8 ms·

How Tesla's Fight With Car Dealers Could Help Decide the Next President

56 points by xmpir 13y ago

kertof 13y ago
I think the fight that Tesla got into is rather an other example of businesses, the car dealers, that exist solely because of legal restriction allowing them to exist, not because there is a market need. The added value of car dealers is extremely limited, and is rather an archaic leftover of previous times. Fighting for these business models is I believe completely ridiculous. It's like fighting for the CD industry or the Print/Paper industry.
louhike 13y ago
"Today the bans on Tesla stores are such a naked example of stifling innovative competition to protect an incumbent industry’s business model that they look positively French." This remark is stupid regarding how much money the US government spent to protect companies like General Motors. I'm not saying it was a bad thing, just that this remark was too easy.
- Totoradio 13y ago
  Even funnier, there is a Tesla store 500m from where I sit. In Gennevilliers, France.
hnnewguy 13y ago
Not much. First, don't underestimate the power of the auto companies along with their associated labour. There are many votes there. Second, most of the country has no clue who or what Tesla is, and as an "issue" it's the least of their concern. They want jobs, a good economy, sometimes to know whether the president believes in god, and other things. Whether rich people can buy their expensive cars in New Jersey isn't a priority, and that's how this story can be sold. These laws will fall, eventually, because they're stupid. >Few capitalists today embody the Ayn Randian entrepreneur-as-hero persona quite as convincingly as Tesla CEO Elon Musk I don't think John Galt would have taken government subsidies. Edit: replaced "No it won't" with "Not much", since I'm sure there will be some sort of effect.
- kaliblack 13y ago
  > No it won't. The article even backs this up by saying that Rubio and Perry may try to use it against Christie. At the very most it argues that Tesla could help decide who isn't president.
- rayiner 13y ago
  Also, Space X not only stands on the shoulders of giants at NASA, who were all publicly funded, but half of its funding has come from NASA pre-payments on launch contracts. Musk is a great example of the current American approach to R&D working: use public funding and subsidies to get technology off the ground, then transition to the private sector once it attains a certain level of maturity.
  - pmorici 13y ago
    "use public funding and subsidies to get technology off the ground, then transition to the private sector once it attains a certain level of maturity." It's the belt way bandit model.
  - sp332 13y ago
    I thought that was the point of the subsidies? It's not like the subsidies were designed to exist forever. They're just to accelerate the development of tech that isn't yet economical.
    - saosebastiao 13y ago
      Elon is quite the anomaly though. Most businesses will take your subsidy and turn it into a self-perpetuating leech as opposed to a business.
      - gamblor956 13y ago
        SpaceX is not an anomaly; most businesses that take subsidies for new industry markets either fail or go on to become successful companies. We simply hear about SpaceX more on HN because of Elon's relationship to tech, whereas most similarly situated companies don't have that name brand connection or are in fields that most HNers know nothing about.
danielweber 13y ago
This article seems weak sauce. Romney opposed Tesla, but that was because the President supported it. Presidential challengers, regardless of their views, always say that the incumbent President's policies are wrong. They have to give the public a reason to vote for them. You do that by creating contrasts in the public's mind between you and the incumbent. If Obama hadn't supported Tesla, Romney would have. It's not because Romney is especially corrupt or venal or cynical. It's simply because that's how you try to unseat an incumbent. When was the last time in a Presidential debate that one guy said "yeah, my opponent is right, and I would do things the same way"?
- streptomycin 13y ago
  When was the last time in a Presidential debate that one guy said "yeah, my opponent is right, and I would do things the same way"? Most of the foreign policy debate in 2012 between Romney and Obama, except when they were playing pedantics about who said what when.
- dustcoin 13y ago
  When was the last time in a Presidential debate that one guy said "yeah, my opponent is right, and I would do things the same way"? Off the top of my head: Marijuana prohibition and benefits for veterans.
- protomyth 13y ago
