New Jersey Votes to Block Tesla’s Direct Sales
recode.net
recode.net
Banning Tesla is an index of the corruptness of state governments as banning Uber is of city governments. (https://twitter.com/paulg/status/443469758369767425)
A very astute observation, as usual.
Some regulation serves a purpose. All regulation can be justified with some sort of logic. That doesn't mean it is either necessary or a net benefit to society.
Proponents claim that cities need to regulate Uber to ensure passenger safety. Meanwhile an NYPost investigation found of the 16 fatalities caused by cab drivers since 2009, all but 2 kept driving cabs. ( http://nypost.com/2014/02/09/cabbies-who-kill-or-maim-in-nyc... ) May be its different in other cities. I haven't been kidnapped by a cab driver in NYC, yet at least.
The Tesla dealership issue is more erroneous and transparent to me than Uber. Car dealerships are a public nuisance. No one would argue we need more middle men for electronics, clothes, or food. Why for cars? The current structure makes it easy for dealers to get away with dishonest business practices. Mechanics are paid to do repairs as fast as possible, increasing the chance of future failures. Car companies are vulnerable to large class action lawsuits while a single dealership is hardly worth an expert lawyer's time.
Heavily regulated environments repel innovation. Regulations, both in Uber's case and Tesla's are written by the incumbents for the incumbents. Follow the letter of the law and instead of a sleek new structure you produce a disfigured chimera, which probably will piss money.
Perhaps one of the best things the internet provided us was a regulation minimal environment. You could put up a website and try new things with out having to worry about getting shaken down. I hope the future web won't be full of rampant EU-mandated privacy notices and DMCA federal government web site registries.
Uber and Tesla don't have a choice. If they want to provide high quality services, laws have to be broken. It is unfortunate that you need to be a large and well funded company to force much needed changes on state and local regulators.
I predict that cities and states which are friendly toward innovation will do better by leaps and bounds in the long run. Betting against change and efficiency tends to be hazardous.
You are not considering the implications of congress interfering in a relatively minor state matter when it refuses to legislate on more pressing state/federal issues (gay marriage, legalising cannabis, etc).
[1] http://en.wikipedia.org/wiki/Commerce_Clause
Be careful with the word 'always'. If a federal law were unconstitutional, and an equivalent state law were not, then clearly it would not trump the state law.
Similarly, despite the modern interpretations of the Commerce Clause, there are Constitutionally imposed limits on federal authority, and they're prescribed a very narrow set of privileges by the Constitution. Depending on the law and its execution, we could very well see a state exercising its rights trump the Commerce Clause. Gary Marbut has fairly carefully crafted such a challenge with his "Montana Buckeroo" rifle which is expressly designed, built and sold only within the confines of Montana, specifically to challenge the Commerce Clause's authority of its manufacture.
That said, he's got some 80-odd years of precedent to overcome, but there may be a quorum that much of that precedent is bad precedent, though it's still a gamble as to whether or not that matters.
While I personally agree with Mr. Marbut's interpretation of the commerce clause's limited scope, I think that the deck is stacked squarely against him, especially since Raich.[1]
I'm not sure if you're being serious or just completely ignorant about how bills are passed into law. Clearly, a Republican controlled House will not vote in favor of gay marriage or legalizing cannabis. Heck, almost every Democratic state hasn't even legalized cannabis and there are still a good number of Democratic states that haven't recognized gay marriage. Those won't pass the federal level any time soon.
"Minor" issues, by the way, are passed into law all the time because both houses can agree on the bill. Take the JOBS Act or the Pay Our Military Act for instance.
Taxi laws in many cities exist to both protect consumers (with criminal background checks and additional vehicle requirements), ensure parts of the city get served equally (requiring taxis to accept fares), and establish clear chains of liability. I don't believe there are anywhere near comparable safety arguments you can make for only allowing third-party dealerships.
Here's my two cents (you don't have to buy into it) - taxicab laws and regulations are frequently imperfect, and there is certainly an element of protectionism and cronyism. On the other hand, I don't want to live in a place without them. There is a reason that when I previous lived in London you'd often see "Don't take unlicensed cabs at night" adverts up at bus shelters. These laws are imperfect, but also necessary.
