Politicians, Car Dealers Trying To Make It Illegal To Buy A Tesla In North Carolina

from the hating-on-disruptive-innovation dept

Last fall, we wrote about how auto dealers were bitching about the fact that electric car company Tesla sells their cars directly. It has “stores” but you can’t buy your cars from those stores, due to antiquated and ridiculous regulations about car sales. Most states have laws that basically say that car companies can’t sell directly. These laws serve no purpose other than to protect (often politically powerful) independent car dealers from being disintermediated.

In North Carolina, however, they’re taking it up a notch. They’re basically trying to make it illegal to sell a Tesla in North Carolina at all. About 80 North Carolina residents have already bought one, but they may be the last:

A legislative proposal, backed by the N.C. Automobile Dealers Association, would make it illegal for Tesla, or any other car maker, to bypass dealerships and sell directly in the state. The proposal cuts at the heart of Tesla’s business model: selling luxury cars over the phone or Internet and then delivering them to the front door of high-net-worth customers.

The North Carolina State Commerce Committee approved the proposal unanimously.

This is the same thing we see over and over again in other contexts. Companies in an entrenched legacy position trying to use regulations to block disruptive upstarts. There is no good reason for this law other than to block Tesla and to prop up dealerships. It’s somewhat disgusting to see politicians actively seek to stamp out innovation.

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Companies: tesla

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Comments on “Politicians, Car Dealers Trying To Make It Illegal To Buy A Tesla In North Carolina”

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74 Comments
ChrisB (profile) says:

Re: Re:

None of those things you mention is directly the fault of corporations. Monopolies only exist when governments grant them, in most cases. And there is only regulatory capture when the regulators are powerful enough to crush competition.

You meant to say the Crony States of America. The solution is less monopolies, less patents, less copyright, less regulation in general.

out_of_the_blue says:

OMG, "disintermediated"!!! Sounds BAD!

Okay, congrats for using a word pretty sure I’ve never run across.

BUT HA! For using it wrongly, EVEN by “economist” usage:

http://www.thefreedictionary.com/Disintermediate

disintermediation
(Economics, Accounting & Finance / Banking & Finance) Finance the elimination of such financial intermediaries as banks and brokers in transactions between principals, often as a result of deregulation and the use of computers

SO I can only guess that Mangler Mike meant “not in on the deal”.

Anonymous Coward says:

Re: OMG, "disintermediated"!!! Sounds BAD!

In economics, disintermediation is the removal of intermediaries in a supply chain, or “cutting out the middleman”. Instead of going through traditional distribution channels, which had some type of intermediate (such as a distributor, wholesaler, broker, or agent), companies may now deal with every customer directly, for example via the Internet.[1] One important factor is a drop in the cost of servicing customers directly.

http://en.wikipedia.org/wiki/Disintermediation

out_of_the_blue says:

Re: Re: OMG, "disintermediated"!!! Sounds BAD!

Yeah, I read that one TOO. The KEY point that sways me here is that a car DEALER is not mere financial transactions (the def above says “banks and brokers”), but supplies services to cars, besides showroom, and so on. So it’s MANGLED. — Also unnecessary! Mike is just flaunting a buzz-word.

out_of_the_blue says:

Re: Re: Re:2 OMG, "disintermediated"!!! Sounds BAD!

3rd addition: Glad to stir controversy over a word! — Actually, I should KNOW better by now.

But I left this out because seemed obvious: dealers can’t be DIS-intermediated as they’re NOT currently “intermediated”. That clinches Mike’s usage as mangling.

Mike JUST wanted to show off, so trotted out a fancy word. I still say it’s wrongly used.

art guerrilla (profile) says:

Re: Honestly...

having bought a new truck a couple years ago (USED ones a year or two older were selling for MORE than NEW ONES! wtf?) and getting the usual salesdroid bullshit, obfuscation, etc, i was already sick of that subhuman cohort of our population…
then, just recently when getting a new car for SWMBO, i purposefully -even though i am a fan of that brand- do NOT go to the same dealer, because we did NOT want to deal with that bullshit…

so, different dealer, same bullshit…

fuckers tried to stiff us on an option we had added on, told us lies about when it could be done, didn’t follow up, didn’t get the parts, didn’t set the appointment, FINALLY had to threaten to return the car just within the 30 days, before the useless bastards got the parts and had a THIRD PARTY install it… (again, NOT what was represented to us when we bought it…)

fuckers, i’ll say it again:
car salesdroids are only a method to keep con men, liars and sociopaths off the streets… the only thing they are good for, is stuffing sinkholes…

art guerrilla
aka ann archy
eof

John Fenderson (profile) says:

Re: Honestly...

