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Texas won't allow Tesla to sell electric cars directly
- pxlpshr 13y agoWhat's not very clear in this article is that Texas has always been pretty good about keeping politicians out of office. So depending on your view of government, that's either a really great thing or really terrible one.
- lukifer 13y agoThat doesn't make any sense. Are politicians born with a magic birthmark that allows one to differentiate them from non-politicians? Politicians adapt themselves to the carrots and sticks of their environment, just like CEOs, blue-collar laborers, and everybody else. For better or worse, they are a reflection of their constituency.
- pxlpshr 13y agoThere is a difference between politicians that work for the people, and career politicians that work for themselves.
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- Nux 13y agoI wonder, do they allow Louis CK to sell his own tickets? :-)
- freehunter 13y agoWhat does Tesla have to do with Louis CK?
- nrb 13y agoI believe they were drawing a parallel to parasitic middle-men in other industries, like Ticketmaster in live entertainment.
- ernie_ 13y agoI think he's pointing out that Louis CK also sells his product directly to his customers instead of going through a middleman like Ticketmaster/Dealership.
- cpursley 13y agoYou mean 'free market' Texas?
- bratsche 13y agoThere's already a Tesla store in Houston. How did they open that store, and will they be able to keep it open? I've seen a couple Teslas driving around Dallas, and am hoping to see more.
- sidupadhyay 13y agoThey also have one in Austin, but the greater issue here is that the stores can't help customers as much. Specifically, in order to comply with state laws the stores can't talk about the purchasing process nor help with the registration. Tesla's site has more details on what they can and cannot do: http://www.teslamotors.com/advocacy_texas http://www.teslamotors.com/advocacy_texas
- Rudism 13y agoI remember reading some time ago that Tesla's loop-hole for opening storefronts is that they don't actually sell cars to people there... they just inform people about the cars and answer their questions. When it's time to actually buy one, they sit you down at a internet terminal and you order over the web just as you would if you were purchasing from anywhere else.
- DanBC 13y agoWould they have been collecting and paying sales tax?
- masonhensley 13y agoI think you pay the sales tax when you register the car, just like you would during a private sale. The only difference is that when you buy a car from a dealer, they probably help fill out that paperwork. I could be wrong, I've never bought a new car & my current vehicles were both gifts from a family member which only carried a flat $10 tax. Texas auto sales tax info: http://www.window.state.tx.us/taxinfo/mtr_veh/mv_su.html http://www.window.state.tx.us/taxinfo/mtr_veh/mv_su.html
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- bratsche 13y agoThere's already a Tesla store in Houston. How did they open that store, and will they be able to keep it open? I've seen a couple Teslas driving around Dallas, and am hoping to see more.
- hvs 13y agoAll too often, the media as well as average people mistake support for corporate interests as support for "free enterprise." When large corporate interests are essentially writing bills for lawmakers, "free enterprise" is precisely what is not being practiced.
- bob13579 13y agoOther car manufacturers can't sell directly. Why should Tesla get special rules?
- jamesaguilar 13y agoTesla shouldn't get special rules. Instead, no car maker should be compelled to use dealerships.
- bob13579 13y agoI'm responding directly to his "large corporate interests" talking point, when those large corporate interests are barred from selling directly.
- jbooth 13y agoThe large corporate interests have the infrastructure in place and don't particularly want to sell directly. This regulation serves as a moat to keep out competition.
- bob13579 13y ago1) The large corporate interests don't own that infrastructure. The actual owners can choose whoever they want to represent. 2) What's stopping Tesla from partnering with Toyota dealers? 3) With its $10B valuation, Tesla could build 10 very nice dealerships for 1% of its valuation.
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- thrownaway2424 13y agoFor the record, you also cannot sell dildos in Texas. I don't know why people are always crowing about how Texas is the land that respects individual rights and free enterprise. It's not. It's the land of unlimited corporate malfeasance, unchecked pollution, and a ban on fire codes.
- cobrausn 13y agoThe statute you refer to was overturned five years ago.
