German Regulators Tell Tesla to Stop Advertising Cars with Gas Savings in Price | Hacker News Reader

German Regulators Tell Tesla to Stop Advertising Cars with Gas Savings in Price

thedrive.com

178 pointsPharmakon98 comments

Good. No one else plays this deceptive game, cherry-picking individual costs of ownership. You can advertise (but not promise!) expected savings, but pretending this reduces the price of the car is deceptive.

> you can advertise (but not promise!)

Did you miss the title of the article? They are trying to stop Tesla from advertising the fact.

> Did you miss the title of the article?

You really shouldn't ask that, since you seem to have missed it.

> They are trying to stop Tesla from advertising the fact.

No, they are trying to stop them from advertising the gas savings in the price, not to stop advertising the gas savings at all.

That is, they want Tesla to stop advertising something other than the actual price as the price.

Then I guess you should be more specific about what kind of advertising you approve.

They started off by saying "Good." (agreeing with the decision) and then explaining what they feel is okay and what isn't.

I'm not sure how more clear you wanted them to be.

They're not stopping Tesla from advertising gas savings, they're stopping them from pre-subtracting it in the advertised price of the car.

Makes sense. Advertising the price as the amount that will come out of your pocket is important, and it's coercive to do otherwise. It's the same way for most consumer products, no reason cars should be any different.

There are ways to advertise the savings that won't be coercive.

By coercive I mean getting you in the door and beginning the sales process when you otherwise would not have.

Ironically, many governments dictate that you can't include government charges like sales tax in price advertisements.

Where? The US/Canada? Most other countries I've lived in/visited require the price advertised to be inclusive of all taxes.

Agreed.

In the UK you're skating on thin ice if you advertise to consumers, sales tax free prices, partially on the basis it looks like tax evasion. Plus the principle of being able to pay the advertised price.

Now its slightly different in shops for the trade where the pre-tax price is front and centre, the post tax price does still need to be displayed though I think.

This is an EU wide directive. The price advertised should be inclusive of all taxes and additional charges. It is so that the buyer (consumer or business) has clear information about exactly how much something will cost them, and so they can compare prices to other suppliers.

https://europa.eu/youreurope/citizens/consumers/shopping/pri...

Agreed.

There have been cases around vat free sales, and 'we pay the vat' promotions that have been pulled up by advertising standards though. That as far as I understand isn't an EU specific thing.

It’s mixed in the US. Some things have taxes included by law, e.g., gas at gas stations and airline tickets.

Interesting, my country has it the other way around, you must include taxes in the price as well. The amount you pay at the counter is the amount that's on the price tag.

What are the "many governments" that dictate this? I'm only aware of the US allowing advertising in a price that's lower than what you end up paying.

Well, in Europe there's an issue with budget airlines advertising tickets for ridiculously low costs that don't include all the costs you're likely to incur when you want to use that ticket. And of course buying houses is complex. But everywhere else, the price advertised has to be the price you pay on purchase. Anything else is deceptive.

This isn't generally the case in Europe - all prices on sites and in stores aimed at ordinary consumers are meant to have VAT included by law.

I think it is mostly the US with sales tax. Employement tax (social security/medicare) is also halfway hidden (half never makes it to your paycheck and is paid by the employer, the other half you have to explicitly pay).

Tariffs are hidden in the US, though you probably couldn't say for sure with any one product as it might come from different origins with different tariffs.

Let's be honest though, is anyone fooled by this? If you are plopping down ~50k for a car you should read the text directly on their first. It says the full price as well as the price minus savings in gas, in the same font size. I get it, it's tacky, but it's not like hidden fine-print and fees 10 pages into a contract.

I've been a Tesla shareholder since 2016, and I think the German government is right. I sincerely hope Tesla drops this, not just in Germany but worldwide.

The question isn't "is anyone fooled by this anyway?", it's "why is Tesla using deceptive practices?". IMO, they should feel free to point out cost savings somewhere, but they should not fudge guestimated values into the first price they show you. It's not just tacky, it's bullshit. Energy cost and tax savings vary by region and based on your individual situation, your driving habits, etc. Tax refunds do not affect the cost you have to pay for a car upfront. Elon Musk is an engineer at heart, and I feel like he should know better. Doing things like this loses them the respect of a lot of people.

I personally feel like pricing in tax refunds into the displayed cost of the car is fair game, but pricing in gas savings is bullshit.

Tax refunds is money I'm definitely going to get back in a bounded (and reasonably short) amount of time. If I pay $40k for a car and get $7k back in the same year, it seems reasonable to advertise the cost as $33k (assuming it's clear that $7k of that is a tax refund).

