California Car Dealers Go Crying To DMV About Tesla's Website

from the (no)-sympathy-for-the-devil dept

Auto dealers have been dealing with disruption just about as well as any other legacy industry has. Instead of attempting to compete, dealers have chosen to respond to Tesla's refusal to cut them in on the middleman action by throwing up as many regulatory roadblocks as possible. Sadly, this antagonistic attitude toward both their competition and the car-buying public somehow makes sense to them, and they seem very willing to bury both the upstart and their last remaining shreds of goodwill at the same time.

In many states, the usual course of action for car dealers is to lobby for protective legislation. Many states have already hooked up car dealers and made it illegal for manufacturers to sell vehicles directly to the public. The remaining states that haven't are being pressured to follow suit.

However, Tesla's direct sales are completely legal in California. Rather than mount an attempt to push protectionist legislation through, the auto dealers have decided instead to attack Tesla's direct sales website, accusing the company of deceptive marketing and pricing. (via Slashdot)

The association's letter to the California DMV (PDF) complains Tesla violates several sections of various Federal and California codes and regulations:

"Tesla fails to provide required information and shatters the notion of comparison finance shopping by including the potential availability of incentives, gas savings, and tax savings into final payment quotes for prospective customers. This scheme is most blatantly demonstrated by the general ―$580 per month after gas savings advertisement found on several of its internal web pages."

It also notes that Tesla's quoted new-car prices net out a $7,500 Federal income-tax credit for purchase of a plug-in electric car. According to the California dealers, just 20 percent of all car shoppers qualify for that credit--and the group attributes that statistic to the Congressional Budget Office.

The complaint also attacked the way Tesla calculates resale value of its cars, the financial value of savings in commute time by using HOV lanes, and the methods used to calculate the savings of powering a car with electricity versus gasoline.
The letter (which runs nine pages alone and includes 11 pages of exhibits) also takes issue with Tesla's widely criticized "cost calculator" and its usage of "net pricing" to show potential buyers a pretty much unattainable ticket price. The letter includes screenshots of Tesla's website, some of which include tons of fine print that would seem to indicate that the rosy picture being painted above, which utilizes all possible incentives and rebates, actually comes with several catches.

But while the letter goes long on "deceptive pricing" and "arbitrary numbers," it conveniently ignores the fact that auto dealers have long held a monopoly on those tactics as well. The reputation of car salesmen ranks somewhere between lawyers NSA officials and Ponzi scheme operators. For most people, buying a car is a process is roughly on par with going in for a full body wax -- you're just hoping to escape with as little pain and bleeding as possible. (Escaping with any dignity intact is out of the question...)

Everything Tesla's being accused of has been the standard operating procedure for countless car dealers around the nation. That doesn't make Tesla right, but it hardly makes the car dealers -- who are fiercely defending their profitable "gatekeeper" status -- look like the lesser of two evils.

This seems to be a whole lot of effort to be expending in order to grab a percentage of a higher-end niche market. The auto dealers would be better off approaching their "benefactors" (especially the Big Three) and asking them why they're not producing highly desirable, groundbreaking products at bonus-spiking profit margins. Instead, they'd rather approach the situation in the worst way possible -- attacking an upstart with a righteous fury that's completely oblivious to the obvious hypocrisy of the accusations.

Certainly Tesla should conform with applicable laws, but its website -- which to most people will still look like amazing prices attached to pages of fine print -- is pretty much similar to any car dealer's online cost calculator. People who think they're going to get the low monthly payment (and low percentage rate) splashed across TVs and newspapers (and websites) are rarely surprised to find out they don't qualify for the promotional rates. What the auto dealers are pointing to as the epitome of deception in this letter is really nothing more than "another day at the office" at nearly every sales operation anywhere: if something looks too good to be true, it probably is. And most consumers are able to see through these advertising tactics without the help of protectionist laws, just as surely as they'll recognize the auto dealers' "concern" for what it truly is: self-interested and desperate flailing.

Filed Under: california, car dealers, disruption, dmv
Companies: tesla

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  1. identicon
    Andrew D. Todd, 26 Sep 2013 @ 3:38pm

    Re: Re: What Is a Used Car? (to John Fenderson, #24)

    The definitions are related, of course. The kind of person who sells a car in the newspaper, or on Craigslist, for "$2000 or best offer," is not going to be willing to offer credit, or a warranty. Doing that kind of thing is a job for a businessman, who knows how to take calculated risks and all. Your definition of a used car is effectively one sufficiently inexpensive that you can afford to buy it out of your liquid cash, and that you are willing to take a bet on its reliability. An automobile dealer will tell you (crocodile-fashion) that you need to drive the most expensive automobile you can become indebted for, and that if you don't do so, this is a direct reflection on your manhood. You have chosen to opt out of this view of life. The problem with a Tesla is that, without a certain minimum value in batteries, it is a hangar queen. A set of batteries is a bit like a Lycoming aircraft engine, or the steel tracks on a bulldozer or an armored fighting vehicle. In the latter case, the usual assumptions about "tires" are not valid either.

    Buying a house "by private treaty" is not a free ride. You need a civil engineer to check the structure, and a lawyer to check the title, the home-owner association, the zoning, etc.

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