- thrownaway2424 13y agoSure, by a federal court. The state, under the same governor who is still in office today, went to court and argued that Texas had a compelling interest in preventing people from having sex for reasons other than procreation.
- cobrausn 13y agoYeah, it's an example of government as envisioned by the founders working as intended - when someone at the state level overreaches, a federal court strikes it down (I'm hoping the same thing happens to this absurd law regarding dealer sales). This happens in more places than just Texas. Doesn't change the fact that your first statement is not factual anymore. Given time I think we (Texans) can eventually stop / vote out all these morons who think legislating morality is their job - we've been headed that way last few elections anyway.
- socialist_coder 13y agoWell, your current governor is Rick Perry so your recent track record on electing non-morons is pretty bad. Austin != Texas.
- krapp 13y agoThat's Governor Goodhair to you.
- utnick 13y agoFunny how similar it is to the alcohol situation. Its illegal for a brewery to sell beer directly to the public in Texas, they have to go through a middleman (distributor) that doesn't really provide value. Although in the last legislative session the rules got relaxed somewhat ( especially for brewpubs ), its still pretty similar.
- protomyth 13y agoThis isn't just a car issue, it is a "protecting local business" issue. Every state has some industries that they mandate a middle man. They either do it through licensing or just straight up saying the manufacture cannot sell direct. Shallow articles like the link don't really help the situation. We really need to start looking at removing the government from business models when there is no actual public safety aspect(1). This is a much wider problem. 1) I do believe Florida is one of the state that licenses interior designers on the theory poor interior design could kill someone. This too should be revoked as it is among the stupidest safety concerns ever.
- Already__Taken 13y agoNot to nitpick but that law can go so long as interior decorators aren't going around moving walls in houses.
- protomyth 13y agoMoving walls actually requires a construction permit since it is generally not an interior decorator's job to move walls. Hard to tell if you're trolling or showing what wrong-headed arguments are used by the industry to justify anti-competive laws.
- bob13579 13y agoFunny how you single out Texas for doing this. How is this different from other states?
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- joshdance 13y agoWas there a mistake in the article? It said that the legislative body would not meet again until 2015? Also, I wonder what affect Big Oil had on the outcome?
- jfb 13y agoTexas has a part-time legislature. There's also no need to go looking for pantomime villains; car dealers are hugely powerful in local and state politics. They're the rock that Tesla will founder on.
- jack-r-abbit 13y agoThat is taking "part time" to the extreme.
- jfb 13y agoI'm of two minds. Is it really OK to have fundamental decisions about a system as large and complex as Texas' state government ultimately be decided by so unserious a group of people? Or would they just do more damage if they were around more? I don't live in Texas, so I have no dog in the fight.
- bjhoops1 13y agoIt would be nice if Texas' governor only worked part-time. Rick Perry is an utter moron. http://www.austinchronicle.com/news/2011-10-28/just-say-no/ http://www.austinchronicle.com/news/2011-10-28/just-say-no/
- jack-r-abbit 13y agoI don't live in Texas either (and I've been instructed to never mess with them) so I don't have a dog in the fight either. But it seems to me that if they meet every 2 years, the work load they would have during that meeting would be huge. Would attention to detail about what they are deciding on be hindered by having such a large volume of stuff? But maybe they do lots of stuff in between the meetings to prepare. It just seems odd to meet about stuff that might have been sitting there waiting for 2 years.
- walshemj 13y agoWho knew that Texas was French deep down :-)
- Luc 13y agoExcusez-moi? It appears you're making a very, very poor joke here, or do you have some insight into the French car sales business we don't know about?
