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Big Name Dealerships Attempting To Ban Sale Of Electric Cars

Posted by on May. 10, 2014 at 2:10 PM
  • 24 Replies

http://www.alternet.org/environment/missouri-may-be-next-state-ban-tesla-motors?paging=off&current_page=1#bookmark

Missouri May Be the Next State to Ban Tesla Motors

Legislators in the "Show Me State" are trying to sneak through legislation banning the electric car company from selling directly to consumers.





 
 

A Tesla Roadster on display.
Photo Credit: Cytech/Flickr

 
 
 
 

Auto dealer lobbies have strong ties to state houses across the U.S., and a perceived threat to their dealerships from Tesla Motors direct-sale model is prompting them to lobby politicians to enact sales bans. But banning the very popular green car doesn't sit well with the public, politicians have found. This has prompted stealth legislation, introduced quietly with few announcements and even less debate. 

Missouri is the latest state to try to slip in anti-Tesla legislation without anyone noticing. The "Show Me State" legislature is trying to obscure their actions by slipping through legislation as its current session comes to an end this Spring. 

Just this week, the state's auto dealers proposed new language in an existing bill that would force consumers to buy new cars and trucks only through franchised dealerships. The bill, HB 1124, has been in bouncing around since late last year, and was passed by the state's House in mid April without containing any anti-Tesla language. But this week, the bill reemerged with the new language aimed to stop Tesla from selling cars. This Senate version passed with no public consultation whatsoever, and will likely move to the House floor for a final vote, essentially without debate.

This change to the bill is not just a minor amendment, it has morphed into a bill that is completely unrelated to the original one, which related only to sales for off-road and all-terrain vehicles and barred the manufacturers from competing against their franchisees (for example, Ford Motor Company cannot compete against Ford dealerships). Tesla, which doesn't have franchisees or a dealership network, would not have been effected by the original bill. 

The amendment also attempts to redefine the word "franchisor" to mean "manufacturer", a slick change of legal wording of which legislators may not even be aware. This goes beyond automotive dealers trying to protect their existing monopolies – this legislation seeks to create a new car-sales monopoly.  

Back in March, New Jersey’s became the third state to bar Tesla from selling their cars directly to consumers without a middleman. The Christie administration said they supported the legislation because Tesla shouldn’t have the right to unilaterally change the way cars are sold.  As TIME magazine notes, the CEO of the company, Elon Musk, blasted the move in a scathing blog post, saying the policy was made as a “backroom deal” to “circumvent the legislative process.”

Tesla sells its cars without using the franchise model.  But most other car companies make a profit by granting individually-owned dealerships the right to sell car brands. So Tesla is going up against automobile dealers who have a lot of power--which stems from their political contributions.  According to Open Secrets, the National Automobile Dealers Association, a lobbying group that represents car and truck dealers, spent $3 million in political contributions in 2012 and another $3 million on lobbying.

Tesla CEO Musk explained the rationale of the sales model in a blog post.

“When Tesla came along as a new company with no existing franchisees, the auto dealers, who possess vastly more resources and influence than Tesla, nonetheless sought to force us to sell through them,” Musk said. “The reason that we did not choose to do this is that the auto dealers have a fundamental conflict of interest between promoting gasoline cars, which constitute virtually all of their revenue, and electric cars, which constitute virtually none.”  

Musk added that electric cars need much less service than the gasoline cars, so there's less of a need for dealership franchises.  “There are no oil, spark plug or fuel filter changes, no tune-ups and no smog checks needed for an electric car...Overcharging people for unneeded servicing (often not even fixing the original problem) is rampant within the industry and happened to me personally on several occasions when I drove gasoline cars.”

The challenge in Missouri comes as Tesla begins its appeal New Jersey’s law banning direct auto sales. Texas and Arizona also bar direct sales of Teslas.

Last month, Forbes reported that New York's auto dealers obtained a promise from aides to Governor Andrew Cuomo that he would sign a Tesla ban that was working its way through the state legislature, but Tesla was able to work out a deal to keep selling cars there. Ohio has worked out a similar deal with Tesla. 

