Elon Musk: To the People of New Jersey
teslamotors.com
teslamotors.com
Sometimes it is necessary to protect important principles in society. You can't discriminate based on race - that limits choice but who would support the contrary? You can't defraud people in selling products - ditto. You can't buy land to build a smokestack plant in a quiet residential neighborhood - ditto. Many other examples might be cited. In all such cases, the law intervenes to limit private choices. And there are few who would not applaud most such limits. Private choice is not the end all and be all of a society.
Yet, in a free society, private choice should be the overwhelming norm and it should require surmounting very large barriers before legal meddling can limit the choices people can make to serve their own best interests.
Unfortunately, in old-line industries, this idea got flipped and, for years, private choice succumbed to whatever a combination of big government, big corporations, and big unions dictated to the public. Back in the day, writers such as John Kenneth Galbraith even used to celebrate the idea of a "new industrial state" in which the old private competition would yield to ever increasing concentrations of power among government, industry, and labor, who would in turn find ways to "cooperate" with one another in ushering in a more enlightened form of carving up markets and their benefits than mere freedom and competition might provide.
Well, the bureaucratic edict in New Jersey is a relic of that old thinking, perhaps perversely and cynically applied to buy off lobbyists and influencers but rationalized nonetheless by the old paternalistic thinking that the consumer is ultimately best served by having his betters making his buying choices for him rather than being allowed to make them for himself.
Other than in this cynical sense, there is no possible way in which this outrage can possibly be characterized as "protecting" the consumer.
Perhaps the main contribution made by the tech revolution since the 1970s is that it ushered in an era of huge freedom in how people managed their private lives. The internet in particular has been a huge liberating force and so young people especially have come to take it for granted that they can freely make all sorts of choices without having to feel burdened or restricted by the heavy hand of the law. Of course, exceptions can and do remain because abuses can pop up in all sorts of ways without any legal restraints. But, that said, the overwhelming presumption today is that, yes, I can do pretty much what I feel is best for me unless there is a very good reason why I should be restricted from doing so.
And that means, if I live in New Jersey, I should be able to find a local Tesla outlet in which I can buy my electric car if I want. The thought that some politician or bureaucrat should be able to dictate serious limits on that choice is repugnant to anyone who thinks that way. And, in my view, rightly so.
Unfortunately, where the old political pull persists, the law can be abused to protect old-line market players under some guise or other that is a mere pretext for guarding them from competitors who might offer something better and wind up dislodging them in a free market. Legal regulation is not to be rejected out of hand, of course. Maybe the old-line taxi services ought not to have their business cherry-picked by new market entrants who do things differently. Maybe there ought to be some limits in an urban context on absolute free space-letting if this creates nuisances or the like. The line can sometimes be tricky to draw and can require careful and fair-minded judgments given the interests at stake. But how often do we have situations where nothing of the kind happens and instead the issues are decided, in essence, by who pays off whom and who has what degree of political or bureaucratic pull that can be used to protect systems and structures that are far inferior to what the new competition might offer.
I believe that, in these sorts of cases, the tech impetus will ultimately prevail and push things toward broader and freer areas of choice for consumers. Even with this rear-guard action in New Jersey, Teslas can be bought direct from the manufacturer just a short distance away or via remote ordering. And tech-inspired sales and distribution methods in this and a broad swath of other fields will mean that those seeking to limit consumer choice by protecting local turf through bureaucratic pull will be fighting what will ultimately prove to be a losing battle. As consumers, we are not bottled up anymore. If we don't like something that is really stupid, we can more and more work around it using other solutions.
And so we can, I think, basically see that what the local commission is trying to do in New Jersey is much more a last gasp for the old ways as opposed to being a harbinger that will limit Tesla (or any similar new-wave competitor) from accomplishing its goals. Tesla is right to oppose and fight it (and presents a compelling argument for its view). But the action stands out as so bizarre precisely because it is so out of step with the tech impetus that rules our day. It will stand legally (courts are loathe to intervene in such matters). But the longer-term political winds are against it, in my view, and it will prove a temporary obstacle at most as the modern tech impetus advances.
Contrary to Mr. Musk's assertion of conspiracy, what seems to have happened here is that there were some unfortunate laws on the books that weren't being enforced. Various business interests (ie the car dealers) complained to the Motor Vehicle Commission. The MVC created a new regulation to reflect the laws already on the books.
Unfortunate? Yes. Should that law get repealed? Absolutely. Should the Governor get involved and push to get the law fixed? Yes.
Conspiracy? No. Suggestions of mafia-like behavior? Childish and insulting, but definitely gets headlines and attention.
What if the law had suggested that Office and Automotive equipment could not be sold directly (perhaps harkening back to a time when the Large Automotive and Office Equipment resellers had built up their distributorship); are you seriously suggesting that means Apple Stores should have been shut down in New Jersey?
Europeans (mostly Germans) I've talked to about how we do this in the US shake their heads. These shenanigans along with the "speed limit+9mph" informal rule make them comment that the US is really a stealth police state.
EDIT: There's a precedent for "two sets of laws" in the US, some of the most prominent of which are related to civil rights and sexual orientation.
Anybody traveling slower than this needs to be in the slower right lanes to avoid getting tailgated or inspiring road rage.
I've often wondered if anybody traveling at (or just over) the speed limit on the freeway has ever been pulled over by the police for obstructing the flow of traffic.
Try going less than 80mph in the fast lane on 101, 280 or 880 when traffic allows for it. Just try.
Drivers who are driving slower than this speed need to move over rightwards. Speed Limit + 9 is a minimum speed for the leftmost lane.
Most of the time if somebody is going the speed limit for any length of time in the left lane, there often is legitimately is an issue that they can be ticketed for.
You won't get pulled by cops tho.
Generally unless you are the only car on the road or you are weaving dangerously between cars at high speed its unlikely you will get a speeding ticket if you are part of a pack of cars for this reason.
Then again I'm not a lawyer so don't go off my knowledge ;)
However, in the grand scheme of things, the eliminating the payroll costs from the gas price in NJ would barely have any impact.
At a normal gas station which is neither busy nor desolate, an attendant may be able to serve, let's say, 30 cars an hour. If they each get $20 worth of gas, and the total cost of the employee per hour is $20, then the prices would go down only a fraction of a percent if he was eliminated.
Get out a pump your own damn gas.... jeeze
I don't know what the party line is to justify the gas attendant rules. If it's "consumer safety" then it's bullshit.
Blatant employment protectionism. Every time it comes up on a ballot the "statement in favor" is always primarily employment protectionism. The arguments are generally of the form "if we allowed self service, nobody would pay for full service, and those jobs would go away".
As with many similarly obnoxious laws: Portland votes for it, the rest of Oregon votes against it, and Portland wins.
Is it just regular old people in Portland who honestly believe it is best, even without any lobbying or propaganda?
The stations themselves might not be against full-service, either (at least away from state borders.) It's an extra cost, true, but it's paid by all of their competitors, too, so it just drives prices up. Demand is pretty inelastic, so profits aren't much affected. This might change with electric and fuel-efficient cars becoming more common, but it's hard to think long-term when you're selling oil.
(I have no idea what's caused this. My personal theory is that it improves throughput at busy periods; many UK petrol stations have closed over the past 10-15 years due to the wafer-thin profit margins so those that are left can often get quite busy. But that's just a guess.)
This has occurred to me with airlines as well - we relentlessly optimise for cheap flights, and then complain that we're crammed in to tiny seats while flight attendants hawk duty free goods to us. Maybe we'd actually be happier if the cheapest flights were actually 50% more expensive and nicer, even though that's not what we choose.
