[quote]
[thumb]http://associationsnow.com/wp-content/uploads/2012/10/1023_tesla-800x479.jpg[/thumb]
Tesla Motors CEO Elon Musk has built a reputation for disrupting industries. But has he met his match with car dealers?
Weeks after numerous dealers’ associations blasted the electric car company’s Apple-store-like model, now Tesla Motors faces lawsuits brought by auto dealer associations in New York and Massachusetts and some of their members, claiming that its stores violate state franchise laws. Tesla avoids calling its stores franchises.
In a blog post Monday, Musk directly addressed the controversy, saying his company stood at a disadvantage under the dealer system and that it was not hurting current franchisees by selling directly to consumers:
“Automotive franchise laws were put in place decades ago to prevent a manufacturer from unfairly opening stores in direct competition with an existing franchise dealer that had already invested time, money, and effort to open and promote their business,” he wrote. “That would, of course, be wrong, but Tesla does not have this issue. We have granted no franchises anywhere in the world that will be harmed by us opening stores.”
Musk claims that the plaintiffs in the lawsuits have their own interests in mind: He says that one dealer is upset that Tesla Motors will not grant it a franchise and another is selling a competing electric vehicle brand, Fisker. ”They will have considerable difficulty explaining to the court why Tesla opening a store in Boston is somehow contrary to the best interests of fair commerce or the public,” he claims.
Associations, however, aren’t buying that argument.
“They claim they’re operating under the guise of a nonsales showroom, and we call that out as an outright scam,” Robert O’Koniewski, executive vice president of the Massachusetts State Automobile Dealers, told AutoNews. His group sued Tesla Motors October 16 in an effort to shut down the company’s suburban Boston store.
Tesla could face an uphill battle against the groups, which have successfully prevented Ford and General Motors from opening similar factory-owned stores in the past 20 years. And as AllThingsD points out, another Silicon Valley startup, TrueCar, effectively retreated from its model after dealers’ groups complained to regulators.
Will Tesla Motors will be able to continue selling without involving dealerships? Let us know what you think in the comments.
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[url=http://associationsnow.com/2012/10/auto-dealer-associations-take-tesla-to-court]Source[/url]
Basically Tesla wants to sell directly to the customers (good for '[b]them[/b]' and '[b]us[/b]') but the Two dealer associations claim the current operating procedure is a 'scam'. I'd rather by a vehicle from the manufactor and cut out the middle man saves me money.
Boo-fucking-hoo.. The other dealers should get with the ages.
Where are the "free market" screaming republicans in this case? They would be needed here.
Honestly. If they're giving people a better product that's value for money, then that's not their problem. lol
i say cut the middleman, car sales people are fucking assholes where i live
too bad those salesmen won't be getting their commision
Why the heck are these laws in place?
If I want a Ford I should be able to go to Ford store and buy one.
If mixed dealers can't compete with other services, there's obviously no space for them in the market and they are just leeching.
What a bunch of protectionist bullshit.
[QUOTE=killu4;38161196]Where are the "free market" screaming republicans in this case? They would be needed here.[/QUOTE]
the free market doesnt apply when it involves already rich businesses, dont you know?
romney 2012
why did I think the title was talking about Nikola Tesla
It sounds like these laws exist to protect car dealerships selling a particular brand of car. If Tesla doesn't supply cars to any dealership, I see no reason why they couldn't open their own store, it doesn't harm any of their dealers because there are none.
[QUOTE=DaCommie1;38163709]It sounds like these laws exist to protect car dealerships selling a particular brand of car. If Tesla doesn't supply cars to any dealership, I see no reason why they couldn't open their own store, it doesn't harm any of their dealers because there are none.[/QUOTE]
To elaborate further; it sounds like they were to prevent a factory from opening up a dealership right next to an existing dealership selling the same thing. The ADA is just abusing these laws to prevent competition.
[QUOTE=killu4;38161196]Where are the "free market" screaming republicans in this case? They would be needed here.[/QUOTE]
I would agree with them heavily in this case.
Electric cars are godly important IMHO.
Except they killed Nikola Tesla and now you buy petrol and fund death.
Why does every car anyone ever buys necessarily have to have an extra $1000 pasted on the price so you can get it from a dealer?
more like $5000
How are the dealers even able to take this to court? It should be company's decision to sell to whoever they want.
Also Tesla makes some sexy cars.
i hate cars as well
[QUOTE=Awesomecaek;38161748]Why the heck are these laws in place?
If I want a Ford I should be able to go to Ford store and buy one.
If mixed dealers can't compete with other services, there's obviously no space for them in the market and they are just leeching.[/QUOTE]
But if you get rid of car dealerships the hair gel and cheap suit industries will crash too.
[QUOTE=Hellduck;38166687]But if you get rid of car dealerships the hair gel and cheap suit industries will crash too.[/QUOTE]
But I buy all my cars second-hand from private sellers.
So basically they mad because car companies realize they don't need them anymore, and customers know that buying straight from the manufacturer is a way better deal. Less parties involved equals less extra money, plus there's probably cheaper and faster first-party customer service and repairs and stuff.
Wow those Telsa cars are really cool.
Looks pretty expensive for the base cost though, but I don't know whether if the overall cost of buying and operating one will be the same as buying and operating a regular car or not.
[QUOTE=Ninja Duck;38167375]Wow those Telsa cars are really cool.
Looks pretty expensive for the base cost though, but I don't know whether if the overall cost of buying and operating one will be the same as buying and operating a regular car or not.[/QUOTE]
It really depends on the price of household electricity or how available gas stations with chargers are in your area. In some areas it's much, much cheaper to use a gas powered car, and using an electric might hurt the enviroment anyway (because the power provided to it via your household plugs comes from a coal plant) and in some others electricity is both clean (hydroelectric/wind/solar) and cheaper than gas.
Some people are even planning on buying their own solar panels to generate the power themselves, making their cars have a much higher price tag, but don't need any more money after that (other than maintenance)
[QUOTE=latin_geek;38166825]So basically they mad because car companies realize they don't need them anymore, and customers know that buying straight from the manufacturer is a way better deal. Less parties involved equals less extra money, plus there's probably cheaper and faster first-party customer service and repairs and stuff.[/QUOTE]
It's dumb, because [URL="http://www.econ.upf.edu/docs/papers/downloads/348.pdf"]it appears you get a better deal and companies make more money using the dealership system,[/URL] since dealers can be more flexible than manufacturer-run stuff. The issue is that right now, in the US, [URL="http://pubs.aeaweb.org/doi/pdfplus/10.1257/jep.24.3.233"]dealerships are so powerful on a state level that they even contributed to the Big 3 collapse.[/URL]
[QUOTE]States earn about 20 percent of all state sales taxes from auto dealers, and auto dealerships easily can account for 7–8 percent of all retail employment. The bulk of these taxes (89 percent) are generated by new car dealerships, those with whom manufacturers deal directly. As a result, car dealerships, and especially local or state car dealership associations, have been able to exert influence over local legislatures. [B]This has resulted in a set of state laws that almost guarantee dealership profitability and survival—albeit at the expense of manufacturer profits.[/B]
...
Additionally, available evidence and theory suggests that as a result of these laws, distribution costs and retail prices are higher than they otherwise would be; and this is particularly true for Detroit’s Big Three car manufacturers—which is likely another factor contributing to their losses in market share vis-à-vis other manufacturers.
...
Prior to the auto industry bailout in 2008, franchise laws protecting auto dealers transferred profits from manufacturers and consumers to dealers. [B]Now, these laws also effectively transfer bailout funds from taxpayers to auto dealers.[/B][/QUOTE]
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