Indeed. Anything that lets me avoid doing business with dealerships (new or used, doesn’t matter) is a good thing. The reason I have never purchased a new car is because I can’t do that without having to go through a dealer.

Although Tesla is a bit out of my price range, theoretically this way of selling would allow me to purchase a new car — otherwise, I am simply a lost sale to them all.

Anonymous Coward says:

Hmm, what a surprise.

1) A car marketed as friendly to the environment and good for fighting global warming.

2) An industry (car dealers) that leans heavily republican, especially with who they donate campaign cash to (a 7 to 1 advantage for republicans).

3) A state that now has a republican governor and republican controlled legislature. And a state not well known for environmentalists being strong politically.

Anonymous Coward says:

Re: Re:

Propping up legacy industries is a “bipartisan issue”…

The thing is that the jobs retained in those industries will stay in that geographic region, the inventive jobs are not necessarily. Since the states interests are heavily based on keeping unemployment down and thereby taxation up, the lack of geographic specificity of internet jobs is a potential threat to their economy!

It is just too easy for lobbyists to put all the blame there.
Since USA cannot in any way compete with South Korea, Singapore and Japan on wages and technological availability, the internet is likely cursed to Hades by any local politician!

fogbugzd (profile) says:

Regulations that only serve to protect existing businesses always come back to haunt the industry they were intended to protect. Part of the motivating force behind Telsa’s business model was a desire to stay out of the dealership quagmire that exists in most states. It will be interesting to see if Telsa teams up with other players at the national level to get federal action to overturn the antiquated state laws en masse. The same laws that kept dealerships protected have in many cases limited them from growing into the internet market. They could be in a lot of trouble if they suddenly have to compete.

Lord Binky says:

Next on the list

Inspired by car dealerships, food market stores push for laws to illegalize the purchase of food products directly from farmers and requires all food market stores to be registered and located in a permanent building (i.e. no wooden stands). The collective insists this is for public safety.

Anonymous Coward says:

Re: Re: Re:

This isn’t regulating INTERstate commerce, though. No one is saying you can’t drive a Tesla or buy one in Virginia and then own it in North Carolina. It’s just saying that Tesla has to play by the same rules as everyone else. This is regulating an intrastate activity, with perhaps an incidental effect on ISC.

It’s a stupid law – don’t get me wrong. And as a North Carolinian, I’m getting exceedingly tired of our boneheaded state legislature. But I don’t think this is unconstitutional.

Anonymous Coward says:

the politicians only back this type of action because, obviously, it is financially beneficial to them! if it were to become illegal to ‘reward’ politicians for this type of behaviour, just think how many more inventions would come to the market? think how much better off mankind could be? what politicians seem to forget is just because they dont back a particular legacy industry that refuses to do anything to advance itself doesn’t mean there would be no rewards if a new comer were backed!

Anonymous Coward says:

Re: Republican obstructionism denies inovative products to its citizens

LOL West Coast Engineering? Really…
Tesla loses money on each car it sells, except for the GOVERNMENT grants for Carbon offsets… if you want to call that good business and Engineering, go right ahead but as a long time Automotive Engineer I will still call it bullshit.
And really Tesla’s design is such a load of crap from a techincal stand point…

madasahatter (profile) says:

Re: Re: Re: Republican obstructionism denies inovative products to its citizens

All electric cars (not hybrids) suffer from the same technical problem of recharging time vs range. The recharging time of the battery limits the usefulness of electric cars to short distance trips with the lengthy recharging in between. Recharging times are often several hours. Tesla has managed to increase the range by having larger batteries installed.

This technical problem has existed since the Brass Era (1890 – 1920) and is caused by the nature of rechargeable batteries.