But gas savings feels like bullshit -- it's money I may or may not get back (depending on my habits), the time horizon is unbounded, and even if it were bounded, it's long (an order of multiple years). That feels deceptive to me, and it's surprising they got away with it until now.

In the US, the federal tax credit is a "credit" rather than a refund. That means that if you don't pay enough federal taxes in that year, you won't be saving the listed amount. Many state rebates don't work like this, but in some sense it is still misleading for Tesla and other electric vehicle manufacturers to not make this clear.

How many people can afford a Tesla while not having $7k of federal tax liability?

The same way “students” and “homemakers” sometimes buy multimillion dollar properties: offshore money (laundering).

Do those credits not carry over to the next year?

They do not carry over for personal use. A business can carry them over.

Hello Uber and Lyft!

I'm not sure you can rely on tax refunds either.

For example, if you buy the car in your name and then you lose your source of income (whatever reason, e.g. health, maternity/childcare) and for example you rely only on your spouse's income, I know at least one country where you can't pass the tax benefits to the other person (not even by transferring ownership of the car)

Yes. This fools people. If you look 5 advertisements while flipping a magazine or driving through a road, and only tesla does this, you end up with the idea that they are cheaper. It hurts comparability. They should not be confusing people about the retail price of the car.

For another recent example Ryanair is being fined in Italy not because their practice of not including the hand luggage in the price of a ticket is illegal, but because it hurts comparability with other airlines

If no one's being fooled by this then surely Tesla will have no problem with just not doing it any more.

Somehow I suspect that they'll keep doing it in every country that hasn't told them to stop.

The screen shot in the article just shows an asterisk after the price.

Theres a further complication in that most countries offer incentives for buying EVs, so you could legitimately think its one of those that Tesla is helpful illustrating for you.

Finally Europe has decent consumer protections, so the price advertised should be the price payable, and people expect that.

We europeans don't like it when the final, listed price isn't the price you have to pay when you buy something. It's the same for airline tickets: no hidden fees in the final listed price allowed.

Somewhat unrelated, but the first time I bought something in a physical store in the USA, i thought i was being ripped off, because the final price came out different than the one that was listed next to the item. I had no idea that it was standard practice to exclude taxes from the displayed price.

Yeah that is bullshit that should have been stopped 50 years ago.

I believe it's the same for airline tickets in the US, and I'd hope they do something about Tesla as well though I wouldn't hold out hope.

Buying an airline ticket is a much better experience than anything else online simply because of this. I wish the same regulation applied to everything.

Absolutely. I feel the same way about shipping charges for online orders, which is a problem in European countries as well. I wouldn't advocate to have them integrated into the prices of products, because I think it is worth having a discount for ordering more or picking up your order in person, which passes on the retailer's savings to you. However, I would like prices to perhaps include the minimum possible shipping charges for your location.

It is surprising that eBay manages to do this despite having decentralized sellers around the world with a global customer base, but an ordinary online retailer doesn't.

Still here in Germany we have a lot of offers for services where the discount price for the first year of subscription is calculated into the advertised price.

But it's no longer allowed to automatically continue into year long contracts with a higher price after the first year, so these schemes lost some of their bite.

A family member just made a contract with a "zero fees in first year" offer and the hidden, real pricing starts in second year. As we live in Germany, can you share more information about what you say?

Hm, maybe I extrapolated too far, this became law in The Netherlands a couple years ago and I assumed it was European legislation. In The Netherlands we had lots of these 2 year phone contracts going on where you'd eventually pay almost double your phone's value, those have effectively been banned.

it is the one shameful act I have to encourage people to ignore when using the Tesla site. the truth is they don't need to do this to sell their cars, it just looks tacky.

to be honest it is stunts like this where regulation does come in handy. like how we have truth in lending laws for home loans and even cars.

I don’t think it’s the only “shameful” thing unfortunately. The claim of cars being capable of FSD is pretty clearly nonsense, although I recognize that some true believers will take some more years to accept that. Still, I think most of us have figured out that full automation isn’t right around the corner, and unless we posit that Musk is an idiot (he isn’t) then he knows that too.

My dream for Tesla is thst Musk is gone, soon, because while he appears able to start great things, he’s a pretty lousy leader (and person) beyond that. I look at SpaceX and see something great that for the most part, does its thing because Musk isn’t around. I look at Tesla and I see him screwing around on Twitter, lying, and generally being a drain on the company. Tesla has too much good going on to make stupid promises about FSD or bullshit about their pricing.

