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.



Reader Comments (rss)

(Flattened / Threaded)

  1.  
    icon
    Ninja (profile), Sep 26th, 2013 @ 4:12am

    I have to disagree with the article. You made a very dangerous mistake when you dethroned the lawyers and put NSA officials there. Lawyer jokes don't sound as funny if you replace lawyer with NSA officials.

    Furthermore (now that's a word lawyers love) car dealers are attacking Tesla for using Hollywood Accounting™ operationalized in their super Quantum Calculator© (patents pending on round corners due to Apples) when they themselves are using the same tactics making them some sort of bad combo between lawyers, NSA officials (?!) and bad Hollywood movies. The horror!

    I say we need to start making jokes with car dealers too.

     

    reply to this | link to this | view in thread ]

  2.  
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    fogbugzd (profile), Sep 26th, 2013 @ 4:32am

    Dealers cannot lose in this complaint. One possible outcome is that they win and Telsa gets hit with fines and has to change its website. If they do not win they get an endorsement of their own deceptive practices.

     

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  3.  
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    Anonymous Howard (profile), Sep 26th, 2013 @ 4:47am

    Re:

    Dealers should win this case, since Tesla is infringing on their methods.

    Joke aside, Tesla should be rectified and fined. Then every single car dealership should be subjected to the same audit, rectified and fined too.

     

    reply to this | link to this | view in thread ]

  4.  
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    Anonymous Howard (profile), Sep 26th, 2013 @ 4:49am

    Then again, what's the raison d'etre of car dealerships and silly laws protecting them?

     

    reply to this | link to this | view in thread ]

  5.  
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    RyanNerd (profile), Sep 26th, 2013 @ 4:52am

    Here's a few eclectic ones I found

    I saw the most beautiful cars in the window of a dealership. A salesman came out and said "come on in. They're bigger than ever and they last a lifetime!" Later I discovered he was talking about the payments.

    How is buying a used car like going to a whorehouse?
    You're pretty sure you'll get screwed.

    A man walked into a tavern and sat next to a very attractive, smartly
    dressed woman perched on a bar stool.
    "Hi there, Good Looking. How's it going?" he asked.
    The woman looked him straight in the eye and said, "Listen, I'll screw
    anybody, anytime, anywhere, your place, my place, it doesn't matter. I've
    been doing it ever since I got out of school, and I just love it!"
    "No kidding?," said the man, "I'm a salesman too! What dealership are you with?"

    Q. What's the difference between a used car salesman and a software salesmen?
    A. Only the used car salesemen knows when he lying.

     

    reply to this | link to this | view in thread ]

  6.  
    identicon
    Anonymous Coward, Sep 26th, 2013 @ 5:00am

    Maybe Tesla can follow in their namesake's footsteps and shock those dealers into...wait, no, that won't happen. They're not elephants.

     

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  7.  
    identicon
    Anonymous Coward, Sep 26th, 2013 @ 5:40am

    Well it's not like anyone is actually going to buy this. I mean really, who here actually trust a car dealer?
    I have more faith in god than any car dealer and I'm an fucking atheist.

    Thank god for that.

     

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  8.  
    identicon
    MikeH, Sep 26th, 2013 @ 5:57am

    Planet Money had a fantastic episode about buying cars and why it's do painful. They go through an interesting history of the market and how the dealers acquired there frankly bizarre monopoly.

    http://www.npr.org/blogs/money/2013/02/12/171814201/episode-435-why-buying-a-car-is-so- awful

     

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  9.  
    identicon
    Rich, Sep 26th, 2013 @ 6:09am

    Re:

    It was Edison that did that, not Tesla.

     

    reply to this | link to this | view in thread ]

  10.  
    identicon
    Rich, Sep 26th, 2013 @ 6:10am

    Re: Re:

    Sorry, I don't know how this got attached here. I was replying to the above about shocking elephants. Sorry.

     

    reply to this | link to this | view in thread ]

  11.  
    identicon
    Anonymous Coward, Sep 26th, 2013 @ 6:11am

    "accusing the company of deceptive marketing and pricing"

    Wow. Is this projection, irony, hypocrisy and lack of self awareness all rolled into one? Politicians will certainly show some level of compassion and understanding.

     

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  12.  
    identicon
    Anonymous Coward, Sep 26th, 2013 @ 6:42am

    I'm still waiting for them to prosecute Jetta for similar lies

    They won't do anything to Tesla. The government STILL hasn't done anything to Jetta for running commercials blatantly lying about their government Miles Per Gallon rating.