The Federal Trade Commission have stated their support for Tesla's right to sell vehicles direct to consumers. In a blog post, the FTC said: "Regulators should differentiate between regulations that truly protect consumers and those that protect the regulated." Separately, a letter signed by more than 70 leading economists under the banner of the International Center for Law & Economics soundly dismisses every dealer argument and concludes that these bans are only motivated by "economic protectionism that favors dealers at the expense of consumers and innovative technologies."

by on May. 10, 2014 at 2:10 PM
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Replies (1-10):
autodidact
by Platinum Member on May. 10, 2014 at 2:18 PM
1 mom liked this

dipshits

autodidact
by Platinum Member on May. 10, 2014 at 3:03 PM

bump

MelanieJK
by Silver Member on May. 10, 2014 at 3:29 PM
1 mom liked this

It points out one of the reasons why unemployment is going to remain a challenge.    New technology employs fewer people.      A lot of dealerships are small businesses that employ quite a few people.     That's money in the local economy that won't be there with these cars.     One would hope the savings would go to the consumer but looking at their stock price,  the  investors are expecting a very healthy hunk of it too.

  

lga1965
by on May. 10, 2014 at 3:41 PM
Morons
Posted on CafeMom Mobile
MelanieJK
by Silver Member on May. 10, 2014 at 3:47 PM

 No,  I was just making an observation about a challenge of technology in general.    The number of people employed in the auto industry in general has plummetted because of technology.    And Tesla's are built with even more automation.     All that stuff listed  in the OP that's not in these cars to fix,   translates to lost jobs.    Those parts involve people making,  distributing,   fixing,  selling,   etc. etc. etc.     

I'm sure we'll adjust but it has and will be a bumpy adjustment for some time. 

Quoting jamelame:

Tesla still needs showrooms. Just because they won't be franchises doesn't mean they don't employ people. This legislation just forced their showrooms to stop selling cars. Does that sound good for employment?

Quoting MelanieJK:

It points out one of the reasons why unemployment is going to remain a challenge.    New technology employs fewer people.      A lot of dealerships are small businesses that employ quite a few people.     That's money in the local economy that won't be there with these cars.     One would hope the savings would go to the consumer but looking at their stock price,  the  investors are expecting a very healthy hunk of it too.

 

 

 

MelanieJK
by Silver Member on May. 10, 2014 at 4:10 PM

The ban is just against the manufacturer selling the car directly to the consumer.    He can sell them through independent franchises like the other car companies do.

Quoting jamelame:

Maybe, but that has literally nothing to do with this law. This will do nothing but hurt employment by forcing Tesla to lay salespeople off and preventing them from opening new showrooms.

Quoting MelanieJK:

 No,  I was just making an observation about a challenge of technology in general.    The number of people employed in the auto industry in general has plummetted because of technology.    And Tesla's are built with even more automation.     All that stuff listed  in the OP that's not in these cars to fix,   translates to lost jobs.    Those parts involve people making,  distributing,   fixing,  selling,   etc. etc. etc.     

I'm sure we'll adjust but it has and will be a bumpy adjustment for some time. 

Quoting jamelame:

Tesla still needs showrooms. Just because they won't be franchises doesn't mean they don't employ people. This legislation just forced their showrooms to stop selling cars. Does that sound good for employment?

Quoting MelanieJK:

It points out one of the reasons why unemployment is going to remain a challenge.    New technology employs fewer people.      A lot of dealerships are small businesses that employ quite a few people.     That's money in the local economy that won't be there with these cars.     One would hope the savings would go to the consumer but looking at their stock price,  the  investors are expecting a very healthy hunk of it too.

 

 

 

 

 

MelanieJK
by Silver Member on May. 10, 2014 at 4:20 PM

 They aren't going to do that by choice.    So it's their decision to not open showrooms.     

There's pros and cons to franchises.    One pro is dstribution of wealth.     Instead of the profits all going to Tesla some will go to people in the local market.   Hey,   you could buy a franchise and get in on it!      

Quoting jamelame:

Tesla have already said they aren't going to do that. Even if they did, what exactly is the difference for consumers between a tesla showroom and a tesla frachise?

