Elon Musk: To the People of New Jersey

http://www.teslamotors.com/blog/people-new-jersey

by zipop • 12 years ago

1265 400 12 years ago

zipop• 12 years ago

I'm not opposed to what Musk is trying to do but how or why are auto dealers a monopoly? Those direct sales laws were originally created to preserve small business.

silverlight• 12 years ago

I thought he did a good job explaining why those laws were put in place and why they're not needed to be applied here. Even if you don't agree it's a monopoly, clearly in this case the law is not being applied as it should be.

notahacker• 12 years ago

I was impressed by the fact that he bothered to offer an explanation of why the law was introduced and what purpose it served; it makes for a more compelling argument than some cookie-cutter rant about Big Evil Corporations wrapping their rent-seeking tentacles around the government.

npizzolato5• 12 years ago

Don't forget that Musk is completely biased here, and his representation of the history of those laws are likely to be tainted by that bias. I don't know the full history of why these laws were put into place, but I wouldn't trust Musk to tell me the full story when he's clearly trying to paint a very specific picture.

Sniperfish• 12 years ago

Oligopoly more than monopoly. But if there is a single dealer lobby group then it's a collusive oligopoly (cartel) which will be able to wield monopolistic power.

digikata3• 12 years ago

This Planet Money episode[1] gives a interesting of the history of autodealers, with some additional info regarding the latest twists that had come up due the fiscal crisis too.

[1] http://www.npr.org/blogs/money/2013/02/12/171814201/episode-...

kyrra2• 12 years ago

That's a fairly one-sided view on the situation. Just some random points:

* Saturn tried the "no-haggle" new car buying experience. People generally liked this, though Saturn doesn't exist anymore.

* "closing a dealer is hard". Dealers have to pay for the land they own. The cars on their lot tend to be bought with money from the bank (a bank really owns the cars). The dealers just have to pay insurance/interest on the cars. The longer a car is on the lot, the more insurance and interest the dealer has to pay. If a dealer isn't selling cars to pay the bills, they will shutdown.

* Dealership "look". My knowledge is only from Texas.... Some brands, like Lexus and Cadillac set some very strict looks for the dealership. Specific signage, layout, etc... A manufacturer can set standards the dealer must live up to. Also, if a dealership ranks below a certain score on their customer surveys, the manufacturer can close them down.

* Pricing... yes, a middle man increases the cost of something. But that middle man can help explain features, is there to help deal with problems, and as they tend to be more locally rooted than an auto-maker, will try (hopefully) try harder to please their customers. Why do we have to pay real-estate agents so much? Good agents really help a buyer, same could (hopefully) be said for a car sales person.

* (edit addition) Why are sales people jerks? This will heavily depend on the dealership you are dealing with. Management of a dealership does a lot to shape the experience for their customers. A few things: sales people are paid a % of the money they hold over the cost of the car, so they are financially incentivized to keep the car price high. A car that has been on a lot for a long time has incentives added to it for a sales person. Sales people get bonuses based on number of cars sold. Sales people sometimes get bonuses based on their customer surveys (or are required to keep a certain average or be fired). Dealers are allocated new shipments of cars based on past sales, so a lot of dealers want to sell as many cars as possible (if they are trying to grow); dealers that don't care about growing will be less flexible about pricing.

Though, I agree that the car buying experience should adapt as information about cars is more easily accessible, it would require all of the states redoing the state auto franchise laws.

pbreit2• 12 years ago

The monopoly is that only dealers are allowed to sell cars. Whatever the original intent, they seem not only unnecessary but quite anti-American (most definitions) now.

300bps2• 12 years ago

My first reaction upon reading your comment was that there was no way you read the article before commenting. Basically, what you say is directly and effectively addressed in the article. I was going to give you the benefit of the doubt though until I saw that the article was posted 23 minutes ago. Your comment was posted 21 minutes ago.

cylinder2• 12 years ago

Most dealerships would not count as "small" businesses. They are at the very least "medium enterprise" and at the most Fortune 500 companies[1].

http://en.wikipedia.org/wiki/Group_1_Automotive

runako• 12 years ago

Excellent link!

Some quick stats on the size of this particular "small" auto dealer company:

Trailing 12-month revenue: $8.9B Trailing 12-month gross profit: $1.29B CEO Pay: $2.5mm (for comparison, this is higher than the cash comp of the CEOs of GM and Microsoft)

I'm not sure this business needs regulatory protection from the likes of Tesla.

Consultant32452• 12 years ago

Well, most dealerships are probably used car dealerships that almost certainly qualify as small businesses. Of course, that has little to do with our current conversation. I'm just feeling extra pedantic today.

easymovet3• 12 years ago

Very saddened by the blatant corruption in our government. Where do I vote for a new government based on ethics and accountability (apart from New Zealand).

mturmon2• 12 years ago

Government does not respond to a passive arrangement where you "vote for ethics" every so often. You have to participate more actively. This involves work.

easymovet3• 12 years ago

Lets keep the discussion positive. Understand I'm not a political science major or a fancy debater, I don't claim to poses more than average intellegence, I'm just asking a question, hoping someone with more knowledge on the matter has an answer. After working to provide for the family I don't have a lot of free time to commit to politics if that's what you mean by 'participate more actively', is that the only course of action?

jliptzin• 12 years ago

The HN community should band together and buy an island and create our own government there.

skore4• 12 years ago

No, no they should not. You really don't want to be involved with those kinda guys:

http://en.wikipedia.org/wiki/Seasteading

It's the sort of hyper-liberterianism that looks and sounds like a passable option until you consider it for more than a second. And then there are the proponents for this kind of insanity...

DavidAdams3• 12 years ago

What should actually happen is that the US-based tech crowd should put together a political action committee and start lobbying. That would have a better chance of real-world impact.

saraid2164• 12 years ago

Voting is an administrative task, not an advocacy action. If you want to change how things work, start advocating. Voting is the end of a campaign, not the beginning.

caycep• 12 years ago

Throwing it down publicly to Chris Christie - now that is confidence!

smacktoward3• 12 years ago

Given how low Chris Christie's political stock is at the moment, I'm not sure much confidence is required.

300bps2• 12 years ago

Chris Christie all but had the Republican presidential nomination sewn up before the bridge closure scandal.

Between that and this nonsense, his reputation as a "non-politician" has been tremendously tarnished.

protomyth7• 12 years ago

Chris Christie wouldn't have made it through the primaries. His polling numbers among the people who vote in primaries were not that good.

stcredzero28• 12 years ago

Given that everyone in the US, starting at least a level below State Governor, is basically required to play political hardball just to survive, why does anyone in the US believe anyone's "non-politician" or "non-insider" political marketing?

Even Martin Luther King and Mahatma Gandhi knew how these things worked.

The best one can hope for are high functioning sociopaths who are somehow invested in the betterment of society -- basically Sherlock with better packaging. That's not to say there aren't real heroes and statesmen out there. Just good luck with distinguishing them from the hordes of sociopaths.

jordan0day• 12 years ago

The "bridge closure to sell you" zinger made me smile.

mrt0mat0• 12 years ago

It blows my mind that in a country that preaches a free-market economy, the government is preventing a company from selling a superior product. I'm pretty sure people will still buy the car if they want to, and in time, those car companies will go under anyway, but why slow down progress?

ethikal• 12 years ago

Because existing businesses are afraid of change and politicians are afraid of possibly eliminating jobs. People are afraid of change because it means that they will have to adapt.

ChuckMcM• 12 years ago

"If you build a better mousetrap, the world will beat a path to your door, unless its run by mice." --me

baddox2• 12 years ago

I think it would be better to say "unless it's run by the current mousetrap manufacturers."

cylinder2• 12 years ago

Remember that the US is not pro-business, it's corporatist. It's a government that is able to be easily captured by incumbent, monied interests. Starting businesses and operating them on a small level is much easier in other developed nations.

bfe4• 12 years ago

Acting in favor of individual businesses is usually orthogonal or antithetical to acting in favor of the free market.

Big businesses and the politicians who love them often rely heavily on erasing the perception of that difference.

bjt• 12 years ago

The relevant government in this case is the state of New Jersey, not the United States of America. There is a lot of variation between state governments.

lutorm• 12 years ago

Like the Economist wrote about George W Bush: "Being pro-business is not the same thing as being pro-market".

baddox2• 12 years ago

There's a big difference between "preaching a free-market economy" and "preaching a free-market economy except in cases where I think there shouldn't be a free-market economy." The latter is the norm in the United States and every other country in the world that I know of.

noja• 12 years ago

It doesn't blow your mind, it happens the whole time. Car imports are a similar example.

djKianoosh2• 12 years ago

while "superior" is subjective, i agree it's best to let the market decide naturally, instead of putting up barriers...

cheald2• 12 years ago

Things like the Consumer Reports ratings and the Motor Trend "Car of the year" award are pretty objective. You're right that it's subjective, but there's empirical evidence that a lot of people feel it's superior.

njharman• 12 years ago

preaches a free-market economy

Those who preach, rarely practice.

