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Car dealership lobbies blocking direct sales

Car dealership lobbies blocking direct sales

I just noticed some recent articles on Eletrek. Texas is now trying to block Tesla from servicing vehicles in the state in addition to blocking direct sales. There are apparently 8 states presenting opposition to the direct sales of Tesla's due to their dealer lobbies. Tesla owners and fans need to contact their local government reps.

jordanrichard | 17 mars 2019

This is very old news, well the part about the dealers trying to block direct sales. Also Tesla has come up with a way to get around the dealers anyways.

Basically if you live in a state like mine CT, Tesla won’t be technically (legally) be delivering the cars which some states like mine consider part of a sale. Your car will be delivered to the nearest location that Tesla is allowed to sell in. At that point, the car is considered delivered because you will have accepted delivery on paper. Then “on your behalf” will arrange for a third party carrier to delivery your car to your house. The car carrier will be fully insured and responsible for any damages. This way you do not legally take delivery from Tesla. Also this is then considered interstate commerce which the dealers/state can not stop.

El Mirio | 17 mars 2019

@Jordan not quiet, this is new legislation which wants Tesla to stop servicing the car in addition to the sales barrier.

jimglas | 17 mars 2019

how is it possible to stop service of the cars? Are they willing to prosecute any mechanic that works on a Tesla?
Seems impossible.

Yodrak. | 17 mars 2019

"Car dealership lobbies blocking direct sales"

The thread title is misleading. It is old news and does not accurately describe the new situation that the OP raises about Tesla service in Texas.

"Are they willing to prosecute any mechanic that works on a Tesla?"

No, not "any mechanic", Tesla mechanics.

El Mirio | 17 mars 2019

They want to ban TESLA to offer service.

jimglas | 17 mars 2019

Tesla could just farm the repairs out to mechanics that have been trained to repair teslas, its not SpaceX science.

El Mirio | 17 mars 2019

TX wants to block any OEM to service vehicles, also OEMs wouldn't be allowed to own a franchises.

https://electrek.co/2019/03/16/tesla-service-ban-texas/

South Carolina already has this, Tesla is only able to service thru Mobile Service, likely with out of state registration based on interstate commerce laws.

carlk | 17 mars 2019

What is going to happen to people who own a Tesla? What if someone had an accident becuase he could not get the car serviced by Tesla? A class action lawsuit for $500 billion damage will fix anything they could pass.

El Mirio | 17 mars 2019

@carlk this brain fart likely originates from the dealership association, i.e. Reps. donors. Likely they got spooked with all that "online only" talk and are now throwing anything against the wall to see what sticks.

jpcollins9 | 17 mars 2019

Living in Alabama where there is not a Tesla Service Center seemed problematic when I ordered online my first Tesla in Oct. 2014. When it was delivered on a flat bed in April 2015, wondered if I had created a problem for myself since the nearest service center was Atlanta, well over a 100 miles away. Fast forward to the present, I've made one trip to the service center with my 2015 car for a full annual service (well first full 3 year service) but that cost me the price of a 2018 X100D (my wife liked the X better than the S so now we have 2 Teslas-happy wife, happy life!) Other services that have come up have all been handled by the mobile service in my garage. Frankly, I could care less what Texas and other traditional dealer protection states try to do. to me it sounds likes trying to turn back time. As my aging back tells me often, good luck with that!!

DubDub | 18 mars 2019

Have already posted this in other threads, but want to get the word out to all. This is 100% false reporting. Senator Kelly Hancock has posted this clarification of the bill. https://senate.texas.gov/members/d09/press/en/p20190318a.pdf
This will NOT affect the ability of any manufacturer to service vehicles it makes.

blue adept | 18 mars 2019

Just sue them for conspiracy and racketeering and monopolizing the area/region/state under the RICO Act combined with a request for Injunctive Relief and be done with it already, sheesh!

blue adept | 18 mars 2019

After you've won Injunctive Relief (should be granted immediately given the documented proof of interference/oppressing), file a complaint with the FTC with the court's findings/ruling attached as both evidence and authority...

Bada-bing, bada-boom! All you bishes are belong to ME! :-)

DubDub | 18 mars 2019

@blue
This is all for nothing. Please see my post. Not to mention nothing you have said makes any sense at all. Sorry.

blue adept | 18 mars 2019

@Dub

It makes sense to Tesla regarding any one, any company, any industry, any state, or even any lobbyist groups thinking of blocking the sales or service or installation of SC's in their states.

The gloves are off and they can see how well they adapt to prison life.

finman100 | 18 mars 2019

yeah, sure. my "belt-and-suspenders" sense this reply to be BS. and in Texas, everything is bigger. so, you know...

we (US in general) really have some f#@cked up laws on the books. and then to double down. wow.