    In case you don't know what I'm talking about, Jetta ran commercials claiming you could get over 50 MPG while going 'Vroom Vroom" (in their own words) as much as you want, despite the fact that the government gave them only a 35 MPG rating. So where did the 50 MPG rating come from? They paid 2 guys to break a world record with really careful driving/etc to get insanely high MPG (which almost requires going VERY SLOW), and they managed to squeeze 50 MPG out of a Jetta. The Government MPG ratings were especially specifically to avoid the kind of false advertising that Jetta was running.

     

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  13. This comment has been flagged by the community. Click here to show it
     
    identicon
    out_of_the_blue, Sep 26th, 2013 @ 6:42am

    SO, can't complain of deception, 'cause... it's innovation!

    Seems to be your point here: that a new company can't be held to the same old fair trade practices...

    Your last paragraph is "they're all crooks", but has this contradictory slapdash: "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 surprisedYeah, they're all lying crooks but we don't need no stinking consumer protection laws!

    Maybe those two self-contradicting sentences popped out and got past your review because you were writing to an agenda for hire instead of from your own beliefs.

     

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  14.  
    identicon
    Anonymous Coward, Sep 26th, 2013 @ 6:49am

    Re: I'm still waiting for them to prosecute Jetta for similar lies

    In the past, there were "Truth In Advertising" laws.
    Today it is a no holds barred environment. Politicians are somewhat hesitant to pass laws which disallow lies, for obvious reasons. There is nothing new about ads containing outright lies, it is expected - and laughed at.

     

    reply to this | link to this | view in thread ]

  15.  
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    negruvoda (profile), Sep 26th, 2013 @ 7:21am

    Re: SO, can't complain of deception, 'cause... it's innovation!

    And again reading comprehension is not your strong point.

    Technologically Tesla is an innovator. Marketing wise.....not so much.

    The crooks (the car dealers association) are trying to stifle a technological advancement by complaining that the marketing methods are.... surprise surprise, crooked. This is either hypocrisy or a really deep set case of lack of self awareness.

    Seems to be a case of the new company should not get the same protection as the old, because the old, well they just don't like it. They all deceive, but the old guys have been doing it for longer, so don't go after them.

    The article only points to the incongruence of one crook accusing another of being a crook. It may be true but it is disingenuous. But so are you in your comments, so I guess your comment is just your usual.

     

    reply to this | link to this | view in thread ]

  16.  
    identicon
    Oolong Kaloofid, Sep 26th, 2013 @ 7:25am

    I demand capitalism on my terms. If someone make money I should have a share. That's what wrong with this country. Everybody is entitled to what they don't make or earn. Everybody is special. There is a name for this misguided thinking. It's called Communism and Socialism...

    Now one of your readers can correct me - as I know they will because they too are special.

     

    reply to this | link to this | view in thread ]

  17.  
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    Elie (profile), Sep 26th, 2013 @ 7:37am

    The insurance industry survives, so will cars

    I have an exceptional interest in this. Co-owning an insurance agency, my competition is the internet and direct corporate sales along with other brokerages. I've always thought it unfair that while I can "build" a car online, I cannot buy it. The fact that this problem needs to be solved was made apparently to me last year when the dealer I eventually bought my new car from all but refused to get me the car I wanted and I haven't been as happy with it as I had hoped to be as a result.

    Insurance agencies everywhere are not only still in business but profiting quite nicely, even though anyone can purchase almost any insurance online and without benefit of human interaction. Why are we still around? We back up our sales with service. And if a client doesn't get the service they want, the agent risks losing the client to a competitor who will give better service. And if a client feels they can never get what they want from an agent, then can buy direct from the company.

    I think car dealers need that same competitive risk. I know for me it would have made my latest car-buying experience more positive. Dealers will do just fine. They'll lose a small amount of sales. If insurance is an indication, only a small and not really growing percentage of most insurance is purchased online. The majority is still bought and sold face to face. Car dealers will always have customers who wish to purchase via relationship-selling.

     

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  18.  
    identicon
    Anonymous Coward, Sep 26th, 2013 @ 7:48am

    Re:

    I would correct you...if I knew what the fuck you were talking about.

     

    reply to this | link to this | view in thread ]

  19.  
    identicon
    Anonymous Coward, Sep 26th, 2013 @ 7:50am

    Re: Re:

    Byte Me

     

    reply to this | link to this | view in thread ]

  20.  
    icon
    negruvoda (profile), Sep 26th, 2013 @ 7:51am

    Re: Re: Re:

    As in: provide my with quantified information?

     

    reply to this | link to this | view in thread ]

  21.  
    identicon
    Wolfy, Sep 26th, 2013 @ 8:39am

    Re: shocking elephants

    Yes, it was the well known invention thief, Edison, doing that, after he sent squads of men out to kidnap dogs from neighborhoods for staged public electrocutions in an attempt to discredit Tesla's A.C. system.