Only some portions of the electorate and politicians preach free-market economy.

gutnor2• 12 years ago

the government is preventing a company from selling a superior product

There is some bias there. You judge Tesla a better product, so of course all the regulation that are against its sales are going to feel unjust.

I have difficulties to really follow this whole stuff (I live in EU, the whole buying a car in the US seems a very 'exiting' experience, at least when reading about it on Reddit), there does not seem to be any sort of nice non-partisan explanation of the problem and why those regulations where put in place.

Actually Musk is the clearest answer that is not either: "Tesla great, fuck the regulation" or the opposite, "Musk dick, cannot follow the regulations like everybody else", but what's PR and what's factual ?

Edit: Just realised why it irked me this time. I was reading about EU decision of standardizing the power plug for smartphone to micro-USB. People were all happy for regulation there. When people complained that now the we would get stuck with micro-usb forever, people dismissed it saying the EU will just change the plug when a better one comes up as if the EU/US hadn't got an awful track record at keeping their regulation and spec up-to-date, like in this case for example.

atmosx4• 12 years ago

Hm, I thought that by now most people would have got that:

* Free-market is for the poor (in every sense: money, political power, etc.)

* The rich (again in every sense) know that in order for you to become obscenely rich you need a state-protected, but not state-owned monopoly.

That's how wall street works actually: We share the loses, they get the winnings... It's risk free win-win for them.

skore4• 12 years ago

An even bigger conflict of interest with auto dealers is that they make most of their profit from service, but electric cars require much less service than gasoline cars. There are no oil, spark plug or fuel filter changes, no tune-ups and no smog checks needed for an electric car. Also, all Tesla Model S vehicles are capable of over-the-air updates to upgrade the software, just like your phone or computer, so no visit to the service center is required for that either.

Gotta hand it to Musk - that's some smooth salestalk in what is supposed to be just voicing a public opinion against shady politics. I was halfway through the third sentence when I caught myself thinking - "indeed, that does sound like such a better dea--- Hey wait a minute!". Musk, you sneaky bastard! Never missing a chance to remind me why I want a dang tesla.

He is right and it's a terrific salespitch. That's the best kind of right.

smacktoward3• 12 years ago

It is a terrific salespitch, especially in how it raises the subject of OTA updates while adroitly waltzing you past the obvious worry that a poorly tested OTA update will brick your car.

peeters2• 12 years ago

How does the distribution mechanism in itself affect the quality? It's just a way of getting new software on the car. You can have the exact same standards of quality for an update installed over the air as one installed at a service centre.

georgemcbay• 12 years ago

a poorly tested OTA update will brick your car

This is possibly true (though I'd be surprised if they didn't have serious precautions in place to prevent a total firmware brick, even fairly cheap electronics are difficult to really brick these days, with multistage/multipartition bootloaders and such).

However, given the amazingly large amount of costly meatspace work they would cause themselves by sending out an OTA that bricks cars, I'm sure they are well motivated to avoid that possibility.

marssaxman3• 12 years ago

Yeah. I am completely uninterested in owning a vehicle which is 0wned by the manufacturer.

toomuchtodo4• 12 years ago

GM's latest recall (faulty ignition switch) killed 303 people and covers 1.6 millions vehicles; I think they'd love to have an OTA update method right now, even with the possibility of "bricking" the vehicle.

http://www.latimes.com/business/autos/la-fi-hy-autos-303-dea...

lifeisstillgood• 12 years ago

A poorly performed service at a dealers will brick your car too.

We trust the manufacturer to correctly service our cars, manually or OTA.

stcredzero28• 12 years ago

An even bigger conflict of interest with auto dealers is that they make most of their profit from service

I am old enough to remember what owning a car was like when things were changing away from mechanical devices one could understand and tinker with and becoming nondescript hunks of plastic you had to buy from a manufacturer. (I'm talking about the ignition system, as one specific example.) There was always a bit of a sinking feeling for me along with a sense that the world was being dumbed down and manipulated for profit. As programmers and technical people, we should be able to see many parallels!

That said, dumbing down the world in some ways is not necessarily a bad thing and can be exceedingly positive. One might miss the twisty, dusty country road in leisure time, but curse it when it's raining and the road has turned into an impassable morass. Reliable, boring, convenient transportation is great sometimes, like when you're driving someone going into labor to the hospital.

Maintenance free electric cars that drive themselves will be one of those positive simplifying things.

error54• 12 years ago

Funny enough, quite a few programmers who have become burned out with the mainstream tech industry move into automotive related industries as cars are becoming more and more computer driven.

wyager• 12 years ago

I hope that emerging manufacturing technologies will allow what has happened to software over the last 25 years to happen to hardware over the next 25 years.

It is possible to run a completely open software stack, and very easy to run an almost-completely open software stack.

My hope is that open-source hardware (both electronic and mechanical) will be abundant enough in the future that I could feasibly fabricate a new ECU from scratch, or 3D print a new evaporator for my AC.

robbles2• 12 years ago

I agree with the idea in principle, that electric cars are a net positive for reliability and minimizing service costs.

However, when you talk nostalgically about the good old days of cars being "mechanical devices one could understand and tinker with", and then turn around and talk about the new generation of electric cars being somehow equivalent, it seems a little logically inconsistent to me.

Make no mistake, a Tesla is just as much of a "hunk of plastic" when it comes to fixing or modifying it yourself. Expecting any complex piece of modern electronics to be similarly hackable to a car from the last century is a little unrealistic.

EDIT: sounds like we're basically in agreement on this. I misunderstood the previous comment.

mikestew• 12 years ago

Yeah, I remember those times, too; perhaps less nostalgically than you do. Take your ignition system example. Sure, one could dig in there and replace and adjust the points. But you did it because you had to, you had to do it regularly, and it would be adjusted correctly exactly once: after you did the job. From there, the points immediately started wearing and it would not be exactly right until you did it again. Solid-state ignition, please.

Synchronizing three Weber carbs? Oh, yeah, good times. Good times that involved poisonous mercury to boot. Port fuel injection, please.

Don't get me wrong, there was a time I liked working on cars, too. So much so, I was a professional ASE-certified mechanic for a while. I also like my Scion xB that in 70K miles we've done nothing to except insert gas, change the oil, and put a set of tires on it. I don't miss having to slap new points and plugs in it before a weekend trip.

And for the Tesla tie-in, our Leaf is about as much of an appliance as you're going to get in a car. There's something to be said about a car whose maintenance schedule doesn't fill a page.

Reliable, boring, convenient transportation is great sometimes, like when you're driving someone going into labor to the hospital.

Or great even for something as simple as getting to work in the morning. I've owned my share of Triumphs and Fiats. I enjoy my dumbed down existence that doesn't involve a late-night session under the hood because I have to be at work the next day.

I mean, I see your point. But if most folks are like the cranky, older version of me now, if they wanted finicky transportation that needs constant maintenance they'd buy a horse.

noonespecial• 12 years ago

It kind of feels like the opposite is happening today with the "maker" movement. With those "blobs of plastic" falling left and right to arduinos and 3d printers, it seems like the makers are on a tear to bring the "good old days" back again.

curun1r• 12 years ago

As long as the carmaker is open about things, the increasing complexity doesn't have to be bad news for tinkerers. It's not officially released yet, but https://github.com/timdorr/model-s-api shows the promise of Tesla's commitment to openness. It won't allow the "how does my car work?" type of tinkering, but it allows the "how can I use my car in interesting ways?" tinkering.

It's much the same as computers. The original Apples were understandable devices. The lack of miniaturization meant that hackers could figure out how everything was working and play with it. That activity would be ridiculous with modern-day CPUs/components as the complexity has increased by orders of magnitude and the miniaturization has reached levels where specialized equipment is needed to look at what's going on that costs well beyond what can fit in a hobbyist's budget. Yet modern-day computers are still programmable and people are still learning and hacking. The only difference is that this learning is happening a few abstraction levels removed from the actual hardware. The same will be true with cars, provided manufacturers are as cooperative as Tesla seems to be.

joering2• 12 years ago

An even bigger conflict of interest with auto dealers is that they make most of their profit from service

Musk is too smart to know hes comparing oranges to apples.

He is only partially right. I say to Mr. Musk - I will agree with your complain when you sell me your car for $18,000 - an average price for an average car in the US. Why it doesnt cost $120,000, like your models, you ask? Well, exactly because of what you mentioned: they use cheaper parts with less engineering that are bound to break faster and then they will make up some profit on the parts. That's why Mr. Musk, they profit from service on car that is TEN times less expensive than your car.

If you asking me I prefer to pay cheaper upfront and be able to treat it like a pair of shoes that I will be able to exchange for a newer model in 2-3 years, when this gets me bored or wears out.

Other than that -- always love to hear brilliant people sticking it out to the lobbyists and corrupted over-bureaucratized politicians! At this stage of things within US, Musk is sticking it to so many groups (building rackets "10-times cheaper than otherwise tax payers would've paid") and pissing off so many powerful people, that I wouldn't be surprised to see him dead sooner or later (although of course I wish him all the best!)

ssmoot2• 12 years ago

Tesla's site is a bit frustrating. I get most of those same benefits driving a Nissan Leaf. So I'm not really interested in a "true cost" comparison to a gas vehicle I wouldn't be buying anyways.