ObMeta: here it seems FSD means "Full Self-Driving".

> Still, I think most of us have figured out that full automation isn’t right around the corner, and unless we posit that Musk is an idiot (he isn’t) then he knows that too.

Except that just the other day Musk went on record (on an earnings call?) saying that Tesla's would be capable of "full self driving, coast to coast, this year"...

Uff, wincing facepalm. That man needs to close his mouth.

I would bet 85% odds that Tesla is eventually going to offer a refund to all current Model 3 owners who "pre-purchased" self driving. In fact, that's the event that is more likely to happen "coast to coast, this year".

Calling it now: There will be an "autopilot hardware v2." And Tesla will have to dig deep to pay back all that pre-purchased FSD cash, probably plus extra to stave off a class action lawsuit, which is its own risk.

I would love to see full self driving, but I don't trust that hardware. I would love to see Tesla succeed, but I fear that Musk himself will bring it down.

He isn't necessarily lying, and there won't be a lawsuit.

The "self-driving" will be made available, both in hardware and software. It just won't be usable on roads (because every state will immediately outlaw it).

Few owners, brave enough to try it in spite of regulations, might discover some notable flaws... But hey, — no one promised you a perfect self-driving! You will be able to "self-drive" in couple of dedicated cities or around wilderness in the middle of nowhere (with modest risk of damaging vehicle), and that's supposedly what everyone has paid for. Musk won't be held responsible for restrictive laws, — he most likely anticipates that and hopes precisely for that.

You can be very very smart and still make boneheaded mistakes. Musk has been being lauded as a genius long enough to begin believing in his own infallibility. I don't think he's lying. I think he believes it. To be fair if he had promised to do what he's already done before he did it no one would have believed that either.

The headline is wrong. It's not a regulator telling anything. A regulator would be a federal or state body making a decision (which then might be challenged in court). It's an organization which maybe could be called a self-regulation body threatening with a lawsuit. And Tesla agreeing "voluntarily" to stop the practice. Well, voluntarily, because they obviously admit that their previous practice would be deemed illegal in court.

The Wettbewerbszentrale is a bit more than a self-regulating body (and why self-regulating? The "regulated" business aren't members). It has special legal status in that it can start such lawsuits, which normal associations can't.

It's one of 78 such organisations (and any that fulfil some criteria can be added to the list). Nobody would call e.g. Foodwatch or the ADAC a "German regulator" but they still enjoy exactly the same rights.

I must admit that I don't have a deeper understanding of their members. Can you shed some light of the structure/profile of their 1200 business members and 800 (lobbying) organisation members?

The list of members is here: https://www.wettbewerbszentrale.de/de/institution/mitgliedsc...

It includes for example Audi, BMW, Daimler, Ford, Opel, Volkswagen, the VDA (Verband der Automobilindustrie; German Association of the Automotive Industry) and the VDIK (Verband der Internationalen Kraftfahrzeughersteller; Association of International Motor Vehicle Manufacturers)

VDA members are here: https://www.vda.de/en/association/members.html

VDIK members are here: http://www.vdik.de/members/members.html and include for example Citroën, Fiat, Honda, Hyundai, Jeep, Mitsubishi, Nissan, Peugot, Renault, Saab, Toyota, Volvo...

OK, so all traditional car manufacturers are there. Tesla is probably not represented and at all or only with a very minimal weight through some association. No surprise they don't accept Tesla's aggressive and misleading marketing, which did not exist in Germany before and is not in compliance with accepted legal practice.

On the other hand there are so many competing companies represented there, that similar practices of any single traditional manufacturer would not be accepted either. So I don't see why people reject the characterization of self-regulation.

Of course if most of the car manufacturers agree to do something illegal the self-regulation will fail. This has happened in the car manufacturing supply-chain, fines have been imposed and more investigations are on the way IIRC. That is governed by different legislation.

Probably also in the emission frauds there have been at least been "gentlemen" agreements. It's not very convincing that the engineers of the competitors did not understand how some manufacturers achieved their emission values.

But also cases related to consumer marketing which should be covered by the self-regulation remain unsatisfactory. It's well known that all manufacturers advertise misleading and unrealistic mileage values that no driver can achieve in real life. So if the majority of the businesses agrees to cheat customers self-regulation just fails. They will just stop newcomers who try to be disruptive in their cheating.

In the end every decision could be brought to court. As a matter of fact in the case of self-regulation it would not have even been Tesla who would have needed to appeal a decision. There was no decision, just a request to comply with legislation. They could have just waited whether Wettbewerbszentrale goes to court. That they decided to comply without any court decision tells a lot.

