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Hypocritical Texas  
User currently onlineBMI727 From United States of America, joined Feb 2009, 15695 posts, RR: 26
Posted (10 months 2 days 23 hours ago) and read 2212 times:

Texas generally has a lot to be proud of as far as being a business friendly environment, but that isn't the same as being a free market friendly environment in some cases. Texas isn't so friendly to businesses that seek to cut out overly entitled middlemen, and as such, has strict dealer protection laws that have severely curtailed Tesla's efforts to sell cars in the state.

Quote:
Employees in Tesla car galleries in Austin and Houston are legally prohibited from offering visitors a test drive, quoting them a price or even directing them to Tesla’s website. If a Texan does order a Tesla from California, the car must be delivered by third-party trucks that cannot advertise the Tesla brand.

These sorts of laws are what I'd expect in New York or Illinois, but coming from Texas it's just ridiculous. Texas is friendlier to some businesses than others. Not that other states aren't, but those states aren't touting themselves as a beacon of freedom.

http://jalopnik.com/how-petty-money-...-crushed-tesla-in-texas-1286201748


Why do Aerospace Engineering students have to turn things in on time?
39 replies: All unread, showing first 25:
 
User currently offlineTWA772LR From United States of America, joined Nov 2011, 1674 posts, RR: 1
Reply 1, posted (10 months 2 days 22 hours ago) and read 2182 times:

Quoting BMI727 (Thread starter):
Tesla

Tesla creates electric cars, which is bad for the oil companies. And with Houston and Dallas being the corporate and operational bases for many of the country's, and even the world's, oil companies, they are going to protect that.

Yes it's immoral from a business perspective, but that's politics.



Я говорю по-русский. :)
User currently offlinesccutler From United States of America, joined Jan 2000, 5484 posts, RR: 28
Reply 2, posted (10 months 2 days 22 hours ago) and read 2173 times:

It has nothing whatsoever to do with oil. Silly, silly notion.

Texas law does (and has for decades) require that automobile dealers possess a dealer's license. Lots of consumer protection in the law.

This is no surprise to, oh, anyone in the auto industry with a brain. Same thing happened with Mini, they got it sorted out.

But, bash away.



...three miles from BRONS, clear for the ILS one five approach...
User currently onlineBMI727 From United States of America, joined Feb 2009, 15695 posts, RR: 26
Reply 3, posted (10 months 2 days 21 hours ago) and read 2123 times:

Quoting TWA772LR (Reply 1):
Tesla creates electric cars, which is bad for the oil companies.

This is nothing to do with oil and everything to do with car dealers. Tesla has fought this battle in other states, but so far have been fairly successful in being allowed to do business.

Quoting sccutler (Reply 2):
Texas law does (and has for decades) require that automobile dealers possess a dealer's license. Lots of consumer protection in the law.

There's nothing wrong with that. Tesla dealers should have to abide by the same laws as any other dealer, the difference being that their dealers are owned by the factory.

Whether cars are sold by the manufacturer directly to consumers or via a dealer should be strictly a civil matter between the manufacturer and their franchisees. Any decent franchise agreement should include a non-compete clause in it, but again, that should be a matter between the two companies. And of course, the original intent behind laws banning manufacturers from selling directly to consumers had nothing to do with protecting consumers but with protecting dealers from having to compete with their own suppliers. If anything, it hurts the consumer by reducing competition and enforcing use of a middle man. The entire law should not apply to Tesla for the simple reason that they have no franchisees to compete with.

There is simply no logical reason why I should have to buy a car any differently than I buy a computer, a washer, or a television. I can go to Dell.com and buy a computer directly from them, why couldn't I buy a Tesla the same way?



Why do Aerospace Engineering students have to turn things in on time?
User currently offlineMD-90 From United States of America, joined Jan 2000, 8502 posts, RR: 12
Reply 4, posted (10 months 2 days 21 hours ago) and read 2111 times:

Quoting sccutler (Reply 2):
Texas law does (and has for decades) require that automobile dealers possess a dealer's license. Lots of consumer protection in the law.

Those laws are not for consumer protection, though, they're for dealer protection to make sure that they keep existing.