- walshemj 13y agoWell its both a reference to bab5 and to the French tendency to pick and support national champions conveniently ignoring the EU treaty's when it suits them. eg it was US multinationals that got raided over the 35 hour week
- maeon3 13y agoTesla said it best: "Tesla will sell its cars the way it wants. If some states don't allow that, then Tesla will simply sell them elsewhere." When a piece of a neural network becomes corrupt and entrenched beyond repair, (cancerous) the tumor or cancer fights to protect itself, there are two solutions to these kinds of problems. 1. One solution is what Musk is doing, treat the dealerships as a cancerous growth in the mind, and pathways are built to bypass it, route around it. Don't fight it, don't fix it, don't interact with it. Establish as many barriers to its growth as possible and starve it so it doesn't grow. Eventually the superior paths created by Musk are the preferred ones to use, and the defective paths are garbage collected. The cancer will seeks to prevent the growth of new pathways because it does not want to be garbage collected. 2. Remove the growth. When the surgeon finds a tumor or cancer in your brain, it doesn't try to coax it to become better or try to "enhance it" to be better. A hole is cut in the head, and lasers and scalpels are used to physically remove the cancer. These are the only two options to deal with cancerous growths working only to maintain its take on the system.
- ajross 13y agoThe metaphor is cute, but maybe overstated. Tesla isn't doing this because it's what a self healing network would do. Tesla is doing this because it's a rapidly-growing startup whose production facilities are heavily oversubscribed already. They have no net downsides to giving up the "Texas" market for now, because they don't have enough cars to sell even without Texas (and the handful of other such states). Eventually that won't be true. Once ramped up, they'll want that Texas market. And at that point someone will have to bend. Musk's bet is that at that point Texas will cave because they don't want to deny their voters the chance to purchase this great new car. Texas's "bet" (really the dealership lobbyists' bet) is that Tesla ultimately won't be successful and that by holding their ground here they will discourage other manufacturers from trying the same thing. IMHO, things make much more sense when you argue in fact instead of metaphor.
- jack-r-abbit 13y ago>Once ramped up, they'll want that Texas market. And at that point someone will have to bend. My money is on Tesla coming out on top here. Musk strikes me as the type of person that would rather give up sales while holding a huge "Fuck Texas" sign than to give in. Edit: Added the parent comment I was responding to. Yes, Tesla is playing nice right now. That puts them in a better public opinion. But eventually they'll either step up their game or walk away from Texas. I don't see them giving in. But only time will tell here.
- ywang0414 13y agoThis is simply ridiculous. I won't even dare to imagine what our country will be like if our president is from that idiotic state. oh wait, it has happened, and it got us into shitty wars and trillions of dollars in debt.
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- stephenhuey 13y agoGreetings from Texas! I tried to be friendly but was modded down, so I'll just be straightforward: Your insult of our state is unkind and inaccurate.
- boot 13y agoYou can listen to this podcast if you're interested in hearing more about how corrupt the car dealership racket is. http://www.npr.org/blogs/money/2013/02/19/172402376/why-buying-a-car-never-changes http://www.npr.org/blogs/money/2013/02/19/172402376/why-buyi...
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- btilly 13y agoThis is Interstate Commerce, pure and simple. What would be really nice is for Congress to pass a law saying these state laws are illegal and suddenly the floodgates would open. Of course all of the car manufacturers will protest that, and their lobbyists are more powerful than Tesla's. But the real plan is for Tesla to make cars and sell them where it can. In time as people see more and more of them being sold and winning awards, they will ask why they can't buy them. Tesla has to lay the groundwork for that now in as many states as it can, but at the moment production seems like more of a bottleneck for them than marketing and sales.
- proland 13y agoIt would be the car dealers protesting... I'm sure other car manufacturers would love to be able to sell their cars direct to consumer again.
- btilly 13y agoYou may be sure, but I'm not. First of all, smart companies understand that the key to profit margins is to have barriers to entry. The need to develop a dealer network is a huge barrier to entry, and car manufacturers have an interest in preserving that. Secondly, choosing to expand vertically can be a fast route to chaos. For instance suppose that Ford decided to get into running its own dealerships. All existing Ford dealers would get nervous, many would switch brands, and others already sell multiple brands and would direct their customers away from Ford. Therefore Ford would have to be very, very careful about opening its own dealerships. Thirdly, even if car manufacturers want to get rid of the dealership model, none want to say this where any dealers might hear. Because of fear of the same kind of chaos as before. So for all three reasons, there is no way that Tesla is getting any support for this from other manufacturers.