Turns out the Model S at $1,466 as optioned is more expensive than a Leaf. :) Not that I wouldn't kill for a 300 mile range...

assholesRppl2• 12 years ago

do you realize how much money you could make from networking opportunities that arise from driving around a Tesla? invest in your future

jack-r-abbit3• 12 years ago

I'm sure the Leaf is a fine vehicle. But I see them directed at two different audiences. That logic would also question why get a Porsche 911 when you can get a VW Beetle for a fraction of the price? They are both German engineered gas vehicles, after all.

mfrommil• 12 years ago

Don't even have to call it a "salespitch". A good product will sell itself. And it's quite clear a Tesla is a good product.

skore4• 12 years ago

Point taken, but then again - it really is a salespitch in what is supposed to be a statement on a political issue.

azernik• 12 years ago

The man is nothing if not a smooth salesperson.

elwell• 12 years ago

He's done a very good job of spinning around the publicity for an improved public opinion of Tesla. Impressive.

rayiner• 12 years ago

The rationale given for the regulation change that requires auto companies to sell through dealers is that it ensures “consumer protection”. If you believe this, Gov. Christie has a bridge closure he wants to sell you!

One of the things I love about Elon Musk, besides the fact that he has the balls to tackle hard, capital-intensive problems, is that he has a pragmatic, realist approach. Getting SpaceX NASA contracts was not something everyone would have done, not when many were marching to the drumbeat of "private space exploration is superior to public." And apparently, he's not being above throwing a recent scandal in Chris Christie's face.

The whole article is a great play though. Note that he starts by explaining the rationale for the existing laws, validating their original purpose, then showing why that rationale doesn't apply to Tesla. This is wonderful persuasive writing.

pbreit2• 12 years ago

In case you missed this last year, Tesla's vision for servicing and customer delight is refreshingly progressive: http://www.teslamotors.com/blog/creating-world%E2%80%99s-bes...

nlh2• 12 years ago

His best line:

The rationale given for the regulation change that requires auto companies to sell through dealers is that it ensures 'consumer protection'. If you believe this, Gov. Christie has a bridge closure he wants to sell you! Unless they are referring to the mafia version of 'protection', this is obviously untrue.

Nicely done, Elon. Nicely done.

xal• 12 years ago

Could you explain the reference please?

cheald2• 12 years ago

http://www.cnn.com/2014/01/09/politics/chris-christie-bridge...

dbarlett• 12 years ago

"Bridgegate" https://en.wikipedia.org/wiki/Fort_Lee_lane_closure_scandal

kevrone• 12 years ago

http://lmgtfy.com/?q=christie+bridge+closure

dangoldin2• 12 years ago

There was a scandal in NJ where Chris Christie's underlings were caught closing a bridge when they didn't get political support from a mayor.

http://www.motherjones.com/politics/2014/01/chris-christie-b...

Karunamon• 12 years ago

Gov. Christie is currently being investigated for closing lanes down on a highway bridge during rush hour as a form of retribution.

http://en.wikipedia.org/wiki/Fort_Lee_lane_closure_scandal

acomjean• 12 years ago

I used to work in NJ.

Chris Christie's administration closed 3 lanes of the George Washington Bridge for a bogus "traffic study", making tons of Traffic. It was political payback against the city of Fort Lee who has a mayor who wouldn't endorse Christie when he was running for governor. Christie says he didn't know about it but some in his administration have left or been asked to leave over it.

mullingitover• 12 years ago

Gov. Christie's office ordered the most heavily trafficked bridge in the country (if not the world) closed for political revenge. He is desperately trying to throw his staff under the bus to avoid accountability for this. It's a very delicate subject for him right now, and Musk bringing it up is cruel and yet at the same time (imho) totally fair play.

nlh2• 12 years ago

What everyone else said re: Bridgegate (thanks!) + the original line, which is a reference to the conman George C. Parker, who would sell things like the Brooklyn Bridge to unsuspecting tourists, which, according to Wikipedia, gave rise to the line "If you believe that, I've got a bridge I can sell you."

http://en.wikipedia.org/wiki/George_C._Parker

HillRat• 12 years ago

This really is one of the nicest pieces of PR -- corporate, political or nonprofit -- I've seen in a while; I appreciate how he starts off with a soft pitch ("the auto dealer franchise laws were originally put in place for a just cause") and only shoves the knife in once he's got the reader in agreement. Beautiful writing.

protomyth7• 12 years ago

Although personally satisfying for the writer, that is a pretty good example of something never to write in a letter that you want to positively influence a situation. Referring to a scandal by a politician when lobbying isn't really going to work, and all letters addresses "to the people" are lobbying.

ericd3• 12 years ago

I think it does a good job of reminding everyone that there's a trend of corruption in his opponent's administration, which is a pretty useful political trick.

Zancarius• 12 years ago

I gather from the suggestion at the end that the only option available to Tesla is through the court system, so it probably doesn't matter what he writes about the governor. If the only remedy is legal, you've lost political lobbying as an option. Save for votes, but the midterms are still 8 months away. Voters are forgetful.

stcredzero28• 12 years ago

that is a pretty good example of something never to write in a letter that you want to positively influence a situation.

Right. It does close the door to Christie deciding to do a turnaround and adopt the issue as a crusader for the people. Actually, considering that Gov. Christie is a politically powerful man with an apparent history of underhanded retaliation, I think it's really the last thing you want to do.

gtaylor3• 12 years ago

As a consumer who may consider a Tesla in the future, I like and appreciate this dig. Christie did something underhanded again, let's bring it up to strengthen Tesla's claim that something fishy happened.

mcv3• 12 years ago

You've got a good point. If he wants to appease Christie, this is not the way to do it. But if he wants payback, well, keep twisting that knife.

jdlshore• 12 years ago

Is this just your opinion, or do you have something to back that up? Because I thought it was a pretty effective piece of writing.

MartinCron5• 12 years ago

I literally gasped when I read that line. I can't speak to it's political effectiveness, but it's good writing.

mcv3• 12 years ago

He starts off pretty neutral, addressing an issue of course, but not in a mean way. And all of a sudden you notice this subtle knife twisting in your ribs.

chris_mahan• 12 years ago

That's some good writing by Elon, by the way.

Perhaps it went through an editor or two, for typos and such, but I have to say I find his style engaging...

(Disclaimer: If I had the money I'd buy a tesla, and I am an investor.)

untog• 12 years ago

Perhaps it went through an editor or two

I 110% percent guarantee it did. No CEO of a decent sized company would not.

minimax• 12 years ago

Your comment reminded me of the Whole Foods guy -- a counterexample.

http://www.nytimes.com/2007/07/12/business/12foods.html?_r=0

jusben13695• 12 years ago

Musk is massively disingenuous and rather insulting to our intelligence. But he's a heck of a salesman and makes a wonderful car. Like many persuasive people he arrives at an answer and backs into rationale but makes it appear the other way around.

I'll give you just one example. The law of the land in NJ is that you can't sell in NJ unless through a dealership. That's the current law. Those laws need to change to allow a direct to consumer sale. Map that to this quote "ended your right to purchase vehicles at a manufacturer store within the state." Brilliant. "You lost something you had" is so much more powerful than "We need to persuade the legislator to make a change to add something new"

Seriously, I dig his cars. And his vision. And I suspect that to attack such large entrenched markets you have to have this kind of maniacal drive. I just hate being misled and manipulated - no matter who the person.

seizethecheese• 12 years ago

This comment exemplifies why I come to Hacker News. The ability to be for a cause, yet still call out any bullshit is unfortunately quite rare.

grifpete• 12 years ago

It seems it was the calling out that was bullshit. :)

revelation2• 12 years ago

I think you missed the part where they instituted new rules effective starting in April, which is when the existing Tesla stores will be reduced to galleries.

In your vigor, you seem to have misled only yourself.

jusben13695• 12 years ago

See above or below.

greglindahl• 12 years ago

Tesla stores are already galleries (with a small repair facility). Purchases are made over the Internet.

thedufer2• 12 years ago

They're currently selling Teslas in NJ (without a middleman) and not having any legal problems because of it, so your example's premise seems to be flawed.

jusben13695• 12 years ago

You have to dig deeper on the story than his post. They've been told for a long time that the license shouldn't have been issued and would be revoked and that a change in legislation was needed. Again, Musk knows all this. But it doesn't fit the dialogue.

darkarmani2• 12 years ago

The law of the land in NJ is that you can't sell in NJ unless through a dealership. That's the current law.

Are you suggesting that Tesla is actively breaking the law in NJ right now? The rule change doesn't take place until April 1st, which is why they have to close their store by then. If they aren't operating illegally right now, then the commission has ended our ability to purchase these cars.