User currently offlinefrancoflier From France, joined Oct 2001, 3712 posts, RR: 11
Reply 5, posted (10 months 2 days 19 hours ago) and read 2030 times:

Quoting BMI727 (Thread starter):
If a Texan does order a Tesla from California, the car must be delivered by third-party trucks that cannot advertise the Tesla brand.

'And said truck shall have bull horns attached to the radiator grille'
 

It's just a local law that will be circumvented by clever business management.
I think Tesla likes a bit of light shone on itself and being shown as the unfairly treated courageous underdog...

I still respect the company and its owner very much.



Looks like I picked the wrong week to quit posting...
User currently offlineseb146 From United States of America, joined Nov 1999, 11462 posts, RR: 15
Reply 6, posted (10 months 2 days 19 hours ago) and read 2022 times:

Quoting TWA772LR (Reply 1):
Yes it's immoral from a business perspective, but that's politics.

Kinda like getting a BJ? That's immoral, but that's politics.

Quoting sccutler (Reply 2):
Texas law does (and has for decades) require that automobile dealers possess a dealer's license. Lots of consumer protection in the law.

So, if Tesla has a dealer's license, yet they are heavily regulated so they can not do business. How very free market of those Texans. Let the free market decide. Unless it threatens the oil industry. Then, government regulation is the answer.



Life in the wall is a drag.
User currently onlineBMI727 From United States of America, joined Feb 2009, 15695 posts, RR: 26
Reply 7, posted (10 months 2 days 18 hours ago) and read 2006 times:

Quoting francoflier (Reply 5):
It's just a local law that will be circumvented by clever business management.

A local law in the place that advertises itself as "open for business." It's a ridiculous law wherever it is, but especially for Texas. Companies shouldn't have to be circumventing laws to do business.

Quoting seb146 (Reply 6):
So, if Tesla has a dealer's license, yet they are heavily regulated so they can not do business.

I'm pretty sure they cannot get a dealer license since they are a manufacturer, hence they're not allowed to do things dealers do: give quotes, test drives, etc. To me it sounds like a glorified auto show booth.

Quoting seb146 (Reply 6):
Unless it threatens the oil industry.

This has absolutely nothing at all to do with threatening the oil industry. Tesla has had to fight through similar laws in other states including North Carolina and New York, neither or which has a significant oil lobby.



Why do Aerospace Engineering students have to turn things in on time?
User currently offlineseb146 From United States of America, joined Nov 1999, 11462 posts, RR: 15
Reply 8, posted (10 months 2 days 16 hours ago) and read 1965 times:

Quoting BMI727 (Reply 7):
I'm pretty sure they cannot get a dealer license since they are a manufacturer, hence they're not allowed to do things dealers do: give quotes, test drives, etc. To me it sounds like a glorified auto show booth.

Like Nissan. Or Ford. Or Chevrolet. Or Toyota. Or Kia. Or Jeep. Or Chrysler. Or.....

Quoting BMI727 (Reply 7):
This has absolutely nothing at all to do with threatening the oil industry.

Except they are. If the oil industry didn't feel threatened, they would not be buying legislation to stop them from selling in the "oil rich" state of Texas.



Life in the wall is a drag.
User currently offlineblueflyer From United States of America, joined Jan 2006, 3900 posts, RR: 2
Reply 9, posted (10 months 2 days 14 hours ago) and read 1934 times:
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Texas is just one of many states, as far North as New Hampshire, where dealer franchising laws heavily favor "traditional" dealerships at the expense of pretty much everyone else, including Tesla.

Tesla isn't even the first well-known victim of these laws, the first were the auto manufacturers themselves. One of the reasons GM and Chrysler went bankrupt was to be able to reduce the number of dealers in order to cut costs. Outside of bankruptcy, most states make it very expensive and difficult, if not impossible, to yank away a dealership's right to sell a specific brand...

Quoting BMI727 (Reply 7):
It's a ridiculous law wherever it is, but especially for Texas. Companies shouldn't have to be circumventing laws to do business.

Once you drive away from the large urban areas such as DFW, Houston, Austin, etc... Texas has a lot of small cities where the largest business for miles and miles around is the local auto dealership, which just happens to be the biggest contributor to the local representative at the state Congress... It is neither ridiculous nor hypocritical of Texas, this is what Texas does, protect business, only this time it pits one industry against the other, usually the losers are consumers.