  "Romney opposed Tesla, but that was because the President supported it." No, Romney opposed government subsidies for clean energy companies. He didn't like the government's due diligence and didn't feel it was an appropriate use of tax payer money. He said this in various speeches. "If Obama hadn't supported Tesla, Romney would have." Nope, say what you will about the man, but he came by his opinion from his own beliefs.
ycaspirant 13y ago
>"Of course, to suggest that opposing Tesla violates GOP principles is to assume that politicians are principled at all. More realistically, the politics of the Tesla bans reflect nothing so much as the truism that all politics are local." ----- I think this is the crucial observation of this article and should be the key take home message. Of course the GOP will claim to champion principles such as innovation, free enterprise, individual choice, etc. but in practice they're ultimately going to pander to their local voter base and its special interest groups.
- jamesie 13y ago
  Building on that I want reporters to ask Christie, "When did you stop believing in American innovation, free enterprise and individual choice?"
cafard 13y ago
The notion that Chris Christie could under conceivable circumstances win the Republican nomination--let's forget Fort Lee, pretend it never happened here--is plausible only to persons within Christie's reality distortion field. Romney wouldn't pick him to run as VP, because of concerns his staff had about the baggage he brought.
- HistoryInAction 13y ago
  Up until the bridge scandal was proven to have legs (several months after it broke, mind you), Christie was winning the pre-primary money/fundraising race. He had solid inroads to both the Bush and Romney machines (aka traditional GOP) and had proven his chops at cutting decent social media-friendly video clips, even if not to our level of virality optimization. I called him the front-runner at the time—I ran data for his '09 election re: potential biases—and even now, he's still got a fair chance at securing the nomination. If he can survive (or not compete in) IA and win NH (with no Romney or McCain figure, Christie's NE Republicanism and brash nature might appeal to the Granite State), he'll have the money to power through FL and make a play for locking things up on Super Tuesday.
  - jsight 13y ago
    To me, he just looks like the next Giuliani. He has no chance in IA and may do ok in a few states in the NE. He will not win SC, and I don't think he has a chance at FL either. I don't think that presents a viable path to the nomination.
  - protomyth 13y ago
    "Up until the bridge scandal was proven to have legs" Christie has no shot of winning Iowa, maybe he can squeak by in New Hampshire, and he will get trounced after that for a bit. He is not liked by the rank and file Republicans. MartinCron said it best https://news.ycombinator.com/item?id=7401536 https://news.ycombinator.com/item?id=7401536 "Yeah, he was always a leading favorite Republican candidate among non-Republicans."
    - 13y ago
wil421 13y ago
I hope the next president focuses on more important things than Tesla. Anyway this seems to be a battle at the state level I dont really know if the Federal Govt should get involved. What exactly was the legal reason for the ban in NJ?
- Jtsummers 13y ago
  > What exactly was the legal reason for the ban in NJ? A long ago decision that car manufacturers couldn't run their own franchises/dealerships. Tesla's stores in NJ were either provisional ("We'll allow it for now, but we may take it back later") or a goof (some articles suggested one, others suggested the other). By law, they shouldn't have been selling directly in NJ (note: I think it's a dumb law), the controversy is that the deal was supposed to be determined by the legislature. Christie went back on his word and made the decision before the legislature could get around to it. Now, the legislature could still change the law to make the stores legal (at which point they'd be able to sell again, right now they're going to become galleries, showrooms).
  - wil421 13y ago
    Basically politics and lobbying parties. (Auto Dealer Associations)
- gamblor956 13y ago
  Historically, car manufacturers would use franchisees to identify profitable locations, and then set up their own stores nearby. Franchisees simply couldn't compete with the car maker financially, but at the same time bore all the risk for identifying profitable locations. That and similar abuses by car makers toward their franchisees led to the first franchise protection laws. Politics wise, it helped that the franchisees were local, but the dealers were not.
jamesie 13y ago
Elon Musk is an immigrant, environmentalist, scientifically minded and an entrepreneur. The GOP have to let go of their opposition to the first three and embrace the last even if it's a french word.
conductr 13y ago