Secondly, if you can only sell through a dealership, why can't Tesla just own some dealerships?

twoodfin• 12 years ago

Are you suggesting that Tesla is actively breaking the law in NJ right now?

That's how a lot of government rule-making works. The law says something general and the specifics are left to departments and commissions. In this case, it's not clear that this particular rule is outside the plain meaning of the law; they just hadn't gotten to writing it before because Tesla presents a novel circumstance. Of course, it's difficult to hold somebody accountable for breaking a rule that hadn't been written yet, so "actively breaking the law" is probably overstating it.

Secondly, if you can only sell through a dealership, why can't Tesla just own some dealerships?

I am not an expert, but I imagine the law was written in such a way that "franchise" is defined as an entity independent of any manufacturer.

jusben13695• 12 years ago

Here's another view worth reading: http://mashable.com/2014/03/12/new-jersey-tesla-dealers/

jessriedel• 12 years ago

I really appreciate you being one of the lone voices here who doesn't just want to heap praise on Musk, and I definitely appreciate a link to a story that isn't one sided. But I have to say that it's not so simple as "Tesla was violating a law that is now going to be enforced", and that therefore the state isn't changing anything and therefore Musk is disingenuous.

Unfortunately, these sorts of laws are often vague and confusing, and boil down a lot to the state's (sometime capricious) choices about what to enforce and how. The governor's ability to direct the state's executive branch is widely and correctly seen as a huge power.

So the law is vague and requires the New Jersey Motor Vehicle Commission to fill in the detail. In fact, the NJMVC itself granted a permit to Tesla to sell cars in the state (as stated in your article). But now the NJMVC has reviewed that decision at a higher level and has decided it made a mistake

http://mashable.com/2014/03/11/tesla-new-jersey/

If permits are being revoked, that sounds like a change to me.

You can say that a proper interpretation of the law would have always led to that outcome, and that Tesla doesn't have a right to complain that the law is finally being enforced correctly. But that presupposes that laws have unambiguous pre-existing interpretations.

Although the text of the state code isn't changing, it seems clear to me that "the law"--as in the actual regulatory environment experienced by Tesla--is changing in a negative, albeit somewhat predictable manner. Was Musk glib in describing this in his letter? Sure. But I don't think it rises to the point of being disingenuous.

larrys4• 12 years ago

"Musk is massively disingenuous and rather insulting to our intelligence. But he's a heck of a salesman "

Agree. And makes you wonder a bit about the marketing materials surrounding these cars, huh?

He's trying to make as if he's acting in the best interest of the people of the state of NJ. When it is very clear that his motivation is his own interests and selling his car. And making more money for himself. Most businesses don't make it that obvious.

Another word I will use is immature. His argument sounds like a spoiled kid who doesn't get what he wants and is going to call out the teacher at school hoping to berate them into just caving in. [1] Real life doesn't work that way. Not to mention the fact that there simply aren't enough people in NJ [2] that care about buying a Tesla to protest and make change on this.

[1] "Hey great argument no I don't mind if you insulted me because you are right!".

[2] Guess what? In Pennsylvania there are many more people that don't want to buy liquor at state stores (which they have to) and that hasn't changed yet.

skore4• 12 years ago

When it is very clear that his motivation is his own interests and selling his car. And making more money for himself. Most businesses don't make it that obvious.

You cannot possibly be saying that with a straight face.

Pretty sure Musk has the high road rather solidly booked all to himself when it comes to his credibility concerning trying to change things for the better when you compare him to any other auto corp.

Goronmon• 12 years ago

He's trying to make as if he's acting in the best interest of the people of the state of NJ. When it is very clear that his motivation is his own interests and selling his car.

I don't see how these goals are mutually exclusive. And saying that he wants to sell his car is falling into the realm of ridiculously obvious.

Most businesses don't make it that obvious.

Really? Most business make merely a token effort at pretending every action they take isn't just about the bottom line. I don't see how pandering to customers makes one business any 'better' than another.

haberman• 12 years ago

What is amazing to me about your comment is that you have harsh words for Musk without any defense whatsoever of why the law is just.

What is "immature" about calling out a stupid and corrupt law?

TheMagicHorsey3• 12 years ago

Misled? There is a bullshit law on the books he wants repealed.

I have no idea where you came up with this line of thought.

sp3322• 12 years ago

It was lost, when the auto dealer franchise laws were put into place along time ago.

manmountain2• 12 years ago

Nice try, New Jersey auto salesman.

Seriously, how can you be on the "we've got to enforce current law" side? It's so ridiculously anti free market that I'm sure all the Tea Partiers are having cognitive dissonance over this.

jusben13695• 12 years ago

Hah! I'm objecting to Musk misleading us. And he is misleading us. Look at many of these comments and you'll see why. Grab the pitchforks and head to NJ!!

sheetjs2• 12 years ago

the auto dealer franchise laws were originally put in place for a just cause and are now being twisted to an unjust purpose

... and Christie can argue that allowing Tesla creates a slippery slope whereby Ford and GM and other companies end up crushing the franchisees that the law intended to protect.

Musk is trying to find a middle ground that just doesn't exist unless you accept governments creating one-off laws that specifically recognizes individual corporations.

ska• 12 years ago

Isn't that easily avoided though? Surely you could protect existing franchises or franchise regions without constraining a manufacturers ability to sell without franchise, or in regions where no franchisee exists.

thedufer2• 12 years ago

Its not clear that that's true. The law says "auto manufacturers can't sell cars" but it originally meant "auto manufacturers can't renege on franchise agreements (or otherwise abuse them)". Surely there's some way to codify the second one without resorting to the first?

sheetjs2• 12 years ago

The auto manufacturers can afford to eat into their normal profit margins and sell the cars at a much lower price (after deals) than the franchisees can, so it would be difficult to craft legislation that protects franchisees without allowing the manufacturers to massively undercut. The only real way to avoid abuse is to prevent auto manufacturers from selling in the first place

strlen2• 12 years ago

There is no slippery slope here if the law is states something like: "contracts between existing de-facto oligarchy of car manufacturers and dealers remain as is, new entrants are free to set their own terms".

Everyone is talking about how we can't trust Elon Musk since he is acting in his rational self-interest. Yet why should we assume that Christie is acting out of the pure goodness of the heart? Politicians too act in their self-interest and that kind of self-interest often involves maximization of power. The currency of politics is not just cash (that helps too, of course!), but also favours: you can be sure that in return for this favour, he'll ask something from the dealership industry which would beneficial to his political career (e.g., the first thing that pops would be to accept additional vehicle taxes, which would help Christie carry and receive donations from environmentally conscious voters in a liberal state susceptible to flooding)

(Edit: remove an incorrect assertion. Laws regarding specific individuals are constitutional, just not "bills of attainder")

stcredzero28• 12 years ago

Everyone is talking about how we can't trust Elon Musk since he is acting in his rational self-interest.

Except that Elon Musk's rational self-interest appears to genuinely involve a vision of the world I really like. Given all the money and effort he's put in toward that vision and the many hours of public speaking and personally answering questions consistent with that, you'd better hope he's the real deal.

gergles• 12 years ago

One-off laws for specific legal entities (individuals or corporations) are unconstitutional, so no one is asking for a law that exempts Tesla and Tesla only.

As an aside, that's actually not true - laws that are intended to benefit one person are passed all the time. [1]

What the constitution forbids are bills of attainder, which are bills that declare a person guilty of a crime.

[1] https://en.wikipedia.org/wiki/Private_bill#United_States

Edmond6• 12 years ago

I hope people don't forget the profit motive of Mr Musk. It seems technology entrepreneurs have adopted the rhetoric of "just trying to make the world a better place" while conveniently ignoring their own profit making motives. I am no friend of car dealers but I am also not going to be suckered by a self-serving sales pitch.

While I don't necessarily support the NJ move, I think we should start asking questions about economic value flow. If people live in one place yet all their economic activity is directed to some place on the other side of the country, what is the long term effect of this on their local economy?

I don't exclude myself, we all use these web services that are highly concentrated in SV, what is going to happen to our local economies?

jrs99• 12 years ago

Well, if local businesses choose the services that save them a lot of money it'll probably make them more profitable and allow them to grow and hire more people.

toomuchtodo4• 12 years ago

I don't exclude myself, we all use these web services that are highly concentrated in SV, what is going to happen to our local economies?

They adapt, as all economies must to the changing winds.

Edmond6• 12 years ago

That is an optimistic take, the evidence so far with the move of manufacturing to low-wage countries suggests otherwise.

kenrikm• 12 years ago

Elon made enough off PayPal to never have to work.. ever again . Instead he put all of his money into Electric cars, solar power and rockets with a huge chance that he would loose it all (and almost did). I don't think that profit is his motivating factor.

TheMagicHorsey3• 12 years ago

I seriously don't understand people that get mad when someone makes a profit. Like are those people expecting to work and earn nothing? When you risk your capital, should you not get a return? And when you risk it on something crazy like electric cars, shouldn't the profits be even that much larger, to compensate you for the out of proportion risk?

saraid2164• 12 years ago

I don't think that profit is his motivating factor.

