Florida has banned direct-to-consumer auto sales, but Tesla and co get a pass | Hacker News Reader

Florida has banned direct-to-consumer auto sales, but Tesla and co get a pass

theverge.com

> The law lets electric-only manufacturers like Tesla sell directly, but older companies’ electric cars must go through dealerships.

Talk about an unlevel playing field. If EVs are to be incentivized, direct sales should be allowed for all EVs from any manufacturer.

I'm kind of curious whether Elon personally has anything to do with that exception. It is pretty advantageous for him.

Elon is helping with DeSantis’ presidential campaign, so it seems almost certain.

I stop wondering a long time ago. It's more blatant than ever.

The two are political bedmates, there's no doubt about it.

Florida situation aside (could be shady shit going on, would have to suss it out with some investigative work), other states that have allowed new automakers to sell direct have been provided the exemption because they don't have an existing dealer network they're competing with.

For legacy auto, the dealer network was a benefit (offloading local customer relationships, inventory, service) that is now an albatross they'll have to buy out. Just another combustion->EV transition disadvantage to incumbents (legacy auto dealers rely primarily on service revenue, and EVs require much less service overall). For example, GM had to buy out 150 Cadillac dealerships that did not want to pay for the costs involved to transition to EV products (~$200k/dealer). Ford is having problems with dealers drastically marking up their EV products with "market adjustment fees", discouraging uptake, and are attempting to twist dealership arms so they fall in line to compete against Tesla's no haggle pricing.

TLDR Interest alignment challenge.

https://www.autonews.com/dealers/car-dealer-automaker-tensio...

https://www.cnbc.com/2020/12/04/about-150-cadillac-dealers-t...

https://electrek.co/2022/09/14/ford-sets-new-dealers-require...

https://twitter.com/mrlevine/status/1373646122548301833

https://www.teslarati.com/ford-dealership-applies-69554-mark...

The past 2 or 3 years have been something of an anomaly, but before the supply chain shortages, you could often basically buy a car at a few hundred dollars above dealer cost. (There are often other dealer incentives that aren't necessarily reflected in the online cost numbers--but close enough.) Which is why dealerships tend to put the big sell on using them for your vehicle's service because that (and financing) is where the money is. If you give them a check, drive your car away, and never see them again, they don't make a lot in general.

Those days are over. Automakers realized they could juice profits by keeping supply constrained, and are doing so.

https://www.axios.com/2022/07/14/automakers-production-level...

https://www.businessinsider.com/automakers-low-inventory-max...

https://www.businessinsider.com/used-vehicle-prices-inventor...

Edit: used vehicle prices are held high by reduced new vehicle deal flow. The whole auto market is supply constrained, pushing aggregate prices up.

Your last link is about used car prices. And, yeah, when I bought a car last year I didn't even try to negotiate down from the sticker price, but I did manage to get them to add the price of "factory options" to my trade-in (which is advantageous from a tax perspective anyway)--for which I got a really good price to my way of thinking given age and some obvious body damage.

And why would we legally protect dealerships? Are we doing the same for McDonalds franchisees? Who is protecting the corner Wendys from being undercut by a mothership restaurant?

Historically, dealer franchise protection laws were enacted to protect local small business (dealerships) from the muscle of Big Auto.

https://futurist.law.umich.edu/preemptive-federal-legislatio...

These laws protect the consumer from a monopoly on sales and service from the manufacturer.

I wouldn’t be entirely surprised if incumbent automakers “spun off” EV divisions as “independent subsidiaries” to try to take advantage of these loopholes. I remember Ford was beginning to take steps towards and arrangement like that to reduce the power of local dealers. It’s a large fight though.

DeSantis announced his presidential bid on Twitter, so I'd say there's a very strong connection.

Would you really feel differently about any part of the situation if you found out he had nothing to do with it? He's still accepting the benefit of it and apparently not campaigning _against_ it.

"Will no one rid me of these meddlesome dealerships?!"

Elon probably influenced the carve out, but the Ban is all Dealer Lobbying

Auto Dealers at the state level it one of the most, if not most powerful groups in state politics, as a huge part of most state revenues are derived from taxes on Auto Sales. it is by far the most expensive item most people purchase that is subject to sale taxation

I am kinda surprised they allowed for a carve at all.

He owns Twitter. DeSantis announced his presidential bid on Twitter.

You can draw your own conclusions.

