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>It sucks, but if you were a legislator in NJ, would you rather Tesla's profit went all out of state to Tesla, or if your citizens could get a crack at some of

• bane 13y ago
  Right, it's actually the job of the legislature to try and pass laws and create regulations to advantage their market over external competitors -- even if that means creating local monopolies. It sucks that New Jersey has to think of California as a competitor (after all, aren't California and New Jersey domestic territories of the same country?), but resources are finite. And if you, as a legislator, think bringing money and jobs into your state doesn't matter, you have another thing coming: https://www.google.com/search?q=%22attract+business+to+the+state%22&oq=%22attract+business+to+the+state%22&aqs=chrome..69i57.5806j0j4&sourceid=chrome&espv=210&es_sm=122&ie=UTF-8 https://www.google.com/search?q=%22attract+business+to+the+s... You'll find endless concern from every state about how to attract businesses and jobs to their state. It's not a coincidence that Hyundai opens a manufacturing plant in Alabama instead of someplace cheaper or more recognizable. http://www.enquirer.com/editions/2002/04/06/fin_alabama_put_forth.html http://www.enquirer.com/editions/2002/04/06/fin_alabama_put_... The problem with New Jersey doing this vs. Alabama is that the mechanism for Alabama to get Hyundai is pretty direct and pretty clear. Offer incentives to Hyundai, get a plant and a couple hundred jobs (plus the indirect halo effect on the economy outside of the plant). For New Jersey it just looks like they're protecting shady car dealers by generating an artificial monopoly. The optics on it are terrible, it looks corrupt and petty, and the public rationale "it helps the consumer" is clearly false, but the practice is pretty much the same. There's absolutely nothing that prevents Tesla from setting up a franchised dealer network in New Jersey, selling their cars cheap to the dealers and then having the dealers keep a cut while generating jobs in the state. It's "spreading the wealth around" from CA to NJ a bit. The only thing that prevents Tesla from doing this is that Tesla wants to maximize the profit share they see from the car sales. The thing is, because Tesla has been very public about it, they know there is room in that large 25% profit margin per vehicle (Honda makes about 15% per hybrid) to "share a little".
  • ghaff 13y ago
    > Tesla wants to maximize the profit share they see from the car sales While true, it's also universally true of just about everything. Yes, using resellers/dealers/etc. means that you have to give them a slice of "your" money. It also frees you from having the scale up the infrastructure and employees yourself. Which is why franchise models (either pure or blended) are so popular. I suspect the more pressing motivation is that Musk wants to have complete freedom to do things his way without filtering by a middleman who would likely be strongly influenced by the way that auto dealers have historically operated. That said, a couple of points. 1. As another poster noted, the auto dealer "experience" that many of us are familiar with doesn't necessarily reflect the experience one gets with a luxury car brand. Haggling over a Ford Fusion and walking into a $INSERT_LUXURY_BRAND dealership aren't the same thing. 2. I suspect a lot of folks are underestimating the degree to which Tesla will have to provide local services that look a lot like a dealership as it scales up and certainly as it introduces cars at more mainstream price points. For example, you need service centers--as they are building out today.
    • bane 13y ago
      > I suspect the more pressing motivation is that Musk wants to have complete freedom to do things his way without filtering by a middleman who would likely be strongly influenced by the way that auto dealers have historically operated. Ding ding ding. In this respect, the HN hive-mind is pretty schizo. Are you a phone company and trying to protect your profits? Burn them at the stake! Are you a popular technologist who builds rocket ships on the side and are trying to protect your profits? Cheer him on! > I suspect a lot of folks are underestimating the degree to which Tesla will have to provide local services that look a lot like a dealership as it scales up and certainly as it introduces cars at more mainstream price points. For example, you need service centers--as they are building out today. That's also true. I'm not sure what the ratio of service center employees per Tesla vs. traditional automobiles. My guess is that you'll have to bring your Tesla back to the dealer for most maintenance needs, while I can bring my regular old family sedan to whatever gas station/service center is down the street. We don't even know what the used car ecosystem for Tesla's will look like. Will anybody really want to buy a car they have to put a few grand of new batteries into? Will there be a used car service center ecosystem in place? When can I walk into the local Pepboys and buy a new sprocket or cog set for my Tesla? Never? Then bye bye Pepboys. The network effects which contribute to the overall size of the auto industry, which is far more than just the manufacturers, is a pretty significant part of the overall economy in a given area. What will this ecosystem look like in 25 years with hyper sophisticated self-driving Tesla-likes all over the road? My guess is that it will be devastating to the system that's there even if an all new ecosystem replaces it. It's not a 1-to-1 map. People won't make the transition and that's a problem governments care about.