I've got $h*t to do
User currently offlineDarkSnowyNight From United States of America, joined Jan 2012, 1340 posts, RR: 3
Reply 10, posted (10 months 2 days 13 hours ago) and read 1915 times:

Quoting BMI727 (Reply 7):
Tesla has had to fight through similar laws in other states including North Carolina and New York,

So basically they've been there and done that, and will find a way to set up shop for real then. Is there a story here?



Posting without Knowledge is simply Tolerated Vandalism... We are the Vandals.
User currently onlineBMI727 From United States of America, joined Feb 2009, 15695 posts, RR: 26
Reply 11, posted (10 months 2 days 12 hours ago) and read 1884 times:

Quoting seb146 (Reply 8):
Like Nissan. Or Ford. Or Chevrolet. Or Toyota. Or Kia. Or Jeep. Or Chrysler.

All of those have their own franchisees with whom they would be competing if they sold direct to consumers. Tesla does not.

Quoting seb146 (Reply 8):
Except they are. If the oil industry didn't feel threatened, they would not be buying legislation to stop them from selling in the "oil rich" state of Texas.

Somebody didn't read the article. This has nothing to do with oil and everything to do with dealers.

Quoting blueflyer (Reply 9):
It is neither ridiculous nor hypocritical of Texas, this is what Texas does, protect business, only this time it pits one industry against the other, usually the losers are consumers.

It is both ridiculous and hypocritical from "Open for Business" Texas. Apparently they're only open for business if you give the middle man a cut of the deal.

Quoting DarkSnowyNight (Reply 10):
So basically they've been there and done that, and will find a way to set up shop for real then. Is there a story here?

Texas is the first place Tesla has really lost. Most other states have realized the stupidity of their laws in fairly short order.



Why do Aerospace Engineering students have to turn things in on time?
User currently onlineAkiestar From Philippines, joined May 2009, 776 posts, RR: 0
Reply 12, posted (10 months 2 days 10 hours ago) and read 1839 times:

Could it be that a major reason for this is the lack of campaign finance reform? A candidate for state representative seems to think so.

http://www.boykotx.org/why-texas-ban...dont-have-campaign-finance-reform/


User currently offlinerfields5421 From United States of America, joined Jul 2007, 7497 posts, RR: 32
Reply 13, posted (10 months 2 days 10 hours ago) and read 1815 times:

Quoting BMI727 (Thread starter):
Texas generally has a lot to be proud of as far as being a business friendly environment,

Where did you ever see proof of that propaganda? Texas is a friendly business environment for industries and businesses which support Texas politicians. It has never been a business friendly state for out of state businesses trying to bypass local merchants. Texas really dislikes direct internet sales. Period.


It is not hypocritical - it is Texas taking care of Texans first.

Quoting BMI727 (Reply 3):
Whether cars are sold by the manufacturer directly to consumers or via a dealer should be strictly a civil matter between the manufacturer and their franchisees.

In the past - direct manufacturer / customer automobile relationships have resulted in many dissatisfied customers, lawsuits and calls for political reform to prevent out of state companies selling directly to Texas (and other state) customers.

An automobile is not a computer. It requires continuing support, and a support network to deal with issues. If Tesla is unwilling to invest in such a network in Texas - then the state has every right to protect its citizens by not allowing direct sales.

That said - getting around the direct sales is extremely easy. Order the vehicle delivered out of state - and pick it up there.

That allows Texas to avoid you trying to sue the state two years later when your Tesla needs repair, and you cannot get it fixed without shipping it out of state.

Quoting BMI727 (Reply 11):
Most other states have realized the stupidity of their laws in fairly short order.

No they haven't. They have realized that fighting a lengthy court battle is an economic loser. Even if the state will most likely win in the end.

Texas state government, on the other hand, has no problem spending tens of millions of tax payer dollars on lawsuits that the attorney general and governor know will be lost eventually. It allows them to point falsely and proudly to their 'conservative' record.


Yes, Texas is a very, very hypocritical state - led by what may be the biggest bunch of two-faced / back stabbing hypocritical politicians in the world.

But their car dealership laws are not hypocritical - just old fashioned consumer protection.