People are allowed to have multiple motivations.

ElComradio3• 12 years ago

Let's not forget the $500M loan Uncle Sam, er, The American Taxpayers, made to Musk, which in the case of Tesla failing, would have been a write off for us, but in the case of Tesla succeeding, only makes us a bit of interest, while making a billionaire more billions.

darkarmani2• 12 years ago

I think we should start asking questions about economic value flow. If people live in one place yet all their economic activity is directed to some place on the other side of the country, what is the long term effect of this on their local economy?

What do you mean? Isn't there economic value in owning a Tesla? Just because the money flows the other way doesn't mean there isn't value in owning the product.

Edmond6• 12 years ago

The problem isn't with owning the Tesla but rather that the economic transaction involved in acquiring the Tesla would leave nothing to NJ (except perhaps sales tax).

When you have a dealership, you have local folks working there thus some of the money that car buyers spend gets circulated locally, which would not be the case if all you have to do is point and click to get your car delivered.

This is a serious concern as more economic transaction is virtualized.

johngalt• 12 years ago

Making the world a better place, and making a profit shouldn't be considered divergent goals. You act as if profit motive should be treated with inherent suspicion.

manmountain2• 12 years ago

You mean like buying billions of gallons of oil from the Middle East?

bfe4• 12 years ago

Just last week, Elon argued against a different legal monopoly, for national security launch services by the Boeing-Lockheed joint venture. [1]

It's amazing how much building a new company in a supposedly free market requires arguing against politicians who claim to champion free market economics, but who actually use government to give cushy monopolies to incumbents with big lobbying budgets.

"Crony capitalism" isn't an accurate term for this; it's more like economic central planning by way of lobbyists instead of communist bureaus.

1. http://www.spacex.com/press/2014/03/05/elon-musks-statement-...

http://www.bloomberg.com/news/2014-03-05/musk-makes-washingt...

Jgrubb2• 12 years ago

Why isn't Crony Capitalism an accurate term for this? Seems like exactly the term to me.

bfe4• 12 years ago

Because it's all crony, no capitalism.

GFK_of_xmaspast• 12 years ago

"crony capitalism" is just regular capitalism.

fennecfoxen• 12 years ago

Let's just play economist and call it http://en.wikipedia.org/wiki/Rent_seeking

In public choice theory, rent-seeking is spending wealth on political lobbying to increase one's share of existing wealth without creating wealth. The effects of rent-seeking are reduced economic efficiency through poor allocation of resources, reduced wealth creation, lost government revenue, national decline, and income inequality. Current studies of rent-seeking focus on the manipulation of regulatory agencies to gain monopolistic advantages in the market while imposing disadvantages on competitors.

smacktoward3• 12 years ago

The evidence is clear: when has an American startup auto company ever succeeded by selling through auto dealers? The last successful American car company was Chrysler, which was founded almost a century ago, and even they went bankrupt a few years ago, along with General Motors. Since the founding of Chrysler, there have been dozens of failures, Tucker and DeLorean being simply the most well-known. In recent years, electric car startups, such as Fisker, Coda, and many others, attempted to use auto dealers and all failed.

This part works better as an argument for "don't start a car company" than anything else.

I mean, yes, Tucker and DeLorean and Fisker et al used dealers, and they all failed, but that doesn't mean that they failed because they used dealers. The people who worked for them all consumed oxygen, too; it doesn't follow that we'd all be driving DeLoreans today if only we lived in an artificial vacuum.

I appreciate where he's coming from, and I think he should be allowed to sell his cars directly to anyone who wants to buy one that way, but shoddy "correlation equals causation" arguments don't help his case.

oddevan• 12 years ago

You make a valid point. In Musk's defense, I can't think of any car manufacturers that have used direct sales on this scale, so while the correlation does not prove causation here, it doesn't disprove it either. He seems to simply be stating that this aspect of their business model (direct sales) is a key part of Tesla's business and one that he believes is essential to its survival.

gutnor2• 12 years ago

Just wondering though, what is preventing them to sell a franchise of Tesla and just provide the seller the appropriate incentive - like keep a fraction of the sales. I suppose they still have the right to put some restriction to the franchisee like they do in the food industry ( like you will not see a McDonald selling KFC )

dclowd9901• 12 years ago

I just wouldn't think he'd want to compare his car to a shitty DeLorean.

dangoldin2• 12 years ago

So it seems you can still buy it online. Does that mean you can go into a dealership and just buy it on your phone?

ericd3• 12 years ago

Ha! Maybe they could set up QR codes to link to the pages that discuss the pricing, or just have signs all over that tell people to go to teslamotors.com on their smartphones, and to contact their legislature if they think this is a stupid rule.

paulgb• 12 years ago

I wonder if they could get away with having iPads pre-loaded to teslamotors.com on-site.

dangrossman2• 12 years ago

AFAIK, everyone who's ever bought a Tesla car has bought it online. In the states Tesla is allowed to sell directly, the process of buying one in the store is being sat at a computer and being guided through your online order with a sales rep's help. They don't have cars on lots you can purchase and drive away. The stores are all basically showrooms whether they're allowed to sell cars there or not.

rdtsc• 12 years ago

Is it possible for Tesla to just create a shell "autodealer dealer" company in each state. I am guessing they thought of that and legal language prevents its from working.

mediaman2• 12 years ago

The dealer cannot be owned by the manufacturer.

koenigdavidmj• 12 years ago

Shell company owning both the manufacturer and the dealers?

larrys4• 12 years ago

"Moreover, it is much harder to sell a new technology car from a new company when people are so used to the old. Inevitably, they revert to selling what’s easy and it is game over for the new company."

That's total BS. Any dealer who invests money in a new show room to sell a new brand of car (think of Mini which was picked up by many legacy BMW dealers and is sold in many mini only showrooms) is going to put in the effort to sell the product. We aren't talking about putting Teslas on the same floor as Mercedes. It would be trivial for Tesla to insist that the product be sold out of a dedicated facility which would cost a dealer money to construct. The idea that that dealer would simply push another product (or the salesman) in another showroom that he operates is ridiculous. And contrary to the behavior of existing multi line large dealerships.

larrys4• 12 years ago

"An even bigger conflict of interest with auto dealers is that they make most of their profit from service, but electric cars require much less service than gasoline cars. There are no oil, spark plug or fuel filter changes, no tune-ups and no smog checks needed for an electric car."

Well then what about BMW with bumper to bumper service as only one example. That's a high end car that you don't pay for service for (iirc) 3 years. They cover everything. Wiper blades you name it. I think last I checked the same was true for Subaru and I think even Jeep Chrysler is doing this (may be wrong about that one).

And that's not a conflict of interest but rather a business model. In the case of cars which do make money from service they therefore in theory have a lower price for the vehicle.

This argument is like saying that you are a better airline because you don't charge for luggage. Presumably that extra revenue allows you to offer lower ticket prices. And surprise that is what happens. Back when airlines were regulated (and had less competition) and they charged way higher prices they didn't have to nickle and dime you to make a profit.

maxerickson• 12 years ago

You don't see any difference between not needing some types of service and building some types of service into the price?

Wiper blades are what, $30 a year if you really care about them?

ghaff5• 12 years ago

More to the point, the things he mentions are not very expensive service items--to say nothing of the fact that there's no particularly compelling reason to have them done at the dealer if you don't want to. (And talking about "tune-ups" is pretty close to an anachronism at this point.)

Tesla, on the other hand, does have all its new electric car components which are all very impressive technically but about which relatively little is yet known about service life and long-term service costs.

Really, this is about Musk wanting control over the complete experience. Nothing wrong with that (see, e.g., Apple). And I'm no particular fan of the auto dealer experience. (Though I don't buy luxury brands today which, I've been told, unsurprisingly offer a better dealer experience in general.) But you'll end up with dealers of some sort one way or the other.

larrys4• 12 years ago

I buy luxury brands and have for a long time.

The dealer experience is pretty darn good.

I took delivery on a new Porsche. The transmission had a problem. So they flew a new one in from Germany by Fedex at a cost of perhaps $8,000 (after all it's pretty heavy) in air freight I was told. Loaner cars? Last time they gave me a brand new Cayman (I own a 911) with 300 miles on it. Other times Cayene Hybrids with 3k miles.

It's not without it's bumps of course (routine service maintenance was $450 to keep up the warranty Mercedes does something similar). But if you can't afford that type of thing you don't buy this type of car (at least not a new one).

The standards are higher for several reasons. One is that people with money don't take shit generally and are very demanding. So they keep the people working there in line and don't take bs answers and complain so much.

I brought the car in to fix a problem and when I was driving down 95 the repair broke. I called them they towed the car back and got the repair mechanic back from home (he had left for the day) and fixed it while I waited. I felt bad for him he was literally fearing for losing his job.

DavidAdams3• 12 years ago

Keep in mind that when a car has a warranty or includes free service for X years, the dealership that performs that service is still paid. It's sort of like a medical insurance model, where you don't get a bill, but if your engine blows out, the manufacturer still pays the dealership for all of the labor (at a pre-negotiated rate) to do the service. Dealers love those kinds of arrangements because it trains people to get their service at the dealer, so even after the warranty is over, they keep coming back for overpriced maintenance and repairs.