(This is probably not that interesting to most people, not even those who live in New Jersey, but it might be some evidence for - or, perhaps, against... - the idea that this is a strange law.)
My tests suggest pumping gas wearing a sweater is probably more dangerous than smoking. Igniting vapors with a static spark is actually much easier.
If you car is newer than 2006, there is basically zero chance you are in any danger. The ORVR systems are a really nice piece of engineering that is mandatory.
Actually I'd say that governments typically get away with paternalistic medding with free consumer choices.
Elon Musk has the right of this argument, and it's heartening to see a CEO take aim at the politicians that are doing that paternalistic meddling.
But I don't see Tesla's CEO fighting back against paternalistic governmental meddling that artificially raises the price of gas cars while producing artificial revenue for Tesla:
http://blog.heritage.org/2013/03/04/cant-afford-a-new-car-wa... By the government’s own account, the stringent new CAFE standards will increase the average cost of a new car by $3,000 in 2025. The Energy Information Administration warned that new cars priced under $15,000 may no longer be available by 2025.
http://www.marketplace.org/topics/sustainability/teslas-secr... If a company comes up short, it has to pay a penalty of up to $5,000 per credit. Or it can buy credits from a company like Tesla, which happens to earn a lot of credits on every car it makes. Tesla has sold enough credits to post its first profit.
So here the government is ensuring a more efficient and free market, not doing any "paternalistic meddling".
Also, even Absolutely Non-Paternalistic Meddling can lead to other massive negative externalities by significantly increasing the cost of new cars (see my link above). Then consumers are less likely to purchase newer cars that, all else being equal, tend to be safer. So we have more deaths.
So, again, even if you're right about these "massive negative externalities," presumably meaning environmental effects, does that justify killing your fellow citizens by dooming the less affluent to drive older, less-safe cars?
Politicians will counter that gas taxes are unpalatable for political reasons, so we have to do something else that's kinda like an indirect gas tax (reduces consumption, makes using it more expensive). I'm open to arguments about us going too far here, but at the same time I don't think the perfect should be the enemy of the good.
Maybe taxes on vehicles are more likely to be passed, and not much worse than taxes on fuel. In that case they may be worthwhile as a compromise solution. They're certainly not a better solution, though.
Holding politicians to account for not being sensible is laudable, but more important is to make noise. Demonstrate that voters are rational in a way that they can recognise, and they might listen. Voting isn't enough, it just gets lost in the noise.
Huh? Voters are quite rational. If you mean they don't pay attention to everything that's happening in Washington, D.C. or state capitols, that's perfectly rational. (Remember you're more likely to win the lottery than to have your vote changing the outcome of an election.) Economics call this, correctly, "rational ignorance" http://en.wikipedia.org/wiki/Rational_ignorance
Politicians and bureaucrats are also rational. Unfortunately this rationality means they put their private interests above the public interest (whatever that means). The influence of special interest groups, the revolving door between .gov and lobbying, these are all elements of it: http://en.wikipedia.org/wiki/Public_choice
i think that's generally taken to mean that the voters do the most optimal thing for themselves, but the whole system ends up being sub-optimal. Some call it the tragedy of the commons.
(Not to mention that "rational ignorance" doesn't explain current voting patterns. Nobody informs themselves politically according to a mixed strategy, and deliberately uninformed people do not abstain from the voting process.)
If gas prices trebled tomorrow, you'll find a lot of hard-working poor people who have to pay three times as much to get to their low-paying jobs.
There will be sob stories on the news about regular people people who can't afford to move closer to work (houses there are expensive now due to high demand) and who can't afford a more efficient car (as they can't pay off the loan on their SUV which is now worth less than the loan value).
Maybe some young people get fuel efficient motorbikes, like in the developing world. There's a rise in road deaths, of course; everyone knows motorbikes are dangerous.
And it won't just be people commuting to work. It'll be more expensive to get to the shops for food - bicycling or walking isn't an option for the hard-working american mother who has to shop for the family, and who has a newborn baby to look after (which is what your political opponents' attack ads will show).
And how do you think that food gets to the shop? On a gas-powered truck of course. And farm machines run on gas as well. Order everything online? The delivery truck runs on gas. You get your trash picked up? Someone's paying to gas up the truck. You're doing construction? Those backhoes and generators all run on gas. Tradespeople like plumbers and builders? Can't carry that roofing ladder on a bus you know. Fire trucks, police cars, ambulances? Gee, I guess they all run on gas. Buses and removal trucks? Same thing. It costs so much to get Jenny to soccer practice now, and how is little Jimmy supposed to get his double bass to after-school orchestra?
Now everything is more expensive, and everyone has less disposable income. People have to get by with less, so they don't go to the restaurant, they make the old car last a few years longer, and the restaurant and car plant have to lay people off, and you've triggered another recession.
Meanwhile, your busy job as a legislator means you still get driven everywhere, so you come across looking like a huge hypocrite.
Now you've put a regressive tax on getting to work, you've caused a rise in traffic accidents, you're anti-family, you've raised the prices of everything, you've triggered a recession, and you're a hypocrite. In exchange you've got the support of the green lobby, but many of them are having second thoughts.
Good luck with your re-election campaign.
Tesla is benefiting from government intervention much more directly. I'm surprised that nobody else has mentioned this yet.
http://www.usnews.com/opinion/blogs/economic-intelligence/20...
Elon Musk is a hypocrite and no friend of free market capitalism.
If someone refuses to serve or otherwise interact with me on account of my race, I would not use the threat of deadly force to change his behavior, nor would I advocate that anyone else do that on my behalf.
That is not to say that I approve of racial discrimination, or that I would do absolutely nothing about it. I am only stating what I would not do about it.
I understand Galbraith is a Libertarian boogeyman and Adam Smith is viewed as the opposite, but they share a heck of a lot in common. It's sad to see such easily refuted ignorance elevated to the top of HN comments threads.
Gotta hand it to Musk - that's some smooth salestalk in what is supposed to be just voicing a public opinion against shady politics. I was halfway through the third sentence when I caught myself thinking - "indeed, that does sound like such a better dea--- Hey wait a minute!". Musk, you sneaky bastard! Never missing a chance to remind me why I want a dang tesla.
He is right and it's a terrific salespitch. That's the best kind of right.
There have long been techniques for writing software as formal proofs of correctness. As far as I can tell, they haven't been popular with mainstream programmers because they are simply too different.
and they'll update it when they service the car. how is that software any safer than the OTA?
its not.
It's easier to test one change in isolation than to try to figure out which of these 20/200/2000 commits broke things.
OTOH I'd risk a bad OTA update 1% of the time if it meant avoiding the service center the other 99% of the time. And I'm sure a bad update is just a call and a tow away from a fix at a Tesla service center. Unless you're on a road-trip I guess.
(BTW, do Teslas apply OTA updates while the car is underway, or store them up for application when parked? If the former, then applying even a correct update to a car in motion could have all sorts of nasty consequences if it resulted in a sudden change to, say, response characteristics of the suspension or brakes.)
But I was responding to a claim of the update being "poorly tested", not insecure. That's orthogonal to it being over the air. A poorly tested update delivered through a service center can also brick your car.
Even your cellphone doesn't update when it's 'under way', what makes you wonder a moving automobile will? If you hazard a guess as to how OTA's are applied to automobiles, I would guess it'll be in Parked, plugged in, and prompted to update by pressing an "Accept & Update" button.