User currently offlinemham001 From United States of America, joined Feb 2005, 3525 posts, RR: 3
Reply 14, posted (10 months 2 days 9 hours ago) and read 1805 times:

Quoting seb146 (Reply 8):
Except they are. If the oil industry didn't feel threatened, they would not be buying legislation to stop them from selling in the "oil rich" state of Texas.

Once again, this has nothing to do with oil. This law was enacted long before Tesla came along. You are completely uninformed.

Quoting DarkSnowyNight (Reply 10):
So basically they've been there and done that, and will find a way to set up shop for real then. Is there a story here?

Yes. The Texas law is particularly stringent. The dealers association wrote the law and shut down every loophole possible. It has also been used as a model in some other states. Another issue with Texas in this regard is that their legislature only meets every 2 years and there is no possibility of changing the law until 2015. I expect most Texans will be appalled when they hear how they are choice-limited and there will be legislative pressure.


User currently onlinewingman From Seychelles, joined May 1999, 2185 posts, RR: 5
Reply 15, posted (10 months 2 days 9 hours ago) and read 1795 times:

I believe Tesla is facing this problem in a majority of states, not just Texas. In my mind their cars and their distribution model (direct sales) are brilliant. They will control not only the production process, but the initial sale/lease process, the delivery, the servicing, and the buyback/resale (and all pricing on this final piece of the puzzle).

This will take some getting used to for many in the industry and the various state and national agencies that regulate commerce. Love him or hate him, Elon Musk is quickly becoming more of a visionary that Steve Jobs ever was. He created a new payment company that took on Visa and MasterCard, sent people to outer space in the world's first private rocket ship, and now has built the most incredible production vehicle the world has seen in over 100 years.

I can't afford a Model S myself but as a car aficionado I am simply astounded by it's combination of looks, performance, near zero total emissions (have to include the charging bit still), and as of two weeks ago it's undisputed status as the safest road passenger vehicle ever tested in United States history. And he did it all in California.


User currently offlinesccutler From United States of America, joined Jan 2000, 5484 posts, RR: 28
Reply 16, posted (10 months 2 days 9 hours ago) and read 1778 times:

Quoting seb146 (Reply 8):
If the oil industry didn't feel threatened, they would not be buying legislation to stop them from selling in the "oil rich" state of Texas.

Huh?

There is bound to be some substance to support that very specific allegation. Love to see it. Do share, educate us, always ready to learn.



...three miles from BRONS, clear for the ILS one five approach...
User currently offlineSmittyOne From , joined Dec 1969, posts, RR:
Reply 17, posted (10 months 2 days 8 hours ago) and read 1756 times:

Quoting rfields5421 (Reply 13):
An automobile is not a computer. It requires continuing support, and a support network to deal with issues. If Tesla is unwilling to invest in such a network in Texas - then the state has every right to protect its citizens by not allowing direct sales.

This seems fallacious to me. If Tesla decided that the best way to provide the warrantee service to the purchasers of their vehicles that they are required to by law was via voucher payments to independent garages, helicopter-equipped mechanical strike teams or alien abduction that should be up to Tesla, the market or ultimately the courts to decide. At the end of the day they are responsible to do certain things...how should be up to them. The state's role should be to hold the automaker accountable for the results, not dictate the methodology

I think it's a mistake for the state to legislatively preserve the status quo for the way a given product is sold or supported, but I can certainly see the incentive for particular lobbies. Otherwise how the hell will we ever see any substantial innovation?

(edit: The part about alien abduction was hyperbole, but the argument that consumers need to be protected from the absence of a 'dealer network' certainly begs the question.)

[Edited 2013-09-11 09:17:51]

User currently offlineseb146 From United States of America, joined Nov 1999, 11462 posts, RR: 15
Reply 18, posted (10 months 2 days 6 hours ago) and read 1704 times:

Quoting BMI727 (Reply 7):
I'm pretty sure they cannot get a dealer license since they are a manufacturer, hence they're not allowed to do things dealers do: give quotes, test drives, etc. To me it sounds like a glorified auto show booth.

Or Scion.

Quoting blueflyer (Reply 9):
. It is neither ridiculous nor hypocritical of Texas, this is what Texas does, protect business, only this time it pits one industry against the other, usually the losers are consumers.

Sounds like Washington DC. Business first, screw everyone else.