Edit: As someone has pointed out, dealerships make a similar safety argument. That said, I would imagine most rational people are able to see the difference between the two. It is still possible to regulate the sale of cars and allow manufacturers to sell directly. Similarly, I think it's possibly to have taxi laws that allow Uber to operate freely but also ensure the safety of those using the service.
Regulated taxi systems are worthwhile - if you don't think they are, try living somewhere with significant crime. Last year I ended up getting posted to Medellin, Colombia for a month - a city with one of the highest murder and violent crime rates in the world. However, it is also a city with a highly regulated taxi system, with criminal background checks and vehicle restrictions. I would happily get into a cab there at 1AM. I would not have considered it if there were zero regulations and restrictions on who could drive a cab, and what cars they could use.
Not so much with unlicensed taxis.
Please excuse the tangent here.
I respect your ability to have an opinion on the positions you personally feel are worth backing by violence (i.e. the nature of law). However, in turn, please respect the fact that nothing is literally "necessary," especially with such conflicted notions, beyond the word's use in hyperbole. Your respect of this point will allow for more respect and tolerance of opinions that differ from your own.
Even 99.9% of the planet agreeing on one issue does not necessarily make that issue necessary. It depends on the actual threat. This is especially the case when that one issue begins to directly impose violence on the 0.1% who disagree and who want to live nonviolently but differently from your own lifestyle.
It's very healthy to focus on solutions that improve awareness in matters where safety is significant. By all means, warn people. By all means, give people more access to the feedback of transparent information: e.g. transmitting knowledge to people about whether or not an entity is regulated by whichever particular system/regulator. But if you advocate the prohibition of a person trying to have a consensual relationship -- such as a person to Uber's service, a person willing to take that "risk" -- then you quickly tread into unethical territory. However small of a law it is in your perspective, it may be a large form of tyranny to the perspective of the people and entities you're directly willing to undermine or criminalize.
Graham is exactly on the mark. The distinction between a law [previously existing for a long time, just recently existing, or about to exist] is laughably trivial. It is a worthless distinction to a person's opinion of a law or system's corruption.
A) Starting a business explicitly profiting from "efficiencies" created by breaking existing laws (Uber)
B) Starting a business that takes advantages of loopholes in the law and failing to take steps to ensure that customers follow the law (Amazon and Use Taxes)
C) Starting a business profiting from certain efficiencies without violating the laws on the books at the time (Tesla)
C) Some states have laws to ban auto-makers from making direct sales to consumers, while others do not.
You have attempted to make a distinction, but not a principled distinction. There is no reason (that I have seen) which explains why unlicensed car dealers are less harmful to the public than unlicensed taxi drivers.
There is no profound difference. No one is stating that the laws are perfectly paralleled. Nothing of this nature is perfectly paralleled. You're failing to appreciate that law is entirely arbitrary and worthless compared to an individual's opinion of the level of corruption surrounding that law. Your points A, B, C are meaningless to a person's opinion of the underlying validity and righteousness of those points.
> "PG is off the mark here. Companies like Uber explicitly ignore the existing laws and regulations. In the case of Tesla, the ruling just passed."
This indicates to me that the "profound" differences to him/her regarding "validity" is whether a law previously exists. (...Seemingly completely oblivious to the notion that much of what is made into law is insidious, vile, and of a precedence worth objecting.) If the point was only about systemic inconsistencies, that wan't clear.
There is only "profound difference" to the circular reasoning of law itself. There was no reason for me to address that. Legal frameworks are inherently rigid and without much individual conscience.
If services like Uber and Lyft simply decided to be a cab company with excellent technological underpinnings, people would have been quite happy with them and they would have been quite profitable. And they could have blown most cab companies out of the water. Buying up inefficient operators, consolidating them, and bringing them into the modern world of technology is a really good business plan.
Uber and Lyft are in trouble because they wanted to be exit strategy profitable rather than simply profitable. And they decided to do this by ignoring all of that icky stuff like liability insurance, commercial licensing, and following the law. In addition, Uber and Lyft tend to want to ply their trade in areas which are already profitable to cab companies rather than taking over areas that are underserved. If they were brokering rides in areas that can't get cabs easily, they would have lots of defenders.
There is a big difference between laws that actually protect consumers vs. laws that protect middlemen. The fact that pg can't see the difference is a pretty big issue.