At first I thought this was a brilliant idea. Fight the stupid laws of the past; I'm on board. However, as a casual follower, I haven't been convinced the problem is that big. Does a franchisee add a large markup? More that Tesla would already assume by opening their own stores? Maybe they want to control the customer experience? Personally, I'd be happy to be a franchisee and only charge $100 per car sold. Because I believe these cars sell themselves. No negotiations, everyone pays MSRP seems to be the Tesla model and, I like that. I won't need a hoard of sales staff. Tesla can dictate/measure my customer service practices. I won't carry a big inventory, I'd probably do setups similar to the Tesla shop in the Houston Galleria. Only a few models so people can see and feel the car, do test drives, then the order is placed with the factory. This is the part that is broken with the car industry. Dealers pre-order inventory then try to sell you the stuff they have on the lot. They all have "build your car" tools on the website, but consumers rarely get the opportunity to buy exactly the car they want. I might not know the full scope of what is required of an auto franchisee. The costs and what-not. But, if Tesla where to give me a market and the rules which to operate. I'd gladly partner with them and provide a high level service at a negligible middle-man fee. I think many other people would too. So why does this need so much disrupting? I'm starting to think, because there is an opportunity to disrupt is the right answer. This topic is generating a lot of buzz. Politicians are talking about it. Just look at the headline of this post, seriously... Tesla is pushing this to be a presidential candidate talking point? That type of PR would be priceless.
- runamok 13y ago
  How do you propose to pay your employees, rent, etc. with $100 per car sold? Granted you are reducing some costs due to not having inventory besides your test/display models. IIRC most dealerships make the bulk of their income on service which Musk has described as a non-starter.
  - conductr 13y ago
    I'm assuming I could run the sales more efficiently, less employees, under the stated model. $100 might not be the right number, just a point that it would be negligible. Also I'm also assuming tesla would give me a large market/city/region. I don't see the need of having so many locations like ford, gm, others currently have.
protomyth 13y ago
From the article's first paragraph: Mitt Romney famously called Tesla Motors a “loser” company during his run for president. He lost, of course, and Tesla is by any measure winning. And so we see would-be presidential candidates lining up behind the Silicon Valley carmaker as its fight against auto dealers becomes a potential breakout issue in the 2016 election. I would say this sums up Wired's expertise on politics. I doubt there was more than a handful of people outside the valley who cared about this statement. This statement had a net zero on the election.
- visakanv 13y ago
  Tesla fan here, but I'm with you on this. "Mitt Romney famously called Tesla Motors a “loser” company" - what is the measure of "famous" here? Because I had no idea he said that. And I bet if I ask 100 other Tesla fans about what Romney said about Tesla, they wouldn't know, either. Let alone laypersons. This is kinda... paint-the-target-around-the-arrows journalism to me.
  - protomyth 13y ago
    Here is a link to the actual video from which the quote is derived: https://www.youtube.com/watch?v=lGwTh-xXoQc https://www.youtube.com/watch?v=lGwTh-xXoQc Note the "I had a friend" and what the other companies mentioned are. The "quote" is like most political quotes, not a literal[1] quote. 1) used in the true definition and not ironically, which probably has a relation to talking about political quotes [edit: to go even further, it sounds like he was referring to loss of money as losers. Someone might check if Tesla was profitable at the time]
    - visakanv 13y ago
      neat, thanks for sharing
danvoell 13y ago
I run a startup in an entrenched industry. I see how many layers (fees, licenses, time for approvals) of bureaucracy have been created by lobbyists in favor of the oligopoly which controls my industry. On the micro level, sure most people don't know the Tesla story. On the macro level, people are sick of government entitlement and lobbying. If the Tesla story most simply articulates the fact that companies are lobbying government to stand in the way of progress in the name of their cash cow, I think it definitely has the power to help shape the election.
mathattack 13y ago
My inclination is that it shows whose pockets the politicians are in. If you think they're a "loser" then you are pandering to Detroit and their unions, or the auto dealers. If you aren't in their pockets, it's easy to see why the direct model is preferable. It's hard to be called a small government conservative if you want to legally mandate middlemen.