I'll answer that for you: yes

Tesla of course wanted direct distribution. Existing automakers lobbied against it. I guess each got what they requested, but only for themselves. It's sort of like a Judgement of Solomon response.

I remember when Tesla was an upstart underdog for whom I rooted.

1. Courted the left with green EV tech & solar

2. Courted the right with access to social media

3. Profit!

Didn't the Gov of FL through recent legislation it very costly to buy or own an EV ? I thought I read that somewhere but forgot where.

This PDF from Consumer Reports discusses some of these EV exclusive taxes:

https://advocacy.consumerreports.org/wp-content/uploads/2019...

Depending on the state, in some states you always save money Vs. gas tax, but in others unless you're in the top 10% or even top >5% of drivers by miles driven, you're likely paying more in EV fees than gas tax would cost. If you only drive your EV low distances, you're particularly negatively impacted.

There are some programs meant to help with fix this, but they involve putting a GPS tracker in your vehicle that both drains the battery and robs you of your privacy, so you're exchanging one problem for another.

PS - Many of these states also target Hybrids and Plug-In Hybrids with these fees and many of the problems listed above also impact them.

https://floridapolitics.com/archives/610033-george-riley-let...

Sounds like a good way to hasten the move to electric. Manufacturers should stop updating gas models and focus all R&D on electric. Phase out ICE vehicles ASAP, and policy that encourages that is good regardless of whether it currently gives an unfair advantage to Tesla, Rivian, etc.

Not at all, whatsoever. This means that any company that sells ICE vehicles can’t even try to compete. So this strongly disincentivizes incumbents from moving towards EVs in Florida. There is no teleporting into a perfect future.

Corruption in plane sight and there is nothing you can do about it except stop giving Elon money in any form and don't vote for DeSantis.

Wouldn’t not buying a car from a dealership have more incentive to end the corruption?

This is 100% a result of car dealerships lobbying

I've long hated dealerships and their lobbying, but it's never occurred to me until now that it's odd that non-Tesla manufacturers don't out-lobby car dealerships (which they could easily do in terms of resources). It would lower the end cost for the consumer and therefore allow them to sell more cars, right? One study shows it would cut costs by 8.6%, which is huge

Can I hate all sides in this? Car manufacturers have a huge information asymmetry with end-users, which leads to ugliness like in-car tracking systems that insurers love. But dealers capture most of that information asymmetry because they can learn the tricks and people don't buy cars very often.

From the political party that praises the free market.

Yes, I want to pay a middle-man dealer for literally nothing other than some perceived right to screw me buying a car at a MSRP price plus "market adjustment" because they can!

If dealers won't sell at MSRP as good enough, it should be redefined as something that is beholden to only their greed, but not simply legitimized by dealers that feel entitled to get over on me adding to the legal price.

Dealerships are now akin to legalized scalping like StubHub and Ticketmaster adding superfluous charges and fees, and I will purposefully try not to deal with them ever again. Dealer licenses should be revoked for doing this, not endorsed and supported.

I thought republicans were all about small Gov...?

this feels like big Gov in intricate detail

The fact that the dealership lobby is having to push for laws to protect their business means they are seeing the writing on the wall: the car dealership model will soon become just another (unpleasant) relic from the past.

Baby Boomers and GenX both like the idea of being sold something and having that service provided, but Millennials and GenZ have consistently shown that we greatly value self-service, straightforward pricing, and not wasting time or money on feeding the “fat” in systems.

Car dealerships are a major reason why new vehicles are so expensive now, with automobile pricing far outpacing inflation or any other metric.

In what other industry, not using the dealership model, would we be ok with major purchases being gate-kept by an army of middlemen who’s job is to grift off of every sale, obfuscating the price, are trained in deception, and their employer will also try to sell you financing, service place, and other crazy shit that people are not informed about? At least in retail you can shop around and find the best price and margins are well understood.

>>In what other industry, not using the dealership model, would we be ok with major purchases being gate-kept by an army of middlemen who’s job is to grift off of every sale

I see you have never tried to buy Enterprise Technology equipment, or Enterprise Software or really anything that is target at B2B sales

Consumer sales have less of this, but 90% B2B is network of middlemen gifting off sales with no way to go direct. hell I was on a call directly with the developer of a software product I wanted to buy, it was a low 4 figure deal, but it took several weeks to buy it because the deal had to go through some 3rd party company as they did not sell direct...

I would rather just added it to a cart online and bought it with my company credit card....