Steam (some Brass Era cars where steamers) and internal combustion engines can use liquid fuels. The refueling time, thus, is only a few minutes. The effective range of the vehicle is determined by the physical limits of the driver.

For example, some Tesla models have a range of about 250 miles with a recharging time of several hours. Your typical IC powered vehicle has a range of about 350 miles but more importantly a refueling time of about 10 minutes. The IC powered vehicle has effective range of 2 – 3 times that of a Tesla.

Also, it is debatable if electric vehicles are overall better for the environment. They are not emissionless, just the emissions occur at a different location and in the production of the battery.

Anonymous Coward says:

Well, if they do make it illegal to sell Teslas in NC, those car dealers should throw an expensive lavish party to ‘thank’ those legislators. They should probably also return the favor by offering high-paying thumb-tiddle jobs to them if ever that ‘government’ thing doesn’t work out.
You know, just to be neighbourly.

Anonymous Coward says:

Wouldn’t this be a violation of the constitutional amendment dealing with equal protection under the law? Interstate commerce is the jurisdiction of the federal government as well. I see a major constitutional challenge coming in the near future should these ridiculous laws pass. Elon Musk can afford an attorney or two.

Anonymous Coward says:

“… would make it illegal for Tesla, or any other car maker, to bypass dealerships and sell directly in the state” is not equal to “…Trying To Make It Illegal To Buy A Tesla In North Carolina”.

If you’re going to crib headlines from Reddit, try to remember that there’s a good chance that the OP is a fag.

Anonymous Coward says:

Re: Re: Re:

Is that why? Well, I see some problems with that.

First, when that law was made, there was probably only Ford, Chrysler, and GM that people could pick from. Today, you have a lot more imports that can give competition.

Second, even if you make a bunch of dealerships, the companies STILL have a monopoly on their product. They can charge whatever they like to the dealerships, who pass the costs on to the consumer. Having a middleman or not doesn’t change that.

Third, you’re punishing companies that had nothing to do with those abuses, since they did not even exist at the time. If companies are abusing a monopoly, then antitrust laws should kick in, but only for those companies.

GrrlGeek1972 (profile) says:

North Carolina vs. Tesla

You are overlooking the double dip on this one: right wingers hate anything to do with ‘green’ technology. North Carolina outlawed using real science to forecast sea level rise, remember? Although the green-eye-shade actuaries at the insurance companies writing homeowners’ insurance won’t be as stupid as the politicos…

horse with no name says:

Dirtect Sales Legal Issues

While it’s nice to spew the misleading headline, perhaps you should spend a little time looking into things to understand why this is such a problem.

First off, many companies who do direct sales do so from another state. Why? Simply, they avoid state sales tax by not being present in the state. Further, the avoid all the public liability, consume safety, and consumer protection rules for that state, and often for the state they are selling from as well.

Have a problem with your new car? Where do you take it?

There is a whole lot more at play here. I guess you know that, but damn, it’s a great (dishonest) headline!

btr1701 (profile) says:

Re: Re: Dirtect Sales Legal Issues

Sales taxes in NC are paid upon getting a
title for the car, so that’s never avoided.

Not only is not avoided, sometimes it’s double-dipped.

I bought a new 4Runner in Texas. Five years later, I moved to Virginia. When I took it to get registered at the Virginia DMV, they wanted me to pay sales tax on the car as if I’d bought it in Virginia. I told them I already paid sales tax on it when I bought it in Texas. They told me that didn’t matter, that if I wanted to register it in Virginia, I had to pay the sales tax again to them. I threw a fit because this was a significant amount of money, and once the supervisor came out of the back, and it was obvious to her I was both an attorney and not willing to be screwed, the tax was suddenly ‘waived’. I have a feeling they know they have a good scam going and don’t want someone who knows the law to ruin it for them, so they waive it for anyone who looks like they might be trouble.

Anonymous Coward says:

The solution to this is obvious.

Tesla creates a new company (only $125 in NC, cheaper elsewhere), independent from the main car manufacturing company, but with the same owners and a contract saying that they mark up the cars almost nothing and that they’re the exclusive reseller of Tesla cars. Then they sell the cars through the shell company.

It’s amazing what shell companies can do really.

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