When a dealer sells you a "lemon" that racks up thousands of dollars in warranty-covered repairs it's actually a bonanza for them.

The conflict of interest Musk is referring to is that dealers won't want to sell extremely maintenance free cars because their revenue on the back-end would be miniscule.

secabeen2• 12 years ago

BMW provides free service for 3 years, but few cars have major repairs during their first 3 years. The money in service is in the later years, when major repairs and maintenance occur.

EGreg• 12 years ago

Musk's sales around the country are probably going up thanks to this event, and his taking the opportunity to tout Teslas using facts :)

dangrossman2• 12 years ago

There probably aren't many people reading Tesla press releases other than (a) people that already own a Tesla car, and (b) people that don't need to be swayed, they just can't afford/justify the price of one.

flyinglizard• 12 years ago

Look beyond this local issue, and you'll see how we're in the middle of a huge power shift. It used to be that businessmen like Musk had to lobby, pressure and bribe, now they just need to appeal directly to the public, completely bypassing the political system in the process.

It hasn't started with Musk, of course. The most obvious display of such power was the website blackout that led to the SOPA repeal. That showed politicians who really holds the power. These companies barely flex their muscles either; just imagine what would happen if Google decided to get into public shaming in its homepage for entities trying to block its Fiber initiative.

The public no longer believes politicians, but they all believe Zuckerberg, Page and Musk. That makes for an interesting future.

stcredzero28• 12 years ago

The public no longer believes politicians, but they all believe Zuckerberg, Page and Musk.

I suspect they really only have a portion of the public -- including Musk.

tonyhb2• 12 years ago

The public no longer believes politicians, but they all believe Zuckerberg, Page and Musk

People are given a lot of information from a lot of sources nowadays, which means they're better at analysing it and weeding out the bullshit(typically).

Your point assumes we're blindly following what they have to say without analysing it.

I can imagine a lot of people aren't. A lot of people may be annoyed with their rights or privacy taken away (SOPA), or laws being changed when it doesn't benefit them (this). At which point, people complain.

If any tech company tried to push a law that didn't benefit the public in an obvious way, I bet most people wouldn't like it.

npizzolato5• 12 years ago

People are given a lot of information from a lot of sources nowadays, which means they're better at analysing it and weeding out the bullshit(typically).

Or people find the version of the "truth" they most agree with and just go with that. Given the huge industry of politically-charged "news" organizations, I think there's a significant amount of people that are doing this instead (sadly).

mncolinlee4• 12 years ago

Having bought a Nissan LEAF, I can say with confidence that traditional auto dealers are where electric vehicles go unsold. Numerous members of our electric auto owners group share the same exact stories.

You go to the dealer specifically asking for an electric car and the salesman tries to make you change your mind to another vehicle. Considering the bonus structure at most dealerships, there is no incentive to sell an electric vehicle.

First, the dealership may choose not to participate in selling electric models at all.

Second, there is usually only one or two people allowed to sell an electric vehicle because your salesperson was not trained. Who wants to lose a customer and a bonus to another salesman?

Third, it takes longer to sell an electric vehicle because you have to explain everything that gas car owners already take for granted. You make less money by spending more time. This also leads most salesmen to push for 10% over MSRP, harming sales.

Finally, some very corrupt dealers go so far as to deliberately discharge their vehicles and leave them that way so they won't have to try selling them. Dealers have little incentive to sell the entire lineup of manufacturer vehicles if they have to train and hire more sales staff for one model. Some dealership owners may even may be politically opposed to the idea of electric vehicles.

MartinCron5• 12 years ago

It's amazing to think that even with all of this horrible experience at Nissan dealers, the Leaf is still selling so well. Imagine how strong it would be if they had real retail support.

mncolinlee4• 12 years ago

Actually, the worst stories came from Ford and GM dealers. Among Nissan dealers, it was more likely they either chose not to participate, told you to come back later for the right salesperson, and/or charged 10% over MSRP and refused to offer the base model.

SurfScore• 12 years ago

Our stores will transition to being galleries, where you can see the car and ask questions of our staff, but we will not be able to discuss price or complete a sale in the store. However, that can still be done at our Manhattan store just over the river in Chelsea or our King of Prussia store near Philadelphia.

"Cross an imaginary line a few miles down the road that the auto dealers can't access and everything will be A-OK!"

This is everything that is wrong with politics in a sentence.

zem• 12 years ago

the entire modern geopolitical setup is based on complicated networks of imaginary lines.

atmosx4• 12 years ago

Could someone explain to a European, in simple words, how the franchise-dealer-factory thing works?

If a dealer is the company who actually sales cars and the factory is the one that produces them, why do they need a franchise in between? And how come that a dealer is comparable to a manufacturer Tesla? Why do they have conflict of interests selling non-gasoline cars?!

softbuilder• 12 years ago

It's not a franchise in between. The terminology makes it more confusing than it should be. The dealers buy franchise rights (right to sell that product) from the manufacturers, becoming "franchisees" - franchise owners. So my local Chevy dealership has a franchise from GM. Typically they also have rights to perform service and are certified for repairs on various brands.

atmosx4• 12 years ago

thanks, clearer now. :-)

ghaff5• 12 years ago

A dealer IS a franchisee. They've been given a franchise by the manufacturer to sell (and service and offer financing for) cars in exchange for meeting a variety of conditions. A similar model is followed for many types of chains, such as restaurants. So the dealer is a middleman that performs various tasks that the manufacturer would otherwise have to do themselves. US auto manufacturers originally went with this approach to avoid many of the costs associated with selling direct (and generally setting up their own manufacturer-owned dealerships).

atmosx4• 12 years ago

ty :-)

rdl• 12 years ago

It's interesting that Christie seems to have totally given up on being a viable national political candidate, after the drive slow thing with the bridges, this, and some other issues.

grellas• 12 years ago

Paternalistic meddling with free consumer choices is always fraught with peril.

Sometimes it is necessary to protect important principles in society. You can't discriminate based on race - that limits choice but who would support the contrary? You can't defraud people in selling products - ditto. You can't buy land to build a smokestack plant in a quiet residential neighborhood - ditto. Many other examples might be cited. In all such cases, the law intervenes to limit private choices. And there are few who would not applaud most such limits. Private choice is not the end all and be all of a society.

Yet, in a free society, private choice should be the overwhelming norm and it should require surmounting very large barriers before legal meddling can limit the choices people can make to serve their own best interests.

Unfortunately, in old-line industries, this idea got flipped and, for years, private choice succumbed to whatever a combination of big government, big corporations, and big unions dictated to the public. Back in the day, writers such as John Kenneth Galbraith even used to celebrate the idea of a "new industrial state" in which the old private competition would yield to ever increasing concentrations of power among government, industry, and labor, who would in turn find ways to "cooperate" with one another in ushering in a more enlightened form of carving up markets and their benefits than mere freedom and competition might provide.

Well, the bureaucratic edict in New Jersey is a relic of that old thinking, perhaps perversely and cynically applied to buy off lobbyists and influencers but rationalized nonetheless by the old paternalistic thinking that the consumer is ultimately best served by having his betters making his buying choices for him rather than being allowed to make them for himself.

Other than in this cynical sense, there is no possible way in which this outrage can possibly be characterized as "protecting" the consumer.

Perhaps the main contribution made by the tech revolution since the 1970s is that it ushered in an era of huge freedom in how people managed their private lives. The internet in particular has been a huge liberating force and so young people especially have come to take it for granted that they can freely make all sorts of choices without having to feel burdened or restricted by the heavy hand of the law. Of course, exceptions can and do remain because abuses can pop up in all sorts of ways without any legal restraints. But, that said, the overwhelming presumption today is that, yes, I can do pretty much what I feel is best for me unless there is a very good reason why I should be restricted from doing so.

And that means, if I live in New Jersey, I should be able to find a local Tesla outlet in which I can buy my electric car if I want. The thought that some politician or bureaucrat should be able to dictate serious limits on that choice is repugnant to anyone who thinks that way. And, in my view, rightly so.

Unfortunately, where the old political pull persists, the law can be abused to protect old-line market players under some guise or other that is a mere pretext for guarding them from competitors who might offer something better and wind up dislodging them in a free market. Legal regulation is not to be rejected out of hand, of course. Maybe the old-line taxi services ought not to have their business cherry-picked by new market entrants who do things differently. Maybe there ought to be some limits in an urban context on absolute free space-letting if this creates nuisances or the like. The line can sometimes be tricky to draw and can require careful and fair-minded judgments given the interests at stake. But how often do we have situations where nothing of the kind happens and instead the issues are decided, in essence, by who pays off whom and who has what degree of political or bureaucratic pull that can be used to protect systems and structures that are far inferior to what the new competition might offer.