56 points by xmpir 13y ago

I think the fight that Tesla got into is rather an other example of businesses, the car dealers, that exist solely because of legal restriction allowing them to exist, not because there is a market need. The added value of car dealers is extremely limited, and is rather an archaic leftover of previous times. Fighting for these business models is I believe completely ridiculous. It's like fighting for the CD industry or the Print/Paper industry.

louhike 13y ago

"Today the bans on Tesla stores are such a naked example of stifling innovative competition to protect an incumbent industry’s business model that they look positively French." This remark is stupid regarding how much money the US government spent to protect companies like General Motors. I'm not saying it was a bad thing, just that this remark was too easy.

Totoradio 13y ago
Even funnier, there is a Tesla store 500m from where I sit. In Gennevilliers, France.

hnnewguy 13y ago

Not much. First, don't underestimate the power of the auto companies along with their associated labour. There are many votes there. Second, most of the country has no clue who or what Tesla is, and as an "issue" it's the least of their concern. They want jobs, a good economy, sometimes to know whether the president believes in god, and other things. Whether rich people can buy their expensive cars in New Jersey isn't a priority, and that's how this story can be sold. These laws will fall, eventually, because they're stupid. >Few capitalists today embody the Ayn Randian entrepreneur-as-hero persona quite as convincingly as Tesla CEO Elon Musk I don't think John Galt would have taken government subsidies. Edit: replaced "No it won't" with "Not much", since I'm sure there will be some sort of effect.

kaliblack 13y ago
> No it won't. The article even backs this up by saying that Rubio and Perry may try to use it against Christie. At the very most it argues that Tesla could help decide who isn't president.
rayiner 13y ago
Also, Space X not only stands on the shoulders of giants at NASA, who were all publicly funded, but half of its funding has come from NASA pre-payments on launch contracts. Musk is a great example of the current American approach to R&D working: use public funding and subsidies to get technology off the ground, then transition to the private sector once it attains a certain level of maturity.
- pmorici 13y ago
  "use public funding and subsidies to get technology off the ground, then transition to the private sector once it attains a certain level of maturity." It's the belt way bandit model.
- sp332 13y ago
  I thought that was the point of the subsidies? It's not like the subsidies were designed to exist forever. They're just to accelerate the development of tech that isn't yet economical.
  - saosebastiao 13y ago
    Elon is quite the anomaly though. Most businesses will take your subsidy and turn it into a self-perpetuating leech as opposed to a business.
    - gamblor956 13y ago
      SpaceX is not an anomaly; most businesses that take subsidies for new industry markets either fail or go on to become successful companies. We simply hear about SpaceX more on HN because of Elon's relationship to tech, whereas most similarly situated companies don't have that name brand connection or are in fields that most HNers know nothing about.

danielweber 13y ago

This article seems weak sauce. Romney opposed Tesla, but that was because the President supported it. Presidential challengers, regardless of their views, always say that the incumbent President's policies are wrong. They have to give the public a reason to vote for them. You do that by creating contrasts in the public's mind between you and the incumbent. If Obama hadn't supported Tesla, Romney would have. It's not because Romney is especially corrupt or venal or cynical. It's simply because that's how you try to unseat an incumbent. When was the last time in a Presidential debate that one guy said "yeah, my opponent is right, and I would do things the same way"?

streptomycin 13y ago
When was the last time in a Presidential debate that one guy said "yeah, my opponent is right, and I would do things the same way"? Most of the foreign policy debate in 2012 between Romney and Obama, except when they were playing pedantics about who said what when.
dustcoin 13y ago
When was the last time in a Presidential debate that one guy said "yeah, my opponent is right, and I would do things the same way"? Off the top of my head: Marijuana prohibition and benefits for veterans.
protomyth 13y ago
"Romney opposed Tesla, but that was because the President supported it." No, Romney opposed government subsidies for clean energy companies. He didn't like the government's due diligence and didn't feel it was an appropriate use of tax payer money. He said this in various speeches. "If Obama hadn't supported Tesla, Romney would have." Nope, say what you will about the man, but he came by his opinion from his own beliefs.