I'm sure PG had something reasonable in mind when he wrote the line, but your shoddy irrationalisms passed as reasoning are basically trojan-horseing his position.
Not that I expect city taxi commissions to apply the same standards.
[1] - http://online.wsj.com/news/articles/SB1000142412788732465940...
Are those two beliefs internally inconsistent in some way? Are you basically arguing that you can either believe in no government involvement, or accept government's involvement on the condition that one must abrogate the moral right to complain about its anti-consumer behavior; that there is no other consistent position to take?
Maybe I'm not understanding what exactly you are saying.
The second portion of your argument appears to be an ad hominem claim that we should disclaim PG's statements because of the possibility that he may own Tesla equity. Do you have an actual claim beyond that?
The pg quote that OP provides is very brief -- State/city govt ruling against Tesla/Uber == corruption -- and more an opinion than a true argument because no evidence/elaboration is provided. That Tesla's (very different) situation is equated with Uber's further points to a hastily voiced opinion rather than a reasoned argument. Hence, I would argue that an ad hominem approach is appropriate because there is not much else to go on. Pg voiced an opinion and I made a statement that mentioned some biases that he was likely to have that informed said opinion.
1) Money buys political influence (duh!)
2) Most cities have small tax bases, where car dealerships are a very large part of the tax base. City managers want a larger tax base to help fund their plans.
3) Thus, car dealerships & local politicians have aligned incentives.
4) So, local laws (zoning, advertising, etc) favor car dealerships.
5) Higher offices are filled from the pool of local politicians, as they move up the food chain.
6) Those politicians remember their contacts @ the dealers, who helped fund/launch their careers, & they remain aligned with them in passing laws empathetic to dealer's interests.
Of course, legitimately, car dealerships have HUGE capital investments (fast aging inventory, large chunks of prime real-estate, staffing costs). Would YC ever want to get into the traditional dealer space? No friggen way. Too risky & doesn't scale.
And, nobody really buys a car without a test drive/showroom. So, nearly any "online" sale is cannibalizing the dealer's investments.
So, we need to have some kind of online buying system where you MUST enter in a dealer showroom code before buying, & they get some commission, as they DO offer real value here folks.
IMO, the whole consumer retail system is going to evolve into "showroom + online buying" in a fair system soon.
I'm just saying that it's a fallacy to think that an online sale is wholly responsible for the sale. They do rely on those huge investments by showrooms/dealers.
So, in a "right evolution", I envision smaller showrooms, wide variety + low inventory per unit. (Yes, like an Apple store).
Similarly, if stores like Best Buy died, Amazon sales of consumer electronics would fall. So, Amazon would likely buy up 1/2 the brick & mortars, to create showrooms. But, until Best Buy dies, Amazon is happy that they provide free showrooms that everyone hates, but still uses & abuses.
And you wouldn't have to enter a dealer showroom code, your dealer would just give you a code for a "special discount" -- this is how businesses already track which of their ad campaigns are paying off.
I suspect that Tesla would actually prefer to sell cars at dealers (that are owned and operated by Tesla); their online sales are just a hack to get around the fact that their dealerships are banned. So any concern about conflict of interest between the dealer and manufacturer seems like it does not apply to Tesla.
Last time I was via PenFed Car Buying Service, got a "guaranteed" web quote:
Got the dealer:
Sure, we will honor the price. But all of our cars have door guards installed - that's $500 extra. We just don't sell the cars without door guards.
Got the contract for the car:
Some extra maintenance plans included for an another $900, forced to remove them. Oh and the dealer made an another mistake for $1000, couldn't add up two numbers together (damn liar). An hour later got a fixed contract.
Got to the financing guy who is trying to sell me extended warranty and gap insurance for about an hour.
And that's over 6-7 hours at the dealership... /vented
I ended up negotiating something half-way decent, but that was a very annoying starting point.
I suspect that fixed pricing is the appropriate pattern for the low end. Dickering over a few bucks just annoys the customer, and isn't worth the salesman's time. Plus, the dealer-installed options schtick allowed the dealer to maintain a very small inventory.
I had the opposite last time I bought a car. I'm still a bit baffled by it.