We keep forgetting that lots of "advanced" features were actually invented decades ago.
Furthermore, the message tells you it won't install unless the car is plugged in or has a certain level of charge.
This is possibly true (though I'd be surprised if they didn't have serious precautions in place to prevent a total firmware brick, even fairly cheap electronics are difficult to really brick these days, with multistage/multipartition bootloaders and such).
However, given the amazingly large amount of costly meatspace work they would cause themselves by sending out an OTA that bricks cars, I'm sure they are well motivated to avoid that possibility.
It should be possible now to have a rollback function built into engine controllers.
If you are trying to make an argument about control then make it and maybe give us some more information than just the conclusion of your thoughts.
Of course Tesla would still supply a standard UI that the vast majority of people would use, but it could be forked on Github if you preferred. (I assume that third-party apps would be separated.)
For all the 'speculation' about Apple merging with Tesla, acquiring a significant portion of Blackberry/QNX would be a better choice. Detroit could end up buying their interactivity from a subsidiary of Tesla.
Just what my car is missing, fifty thousand anime ringtones and a SNES emulator with all-you-can-eat ROMs.
http://www.latimes.com/business/autos/la-fi-hy-autos-303-dea...
We trust the manufacturer to correctly service our cars, manually or OTA.
I am old enough to remember what owning a car was like when things were changing away from mechanical devices one could understand and tinker with and becoming nondescript hunks of plastic you had to buy from a manufacturer. (I'm talking about the ignition system, as one specific example.) There was always a bit of a sinking feeling for me along with a sense that the world was being dumbed down and manipulated for profit. As programmers and technical people, we should be able to see many parallels!
That said, dumbing down the world in some ways is not necessarily a bad thing and can be exceedingly positive. One might miss the twisty, dusty country road in leisure time, but curse it when it's raining and the road has turned into an impassable morass. Reliable, boring, convenient transportation is great sometimes, like when you're driving someone going into labor to the hospital.
Maintenance free electric cars that drive themselves will be one of those positive simplifying things.
It is possible to run a completely open software stack, and very easy to run an almost-completely open software stack.
My hope is that open-source hardware (both electronic and mechanical) will be abundant enough in the future that I could feasibly fabricate a new ECU from scratch, or 3D print a new evaporator for my AC.
However, when you talk nostalgically about the good old days of cars being "mechanical devices one could understand and tinker with", and then turn around and talk about the new generation of electric cars being somehow equivalent, it seems a little logically inconsistent to me.
Make no mistake, a Tesla is just as much of a "hunk of plastic" when it comes to fixing or modifying it yourself. Expecting any complex piece of modern electronics to be similarly hackable to a car from the last century is a little unrealistic.
EDIT: sounds like we're basically in agreement on this. I misunderstood the previous comment.
That is exactly my point. Did you actually read the whole comment you are responding to?
Synchronizing three Weber carbs? Oh, yeah, good times. Good times that involved poisonous mercury to boot. Port fuel injection, please.
Don't get me wrong, there was a time I liked working on cars, too. So much so, I was a professional ASE-certified mechanic for a while. I also like my Scion xB that in 70K miles we've done nothing to except insert gas, change the oil, and put a set of tires on it. I don't miss having to slap new points and plugs in it before a weekend trip.
And for the Tesla tie-in, our Leaf is about as much of an appliance as you're going to get in a car. There's something to be said about a car whose maintenance schedule doesn't fill a page.
> Reliable, boring, convenient transportation is great sometimes, like when you're driving someone going into labor to the hospital.
Or great even for something as simple as getting to work in the morning. I've owned my share of Triumphs and Fiats. I enjoy my dumbed down existence that doesn't involve a late-night session under the hood because I have to be at work the next day.
I mean, I see your point. But if most folks are like the cranky, older version of me now, if they wanted finicky transportation that needs constant maintenance they'd buy a horse.
The car equivalent of these used to exist for daily drivers, but are now relegated mainly to closed course competition vehicles (much to my delight). The Radical SR is probably my favorite one, consisting of a modular vehicle that can be built from a kit shipped in boxes of parts [1].
There is extreme pleasure to be had from driving both a Tesla, and a Radical SR. But both have very different uses, and very different performance and maintenance criteria.
For those interested:
They're still muscle cars. Tablets and phones have been making inroads, but the inmates still run the asylum.
It's not fair to say Macs are less customizable or less of a tinkerer's paradise just because they are more user friendly.
Carbs are great until something in the environment changes and they're not perfect anymore. I want MAF's, o2 sensors, etc, thanks.
I think my favorite car was my late 80's toyota truck with a 22RE. For my taste (which would vary wildly for another person) it had the perfect blend of technology while keeping things reliable and easy to work on. But it was still just something I enjoyed working on because I enjoy working on things.
For a day to day car, I'd rather have something I never had to touch. I'm hoping the move to electric vehicles picks up speed.
The thing with the toyota truck I noticed mostly, is that despite cosmetic flaws, it still ran great and was pretty sound functionally at 230k. I had a dodge dakota that fell apart around me and spun a bearing at 160k. The drivers side door hinges actually rusted completely out.
I had a 1987 MR2 in St. Louis for four or five years as well, and my friend had it for three or four before that. It had issues with the rear quarter panel as well, but otherwise was good.
All anecdotal, and the St. Louis winter isn't a Michigan winter or anything like that, but there's my experience fwiw
It's much the same as computers. The original Apples were understandable devices. The lack of miniaturization meant that hackers could figure out how everything was working and play with it. That activity would be ridiculous with modern-day CPUs/components as the complexity has increased by orders of magnitude and the miniaturization has reached levels where specialized equipment is needed to look at what's going on that costs well beyond what can fit in a hobbyist's budget. Yet modern-day computers are still programmable and people are still learning and hacking. The only difference is that this learning is happening a few abstraction levels removed from the actual hardware. The same will be true with cars, provided manufacturers are as cooperative as Tesla seems to be.
Musk is too smart to know hes comparing oranges to apples.
He is only partially right. I say to Mr. Musk - I will agree with your complain when you sell me your car for $18,000 - an average price for an average car in the US. Why it doesnt cost $120,000, like your models, you ask? Well, exactly because of what you mentioned: they use cheaper parts with less engineering that are bound to break faster and then they will make up some profit on the parts. That's why Mr. Musk, they profit from service on car that is TEN times less expensive than your car.
If you asking me I prefer to pay cheaper upfront and be able to treat it like a pair of shoes that I will be able to exchange for a newer model in 2-3 years, when this gets me bored or wears out.
Other than that -- always love to hear brilliant people sticking it out to the lobbyists and corrupted over-bureaucratized politicians! At this stage of things within US, Musk is sticking it to so many groups (building rackets "10-times cheaper than otherwise tax payers would've paid") and pissing off so many powerful people, that I wouldn't be surprised to see him dead sooner or later (although of course I wish him all the best!)
Turns out the Model S at $1,466 as optioned is more expensive than a Leaf. :) Not that I wouldn't kill for a 300 mile range...
It's more likely to come with a hackerspace membership.
> The rationale given for the regulation change that requires auto companies to sell through dealers is that it ensures 'consumer protection'. If you believe this, Gov. Christie has a bridge closure he wants to sell you! Unless they are referring to the mafia version of 'protection', this is obviously untrue.
Nicely done, Elon. Nicely done.
http://www.motherjones.com/politics/2014/01/chris-christie-b...