ycaspirant 13y ago

>"Of course, to suggest that opposing Tesla violates GOP principles is to assume that politicians are principled at all. More realistically, the politics of the Tesla bans reflect nothing so much as the truism that all politics are local." ----- I think this is the crucial observation of this article and should be the key take home message. Of course the GOP will claim to champion principles such as innovation, free enterprise, individual choice, etc. but in practice they're ultimately going to pander to their local voter base and its special interest groups.

jamesie 13y ago
Building on that I want reporters to ask Christie, "When did you stop believing in American innovation, free enterprise and individual choice?"

cafard 13y ago

The notion that Chris Christie could under conceivable circumstances win the Republican nomination--let's forget Fort Lee, pretend it never happened here--is plausible only to persons within Christie's reality distortion field. Romney wouldn't pick him to run as VP, because of concerns his staff had about the baggage he brought.

HistoryInAction 13y ago
Up until the bridge scandal was proven to have legs (several months after it broke, mind you), Christie was winning the pre-primary money/fundraising race. He had solid inroads to both the Bush and Romney machines (aka traditional GOP) and had proven his chops at cutting decent social media-friendly video clips, even if not to our level of virality optimization. I called him the front-runner at the time—I ran data for his '09 election re: potential biases—and even now, he's still got a fair chance at securing the nomination. If he can survive (or not compete in) IA and win NH (with no Romney or McCain figure, Christie's NE Republicanism and brash nature might appeal to the Granite State), he'll have the money to power through FL and make a play for locking things up on Super Tuesday.
- jsight 13y ago
  To me, he just looks like the next Giuliani. He has no chance in IA and may do ok in a few states in the NE. He will not win SC, and I don't think he has a chance at FL either. I don't think that presents a viable path to the nomination.
- protomyth 13y ago
  "Up until the bridge scandal was proven to have legs" Christie has no shot of winning Iowa, maybe he can squeak by in New Hampshire, and he will get trounced after that for a bit. He is not liked by the rank and file Republicans. MartinCron said it best https://news.ycombinator.com/item?id=7401536 https://news.ycombinator.com/item?id=7401536 "Yeah, he was always a leading favorite Republican candidate among non-Republicans."
  - 13y ago

wil421 13y ago

I hope the next president focuses on more important things than Tesla. Anyway this seems to be a battle at the state level I dont really know if the Federal Govt should get involved. What exactly was the legal reason for the ban in NJ?

Jtsummers 13y ago
> What exactly was the legal reason for the ban in NJ? A long ago decision that car manufacturers couldn't run their own franchises/dealerships. Tesla's stores in NJ were either provisional ("We'll allow it for now, but we may take it back later") or a goof (some articles suggested one, others suggested the other). By law, they shouldn't have been selling directly in NJ (note: I think it's a dumb law), the controversy is that the deal was supposed to be determined by the legislature. Christie went back on his word and made the decision before the legislature could get around to it. Now, the legislature could still change the law to make the stores legal (at which point they'd be able to sell again, right now they're going to become galleries, showrooms).
- wil421 13y ago
  Basically politics and lobbying parties. (Auto Dealer Associations)
gamblor956 13y ago
Historically, car manufacturers would use franchisees to identify profitable locations, and then set up their own stores nearby. Franchisees simply couldn't compete with the car maker financially, but at the same time bore all the risk for identifying profitable locations. That and similar abuses by car makers toward their franchisees led to the first franchise protection laws. Politics wise, it helped that the franchisees were local, but the dealers were not.

jamesie 13y ago

Elon Musk is an immigrant, environmentalist, scientifically minded and an entrepreneur. The GOP have to let go of their opposition to the first three and embrace the last even if it's a french word.