Life in the wall is a drag.
User currently offlineFlighty From United States of America, joined Apr 2007, 8370 posts, RR: 3
Reply 19, posted (10 months 2 days 5 hours ago) and read 1687 times:

Tesla won't care. Watch them out-sell numerous brands in Texas, even without test drives.

A test drive isn't the be-all.

Quoting BMI727 (Thread starter):
Quote:
Employees in Tesla car galleries in Austin and Houston are legally prohibited from offering visitors a test drive, quoting them a price or even directing them to Tesla’s website. If a Texan does order a Tesla from California, the car must be delivered by third-party trucks that cannot advertise the Tesla brand

Employees could say "I am legally prohibited from directing you to Tesla.com." Good enough in my book.


User currently offlineFlyingSicilian From Italy, joined Mar 2009, 1292 posts, RR: 0
Reply 20, posted (10 months 2 days 5 hours ago) and read 1686 times:

Quoting seb146 (Reply 8):
Except they are. If the oil industry didn't feel threatened, they would not be buying legislation to stop them from selling in the "oil rich" state of Texas.

Where is it noted any oil companies are lobbying?

All articles and news on this notes it isfrom the very large Texas dealer lobby.

There are plenty of Teslas driving around Texas so it couldn't be that bad for them...



Ciao Windjet mi manchi
User currently offlineRevelation From United States of America, joined Feb 2005, 12270 posts, RR: 25
Reply 21, posted (10 months 2 days 4 hours ago) and read 1667 times:

Quoting rfields5421 (Reply 13):
But their car dealership laws are not hypocritical - just old fashioned consumer protection.

I'm confused then: if it's about consumer protection, then how come Tesla can't set up company-owned dealerships that meet the consumer protection aspects of the law?



Inspiration, move me brightly!
User currently offlineokie From United States of America, joined Jul 2003, 2966 posts, RR: 3
Reply 22, posted (10 months 2 days 1 hour ago) and read 1622 times:

Quoting Revelation (Reply 21):
I'm confused then: if it's about consumer protection, then how come Tesla can't set up company-owned dealerships that meet the consumer protection aspects of the law

As far as I know there is nothing keeping them from doing so, it is Tesla's choice. Tesla's business model does not have a carve out for the cost of dealerships.
This is not a Texas only situation which has been pointed out.

Quoting seb146 (Reply 8):
Except they are. If the oil industry didn't feel threatened, they would not be buying legislation to stop them from selling in the "oil rich" state of Texas.

Are slipping you forgot Bush.   

The article specifically indicates it is the Automobile Dealers Association.

Okie


User currently onlineBMI727 From United States of America, joined Feb 2009, 15695 posts, RR: 26
Reply 23, posted (10 months 2 days ago) and read 1604 times:

Quoting rfields5421 (Reply 13):
In the past - direct manufacturer / customer automobile relationships have resulted in many dissatisfied customers, lawsuits and calls for political reform to prevent out of state companies selling directly to Texas (and other state) customers.

That should purely be a buyer beware situation. Any customer with any sense at all would think twice about buying a car where the nearest dealer is a hundred miles away, or has no dealers at all. (Tesla does have service centers in some major cities anyway) But, for the sake of argument, yes lack of dealers could pose a problem and cause customers to have issues. But there is no reason why one customer having a serious issue with not having dealer support means I should not be allowed to buy a car if I decide I don't mind.

It's restriction on freedom, pure and simple.

Quoting rfields5421 (Reply 13):
It requires continuing support, and a support network to deal with issues.

First, computers do require support. Second, Tesla does have a support network. Tesla wants to build dealers and already has three service centers (vs. only two stores) located in Texas.

It is not an issue of dealers vs. no dealers, it's an issue of franchises vs. no franchises. Texas has no problem with Tesla fixing their cars in the state, only selling them. There is absolutely no angle of consumer protection here. Tesla's entire plan is to basically mirror the Apple stores, and yet Apple isn't exactly hated by consumers. If it's good enough for an iPod, it's good enough for a car.

Quoting rfields5421 (Reply 13):
But their car dealership laws are not hypocritical - just old fashioned consumer protection.

The only people being protected by this law are car dealers.

Quoting seb146 (Reply 18):
Or Scion.