Chris Christie's administration closed 3 lanes of the George Washington Bridge for a bogus "traffic study", making tons of Traffic. It was political payback against the city of Fort Lee who has a mayor who wouldn't endorse Christie when he was running for governor. Christie says he didn't know about it but some in his administration have left or been asked to leave over it.
The other problem with this is that the Gov is still has popular support and Mr. Musk probably negatively influenced those people. Further, making this an actual political fight is really not something Mr. Musk should be looking towards because their is a fair amount of material the Gov can use on Mr. Musk.
Think of every attack that can be levied against the elitism of Silicon Valley and personify it in the person of Elon Musk. It could get quite nasty and the valley doesn't really do well in political games.
Christie has a lot more to lose by his constituents seeing a bad trend in Christie's record than Musk has by any personal character attacks Christie could send back his way. Musk's job certainly isn't in any danger from bad things coming out about him in NJ.
Right. It does close the door to Christie deciding to do a turnaround and adopt the issue as a crusader for the people. Actually, considering that Gov. Christie is a politically powerful man with an apparent history of underhanded retaliation, I think it's really the last thing you want to do.
Remember, this letter is to "the people of new jersey" and not "the current governor of new jersey". Musk is choosing his venue, the court of public opinion - an arena where Christie is taking some major hits.
"All that is necessary for the triumph of evil is that good men do nothing." -Edmund Burke
"This administration does not find it appropriate to unilaterally change the way cars are sold in New Jersey without legislation and Tesla has been aware of this position since the beginning."[1]
It would be far more underhanded for the governor to exempt a single organization from the rules. Yes, the rules are stupid, but tomorrow it's going to be a time when you do agree with the law, and it amounts to giving a bad guy some special privilege.
[1]http://www.itproportal.com/2014/03/13/new-jersey-bans-the-sa...
How is this not underhanded? It'd be unilaterally preventing the changing of the law since he didn't even allow it to enter the regular legislative process.
He saw it coming and shut it down before it could go through the normal legislative process. Yes, that is underhanded.
It's amazing how much building a new company in a supposedly free market requires arguing against politicians who claim to champion free market economics, but who actually use government to give cushy monopolies to incumbents with big lobbying budgets.
"Crony capitalism" isn't an accurate term for this; it's more like economic central planning by way of lobbyists instead of communist bureaus.
1. http://www.spacex.com/press/2014/03/05/elon-musks-statement-...
http://www.bloomberg.com/news/2014-03-05/musk-makes-washingt...
crony capitalism == crony "capitalism"
Americans are just lousy with punctuation.
Well, except that it demonstrates exactly the characteristics of the system in which the holders of capital hold society captive to their interests which led to its criticism by the people who coined the term "capitalism" for that system.
> In public choice theory, rent-seeking is spending wealth on political lobbying to increase one's share of existing wealth without creating wealth. The effects of rent-seeking are reduced economic efficiency through poor allocation of resources, reduced wealth creation, lost government revenue, national decline, and income inequality. Current studies of rent-seeking focus on the manipulation of regulatory agencies to gain monopolistic advantages in the market while imposing disadvantages on competitors.
The term "economic central planning" emphasizes that it's fundamentally opposite to free market economics, and that its practitioners and defenders are hypocrites.
I think the above poster had it correct; refer to it as "crony capitalism" to non-economists.
You go to the dealer specifically asking for an electric car and the salesman tries to make you change your mind to another vehicle. Considering the bonus structure at most dealerships, there is no incentive to sell an electric vehicle.
First, the dealership may choose not to participate in selling electric models at all.
Second, there is usually only one or two people allowed to sell an electric vehicle because your salesperson was not trained. Who wants to lose a customer and a bonus to another salesman?
Third, it takes longer to sell an electric vehicle because you have to explain everything that gas car owners already take for granted. You make less money by spending more time. This also leads most salesmen to push for 10% over MSRP, harming sales.
Finally, some very corrupt dealers go so far as to deliberately discharge their vehicles and leave them that way so they won't have to try selling them. Dealers have little incentive to sell the entire lineup of manufacturer vehicles if they have to train and hire more sales staff for one model. Some dealership owners may even may be politically opposed to the idea of electric vehicles.
Big businesses and the politicians who love them often rely heavily on erasing the perception of that difference.
In practice, most politicians mean an economy tilted in favor of multinational corporations when they use these dog whistle terms. It is an offense to everything Adam Smith stood for, but it's what they really mean by "free market." The real Adam Smith believed modern-style multinational corporations were a recipe for corruption.
"The directors of such [joint-stock] companies, however, being the managers rather of other people’s money than of their own, it cannot well be expected, that they should watch over it with the same anxious vigilance with which the partners in a private copartnery frequently watch over their own.... Negligence and profusion, therefore, must always prevail, more or less, in the management of the affairs of such a company."
That's a great phrase. I look on in trepidation at the almost mechanical way folks in their teens and 20's react to memes. I find parallels in the way programmers parrot half-truths and untruths. And of course, there's the joke that passes for political discourse on TV.
Really, we 1st world people aren't that much more sophisticated than 19th century Russian peasants chanting "Constantine and constitution" thinking "constitution" was Constantine's wife.
Besides, I may not purchase a vehicle based on any of the same factors as the average person that these ratings/awards are targeted to. To some people a car has to have a certain feel. How much more subjective can that be?
It's like product reviews on the internet. Almost wish they didn't exist they're so fake most of the time. we digress...
The quality of awards/ratings aside, that shouldn't even matter here. Tesla or any other manufacturer should be able to sell directly to the consumer if that's the way the two parties want to do business. I can buy apple products directly from Apple and not have to go through Best Buy or anyone else. Why do cars have to be different, still, in 2014?
Those who preach, rarely practice.
Only some portions of the electorate and politicians preach free-market economy.
There is some bias there. You judge Tesla a better product, so of course all the regulation that are against its sales are going to feel unjust.
I have difficulties to really follow this whole stuff (I live in EU, the whole buying a car in the US seems a very 'exiting' experience, at least when reading about it on Reddit), there does not seem to be any sort of nice non-partisan explanation of the problem and why those regulations where put in place.
Actually Musk is the clearest answer that is not either: "Tesla great, fuck the regulation" or the opposite, "Musk dick, cannot follow the regulations like everybody else", but what's PR and what's factual ?
Edit: Just realised why it irked me this time. I was reading about EU decision of standardizing the power plug for smartphone to micro-USB. People were all happy for regulation there. When people complained that now the we would get stuck with micro-usb forever, people dismissed it saying the EU will just change the plug when a better one comes up as if the EU/US hadn't got an awful track record at keeping their regulation and spec up-to-date, like in this case for example.
* Free-market is for the poor (in every sense: money, political power, etc.)
* The rich (again in every sense) know that in order for you to become obscenely rich you need a state-protected, but not state-owned monopoly.
That's how wall street works actually: We share the loses, they get the winnings... It's risk free win-win for them.
This part works better as an argument for "don't start a car company" than anything else.
I mean, yes, Tucker and DeLorean and Fisker et al used dealers, and they all failed, but that doesn't mean that they failed because they used dealers. The people who worked for them all consumed oxygen, too; it doesn't follow that we'd all be driving DeLoreans today if only we lived in an artificial vacuum.
I appreciate where he's coming from, and I think he should be allowed to sell his cars directly to anyone who wants to buy one that way, but shoddy "correlation equals causation" arguments don't help his case.
In other words, they are not trying this simply because selling direct is a better choice.
