Nobody is saying the law is at all fair to Ford, GM, Toyota, etc. It's not. They should be able to sell directly to consumers also. The law was lobbied for by dealers in Texas, and signed by America's greatest president, George W. Bush, when he was still governor of Texas. Bush was a true conservative who believed in free market principles, except for when he wasn't.
Let's not pretend this is Tesla vs. Ford/GM/Toyota. This is Tesla vs. the good old boy, rent-seeker network that is the auto dealer lobby.
Car dealerships are some of the last dynasty busineses. Ever wonder why most family run businesses eventually fail when an incompetent son/daughter takes over, but dealerships just stay around for 3 or 4 generations? Its because its a rigged market that requires no skill. The profits don't come from adding value. They come from gouging consumers.
Tesla is just a new reminder that we are being screwed, and they don't have the inventory to support the network of the dealership mafiosos and their fratboy progeny.
"Dude, my dad owns this dealership, so I totally know business bro......" (overheard at every frat party ever)
-Anatole France
It has less to do with money and more to do with interest.
And the law is stupid: it protects a method of sale which is altogether irrelevant to the economy, except in the sense that dealerships want the law because it prevents competition and secures their position in the market. Preventing competition is not in the best interest of the economy, the people, or the government, so the law should be changed.
Early on, cars were sold by local dealers. Later, when manufacturers wanted to sell direct they learned that local politicians cared more about the business down the street than some giant company in Detroit. Therefore, all manner of state and local laws got passed to protect dealerships' turf.
In a lot of ways, car dealerships are perfectly suited to exercise power in state legislatures. No matter what poduck district a state lawmaker comes from there are probably several car dealers there. They're often some of the most locally famous people thanks to the amount of advertising their businesses do. I couldn't name my gradeschool teacher from 30 years ago but I sure could tell you who owned the largest car dealership in the area... and sing his radio jingle.
By contrast, few state lawmakers have a Ford or GM plant in their district.
Also I don't see why being able to sell directly to consumers should be count as a "special rule". On the contrary, being forced to find a dealer in the "network" to work between you and your consumer is.
Tesla would probably be fine with allowing everyone direct dealerships, but the dealerships are not.
2) What's stopping Tesla from partnering with Toyota dealers?
3) With its $10B valuation, Tesla could build 10 very nice dealerships for 1% of its valuation.
My guess is Tesla not wanting to slap a bunch of dealer costs on top of the cost of the cars.
> Tesla could build 10 very nice dealerships for 1% of its valuation.
As I understand it, Tesla owning those dealerships would be just as illegal. If Tesla doesn't own the dealerships, they're either going to share the profits of the sold cars with the dealership or deal with the dealers markup and dealers fees increasing the costs of the cars.
But, if the regulation was a big problem for the corporate interests? The regulations would definitely not still be here. When it comes to money and regulations, I like to picture water acting on rock over time -- they get carved away a little bit at a time.
Tesla has no existing dealer network, and therefore has no need to have said non-existed dealer network protected from them.
Laws are laws. Either change the law or enforce it. That's fair. Not cronyism.
ftp://ftp.legis.state.tx.us/bills/83R/billtext/html/senate_bills/SB01600_SB01699/SB01659I.htm ftp://ftp.legis.state.tx.us/bills/83R/billtext/html/house_bills/HB03300_HB03399/HB03351I.htm
The above are linked from here:
http://www.teslamotors.com/advocacy_texas
I believe the issue bob13579 is bringing up (in the least helpful and most aggravating way possible) is that these bills effectively single out Tesla. Read the amendment in section 1. I think it means that the exclusion would only apply to electric- or battery-only car manufacturers doing business in Texas on or before 3/1/2013. This is surely only Tesla.
My opinion is that the existing law should not exist. But it does, and (again, my opinion) if this bill had 'done the right thing' and tried to remove the protection for all dealers, it would have received even less consideration.
Is this protectionism something that can be tested for constitutionality in the courts? Has it been already? It seems like the sort of thing that ought to get litigated.
Tesla shouldn't get special rules. Tesla probably advocates a non-special-rule model.
http://www.npr.org/blogs/money/2013/02/19/172402376/why-buyi...
I suspect it would be better for everyone if special dealership regulations were broken down. But, given that Tesla is a new car company, without any historical dealership agreements, why should they be bound the inefficient legal infrastructure that essentially cropped up around private contractual agreements between other car companies and dealers.
I know the dealership laws are awful, but IMO we should be focusing on changing those laws instead of giving special treatment to particular companies.
The world does not work that way. You can not put off inventing transport just because you have not invented teleportation yet. Things work in small steps.
Why is this (I'm not familiar with the way it works in the US)?
If you're looking for the justifications, here's an explanation from a Cato article (pp. 3-6):
Why Restrictions on Online Auto Sales?
The franchise laws that inhibit the new business models for car sales from spreading online are defended as being important for protecting dealers and consumers from automobile manufacturers. Defenses of those laws, which became widespread in the 1950s, revolve around two arguments: first, that restrictive franchise laws are needed to protect consumers and, second, that such laws are needed to protect distributors from rapacious manufacturers[...]