I believe that, in these sorts of cases, the tech impetus will ultimately prevail and push things toward broader and freer areas of choice for consumers. Even with this rear-guard action in New Jersey, Teslas can be bought direct from the manufacturer just a short distance away or via remote ordering. And tech-inspired sales and distribution methods in this and a broad swath of other fields will mean that those seeking to limit consumer choice by protecting local turf through bureaucratic pull will be fighting what will ultimately prove to be a losing battle. As consumers, we are not bottled up anymore. If we don't like something that is really stupid, we can more and more work around it using other solutions.

And so we can, I think, basically see that what the local commission is trying to do in New Jersey is much more a last gasp for the old ways as opposed to being a harbinger that will limit Tesla (or any similar new-wave competitor) from accomplishing its goals. Tesla is right to oppose and fight it (and presents a compelling argument for its view). But the action stands out as so bizarre precisely because it is so out of step with the tech impetus that rules our day. It will stand legally (courts are loathe to intervene in such matters). But the longer-term political winds are against it, in my view, and it will prove a temporary obstacle at most as the modern tech impetus advances.

maratd• 12 years ago

While I agree with the spirit of your post and that of Mr. Musk, there's something missing here.

Contrary to Mr. Musk's assertion of conspiracy, what seems to have happened here is that there were some unfortunate laws on the books that weren't being enforced. Various business interests (ie the car dealers) complained to the Motor Vehicle Commission. The MVC created a new regulation to reflect the laws already on the books.

Unfortunate? Yes. Should that law get repealed? Absolutely. Should the Governor get involved and push to get the law fixed? Yes.

Conspiracy? No. Suggestions of mafia-like behavior? Childish and insulting, but definitely gets headlines and attention.

doorhammer3• 12 years ago

I'm not particularly well versed in the specifics of the Tesla situation, and I'm not a lawyer, by any means; I'm saying this as a general consideration. I would tend toward thinking that the selective enforcement or reinforcement of antiquated laws could be seen as just as negative, if the outcome is the same.

unethical_ban• 12 years ago

Christie didn't say "I wish this is repealed, but it's my duty"; he said it's for the good of the consumer. It is industry protection.

ghshephard3• 12 years ago

There are all sorts of laws on the books that we've agreed are idiotic and are no longer enforced. It's up to the executive to determine which those ones are, and, as time progresses, some laws become so outdated that no rational minded person would ever think of enforcing them.

What if the law had suggested that Office and Automotive equipment could not be sold directly (perhaps harkening back to a time when the Large Automotive and Office Equipment resellers had built up their distributorship); are you seriously suggesting that means Apple Stores should have been shut down in New Jersey?

mathattack• 12 years ago

New Jersey has a lot of these strange laws. They also force you to have full service at the gas station. The lobbies force the issue.

vampirechicken• 12 years ago

The last time I was in NJ, the full-service gas there was the same price as the self-serve in suburban NY. Maybe that's changed, but given the hug number of commuters in NJ, I conclude it likely that holy hell would have been raised of full-serve was significantly more expensive.

marincounty• 12 years ago

I once had a sweet, innocent, virgin girlfriend who was raised in New Jersey. She arrived in Califirnia, and We started to go out. As I got to know her--I saw the New Jersey upbringing peak out. I started slowly. Her major in college changed to business. She believed it was O.k. to cheat in order to pass a test. She believed it was just fine to step on people to get ahead. She would make a sandwich, after sex, and always give me the smaller half. Oh yea, she really didn't care about the homeless, animals, or anyone other than herself and mom. At first--I just thought she was young and naive, but after awhile I think New Jersey rubbed off? I always thought what I would say to her if I ran into her. I think it would be, "Let's go to France and live out The last Tango in Paris, without the fingernail scene, and the gunshot." Yea--She had a body that was well spectacular.

to3m2• 12 years ago

I believe you can fill your own car if it takes diesel fuel.

(This is probably not that interesting to most people, not even those who live in New Jersey, but it might be some evidence for - or, perhaps, against... - the idea that this is a strange law.)

timthorn• 12 years ago

Yeah, last time I filled up in NJ one of the attendants was smoking at the pumps. Never been so nervous!

declan3• 12 years ago

Paternalistic meddling with free consumer choices is always fraught with peril.

Actually I'd say that governments typically get away with paternalistic medding with free consumer choices.

Elon Musk has the right of this argument, and it's heartening to see a CEO take aim at the politicians that are doing that paternalistic meddling.

But I don't see Tesla's CEO fighting back against paternalistic governmental meddling that artificially raises the price of gas cars while producing artificial revenue for Tesla:

http://blog.heritage.org/2013/03/04/cant-afford-a-new-car-wa... By the government’s own account, the stringent new CAFE standards will increase the average cost of a new car by $3,000 in 2025. The Energy Information Administration warned that new cars priced under $15,000 may no longer be available by 2025.

http://www.marketplace.org/topics/sustainability/teslas-secr... If a company comes up short, it has to pay a penalty of up to $5,000 per credit. Or it can buy credits from a company like Tesla, which happens to earn a lot of credits on every car it makes. Tesla has sold enough credits to post its first profit.

gaadd33• 12 years ago

Aren't the CAFE standards to offset the emissions and damage caused by them since you can't directly bill that to an individual user of a specific car? It seems like it would be better to just add a carbon tax to gasoline but I assume that is significantly more unpalatable than the CAFE standards. Tesla's portion of a tax with similar intent is baked into the cost of electricity so consumers pay for it gradually rather than in a lump sum when purchasing the car.

revelation2• 12 years ago

Conventional gas cars produce massive negative externalities that, if not accounted for (by charging any of the parties indirectly or directly involved in producing them), lead to market inefficiencies. The very nature of externalities makes it that they are very difficult to accurately measure, but rest assured, whatever extra cost new CAFE standards bring is not merely a drop in the bucket for the damage already produced and unremedied.

So here the government is ensuring a more efficient and free market, not doing any "paternalistic meddling".

andkore• 12 years ago

But I don't see Tesla's CEO fighting back against paternalistic governmental meddling that artificially raises the price of gas cars while producing artificial revenue for Tesla

Tesla is benefiting from government intervention much more directly. I'm surprised that nobody else has mentioned this yet.

http://www.usnews.com/opinion/blogs/economic-intelligence/20...

Elon Musk is a hypocrite and no friend of free market capitalism.

fexl• 12 years ago

"You can't discriminate based on race - that limits choice but who would support the contrary?"

If someone refuses to serve or otherwise interact with me on account of my race, I would not use the threat of deadly force to change his behavior, nor would I advocate that anyone else do that on my behalf.

That is not to say that I approve of racial discrimination, or that I would do absolutely nothing about it. I am only stating what I would not do about it.

mncolinlee4• 12 years ago

I don't think anyone could a write a less accurate depiction of John Kenneth Galbraith's writings if one were trying. He did not argue against competition. He argued that modern industries tended to anticompetitive behaviors and that they could not be trusted to preserve free, competitive markets. He was right. Proof is in the behavior of the auto dealers.

I understand Galbraith is a Libertarian boogeyman and Adam Smith is viewed as the opposite, but they share a heck of a lot in common. It's sad to see such easily refuted ignorance elevated to the top of HN comments threads.

a1a• 12 years ago

all Tesla Model S vehicles are capable of over-the-air updates to upgrade the software, just like your phone or computer

It's an interesting future. We are approaching the age of malware infected cars. Does anyone have more info about what the limitations of this internet connected system is? What is possible if someone roots my car?

- Can they disable security system?

- Unlock the car? Lock me out of the car?

- Feed false data (slow destruction of car)? Feed false speed-data? False directions?

- Obtain the cars whereabouts?

- Disable breaks (would assume not)?

zmjjmz• 12 years ago

Hopefully those updates are signed, in which case as long as there aren't user install-able applications it should be fine.

Systemic33• 12 years ago

So much for the american "free market"...

What a joke.

As a european, i can't even comprehend how ludicruous it sounds that a business can't sell it's goods directly. It's so outrageously wrong, that I can't find words that fit adequately.

mcv3• 12 years ago

I agree, it sounds ludicrous. But there are plenty of ludicrous instances in the EU where free trade gets banned by some stupid law legalizing a monopoly. As much as I'd like it to be, the EU is hardly perfect in this.

stcredzero28• 12 years ago

What makes it ludicrous is how much noise US politicians on the right make about "free market" and how they vilify "socialism" then turn around and pass legislation that implements massive market-distortions. It's basically massive demagoguery and corruption.

bane7• 12 years ago

The truth is, car dealerships, which are mostly locally owned, are a way for a state to boost revenue capture and generate jobs. In New Jersey, not being able to pump your own gas is the same deal.

Look at the economics of a Tesla dealership, for every car sold in New Jersey, how much of that money stays in New Jersey? And let's be honest, being a car salesman is not the most lucrative or respectable of trades. The jobs are usually temporary so down on their luck folks can try and earn some money while looking for something else. Ensuring a state has dealerships possibly out of work people can fall into for temporary jobs is like having a social welfare program without having it on the books.

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 it and have it circulate around in the local economy for a bit.