This makes sense to me: On any purchasing/configuring/ordering page, the local-currency number displayed should be the number that is actually being charged, and that number should have the highest weight (the largest size, the most-emphasized, etc.).

Europeans might be particularly sensitive to this mispricing, because I think they enjoy SANE advertised pricing all around - such as including tax in the price.

Meanwhile, the shenanigans in US advertised pricing allows for enormous hidden costs - think cellphone, cable or telephone bills.

> Europeans might be particularly sensitive to this mispricing, because I think they enjoy SANE advertised pricing all around - such as including tax in the price

How does that work for online advertising and online shopping sites? Most of Europe uses destination based VAT for remote sales, which could make it very difficult or annoying to include VAT in the advertised price if the ads or shopping site reach more than one country.

You just ask for the user's location. A dropdown box with countries.

That's not unusual, American companies do that, too, in order to calculate sales tax.

You probably need it anyway to calculate shipping.

Most Europen countries also have their own languages. All of them have their own top level domains. And despite the Euro, there are 11 different currencies used in the EU.

VAT just isn’t particularly hard, as business problems go.

It's not that trivial either (search for "VAT MOSS" to learn more), but otherwise your point is valid.

you just display the price with your local VAT. In the last step, if the user is from a different country AND if you do more than 100k eur revenue for that country/year, you recalculate with the correct user VAT.

And if you are Amazon, you then give the diff as a discount if it was more than advertised.

I think most consumers take "savings" to mean "reduction in purchase price." Obviously, (or not so obviously) Tesla's sales-page means something different. But even if you dig into the asterisk next to the "after savings price" you find some aggressive assumptions. And $4300 gas savings over 6 years is not worth $4300 today to any rational person on this Earth. They need an asterisk explanation within their asterisk explanation stating they assume a 0% discount rate.

It's disappointing that Tesla needs to be told to stop this deceptive practice

They already did this change in Norway. Before the main price you saw was included the savings, now the main price you see is the actual price.

You can click on a "details" button where it will expand and list all the details, and only there, after the purchase price it'll say how much you can save by not having to buy gas.

The problem with Tesla’s pricing shenanigans is that it makes me not trust them at face value on the issue of pricing. The other day Tesla plainly tweeted Model 3 pricing and explicitly noted that the pricing was “before incentives” but I still had to wonder, “But is that the actual price or not?” because of their history of and reputation for bizarre communication when it comes to what the actual price of their cars are.

Isn’t this including negative opportunity cost in the price? I agree with one of the comments that the price should reflect what you have to pay at time of sale. The problem with this approach is that they are assuming too many things. The biggest assumption is 1) that buyers are comparing a Tesla to another car. Why not a motorcycle with better fuel efficiency. This also assumes a fixed differential between gas and energy costs which may or may not hold and 3) that a comparable time period is 6 years and 4) a present value discount rate of 0%. Sure, anyone can calculate all sorts of returns on investment on meechandise. But why don’t we just agree to quote the investment and not the return. At the end of the day, that’s all we know today.

finally - it was an utter nonsense of a claim.

Is the electricity that goes into a Tesla actually a cost savings over the cost of gasoline that goes into a gas powered car?

Yes, definitely, even with high-electricity-cost utilities.

Even the big, heavy older Teslas get the equivalent of at least 60 mpg (say, 300 watt hours per mile at 15 cents per kWh vs $3 for a gallon of gas).

Electricity is still cheaper than gas, but electricity in many European countries these days is at least 30 cents per kWh (and rising every year), instead of the 15 cents you mention.

The eMPG is an attempt to convert WH/m into MPG based on some fixed numbers for $/kWh and $/gallon.

a WH/m x b $/kWh / 1000 = x $/mi

c $/ga gasoline / x $/mi = mpg equivalent.

For a=300, b=0.15, c=$3.00 you get 66mpg.

You can plug in your own numbers as you see fit.

The cost savings is then estimated by plugging in a number of miles driven, and comparing gallons of gas versus a hypothetically less efficient car (not sure what MPG rating Tesla uses for its comparison)

Note that the Tesla Model 3 is closer to 150 WH/mi. And what does gasoline cost in those European countries?

€1.3 per litre, so that's $5.53 per gallon.

The amount of savings obviously depends on electricity and gas prices where you live, but yes, the electricity will be less expensive for the same mileage.

They better advertise the higher residual price of a car after N years ownership. That's where the savings are! Or better yet, not advertise, but partner with banks to launch the lease program taking in account these savings. 3-yr lease of a $35K model 3 will be comparable to a typical $25-$28K car.

