also pay for his car. But that does not describe the whole transaction or even the main part when it comes to dealer profits. ICE car sales (the basis of all analogies used by NADA, GM etc) are sold by dealers with a warranty as part of the consumer value proposition whose value is conditional upon the consumer showing up and paying for regular inspections and maintenance services.
Tesla's sale with a warranty is not conditional on showing up and paying for routine maintenance. You buy the car with a warranty, then own a car with a warranty. The end.
A dealer performing the normal functions of a dealership cannot add any consumer value to that process on Tesla's behalf at least not competitively or without raising the price to the consumer. To suggest otherwise is a nebulous claim of which there is no proof. To claim it as a fact on the basis of the way ICE cars are traded and serviced is just blatantly misleading, most likely false and Tesla does not want it anyway for a host of competitive reasons that to overrule at law is anti-competitive by definition.
To your last point, of course GM would be pleased as punch to get rid of the requirement to use dealers. If they don't they will go bust. The business model is absolutely unsustainable in the face of competition from EVs and especially fleets of Autonomous EVs providing transport as a commodity that don't need any sales inventory or any salesmen. Just charging and not for profit service centers (like Tesla has).
The trouble that GM is in and should not be allowed to escape from is that there is a relationship between GM and its dealerships whereby the dealership industry as a whole has fair claim to having invested for a hundred years in established the consumer brand and market for GM. It is not reasonable for GM to simply take over the benefit of that effort without fair compensation. Fair meaning not negotiated under threat of supply starvation or under threat of a GM-owned dealership establishing itself next door and competing with it on price.
Bottom line GM is in a hard place. This is tech disruption. The consumers that vote for the politicians that are supposed to represent the interests of The People (and not the car dealers) are universally disgusted with the idea of being forced to use dealerships against their will, even if they hate Tesla or the whole idea of EVs.
There is nothing realistic that Mary Barra can do about it. The true level playing field here exists between Elon Musk (and now Elon Musk and his Co-Investors) and GM and theirs. If GM wants to compete with Tesla it needs to do exactly what Elon did. Invest in an independent startup dedicated to making EVs. It can be a big well funded startup, but there are no short cuts. GM and its dealership business model will and must die like anything else that has reached the end of its life.
Trying to force Franchised Dealers in front of connected EV technology is about as realistic as Horse Drawn Hackney Carriage lobbyist backed legislation to have a manservant with a red flag walk ahead of the first automobiles to keep them from going too fast and scaring horses. Laws like that are swept away by economics of disruption, not the other way around.