It's unpopular, and us tech folks don't like it, but from a NJ legislator's position it's pretty rational.

The correct answer of course is to foster a local auto industry and get a company to make and build and sell cars from out of NJ elsewhere. But that's too impossibly forward looking.

Edmond6• 12 years ago

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 it and have it circulate around in the local economy for a bit.

I was making a similar point earlier. In fact I wouldn't be surprised if over time we start seeing more laws passed to encourage more of the money citizens of states spend to stay in-state. I think this is going to become a serious concern over time, how are local economies going to thrive if we keep buying stuff online and all the major online companies are somewhere in SV?

bane7• 12 years 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+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_...

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".

jonknee3• 12 years ago

So now none of the money or jobs stay in NJ... I don't see the logic. If they wanted the tax money they would want Tesla to sell a lot of cars in NJ.

bane7• 12 years ago

That's not the right way to think about it. Taxes are only a small portion of the economic activity a bunch of car dealerships in a state generate. A dealer gets to keep some of that profit margin that Tesla gets 100% of right now. They then pay the dealership owner (1 job), the receptionist (2 jobs), the finance guy (3 jobs) and pay the commission to the sales guy (4 jobs) and then you bring back the car to the repair center manager (5 jobs) the mechanic (6 jobs) the car wash guy (7 jobs). There's also the sales tax on the car + the income tax for those 4 people + the consumption taxes on those people as they go about their daily lives. All those people then go out in the local economy and eat pizza and do whatever other local economic activity people do with their money. Which also generates more jobs.

In the Tesla model, you eliminate all those for a "test drive experience genius" or whatever they call it, 3 or 4 to a "test drive experience center", NJ gets the sales tax on the car, and whatever they can squeeze out of the 3 or 4 guys who work at the Tesla dealership and the 2 mechanics who work in back.

If Tesla, an extremely minor player in the industry right now, gets to do this, why doesn't everybody else? Overnight all those endless seas of car dealerships, representing millions upon millions of dollars NJ wants to capture into it's state economy go bankrupt and now nearly all of the money is going to CA, Japan and Detroit with a handful of in-state jobs to man the direct-to-consumer "test drive centers". And now for the out-of-work accountant or phone engineer? He used to have a chance to at least work a commission only car salesman job for a few months till he found better work. Now he has nothing to go to in the interim and overall state unemployment ticks up a half percentage point.

As an engineer I see lots of built-in inefficiency in all this. So I understand the HN outrage. But NJ doesn't want efficiency, they want people in jobs and off welfare. Each person in a job is a chance for the State to capture a few hundred dollars off of each car sold -- not as taxes, but as GDP (which will eventually float the government's coffers as taxes anyways), rather than paying out for social welfare programs. It's in the interest of good governance to have an inefficient system, so that there's lots of places citizens in the state can reach into the car-to-consumer pipeline and extract some money from it. And they can do all this without having to put in place unpopular social welfare programs or increase taxes or some other public works program because they can regulate the private market to force it to be more inefficient than it should be.

From a macro perspective, NJ's behavior here is completely rational. I don't agree with it personally, I think there's better ways to do this. But it's easy to explain without resorting to name calling or disparaging thinking about the competency of NJ's governing officials.

hrjet• 12 years ago

The truth is, car dealerships, which are mostly locally owned, are a way for a state to boost revenue capture and generate jobs. In New Jersey, not being able to pump your own gas is the same deal.

That can be said to be true about everything. Why allow online software sales, or Amazon purchases? Force them to have local BNM shops.

Crito4• 12 years ago

Or hell, computers. Why is Apple allowed to have Apple stores in New Jersey, but Tesla is not allowed to have Tesla stores?

bane7• 12 years ago

Don't think this isn't something every state legislator in every state is thinking about. But it's a hard sell to reverse the course of the river and keep your seat. With dealerships, they're already the established model and keeping the status quo is much less work.

In your example, states are actively trying to collect at least sales tax. New Jersey is no exception

http://www.northjersey.com/news/sales-tax-decision-could-be-...

eruditely• 12 years ago

Your apologism is incredible.

"Merely corroborative detail, intended to give artistic verisimilitude to an otherwise bald and unconvincing narrative.."

bane7• 12 years ago

You need to read my entire comment before posting non-contributing responses.

puppetmaster3• 12 years ago

Musk, you need to make donation to the right politicians. N00b.

ValG• 12 years ago

This just got reposted on the NPR site, it's highly relevant and timely along with this law and Elon's response:

http://pcasts.in/9Ruq?

In it, some argue that "A no haggle, painless car buying experience will eventually come; but it won't be without your local dealers"

I wouldn't be so sure. As Elon states, the fundamentals of the industry haven't changed in quite a while. He's approaching it from one direction (The cars/manufacturing and sale of new cars), and others (like myself and partners) are going directly after the used car Buying/Selling process. Our goal is to make it as easy as possible for Sellers/Buyers to transact. Check us out here:

http://www.instamotor.com/

tinalumfoil• 12 years ago

TL;DR: Elon Musk disagrees with the decision and viciously attacks Chris Christie , Auto Dealers, the State of NJ and compares their reasoning to the mafia. He also encourages you to buy a tesla car before the laws take into effect. Tesla will continue to lobby and possibly sue for a change.

ZeGoggles• 12 years ago

"The rationale given for the regulation change that requires auto companies to sell through dealers is that it ensures “consumer protection”. If you believe this, Gov. Christie has a bridge closure he wants to sell you! Unless they are referring to the mafia version of “protection”, this is obviously untrue."

This is weird. Really weird. It's raw and exaggerated...almost a cartoon. I'd believe this is raw Elon Musk, but why is someone letting raw Elon Musk define this campaign? Remember raw Bill Gates? Did we learn nothing from that? Or maybe we learned a lot. And "we" have developed an affinity--a need--for the brash genius.

I'm probabilistically wrong--Tesla's doing well. But something about this appeal, the wording, makes me react atavistically, "Go fuck yourself. Nothing is obvious."

I had an argument here, but it didn't seem important, so whatever. Dogecoin and such. Also hyperloop. But really, hyperloop. But remember, I was right about New Jersey. Poor New Jersey.

sidcool• 12 years ago

The ugly side of capitalism. But that does not make the whole system bad. There are those who will always stall progress for profits, and there are those who will surmount the bullies. Go Elon!

sadfnjksdf• 12 years ago

NJ can just buy from nearby states. Not a good solution, but whatever.

zobzu3• 12 years ago

I think the major point is that we want to be on his side. As long as hes not saying or doing something completely wrong, I'm sure we all agree there are huge issues with the govt, laws and corruption and that any strong voice attempting to fix this is a good thing.

There's also a lack in innovation and lead from the US market in various technologies.

Elon Musk took all of these things head on and keeps doing so all the time. What's not to like, I would ask?

I am 100% behind the man as long as he keeps doing so.

acd• 12 years ago

I think that oil is poison for humanity, it leads to resource conflicts and providing money for evil governments. Thus we need to get off oil to have long term peace on earth.

Elon Musk is a hero

stcredzero28• 12 years ago

It's not oil or other resource conflicts that are poison per-se. It's a system of conflict resolution that eventually and too often turns to armed conflict as "diplomacy by other means."

It's also a "human nature" that is prone to having one group of us kill another as a means of conflict resolution. Unfortunately, that is apparently a part of the natural behavior repertoire of Homo sapiens and Pan troglodytes.

I assure you that governments will continue to do evil things and will find the money to do so, but over time governments will become less evil.

hyp0• 12 years ago

such pleasure to read Musk. he's got that evangelial air... of course, it helps that he's in the right.

I wonder if he'll end up Emperor of Mars?

lnanek2• 12 years ago

This is pretty standard for New Jersey. It's common for money from highway projects to get diverted, or tolls to go into people's pockets long after roads were paid for, etc..

kator• 12 years ago

My father worked for 30+ years in auto dealerships. He was a mechanic and in the end worked his way up as the service manager. It was made clear to him that sales had to make money and service had to make money and they didn't care how it was done. He is a good and honorable man and even quit one dealership because they pushed crazy service incentives on service writers to up-sell every kind of service you can imagine. That said in the end he retired early because the dealership he was at was bought by a consortium of dealerships and they let him know that his service shop wasn't as profitable as needed and that he needed to up-sell more services to the customers.

In the end dealerships are about making money from their clients by "adding value". Sadly most of the time that value is having the black car in stock -vs- someone down the street who only has the blue one.

It's sad to see a government more concerned about backing the establishment then creating an environment for free trade and new business models.

AgathaTheWitch• 12 years ago

I will be glad to move out of Jersey (likely next year). I live in Fort Lee and was trapped in "Bridgegate" traffic last fall. My cautious optimism over Christie has faded over the years as he has so transparently started focusing on positioning for 2016. This cave-in to the dealership lobby is just another reason to take my talents and tax dollars elsewhere.

Jugurtha• 12 years ago

"To the People of New Jersey".. I can picture a Marsian saying this. Oh wait, it's Elon Musk :)

Elon Musk: To the People of New Jersey

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