Who would buy a used Tesla?

The thing would need to be mint as any minor issue would be takes months to fix.

In defense of buying a used Tesla I really appreciate the idea that if your car is 'out of date' in terms of current hardware you can simply pay for an upgrade instead of being told you have to sell your car as used and buy a whole new car. When you think of how much money a lot of people invest in their cars treating it as a disposable commodity doesn't make a lot of sense economically and ecologically. In terms of turnaround time, obviously your point is valid, but if Tesla manages to disrupt the entire paradigm of an industry in a positive way it may be a minor critique in the grand scheme of things.

I’ve never purchased a car new, and my previous daily driver was a 2003 that was damaged in a minor collision last year.

With every car I’ve owned, I have no direct relationship with the OEM. I think I had a Cadillac repaired by the dealer once because it ended up being cheaper. That’s a feature. I’ve seen what happens when companies corner the market on anything — it’s not good for anyone but the company abusing the market.

I’d lease a Tesla. Anything else is too big a risk.

On one hand, these numbers are kinda bogus. On the other... ICE car prices should really be advertised with a reasonable fuel cost included, particularly in Germany where fuel is so expensive.

All carmakers disclose the fuel economy of their vehicles. How much you'll actually pay for fuel depends greatly on not just the fuel economy of the vehicle, but how much you drive, how aggressively you drive, and the price of fuel in your area and at the particular time. I don't see how you could distill all that down to a single number that means anything.

A reasonable guess would be fine. It's what appliances are required to do, for example.

It's reasonable to assume that a fridge or freezer is powered on 24/7/365.

For a car there simply cannot be a correspondingly safe assumption, can there?

They could do the calculation based on the amount and type of driving done by the median driver. Then this would be a good approximation for most people and the outlier who knows they drive twice that many miles could double the number etc.

I think most people will get a better picture seeing the usual numbers like "4.8 l/100km urban, 4.5 mixed, 4.2 highway" than something like "median fuel cost per year 850€".

Especially since you can't estimate the future price of fuel.

The problem with l/100km is that you can't compare it to purchase prices without doing math, which makes it less intuitive.

This is especially true once you're no longer comparing the same units even between vehicles. It's much easier to compare euros with euros than having to compare euros with l/100km and kWh/100km.

Moreover, it's possible to make a plausible fuel price estimate based on current and historical prices, and if it turns out to be wrong then it wouldn't be any less wrong for having the buyer calculate it instead of the seller.

But this should not be included in price, added as an extra value somewhere and it must be somewhere standardized so all companies would use same algorithm to calculate this value.

A TV, dishwasher, or laundry machine is a better corollary. Everyone uses theirs at a different rate but they still put a reasonable guess at yearly cost on the Energy Star label.

But the variation between lowest and highest usage and cost for a TV or dishwasher is going to be far less than it is for the cost of fueling a car, there's a huge difference between someone who uses the car for a few short journeys a few times a week and someone who drives hundreds of miles almost every day for work.

They could. I'm sure some do. But I think you're missing the point.

Tesla aren't saying "this is how much you could save", they're taking that number off the purchase price until you walk through the checkout.

This is a bad idea, a price label should display the price and not something else, if you introduce some bogus average fule costs this values will be gamed, just keep the price as a price, keep the fuel economy as that and include extra information if you want.

They already advertise MPG/ LKM.

Fuel varies so much in price that fuel price variation would mask cost differentials between cars.

You could start combining some synthetic averaged fuel price with MPG to arrive at a cost. But is it a cost that anyone's likely to achieve, or know how it relates to their own circumstances. At least mileage figures however flawed are a known quantity, I know how it relates to my driving, and I know whether fuel prices are currently low or high.

Germany has one of the highest electricity prices of the world too. So there's that.

https://www.statista.com/statistics/263492/electricity-price...

Every car has a window sticker that includes annual fuel costs based on a standard calculation approach.

It was about time!

People might not be aware how much they can save on gas prices by switching to full electric. I don’t see any downside in advertising an estimate. It’s not like they are presenting that as the price with a footnote that says it includes gas savings.

It’s not like they are presenting that as the price with a footnote that says it includes gas savings.

That is very close to what they are doing. If it had the real price and it said "You would save x amount with this option" I doubt anyone would care.

That’s exactly what I’m seeing. A price with an asterisk, and below the fold, “Prices above include potential incentives and gas savings.”

So, it’s not just “like” they are doing it, they are doing it.

No, it's very different.

They are allowed to advertise "price X, but remember you also save Y per year". But not "price X minus Y".

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