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

http://www.wired.com/business/2014/03/teslas-fight-car-dealers-help-decide-next-president/

by xmpir • 12 years ago

56 41 12 years ago

louhike• 12 years 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• 12 years ago

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

hnnewguy• 12 years 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• 12 years 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• 12 years 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• 12 years 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• 12 years 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.

phaemon• 12 years ago

I don't think John Galt would have taken government subsidies.

Why not? Ayn Rand did.

kertof• 12 years 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.

danielweber• 12 years 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"?

streptomycin2• 12 years 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• 12 years 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.

protomyth5• 12 years 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• 12 years 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.

jamesie2• 12 years ago

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

cafard• 12 years 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• 12 years 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.

_ea1k• 12 years 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.

protomyth5• 12 years 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 "Yeah, he was always a leading favorite Republican candidate among non-Republicans."

humanrebar• 12 years ago

Romney wouldn't pick him to run as VP, because of concerns his staff had about the baggage he brought.

I would like a citation on that. I'm skeptical Christie was an interesting pick to anyone but the people that write headlines.

Both Christie and Romney are deep-blue state governors. Christie wouldn't have turned out the vote in any places Romney couldn't. And he wouldn't lend Romney any conservative credibility either.

streptomycin2• 12 years ago

> Romney wouldn't pick him to run as VP, because of concerns his staff had about the baggage he brought.
I would like a citation on that

I'm not the guy you replied to, but I remember reading that too. It was in a really long post mortem of the Romney campaign published in one of the mainstream media outlets. I forget where exactly.

wil4212• 12 years 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• 12 years 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).

wil4212• 12 years ago

Basically politics and lobbying parties. (Auto Dealer Associations)

gamblor9562• 12 years 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.

jamesie2• 12 years 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.

conductr3• 12 years 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• 12 years 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.

conductr3• 12 years 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.

plainketchup• 12 years ago

The problem (from Tesla's perspective) with giving you a franchise is that the current franchise laws make it effectively impossible to take back that franchise, short of going to bankruptcy court. There are some truly awful dealerships out there, but Chevrolet had a hard time closing bad ones, even with the help of a bankruptcy court. Maybe you'd do an better job than Tesla of holding the customers' hand through the process of their first electric car purchase, but maybe in five years you'll decide there's more profit in high-pressure sales techniques. The cows have already left the barn at that point and there is nothing Tesla can do to stop you (so your promise to only take a $100 commission on each sale is worthless).

You seem skeptical that dealerships are adding a large markup. Maybe that's true, but then why are the dealer's so adamant that Tesla only be allowed to sell cars through franchise operations? The dealers have nothing to worry about if you're right. It's not as if Tesla is taking away a current franchise. They're simply not franchising in the first place.

conductr3• 12 years ago

You make good point on longevity of the relationship. I figured tesla could solve this with the right contracts when they did setup a dealer. That might not be the case.

I not skeptical and believe dealers do add costs. Significant probably. I don't have the data to know to what degree. I'm just suggesting tesla scrap the current dealers and build their own network with its own set of rules and economics. There may be valid reasons that is a bad idea, but i would be glad to be a part of it

protomyth5• 12 years 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.

visakanv2• 12 years 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.

protomyth5• 12 years ago

Here is a link to the actual video from which the quote is derived: 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]

danvoell• 12 years 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• 12 years 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.

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

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