The salesman said he could let me have the car for $X. I countered that if he could let me have it for $Y (which was the price a dealer an hour away was offering for people who bought online for pickup, and was the price that my research had said was quite good), I'd write a check right then and there. He said he'd have to talk to the manager about that.
When he came back from his talk, he said that the best he could do was $Z. The odd part: $Z was LESS THAN $Y, by something like $1-2k.
Extended warranties, sneaky extras and premiums added to your contract, the amount of crap you have to endure when buying a new car these days is horrendously deep. If only more car companies sold directly and allowed you to buy online like Tesla does, I know the lobbyist motor dealerships group would never let that happen though.
No wonder the car industry is in the toilet, it's killing itself and Elon Musk is one of few people trying to change things and he's met with resistance: typical.
Middlemen gotta get theirs.
Big Oil, Big Auto. Why would they have a problem with electric cars?
Also, what does this have to do with this issue?
It has no purpose when the manufacturer has no dealership agreements to begin with.
Also, I love how the article title reads "New Jersey Votes", as if the citizens got a vote in the matter.
In fact, it looks like direct sales have been illegal for a long time, but the law is poorly worded, and can be read in a way that bans direct sales for Ford, Chevy, Toyota, and most other major car manufacturers, but does not apply to manufacturers like Tesla, who only sell direct.
What the new law is doing is saying that the old law is meant to apply to all car manufacturers, not just Ford, Chevy, and so on.
You would take delivery at that address, and then re-register the vehicle in your home state after the title was in your name.
It's just to annoy people who don't know what they want. They can still do test drives in NJ, but can't talk about pricing, options, financing options etc.
And when Tesla creates a Oculus Rift based VR showroom? What if there was a fancy VR showroom in the mall where several different vendors could show there wares - would Tesla be the only company banned? It'd be fun watching that battle.
Relevant Planet Money: http://www.npr.org/blogs/money/2013/02/12/171814201/episode-...
That's a scenario no upstart car company would ever enter into willingly, so Tesla of course didn't. And eventually, companies like Tesla will increase the pressure on all car companies to sell directly, and the dealership cabal will collapse. But in the meantime, that's a lot of tied hands.
Adding legal barriers through lobbying makes all of that worse, of course.
Your understanding of the history of movie distribution as it relates to theater ownership isn't quite right. You can read up more here: http://en.wikipedia.org/wiki/Block_booking
In a nutshell, distributors (i.e. movie studios) owned the major theater chains until 1948, when the Supreme Court demanded that theater production and distribution be separated from exhibition (i.e. theaters).
Not a great article, but here's a reference: http://www.techdirt.com/articles/20060118/195200.shtml
> Tesla has won recent legislative battles in states like Washington, Ohio, New York and Minnesota, but states such as Texas, Arizona and Virginia have retained or added laws limiting the company’s ability to operate stores.
This is the same middle man battle going on in other industries, years of legacy middle men. Dealerships will still exist and Tesla won't kill them, let them play.
If you sell direct, no dealers. If you have dealers, you can't sell direct
In all of Tesla's battles, I haven't seen this brought up.
I have to admire Tesla for standing up to this corruption.
I would do this just to create press and get people to come and see the free-internet-cafe-next-to-showroom that caused such a fuss.
Sometimes, it just seems to me the land of free market for those that can afford it?
The Model S is not a cheap car.
But thank you for the little insight into the political system. Though I don't understand to much what this Congress, Senate and whatsoever are all about ...
The same forces opposing freedom in Europe exist in US. The US Constitution sometimes slows them down (esp. in regards like freedom of speech, which in Europe is commonly restricted) but they still claim many successes.
Then again, there's probably the difference in approaches in Europe and US. US constitution starts with "We the people" and the EU constitution project starts with [1] "HIS MAJESTY THE KING OF THE BELGIANS, /.../, HER MAJESTY THE QUEEN OF THE UNITED KINGDOM OF GREAT BRITAIN AND NORTHERN IRELAND" and so it goes on. Then again, it was rejected, so maybe there's hope yet :)
[1] http://www1.umn.edu/humanrts/instree/euroconstitpreamble.htm...
- Can Tesla set up a proxy dealership whose only job is to take the order and send out a receipt of purchase?
- Can dealership be purely online?
I've done a completely trivial amount of research, and haven't found anything in court on it.