Quoting MelanieJK:

The ban is just against the manufacturer selling the car directly to the consumer.    He can sell them through independent franchises like the other car companies.   

 

LokisMama
by Bronze Member on May. 10, 2014 at 4:38 PM
1 mom liked this

I don't see the issue with selling directly to the consumers.  Sure, it's not as good for employment because you don't have to hire the middleman.  But it keeps overall prices down. 

Electric cars should be prioritized, not shut down like this. For a country that's so worried about global warming, carbon footprints, and climate change, they've really dropped the ball by letting the worst offenders in all three catagories dictate policy. 

MelanieJK
by Silver Member on May. 10, 2014 at 8:00 PM

 Well it's not like Tesla didn't get their government goodies including state law goodies..    These are cars that only the 1% can even afford so the boohoohoo  about the consumer is a little suspect.    We're subsidizing the price for the one percenters?!    lol      And competitors who make cars the average consumer can afford were required to pay for their air-pollution credits.     

Tesla’s success would have been impossible without a big assist from government: a $465 million, low-interest Energy Department loan ; substantial tax credits for purchasers; tens of millions of dollars’ worth of air-pollution credits awarded by California regulators to Tesla and sold to competitors who, under state law, had to buy them.

Quoting jamelame:

Yeah, what kind of small fragile startup company actually needs the profits from the cars it sells.

It's not the job of state government to try and prevent businesses making money. The idea that this law is designed to prevent Tesla making too much profit is laughable. The state already knew that Tesla would not bow to franchises and would simply sell over the internet, and they went ahead and did it anyway. Members of the public would absolutely NOT support this, it only happened because big motor companies and franchises are using the LAW to prevent competition.

Quoting MelanieJK:

 They aren't going to do that by choice.    So it's their decision to not open showrooms.     

There's pros and cons to franchises.    One pro is dstribution of wealth.     Instead of the profits all going to Tesla some will go to people in the local market.   Hey,   you could buy a franchise and get in on it!      

Quoting jamelame:

Tesla have already said they aren't going to do that. Even if they did, what exactly is the difference for consumers between a tesla showroom and a tesla frachise?

Quoting MelanieJK:

The ban is just against the manufacturer selling the car directly to the consumer.    He can sell them through independent franchises like the other car companies.   

 

 

 

autodidact
by Platinum Member on May. 10, 2014 at 8:09 PM

why did you edit that out of your copy and paste that the loan has been repaid?

Quoting MelanieJK:

 Well it's not like Tesla didn't get their government goodies including state law goodies..    These are cars that only the 1% can even afford so the boohoo about the consumer is a little suspect.    We're subsidizing the price for the one percenters!      lol      

Tesla’s success would have been impossible without a big assist from government: a $465 million, low-interest Energy Department loan ; substantial tax credits for purchasers; tens of millions of dollars’ worth of air-pollution credits awarded by California regulators to Tesla and sold to competitors who, under state law, had to buy them.

The (dubious) policy rationale is that a shift to electric cars would lower carbon emissions significantly and that the way to achieve such a shift is by subsidizing the manufacture and sale of a luxury vehicle that only the 1 percent can afford.

Quoting jamelame:

Yeah, what kind of small fragile startup company actually needs the profits from the cars it sells.

It's not the job of state government to try and prevent businesses making money. The idea that this law is designed to prevent Tesla making too much profit is laughable. The state already knew that Tesla would not bow to franchises and would simply sell over the internet, and they went ahead and did it anyway. Members of the public would absolutely NOT support this, it only happened because big motor companies and franchises are using the LAW to prevent competition.

Quoting MelanieJK:

 They aren't going to do that by choice.    So it's their decision to not open showrooms.     

There's pros and cons to franchises.    One pro is dstribution of wealth.     Instead of the profits all going to Tesla some will go to people in the local market.   Hey,   you could buy a franchise and get in on it!      

Quoting jamelame:

Tesla have already said they aren't going to do that. Even if they did, what exactly is the difference for consumers between a tesla showroom and a tesla frachise?

Quoting MelanieJK:

The ban is just against the manufacturer selling the car directly to the consumer.    He can sell them through independent franchises like the other car companies.   





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