- bob13579 13y agoManufacturers would love to sell directly. They're doing it in Europe and aren't trying to enact protectionist dealership laws to protect their interests from upstart competitors. Dealers are notorious for bad service, and you can't shut underperforming ones without large buyout fees.
- bennyg 13y agoWhy does Texas not want any sales-tax on Tesla sales and property tax on Tesla locations?
- skaevola 13y agoThis article is misleading - Tesla can and does sell cars in Texas (online), their "physical stores" just can't sell them. Also, Tesla wasn't denied the right, their bill was not voted on (an omission rather than an action). They'll undoubtedly bring it back up next session.
- jack-r-abbit 13y ago>They'll undoubtedly bring it back up next session. Sure... in 2015. That is between 1.5 and 2.5 years away. That they don't meet again until 2015 is really crappy. How do they ever get stuff done?
- skaevola 13y agoIt's kind of silly, but people here think that annual legislative sessions will lead to a larger government. It's a real problem for budgeting, however.
- ck2 13y agoSo Texas is not for "freedom" and "small government" ? Who would have guessed.
- khawkins 13y agoThis article is somewhat misleading. This is not a "Texas vs. Tesla" issue, this is a "car dealerships want a monopoly" problem. This issue has been around long before Tesla came on the scene. http://www.motherjones.com/politics/2009/02/why-you-cant-buy-new-car-online http://www.motherjones.com/politics/2009/02/why-you-cant-buy...
- segmondy 13y agoPlease. Tesla will sell it over the internet and ship it. How many models do they have? They can have showrooms that don't engage in any sales. Where people can just go to look, test drive. This is such a non issue for them. Hope TX is forcing every one that sells over the internet to her citizens to pay her tax or else they will be missing those tax revenues too.
- penland 13y agoI keep waiting for someone to mention that the Texas law is virtually identical to the laws on the books in 48 other states. Also, Ford went to the Supreme Court over this in 2001 and got the back of their hand. The law is on the books for real consumer protection reasons beyond putting money in dealers' pockets ( though, putting money in dealers' pockets is a plus too ). In this case, I think an exemption for the staggeringly different service model of Tesla would be appropriate, while leaving on existing rules.
- gcb0 13y agoPlaying devil's advocate... I'd love if Google were forced to have a physical presence after it started talking my money. I'm still using a phone with several flaws that i tried to return/complain several times but never found a phone number or email address that went answered. They just took my money and run. Now imagine that for a 60k car. Maybe it's just reasonable that the state protects it's citizens and demand at least one customer care or repair facility in its borders. Imagine having to drive to California to a recall. If course that would be hard given Tesla reputation, but without enforcing a local presence, how can you be sure?
- ghaff 13y agoI'm sure there's no law requiring that, say, a Land Rover dealer exist in your state. This has nothing to do with whether a dealer exists or not but whether a manufacturer can directly own and operate a dealership.
- bdcravens 13y agoI was in The Galleria mall in Houston Sunday, and they have a "showroom" with 2-3 cars in it (they were closing so I didn't have time to stop and look). I wonder what the point was, and if they have any pending orders here.
- veritas20 13y agoGiven the history of bankruptcies in the car manufacturing space, it would be interesting to see how the effect of mandated dealerships affected the overall profit margins and viability of the car manufacturers. Think about it for a second. Requiring a car manufacturer to sell cars through a dealership network naturally reduces profit margins for the car manufacturer thus affecting their long-term viability.
- chris_mahan 13y agoWell, the Tesla dealership in Shreveport, Louisiana will be happy to hear that.
- mc-lovin 13y agoI admire Tesla for playing hardball with these dealerships. The deals between manufacturers and their own dealerships can be arranged with contracts. There is no need for a blanket ban on dealers selling directly. It's hard to think of a purer example of rent seeking than the protection that dealerships currently have. I hope Tesla continue to demand what is right and refuse to cut any deals with the dealerships.
- hippich 13y agoWhat prevents selling cars over internet and then just ship 'em?