I'll give you just one example. The law of the land in NJ is that you can't sell in NJ unless through a dealership. That's the current law. Those laws need to change to allow a direct to consumer sale. Map that to this quote "ended your right to purchase vehicles at a manufacturer store within the state." Brilliant. "You lost something you had" is so much more powerful than "We need to persuade the legislator to make a change to add something new"
Seriously, I dig his cars. And his vision. And I suspect that to attack such large entrenched markets you have to have this kind of maniacal drive. I just hate being misled and manipulated - no matter who the person.
It was possible to read part of the law as being written in a way that would not apply to Tesla, but would apply to nearly all other current makers. (I mentioned this in a Reddit discussion, and someone pointed out that another part of New Jersey law made it so that reading was clearly not correct, and the law prohibiting other makers from selling direct did pretty clearly cover Tesla).
The new rule is basically clarifying that yes, the current law does indeed also apply to Tesla, and anyone who issued any permits or otherwise had approved Tesla's sales was in error.
In your vigor, you seem to have misled only yourself.
I can understand what you mean, but to the end consumer they are going from being able to buy a Tesla directly to not being able to.
Shouldn't have been issued according to who? According to law, it should've been issued, otherwise you don't need a law change to revoke it.
Recently they were told differently: that the executive has made the decision, and they're shut down. Not much wonder that Elon's unhappy with the situation. Nobody likes the rug removed from under their feet. Plus it feels like (and probably is) inside ball when something like that happens.
Are you suggesting that Tesla is actively breaking the law in NJ right now? The rule change doesn't take place until April 1st, which is why they have to close their store by then. If they aren't operating illegally right now, then the commission has ended our ability to purchase these cars.
Secondly, if you can only sell through a dealership, why can't Tesla just own some dealerships?
That's how a lot of government rule-making works. The law says something general and the specifics are left to departments and commissions. In this case, it's not clear that this particular rule is outside the plain meaning of the law; they just hadn't gotten to writing it before because Tesla presents a novel circumstance. Of course, it's difficult to hold somebody accountable for breaking a rule that hadn't been written yet, so "actively breaking the law" is probably overstating it.
Secondly, if you can only sell through a dealership, why can't Tesla just own some dealerships?
I am not an expert, but I imagine the law was written in such a way that "franchise" is defined as an entity independent of any manufacturer.
Unfortunately, these sorts of laws are often vague and confusing, and boil down a lot to the state's (sometime capricious) choices about what to enforce and how. The governor's ability to direct the state's executive branch is widely and correctly seen as a huge power.
So the law is vague and requires the New Jersey Motor Vehicle Commission to fill in the detail. In fact, the NJMVC itself granted a permit to Tesla to sell cars in the state (as stated in your article). But now the NJMVC has reviewed that decision at a higher level and has decided it made a mistake
http://mashable.com/2014/03/11/tesla-new-jersey/
If permits are being revoked, that sounds like a change to me.
You can say that a proper interpretation of the law would have always led to that outcome, and that Tesla doesn't have a right to complain that the law is finally being enforced correctly. But that presupposes that laws have unambiguous pre-existing interpretations.
Although the text of the state code isn't changing, it seems clear to me that "the law"--as in the actual regulatory environment experienced by Tesla--is changing in a negative, albeit somewhat predictable manner. Was Musk glib in describing this in his letter? Sure. But I don't think it rises to the point of being disingenuous.
Agree. And makes you wonder a bit about the marketing materials surrounding these cars, huh?
He's trying to make as if he's acting in the best interest of the people of the state of NJ. When it is very clear that his motivation is his own interests and selling his car. And making more money for himself. Most businesses don't make it that obvious.
Another word I will use is immature. His argument sounds like a spoiled kid who doesn't get what he wants and is going to call out the teacher at school hoping to berate them into just caving in. [1] Real life doesn't work that way. Not to mention the fact that there simply aren't enough people in NJ [2] that care about buying a Tesla to protest and make change on this.
[1] "Hey great argument no I don't mind if you insulted me because you are right!".
[2] Guess what? In Pennsylvania there are many more people that don't want to buy liquor at state stores (which they have to) and that hasn't changed yet.
You cannot possibly be saying that with a straight face.
Pretty sure Musk has the high road rather solidly booked all to himself when it comes to his credibility concerning trying to change things for the better when you compare him to any other auto corp.
I don't see how these goals are mutually exclusive. And saying that he wants to sell his car is falling into the realm of ridiculously obvious.
Most businesses don't make it that obvious.
Really? Most business make merely a token effort at pretending every action they take isn't just about the bottom line. I don't see how pandering to customers makes one business any 'better' than another.
What is "immature" about calling out a stupid and corrupt law?
I have no idea where you came up with this line of thought.
Seriously, how can you be on the "we've got to enforce current law" side? It's so ridiculously anti free market that I'm sure all the Tea Partiers are having cognitive dissonance over this.
One of the things I love about Elon Musk, besides the fact that he has the balls to tackle hard, capital-intensive problems, is that he has a pragmatic, realist approach. Getting SpaceX NASA contracts was not something everyone would have done, not when many were marching to the drumbeat of "private space exploration is superior to public." And apparently, he's not being above throwing a recent scandal in Chris Christie's face.
The whole article is a great play though. Note that he starts by explaining the rationale for the existing laws, validating their original purpose, then showing why that rationale doesn't apply to Tesla. This is wonderful persuasive writing.
Look at the economics of a Tesla dealership, for every car sold in New Jersey, how much of that money stays in New Jersey? And let's be honest, being a car salesman is not the most lucrative or respectable of trades. The jobs are usually temporary so down on their luck folks can try and earn some money while looking for something else. Ensuring a state has dealerships possibly out of work people can fall into for temporary jobs is like having a social welfare program without having it on the books.
It sucks, but if you were a legislator in NJ, would you rather Tesla's profit went all out of state to Tesla, or if your citizens could get a crack at some of it and have it circulate around in the local economy for a bit.
It's unpopular, and us tech folks don't like it, but from a NJ legislator's position it's pretty rational.
The correct answer of course is to foster a local auto industry and get a company to make and build and sell cars from out of NJ elsewhere. But that's too impossibly forward looking.
I was making a similar point earlier. In fact I wouldn't be surprised if over time we start seeing more laws passed to encourage more of the money citizens of states spend to stay in-state. I think this is going to become a serious concern over time, how are local economies going to thrive if we keep buying stuff online and all the major online companies are somewhere in SV?
And if you, as a legislator, think bringing money and jobs into your state doesn't matter, you have another thing coming:
https://www.google.com/search?q=%22attract+business+to+the+s...
You'll find endless concern from every state about how to attract businesses and jobs to their state. It's not a coincidence that Hyundai opens a manufacturing plant in Alabama instead of someplace cheaper or more recognizable.
http://www.enquirer.com/editions/2002/04/06/fin_alabama_put_...
The problem with New Jersey doing this vs. Alabama is that the mechanism for Alabama to get Hyundai is pretty direct and pretty clear. Offer incentives to Hyundai, get a plant and a couple hundred jobs (plus the indirect halo effect on the economy outside of the plant).
For New Jersey it just looks like they're protecting shady car dealers by generating an artificial monopoly. The optics on it are terrible, it looks corrupt and petty, and the public rationale "it helps the consumer" is clearly false, but the practice is pretty much the same.
There's absolutely nothing that prevents Tesla from setting up a franchised dealer network in New Jersey, selling their cars cheap to the dealers and then having the dealers keep a cut while generating jobs in the state. It's "spreading the wealth around" from CA to NJ a bit. The only thing that prevents Tesla from doing this is that Tesla wants to maximize the profit share they see from the car sales.