     

    reply to this | link to this | view in thread ]

  22.  
    identicon
    jackn, Sep 26th, 2013 @ 8:47am

    Re: Re: I'm still waiting for them to prosecute Jetta for similar lies

    This isn't really about advertising or marketing.

    The root cause here is Dealers not getting their cut. They feel they are entitled to insert themselve into the value chain.

    I guess we do need to work on entitlement reform.

     

    reply to this | link to this | view in thread ]

  23.  
    identicon
    Anonymous Coward, Sep 26th, 2013 @ 10:28am

    Re:

    Edison shocked the elephants, not Tesla

     

    reply to this | link to this | view in thread ]

  24.  
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    John Fenderson (profile), Sep 26th, 2013 @ 11:10am

    I'll wait until they're used

    This is clearly a case of the pot calling the kettle black.

    The only reason I have never purchased a new car (and probably never will) is because I'd have to interact with dealerships in some way. Doesn't matter if it's Tesla or not.

    I think it'd be pretty cool to drive a Tesla. I might do so once I can buy a used one.

     

    reply to this | link to this | view in thread ]

  25.  
    icon
    nubwaxer (profile), Sep 26th, 2013 @ 11:55am

    Re: The insurance industry survives, so will cars

    i can buy my insurance online from geico or progressive confident that i can call customer service anytime and get immediate customer service. i see allstate ofices around but i tried to buy insurance from allstate online and they sent me a large envelope full of forms so i guess if i went to their office i'd face the same cumbersome process. they even wanted something filled out by the dmv. ridiculous.
    dealers provide the constant authorized service to maintain the cars under warranty. i'm thinking tesla cars need very little maintenance and therefor one of the main reasons for dealerships has been eliminated.
    the hypocrisy is so obvious when corporasts have fought against regulations that prevented them from running amok but now they're all for crushing a tiny competitor that produces a great car.

     

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  26.  
    identicon
    MAC, Sep 26th, 2013 @ 12:16pm

    The Same...

    We despise in others what we loath in ourselves...

     

    reply to this | link to this | view in thread ]

  27.  
    identicon
    Andrew D. Todd, Sep 26th, 2013 @ 2:27pm

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

    Well, I think the moment of truth for Tesla will be in two or three years, when the battery packs go stale, and have to be expensively replaced. Contra Elon Musk, there is no indication that batteries are going to start behaving according to Moore's Law. The conventional definition of a used car assumes that a new battery and a new set of tires are not a very big expense. Airplanes do not become used in the automobile sense of the word-- there is just too much stuff which has to be inspected or replaced to keep the airplane airworthy. Old airplanes become "hangar queens." I argue that it is impossible for a Tesla to become used.

     

    reply to this | link to this | view in thread ]

  28.  
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    John Fenderson (profile), Sep 26th, 2013 @ 2:34pm

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

    By "used car", I mean a car I can purchase directly from the human being who was its prior owner. It doesn't matter whether that car was ever even actually used -- I just don't want to work through a middleman.

     

    reply to this | link to this | view in thread ]

  29.  
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    John Fenderson (profile), Sep 26th, 2013 @ 2:36pm

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

    Oops, I forgot this bit:

    For what it's worth, I've purchased eight or so used cars in my lifetime (only one time did I regret it), two from a used car lot and the rest from people. Not one of them had a new battery or new tires.

     

    reply to this | link to this | view in thread ]

  30.  
    identicon
    Andrew D. Todd, Sep 26th, 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.

     

    reply to this | link to this | view in thread ]

  31.  
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    John Fenderson (profile), Sep 26th, 2013 @ 3:58pm

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

    All true, but the car is still used regardless of all that.

    is not going to be willing to offer credit, or a warranty


    True, but I absolutely don't want the credit (I have my own bankers for that), and warranties don't enter into my decision making anyway.

    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.


    Not quite. I have financed used car purchases from private parties through my credit union, and the bet on reliability is one that I have to take regardless of whether it comes from a dealer or not. I hedge that bet by having a mechanic examine it (whether it comes from a dealer or not) prior to locking in the purchase.

     

    reply to this | link to this | view in thread ]

  32.  
    identicon
    Anonymous Coward, Sep 26th, 2013 @ 6:01pm

    All I know is, if you go to a dealer to buy a replacement part. The price of that replacement part is going to cost you an arm and a leg.

    So I really don't give a damn about overpriced dealers.

     

    reply to this | link to this | view in thread ]

  33.  
    identicon
    wistar, Mar 15th, 2014 @ 1:23am

    Re: I'll wait until they're used

    Congrats! You can buy a brand new Tesla today without interacting with a dealership because... Tesla has no dealerships!

     

    reply to this | link to this | view in thread ]


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