DubDub | 18 mars 2019

@finman
Well, I’ve posted you a link to the senator’s clarification. Not sure what’s going on with your “belt and suspenders” but looks pretty cut and dry to me. If you don’t believe the hard evidence in front of you, I’m not sure what else would clear it up for you. I can explain it to you, but I can’t undersrand it for you. Have a nice day.

carlk | 18 mars 2019

@blue adept Thank you for pointing out the RICO. Upon a little further reading it's pretty clear this law applies to this case perfectly. Best of all is not only federal or state attorney could file criminal lawsuit individuals who are harmed by the "enterprise" could also file civil lawsuits under the law.

rxlawdude | 18 mars 2019

I just read the entire bill. What the good (?) Senator states in his letter of clarification does not seem match the plain language, which in my reading in fact precludes Tesla from servicing its vehicles.

RES, are you around? Take a gander at the language and give your interpretation.

https://capitol.texas.gov/tlodocs/86R/billtext/pdf/SB01415I.pdf#navpanes=0

rxlawdude | 18 mars 2019

And @Dub, the good (?) Senator could "clarify" the sky is green, but if it's not in the text of his bill, it's not binding law.

Earl and Nagin ... | 18 mars 2019

@rxlawdude,
Thanks for the read. Sounds like the old Texas 2-step. Write one thing, then tell the people it says something different. That way, you can collect your graft and still get re-elected.

blue adept | 18 mars 2019

@carlk

Exactly!

Under RICO you can lump EVERYONE/whoever has shat on Tesla...all of the ICE manufacturers, dealerships, unions, lobbyists, mayors, governors, senators, congressmen, even the Pres. (citing the legislation he's signed that circumvented Tesla's ability to market their products)...all together and take them all out in one fell swoop!

And, ironically, you'd need only use their own actions/words against them to prosecute them under the longstanding legal precedents that were put in place to guard against such practices (conspiracy and racketeering) already on the books as they've, essentially, put their own feet in their mouths!

Just read up on it and you'll be able to see it for yourself, that is, how their actions to monopolize a segment of the market amounts to a conspiracy to deprive any business its right to operate free of obstruction or onerous imposition:

https://www.nolo.com/legal-encyclopedia/content/rico-act.html

Granted, there's a bit more to it than that, but that's the gist of it.

bp | 19 mars 2019

Since the dealership lobbies are unlikely to stop their attempts to block Tesla, there is only one way this will eventually end - and that's with a federal lawsuit against state-level dealership protections which will likely end up undoing all of the protections each lobby has fought hard to gain in every state.

Rather than lobbying for increased dealership protections, in the long run, the dealerships will survive only if they are providing real value to customers and to the manufacturers - and should be focusing on changing their business model rather than using laws to protect their inefficient brick & mortar businesses.

jordanrichard | 19 mars 2019

bp, agreed but the change to the dealer's business model involves making less money. A while ago I post thread proposing a way for the dealerships to make up for the lost revenue from service and was to open up small cafes in the dealership. These cafes would be a place for those charging to grab something to eat/drink. As everyone knows, there is an absolutely huge profit margin on drinks, just ask Starbucks.......

While a dealership near a highway would probably see more EV travelers, those dealerships at are not would get business from local EV owners that live in condos or apartments. This café idea would give a dealer an competitive edge over others. Now, as I also mentioned in that thread, there may be zoning issues because they would be trying to set a restaurant (eatery), so they will then have to contend with health inspections.

Nexxus | 19 mars 2019

The meat of this new law, if enacted, is:

Except as provided by this section, a manufacturer or distributor may not directly or indirectly:
(1) own an interest in:
(A) a franchised [or nonfranchised] dealer or dealership, or
(B) a nonfranchised dealer or dealership;

(2) operate or control:
(A) a franchised [or nonfranchised] dealer or dealership, or
(B) a nonfranchised dealer or dealership; or

(3) act in the capacity of:
(A) a franchised [or nonfranchised] dealer or dealership,
(B) a nonfranchised dealer.

So what his bill is saying is Tesla can't own a franchised dealer, non-franchised dealer, or act in the capacity of any dealer in the state of Texas. This will preclude Tesla from servicing their own vehicles (acting in the capacity of a dealer). And he's reinforcing the ban on Tesla owning their own stores in the State of Texas

Earl and Nagin ... | 19 mars 2019

@bp,
You're correct, however, federal laws against local practices would be regulating intra-state commerce, violating state's rights.
Personally, I'd prefer these protections of state's rights were protected since they enable one state to do the right thing even if others don't, thus enabling a model of what is right. The ability of states to make mistakes without dragging the others down is also a good thing. Its less efficient but safer in the long run.
If a few backward states want to rot in their own collective stupidity, let them. The other states can put pressure on them to eventually do the right thing by showing enough people in the state they are wrong to get the other states in line. Its been working well for over 200 years with only a few major hiccups (civil war).
Tesla can live without Texas even though serious Texans will continue to be able to drive Teslas even if they must go to LA, OK, AR, or NM for service.

jordanrichard | 19 mars 2019

Nexxus, no that does preclude from Tesla servicing their cars. One does not have to be a dealer to service cars. If that were the case, there would be no independent garages, Firestone, Sears Auto, Pep Boys etc. etc.

teslu3 | 19 mars 2019

If Texan Teslas don't get proper service, many will feel forced to go to other states for service.
Tesla will get negative press for not properly servicing their cars, hurting sales in other states.
This does affect interstate commerce.

finman100 | 19 mars 2019

Really DubDub? you didn't read the actual pdf you posted a link to? figures. "belts-and-suspenders" language. maybe that isn't clear enough that I'm funning with you about the stupid senator and his double-speak language.