The thing is, because Tesla has been very public about it, they know there is room in that large 25% profit margin per vehicle (Honda makes about 15% per hybrid) to "share a little".
While true, it's also universally true of just about everything. Yes, using resellers/dealers/etc. means that you have to give them a slice of "your" money. It also frees you from having the scale up the infrastructure and employees yourself. Which is why franchise models (either pure or blended) are so popular.
I suspect the more pressing motivation is that Musk wants to have complete freedom to do things his way without filtering by a middleman who would likely be strongly influenced by the way that auto dealers have historically operated.
That said, a couple of points.
1. As another poster noted, the auto dealer "experience" that many of us are familiar with doesn't necessarily reflect the experience one gets with a luxury car brand. Haggling over a Ford Fusion and walking into a $INSERT_LUXURY_BRAND dealership aren't the same thing.
2. I suspect a lot of folks are underestimating the degree to which Tesla will have to provide local services that look a lot like a dealership as it scales up and certainly as it introduces cars at more mainstream price points. For example, you need service centers--as they are building out today.
Ding ding ding. In this respect, the HN hive-mind is pretty schizo. Are you a phone company and trying to protect your profits? Burn them at the stake!
Are you a popular technologist who builds rocket ships on the side and are trying to protect your profits? Cheer him on!
> I suspect a lot of folks are underestimating the degree to which Tesla will have to provide local services that look a lot like a dealership as it scales up and certainly as it introduces cars at more mainstream price points. For example, you need service centers--as they are building out today.
That's also true. I'm not sure what the ratio of service center employees per Tesla vs. traditional automobiles. My guess is that you'll have to bring your Tesla back to the dealer for most maintenance needs, while I can bring my regular old family sedan to whatever gas station/service center is down the street.
We don't even know what the used car ecosystem for Tesla's will look like. Will anybody really want to buy a car they have to put a few grand of new batteries into? Will there be a used car service center ecosystem in place? When can I walk into the local Pepboys and buy a new sprocket or cog set for my Tesla? Never? Then bye bye Pepboys.
The network effects which contribute to the overall size of the auto industry, which is far more than just the manufacturers, is a pretty significant part of the overall economy in a given area. What will this ecosystem look like in 25 years with hyper sophisticated self-driving Tesla-likes all over the road? My guess is that it will be devastating to the system that's there even if an all new ecosystem replaces it. It's not a 1-to-1 map. People won't make the transition and that's a problem governments care about.
In the Tesla model, you eliminate all those for a "test drive experience genius" or whatever they call it, 3 or 4 to a "test drive experience center", NJ gets the sales tax on the car, and whatever they can squeeze out of the 3 or 4 guys who work at the Tesla dealership and the 2 mechanics who work in back.
If Tesla, an extremely minor player in the industry right now, gets to do this, why doesn't everybody else? Overnight all those endless seas of car dealerships, representing millions upon millions of dollars NJ wants to capture into it's state economy go bankrupt and now nearly all of the money is going to CA, Japan and Detroit with a handful of in-state jobs to man the direct-to-consumer "test drive centers". And now for the out-of-work accountant or phone engineer? He used to have a chance to at least work a commission only car salesman job for a few months till he found better work. Now he has nothing to go to in the interim and overall state unemployment ticks up a half percentage point.
As an engineer I see lots of built-in inefficiency in all this. So I understand the HN outrage. But NJ doesn't want efficiency, they want people in jobs and off welfare. Each person in a job is a chance for the State to capture a few hundred dollars off of each car sold -- not as taxes, but as GDP (which will eventually float the government's coffers as taxes anyways), rather than paying out for social welfare programs. It's in the interest of good governance to have an inefficient system, so that there's lots of places citizens in the state can reach into the car-to-consumer pipeline and extract some money from it. And they can do all this without having to put in place unpopular social welfare programs or increase taxes or some other public works program because they can regulate the private market to force it to be more inefficient than it should be.
From a macro perspective, NJ's behavior here is completely rational. I don't agree with it personally, I think there's better ways to do this. But it's easy to explain without resorting to name calling or disparaging thinking about the competency of NJ's governing officials.
To be clear, I'm not supporting the move. EVs are the future and the sooner we embrace them the better. Just trying to see it in the light of the argument made above.
Other than the dealer keeping the profit all of those jobs and people would be in NJ if there was a Telsa dealership in NJ. Now there won't be and those jobs won't exist.
Tesla's "dealer" lives in CA. GM's "dealer" lives in MI and Italy. Honda's "dealer" lives in Japan. Hyundai's "dealer" lives in South Korea. BMW's "dealer" lives in Germany. Mercedes' "dealer" lives in Germany. Toyota's "dealer" lives in Japan. Ford's "dealer" lives in MI. Suburu's "dealer" lives in Japan.
and on and on and on: Alfa Romeo, Aston Martin, Audi, VW, Cadillac, Fiat, Jaguar, Kia, Nissan, Porsche etc.
I don't know how many dealerships are in New Jersey, but let's say there's 1,000. You give Tesla the ability to sell direct to consumer, then everybody else will want to do the same. Franchise dealerships don't get their contracts renewed and every car maker moves to direct to consumer. Congratulations State Legislator jonknee, you've just cost New Jersey a minimum of 1,000 very lucrative jobs.
To give you an idea of how important 1,000 jobs are to a state economy, when Alabama was fighting for Hyundai to come open up a plant for 2,000 workers, with an average salary of just $40,000, Alabama offered around $253 million in incentives or over $115,000 per job. This is because of all the economic activity having just 1,000 employees running around with cash in their pockets would create and the network effects therein. Over 5 or 10 years, Alabama is set to make up that investment in spades.
I don't know how much your average car dealership owner makes, but I bet it's quite a bit over $40,000. I bet a 1,000 out of work bankrupt dealership owners is a pretty big slice of state economic pie. Over 5 or 10 years, I'd hazard they represent way more than $253 million in activity to New Jersey.
So congratulations, you've just cost New Jersey hundreds of millions of dollars in GDP and economic activity just by counting only the dealership owners and not all the rest.
Now you and I both know that when you go to 47 in Vineland, and there's mile after mile of car dealerships. They don't just have 1 or 2 sales guys. Each of those places employs a dozen to two dozen sales guys. A dealership can do that because they don't pay these guys almost anything except commission, so they can afford to keep a bunch of them around, grooming their power ties. So let's say there's an average of 12 sales guys for New Jersey's 1,000 dealerships or 12,000 people employed just selling the cars.
Well a Tesla style dealership doesn't want high pressure commission only power tie wearing salesmen. They want "car information experts". So they hire say 4 guys to mill around and direct potential customers to the interactive information kiosks. Let's say NJ is able to get all 4 of these guys from the pool of current car sales guys. What happens to the other 8?
So we have about 8,000 guys out of work. Congratulations. Let's use Alabama's model, you've just cost New Jersey a few billion dollars in economic losses. And now all those food trucks and restaurants and tie shops have to figure out how to get by with 1/3rd the number of customers. So that's even more people out of work and more economic losses.
How much economic damage are you willing to cause New Jersey, legislator jonknee, just so consumers don't have to haggle a bit when they buy a car every 7 years on average?
That can be said to be true about everything. Why allow online software sales, or Amazon purchases? Force them to have local BNM shops.
In your example, states are actively trying to collect at least sales tax. New Jersey is no exception
http://www.northjersey.com/news/sales-tax-decision-could-be-...
"Merely corroborative detail, intended to give artistic verisimilitude to an otherwise bald and unconvincing narrative.."