Self service on modern cars, good luck with that.

Car dealerships need their local customers, global car manufacturers don't.

Prepare yourself for a poop emoji if you try to complain.

Car dealerships should not exist. The fact they have a lobby trying to get laws passed to save them should be a very clear signal that they are in trouble.

Global car makers would love to sell directly. Again, why are there laws forbidding this if there was no intention by the manufacturers?

Self service on an EV is easy. There's so little to do that you can learn it all yourself. Change tires, inspect and lube brakes, check brake lines for water, change wiper blades, change cabin air filters. That's pretty much all you need for about 10 years when you'll have to replace the brake fluid and/or 200,000 miles when you'll change the brake pads.

What about broken head lights or turn lights?

LED lights are not a maintenance item.

For self service includes small repairs not only maintenance.

If somebody takes a baseball bat to your headlights then insurance pays for the replacement. And given that insurable events are the most likely reason to replace LED lights, I'm not sure why you're asking about headlights.

LEDs wear out depending on temperature and humidity, so if it's not an insurrance event you need a garage nowadays to change them and as a local customer to global company you are far down the priority list.

It's already bad that you can repair less and less on a car without a workshop appointment.

If your LED light doesn't last 50,000 hours you got a bum light. The frunk of an EV is far more useful than being able to replace something that should last longer than your car does.

50,000 hours at what intensity? In my country an LED is considered worn out from 70% power or less and if more than one third of the LEDs have failed, this is considered a significant defect and you are not allowed to continue driving.

> the car dealership model will soon become just another (unpleasant) relic from the past.

The profitability of dealerships is in after-sale maintenance. Selling vehicles that require _less maintenance_ will hurt the profit model. To judge from the decision in Florida, dealerships must be owned by influential rich people there.

> Baby Boomers and GenX both like the idea of being sold something and having that service provided, but Millennials and GenZ have consistently shown that we greatly value self-service, straightforward pricing, and not wasting time or money on feeding the “fat” in systems

I don't think that seeing this economic model through the the distortion lense of generational marketing is a lucid explanation. Consumers don't like car dealerships and the sham business practices that they inflict on people.

People who understand the new breed of electric cars know their value. The demand for EVs is growing fast and manufacturers outside the US are responding to meet the demand.

The change is happening too fast for the profit model of US dealership owners.

Besides Tesla, What automakers sell direct to consumers?

OKA, for one.

https://www.oka-atv.com/about-oka

I assume all of them, just not in the US

What a fascinating example of what we can expect from DeSantis should he become president.

You do him favors, like give him a platform to announce his presidency run, and you get laws passed that are clearly designed to help your company beat your competitors.

There's nothing sly or secretive about it. He's making a statement here to all the big companies: "those who help me win will get rewarded for it".

Edit later: Sorry all, feel free to disregard this and/or down vote it. Not because you agree or disagree but because this isn't the right place for this kind of snarkiness.

You should expect this from any candidate. The amount of money required to run for President is absurd. There's a very small class of people who are capable of putting this together, and they're all apparently incapable of doing so without making massive political sacrifices to the donor class.

American politics are largely broken.

Some candidates are more corrupt then others. Yes, if your candidate is the most corrupt one, it pays off to pretend corruption level is the same and dont matter.

How does it help “beat your competitors” if Rivian and Lucid get the same treatment?

Because Tesla is the dominant player in the market by a very large amount.

Yes a few other companies will benefit, but none that Tesla is worried about.

Well, they don’t get rid of all the competitors… just most of them, and the ones that really matter.

Ford and Toyota don't get the same treatment.

Well, they have been very lazy about not flooding Florida, so makes sense

Who? Never heard of that two.

I think the real competitors are VW, BMW, Ford etc.

On a side note how can Republicans believe in fair market competition and then vote for this guy?

Because you don't have to agree with every decision a politician makes to vote for him. Similar critiques could be made of pretty much every politician. The things that really matter to most republican voters Desantis is aligned on. Gun rights, low taxes, free speech, and (in a humorous political realignment)battling large corporations.

  free speech

How is requiring journalists to register with the state free speech? Or don't say gay? You're right that desantis appeals to Republican core values, but you're wrong on what those core values are.

To me it seems that the biggest red flag is his pettyness, this guy went into an all in war against Disney for making him look bad, dug himself into a hole and just kept on digging. This guy is considered the "smarter" Trump.

What could you possible expect from such a person other than being left with a bunch of holes to fill.

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