Scion has always had dealers, almost entirely rolled in with larger Toyota dealers.

Quoting Revelation (Reply 21):
I'm confused then: if it's about consumer protection, then how come Tesla can't set up company-owned dealerships that meet the consumer protection aspects of the law?

That's exactly what they are trying to do. Again, this has nothing to do with oil and nothing to do with protecting consumers.



Why do Aerospace Engineering students have to turn things in on time?
User currently offlinerfields5421 From United States of America, joined Jul 2007, 7497 posts, RR: 32
Reply 24, posted (10 months 1 day 23 hours ago) and read 1595 times:

Quoting Revelation (Reply 21):
then how come Tesla can't set up company-owned dealerships that meet the consumer protection aspects of the law?

Tesla can setup company owned dealerships in Texas.

Other speciality car / small volume manufacturers have done so in the past, and will in the future. It only takes one dealership in the state, with 'branches' at places like mentioned above.

Mini-Cooper had the same issues - and after a couple years the dealer network was in place.

Really this whole deal is a big bunch of hot air over nothing. If Tesla does well - they will get into Texas. And have dealerships. If the car/ company fails - it won't be because of Texas. They cannot be making their company survival dependent on this state.


Quoting SmittyOne (Reply 17):
I think it's a mistake for the state to legislatively preserve the status quo for the way a given product is sold or supported, but I can certainly see the incentive for particular lobbies

The 'status quo' is presented to the voters as a protection for them - by the Automobile Dealers Association. When dealerships are dropped, or people have orphan brand cars and cannot get quick service response - the stories make the news very quickly. With a lot of publicity about the 'evil out of state company taking advantage of Texans'.

As mentioned above - the regular legislative session is only for a few short weeks ever two years.

The logjam of needed legislation does more to 'preserve' the Texas 'business friendly' environment than anything. The state legislature almost never gets a budget done. There are many special sessions after the regular session each bi-annual period. But only the Governor can put an item on the agenda for a special session.

So unless Tesla invest tens of millions, likely over a hundred million, in Texas legislature, attorney general and governor's political candidates - the law isn't going to change.

We all know that the old joke of the US Congress being the best legislature money can buy is wrong - but Texas is very close to that making that true.


25 BMI727 : ...just without offering test drives, price quotes, or, you know, actually selling cars. That's not a dealership, that's an info booth. It's actually
26 Post contains images MaverickM11 : Remember the cluster over closing dealerships during the gov't rescue of car companies? The dealerships have friends in high places too.
27 MD11Engineer : True capitalists don´t like competition. They like to corner a market, preferably set up a monopoly and squeeze it for all they can. Jan
28 casinterest : North Carolina is attempting to do the same thing to Tesla. This is more about the dealerships than oil or anything else.
29 Slider : As has already been alluded to, the dealership structure itself across the country is really fatally flawed. I'm surprised that the construct even st
30 Post contains images MaverickM11 : Considering this is airliners.net and the internet has truly eviscerated airline pricing power in the US, it is indeed hard to believe
31 Revelation : I bought a new vehicle via the Internet in 1996 and it's actually harder to do it now than it was then, because back then not too many people knew wh
32 txjim : It has everything to do with consumer protection. It's the law that keeps anyone from buying a couple salvage cars, selling them as new and leaving t
33 BMI727 : It's an artifact from a different age. In the early days of motoring it really was the best way to get products and service to customers, but now it'
34 txjim : Ferrari's are sold by licenced dealers, they don't seem to have any problems. Saturns were sold at list. Popular new introductions are often sold abo
35 BMI727 : So selling cars at or above MSRP isn't the problem, a dealership owned by the manufacturer is a problem. So there really is no case for the restricti
36 rfields5421 : Thus dear and near to the Republican Party and the Tea Party - which control the Texas Legislature today. A manufacturer owned dealership is not ille
37 BMI727 : That's exactly what this is about. Franchise laws state that car manufacturers cannot sell directly to consumers, in other words, no factory owned de
38 rfields5421 : And the article is incomplete. There have been several new car companies who have setup dealerships under a Texas corporation - wholly owned by the m
39 Post contains images BMI727 : Which ones? Then why are they setting up non-dealership stores, service centers, and Supercharger stations?
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