While I don't necessarily support the NJ move, I think we should start asking questions about economic value flow. If people live in one place yet all their economic activity is directed to some place on the other side of the country, what is the long term effect of this on their local economy?
I don't exclude myself, we all use these web services that are highly concentrated in SV, what is going to happen to our local economies?
They adapt, as all economies must to the changing winds.
The future is going to be not only disruptive, but destructive, to industries and people alike. How we turn out as a society will be determined by the policies we develop around handling this turbulent time in human history.
Like Germany?
People are allowed to have multiple motivations.
Also, do you really believe Elon Musk started an electric car company, a company which builds rockets and one which is the largest residential solar power provider in the country, under the only premise to make more money?
People complain about "corporate welfare" but Musk gets the "cool sustainable tech bro!" pass.
What do you mean? Isn't there economic value in owning a Tesla? Just because the money flows the other way doesn't mean there isn't value in owning the product.
When you have a dealership, you have local folks working there thus some of the money that car buyers spend gets circulated locally, which would not be the case if all you have to do is point and click to get your car delivered.
This is a serious concern as more economic transaction is virtualized.
As I understand the sales will shift completely from local venues to point and click only after the laws in question come into power. The stores that are about to become galleries do employ local folks and a sales ban may imply reductions on sales-related positions, right?
In any case, issues like this I believe are just the beginning of a larger debate to come. I don't see how local economies are going to sit idly by and watch us do all our shopping on Amazon.com where the only part of the transaction's economic value that enters the local vicinity is perhaps the delivery truck, that is not sustainable.
It's one of the things that makes it practical and tolerable for me to live in a somewhat isolated, low-population-density town/area where I own a home, pay taxes, receive medical care and various other non-remoteable services, purchase prepared food and other perishable goods, all while working for a company based on the other side of the planet, bringing in a fairly high salary for the area.
My local economy receives far more value because Amazon makes it easy for me to live there than they would if Amazon didn't exist and I instead lived in a much more convenient large city.
This is weird. Really weird. It's raw and exaggerated...almost a cartoon. I'd believe this is raw Elon Musk, but why is someone letting raw Elon Musk define this campaign? Remember raw Bill Gates? Did we learn nothing from that? Or maybe we learned a lot. And "we" have developed an affinity--a need--for the brash genius.
I'm probabilistically wrong--Tesla's doing well. But something about this appeal, the wording, makes me react atavistically, "Go fuck yourself. Nothing is obvious."
I had an argument here, but it didn't seem important, so whatever. Dogecoin and such. Also hyperloop. But really, hyperloop. But remember, I was right about New Jersey. Poor New Jersey.
Between that and this nonsense, his reputation as a "non-politician" has been tremendously tarnished.
A true sociopath would appear to be a pragmatist, as that's the most practical approach.
Even Martin Luther King and Mahatma Gandhi knew how these things worked.
The best one can hope for are high functioning sociopaths who are somehow invested in the betterment of society -- basically Sherlock with better packaging. That's not to say there aren't real heroes and statesmen out there. Just good luck with distinguishing them from the hordes of sociopaths.
Wishful thinking. Same reason a lot of people felt George W. Bush was someone they'd have a beer with, and considered this a relevant datum for supporting his presidency.
Schwarzenegger was basically elected as state governor off this notion. And it wasn't untrue so much as... stupid.
... and Christie can argue that allowing Tesla creates a slippery slope whereby Ford and GM and other companies end up crushing the franchisees that the law intended to protect.
Musk is trying to find a middle ground that just doesn't exist unless you accept governments creating one-off laws that specifically recognizes individual corporations.
Everyone is talking about how we can't trust Elon Musk since he is acting in his rational self-interest. Yet why should we assume that Christie is acting out of the pure goodness of the heart? Politicians too act in their self-interest and that kind of self-interest often involves maximization of power. The currency of politics is not just cash (that helps too, of course!), but also favours: you can be sure that in return for this favour, he'll ask something from the dealership industry which would beneficial to his political career (e.g., the first thing that pops would be to accept additional vehicle taxes, which would help Christie carry and receive donations from environmentally conscious voters in a liberal state susceptible to flooding)
(Edit: remove an incorrect assertion. Laws regarding specific individuals are constitutional, just not "bills of attainder")
Except that Elon Musk's rational self-interest appears to genuinely involve a vision of the world I really like. Given all the money and effort he's put in toward that vision and the many hours of public speaking and personally answering questions consistent with that, you'd better hope he's the real deal.
"[I would] rather discover one cause than gain the kingdom of Persia." - Democritus
As an aside, that's actually not true - laws that are intended to benefit one person are passed all the time. [1]
What the constitution forbids are bills of attainder, which are bills that declare a person guilty of a crime.
[1]: https://en.wikipedia.org/wiki/Private_bill#United_States
It's an interesting future. We are approaching the age of malware infected cars. Does anyone have more info about what the limitations of this internet connected system is? What is possible if someone roots my car?
- Can they disable security system?
- Unlock the car? Lock me out of the car?
- Feed false data (slow destruction of car)? Feed false speed-data? False directions?
- Obtain the cars whereabouts?
- Disable breaks (would assume not)?
It hasn't started with Musk, of course. The most obvious display of such power was the website blackout that led to the SOPA repeal. That showed politicians who really holds the power. These companies barely flex their muscles either; just imagine what would happen if Google decided to get into public shaming in its homepage for entities trying to block its Fiber initiative.
The public no longer believes politicians, but they all believe Zuckerberg, Page and Musk. That makes for an interesting future.
I suspect they really only have a portion of the public -- including Musk.
People are given a lot of information from a lot of sources nowadays, which means they're better at analysing it and weeding out the bullshit(typically).
Your point assumes we're blindly following what they have to say without analysing it.
I can imagine a lot of people aren't. A lot of people may be annoyed with their rights or privacy taken away (SOPA), or laws being changed when it doesn't benefit them (this). At which point, people complain.
If any tech company tried to push a law that didn't benefit the public in an obvious way, I bet most people wouldn't like it.
Or people find the version of the "truth" they most agree with and just go with that. Given the huge industry of politically-charged "news" organizations, I think there's a significant amount of people that are doing this instead (sadly).
If a dealer is the company who actually sales cars and the factory is the one that produces them, why do they need a franchise in between? And how come that a dealer is comparable to a manufacturer Tesla? Why do they have conflict of interests selling non-gasoline cars?!
FYI, this is effectively deliberate. You're more useful to companies as a business asset rather than as a political force. It may be worthwhile for you to look into ways to pool resources with other people in order to get enough free time to commit more to politics.
In other words, you were asking about a way to vote to fix this, and it's not fixable by a vote.
http://en.wikipedia.org/wiki/Seasteading
It's the sort of hyper-liberterianism that looks and sounds like a passable option until you consider it for more than a second. And then there are the proponents for this kind of insanity...
Well then what about BMW with bumper to bumper service as only one example. That's a high end car that you don't pay for service for (iirc) 3 years. They cover everything. Wiper blades you name it. I think last I checked the same was true for Subaru and I think even Jeep Chrysler is doing this (may be wrong about that one).
And that's not a conflict of interest but rather a business model. In the case of cars which do make money from service they therefore in theory have a lower price for the vehicle.
This argument is like saying that you are a better airline because you don't charge for luggage. Presumably that extra revenue allows you to offer lower ticket prices. And surprise that is what happens. Back when airlines were regulated (and had less competition) and they charged way higher prices they didn't have to nickle and dime you to make a profit.
Wiper blades are what, $30 a year if you really care about them?