conductr 13y ago

At first I thought this was a brilliant idea. Fight the stupid laws of the past; I'm on board. However, as a casual follower, I haven't been convinced the problem is that big. Does a franchisee add a large markup? More that Tesla would already assume by opening their own stores? Maybe they want to control the customer experience? Personally, I'd be happy to be a franchisee and only charge $100 per car sold. Because I believe these cars sell themselves. No negotiations, everyone pays MSRP seems to be the Tesla model and, I like that. I won't need a hoard of sales staff. Tesla can dictate/measure my customer service practices. I won't carry a big inventory, I'd probably do setups similar to the Tesla shop in the Houston Galleria. Only a few models so people can see and feel the car, do test drives, then the order is placed with the factory. This is the part that is broken with the car industry. Dealers pre-order inventory then try to sell you the stuff they have on the lot. They all have "build your car" tools on the website, but consumers rarely get the opportunity to buy exactly the car they want. I might not know the full scope of what is required of an auto franchisee. The costs and what-not. But, if Tesla where to give me a market and the rules which to operate. I'd gladly partner with them and provide a high level service at a negligible middle-man fee. I think many other people would too. So why does this need so much disrupting? I'm starting to think, because there is an opportunity to disrupt is the right answer. This topic is generating a lot of buzz. Politicians are talking about it. Just look at the headline of this post, seriously... Tesla is pushing this to be a presidential candidate talking point? That type of PR would be priceless.

runamok 13y ago
How do you propose to pay your employees, rent, etc. with $100 per car sold? Granted you are reducing some costs due to not having inventory besides your test/display models. IIRC most dealerships make the bulk of their income on service which Musk has described as a non-starter.
- conductr 13y ago
  I'm assuming I could run the sales more efficiently, less employees, under the stated model. $100 might not be the right number, just a point that it would be negligible. Also I'm also assuming tesla would give me a large market/city/region. I don't see the need of having so many locations like ford, gm, others currently have.

protomyth 13y ago

From the article's first paragraph: Mitt Romney famously called Tesla Motors a “loser” company during his run for president. He lost, of course, and Tesla is by any measure winning. And so we see would-be presidential candidates lining up behind the Silicon Valley carmaker as its fight against auto dealers becomes a potential breakout issue in the 2016 election. I would say this sums up Wired's expertise on politics. I doubt there was more than a handful of people outside the valley who cared about this statement. This statement had a net zero on the election.

visakanv 13y ago
Tesla fan here, but I'm with you on this. "Mitt Romney famously called Tesla Motors a “loser” company" - what is the measure of "famous" here? Because I had no idea he said that. And I bet if I ask 100 other Tesla fans about what Romney said about Tesla, they wouldn't know, either. Let alone laypersons. This is kinda... paint-the-target-around-the-arrows journalism to me.
- protomyth 13y ago
  Here is a link to the actual video from which the quote is derived: https://www.youtube.com/watch?v=lGwTh-xXoQc https://www.youtube.com/watch?v=lGwTh-xXoQc Note the "I had a friend" and what the other companies mentioned are. The "quote" is like most political quotes, not a literal[1] quote. 1) used in the true definition and not ironically, which probably has a relation to talking about political quotes [edit: to go even further, it sounds like he was referring to loss of money as losers. Someone might check if Tesla was profitable at the time]
  - visakanv 13y ago
    neat, thanks for sharing

danvoell 13y ago

I run a startup in an entrenched industry. I see how many layers (fees, licenses, time for approvals) of bureaucracy have been created by lobbyists in favor of the oligopoly which controls my industry. On the micro level, sure most people don't know the Tesla story. On the macro level, people are sick of government entitlement and lobbying. If the Tesla story most simply articulates the fact that companies are lobbying government to stand in the way of progress in the name of their cash cow, I think it definitely has the power to help shape the election.

mathattack 13y ago

My inclination is that it shows whose pockets the politicians are in. If you think they're a "loser" then you are pandering to Detroit and their unions, or the auto dealers. If you aren't in their pockets, it's easy to see why the direct model is preferable. It's hard to be called a small government conservative if you want to legally mandate middlemen.