Tesla, on the other hand, does have all its new electric car components which are all very impressive technically but about which relatively little is yet known about service life and long-term service costs.
Really, this is about Musk wanting control over the complete experience. Nothing wrong with that (see, e.g., Apple). And I'm no particular fan of the auto dealer experience. (Though I don't buy luxury brands today which, I've been told, unsurprisingly offer a better dealer experience in general.) But you'll end up with dealers of some sort one way or the other.
The dealer experience is pretty darn good.
I took delivery on a new Porsche. The transmission had a problem. So they flew a new one in from Germany by Fedex at a cost of perhaps $8,000 (after all it's pretty heavy) in air freight I was told. Loaner cars? Last time they gave me a brand new Cayman (I own a 911) with 300 miles on it. Other times Cayene Hybrids with 3k miles.
It's not without it's bumps of course (routine service maintenance was $450 to keep up the warranty Mercedes does something similar). But if you can't afford that type of thing you don't buy this type of car (at least not a new one).
The standards are higher for several reasons. One is that people with money don't take shit generally and are very demanding. So they keep the people working there in line and don't take bs answers and complain so much.
I brought the car in to fix a problem and when I was driving down 95 the repair broke. I called them they towed the car back and got the repair mechanic back from home (he had left for the day) and fixed it while I waited. I felt bad for him he was literally fearing for losing his job.
Mercedes in Houston charged you something like $175 or $250 just for bringing your car in.
When a dealer sells you a "lemon" that racks up thousands of dollars in warranty-covered repairs it's actually a bonanza for them.
The conflict of interest Musk is referring to is that dealers won't want to sell extremely maintenance free cars because their revenue on the back-end would be miniscule.
In the end dealerships are about making money from their clients by "adding value". Sadly most of the time that value is having the black car in stock -vs- someone down the street who only has the blue one.
It's sad to see a government more concerned about backing the establishment then creating an environment for free trade and new business models.
"Cross an imaginary line a few miles down the road that the auto dealers can't access and everything will be A-OK!"
This is everything that is wrong with politics in a sentence.
That's total BS. Any dealer who invests money in a new show room to sell a new brand of car (think of Mini which was picked up by many legacy BMW dealers and is sold in many mini only showrooms) is going to put in the effort to sell the product. We aren't talking about putting Teslas on the same floor as Mercedes. It would be trivial for Tesla to insist that the product be sold out of a dedicated facility which would cost a dealer money to construct. The idea that that dealer would simply push another product (or the salesman) in another showroom that he operates is ridiculous. And contrary to the behavior of existing multi line large dealerships.
In it, some argue that "A no haggle, painless car buying experience will eventually come; but it won't be without your local dealers"
I wouldn't be so sure. As Elon states, the fundamentals of the industry haven't changed in quite a while. He's approaching it from one direction (The cars/manufacturing and sale of new cars), and others (like myself and partners) are going directly after the used car Buying/Selling process. Our goal is to make it as easy as possible for Sellers/Buyers to transact. Check us out here:
What a joke.
As a european, i can't even comprehend how ludicruous it sounds that a business can't sell it's goods directly. It's so outrageously wrong, that I can't find words that fit adequately.
"Free market regulation is bad for the economy " + s
"Government services are handouts and immoral " + s
etc. etc.
Perhaps it went through an editor or two, for typos and such, but I have to say I find his style engaging...
(Disclaimer: If I had the money I'd buy a tesla, and I am an investor.)
I 110% percent guarantee it did. No CEO of a decent sized company would not.
http://www.nytimes.com/2007/07/12/business/12foods.html?_r=0
There's also a lack in innovation and lead from the US market in various technologies.
Elon Musk took all of these things head on and keeps doing so all the time. What's not to like, I would ask?
I am 100% behind the man as long as he keeps doing so.
Elon Musk is a hero
It's also a "human nature" that is prone to having one group of us kill another as a means of conflict resolution. Unfortunately, that is apparently a part of the natural behavior repertoire of Homo sapiens and Pan troglodytes.
I assure you that governments will continue to do evil things and will find the money to do so, but over time governments will become less evil.
[1] http://www.npr.org/blogs/money/2013/02/12/171814201/episode-...
* Saturn tried the "no-haggle" new car buying experience. People generally liked this, though Saturn doesn't exist anymore.
* "closing a dealer is hard". Dealers have to pay for the land they own. The cars on their lot tend to be bought with money from the bank (a bank really owns the cars). The dealers just have to pay insurance/interest on the cars. The longer a car is on the lot, the more insurance and interest the dealer has to pay. If a dealer isn't selling cars to pay the bills, they will shutdown.
* Dealership "look". My knowledge is only from Texas.... Some brands, like Lexus and Cadillac set some very strict looks for the dealership. Specific signage, layout, etc... A manufacturer can set standards the dealer must live up to. Also, if a dealership ranks below a certain score on their customer surveys, the manufacturer can close them down.
* Pricing... yes, a middle man increases the cost of something. But that middle man can help explain features, is there to help deal with problems, and as they tend to be more locally rooted than an auto-maker, will try (hopefully) try harder to please their customers. Why do we have to pay real-estate agents so much? Good agents really help a buyer, same could (hopefully) be said for a car sales person.
* (edit addition) Why are sales people jerks? This will heavily depend on the dealership you are dealing with. Management of a dealership does a lot to shape the experience for their customers. A few things: sales people are paid a % of the money they hold over the cost of the car, so they are financially incentivized to keep the car price high. A car that has been on a lot for a long time has incentives added to it for a sales person. Sales people get bonuses based on number of cars sold. Sales people sometimes get bonuses based on their customer surveys (or are required to keep a certain average or be fired). Dealers are allocated new shipments of cars based on past sales, so a lot of dealers want to sell as many cars as possible (if they are trying to grow); dealers that don't care about growing will be less flexible about pricing.
Though, I agree that the car buying experience should adapt as information about cars is more easily accessible, it would require all of the states redoing the state auto franchise laws.
The auto makers of back then dug their own grave with their business practices.
Another argument I've heard is about sales tax. If an auto-maker could sell direct to customers, it could (possibly) be treated as interstate commerce and avoid directly collecting the sales tax. So it's in the state interest to keep dealerships around.
If you have a building or lot where people have to go to physically see the car (as Tesla does provide BTW), then it's difficult to imagine how sales tax would be avoided.
Why in heck do we let software companies bully OEMs?
I'm generally sympathetic to the notion that auto manufacturers should be able to sell direct subject to whatever contractual promises they may have made to existing franchisees. That said I'm unconvinced that, from the consumer perspective, there's going to be a huge difference between a luxury brand car dealership network such as those that exist for BMW and Mercedes and Tesla-owned and operated locations that do things like: service, helping to arrange financing, take trade-ins, showroom, offer test drives, etc. Sounds a lot like a dealer to me. As you note, it's really a false dichotomy between manufacturer-operated network on the one hand and an uncontrolled Wild West of franchises on the other.
EDIT: Spelling.
That's mostly due to internal politics at GM when they were going bankrupt. Even though Saturn was one of the divisions making a profit, they got the axe.
Once again, internal company politics being a terrible proxy for rational decision making.
Some quick stats on the size of this particular "small" auto dealer company:
Trailing 12-month revenue: $8.9B Trailing 12-month gross profit: $1.29B CEO Pay: $2.5mm (for comparison, this is higher than the cash comp of the CEOs of GM and Microsoft)
I'm not sure this business needs regulatory protection from the likes of Tesla.
I wonder if he'll end up Emperor of Mars?