Can't see that? oh well. continue to live in backwards TX. yee-effing-haw.

Go free market...not. good grief.

wow, and to think we are at the top of the food chain.

Needsdecaf | 19 mars 2019

@jordanrichard

No, it does not directly preclude Tesla from servicing their cars. Not directly.

What it does is:

Define what a manufacturer is
Define that people working for a manufacturer, or on behalf of a manufacturer, are considered to be synonmyous with the manufacturer
Adds additional detail to the definition of a dealership as "the business of which includes buying, selling, exchanging, servicing, or repairing the same type of motor vehicle that the manufacturer or distributor manufactures or distributes"
And finally, prohibits a dealership from acting in the capacity of a dealership.

Ergo, it would then be possible to sue Tesla on the grounds that it's moblie technicians are acting on behalf of the manufacturer, and therefore Tesla the manufacturer is acting in the capacity of a dealership. Something that they are not allowed to do.

So no, this legislation does not directly prevent Tesla from doing anything. It just opens the door for them to be sued and their operations be shut down if that's what the judge finds.

Madatgascar | 19 mars 2019

Looks clear to me. A manufacturer may not operate or own an interest in an (entity) that...services or repairs... the same type of vehicle the manufacturer manufactures. What is not clear?

Nexxus | 20 mars 2019

@Madatgascar,

Seems clear to me, although jordanrichard seems to think otherwise. If this gets passed into law the repercussions will be devastating and the potential lawsuits stultifying to Tesla.

finman100 | 20 mars 2019

that is a great word Nexxus! need to get that into conversation today...

https://www.google.com/search?client=firefox-b-1-d&q=stultifying

bp | 21 mars 2019

If this bill becomes law (low probability) and it does prevent Tesla from directly serving in Texas (which the bill's author claims isn't the case), worst case is that Tesla will find a way to workaround this restriction, perhaps having a 3rd party purchase and operate the Service Centers, subcontracting the actual maintenance to Tesla.

It seems highly unlikely Tesla owners would be forced to drive out of state to do their service (Tesla owners in central Texas - Austin & San Antonio - would have a 5 to 6 hour drive to the nearest border where a service center could be located out of state).

Plus, because this bill will have an adverse impact on current Tesla owners, Tesla would likely be able to take legal action to block the bill from taking effect until any lawsuits have been completely resolved, which could take years.

The probability this will prevent us from getting our S & X serviced is so tiny, we're not worried about it. Just like we don't see any problems with the lack of direct sales. Much more concerned about Tesla's ability to sustain profitability, ramp up their support/service to handle the rapidly expanding customer base, and continuing to introduce innovations in AP and other technologies...

Earl and Nagin ... | 21 mars 2019

@bp,
3rd party = dealership.
That's the whole problem.
I agree that Texas is too big to serve from neighboring states.
Texas may just get left back in the ICE age.

mikea | 21 mars 2019

@bp, are you getting access to the Tesla mobile service there? I hope this coverage will not be affected and it expands everywhere to maintain customer satisfaction. Here in CA, they are stationed at one of the big superchargers (certain days and times) to perform repairs while you charge. They handled a minor repair on my X and I was on my way. Excellent experience. I hope all states are able to have this level of service. ...and I agree that focus on innovation plus support are keys to survival and success. I hope these legal issues do not become distractions.

blue adept | 21 mars 2019

All little more than scare tactics/propaganda intent on discouraging residents from purchasing Tesla's (which Tesla can get paid for due to potential sale losses).

Unfortunately for them the fact of the matter is that a state cannot enact legislation that undermines or circumvents or supersedes federal law, laws such as The Sherman Antitrust Act (which outlawed monopolistic business practices and regulates enterprise competition), The Clayton Antitrust Act (which, in addition to creating new rules for mergers and corporate directors, also listed specific examples of practices that would violate the Sherman Act [e.g., like what Texas is up to]) and, of course, The Federal Trade Commission Act (which created the Federal Trade Commission [FTC], which sets standards for business practices and enforces the two antitrust acts, along with the Antitrust Division of the United States Department of Justice).

The laws are intended to preserve competition and allow smaller companies to enter a market, not to mention to insure against the sort of BS like those people are trying to do by conflating one type of business with that of another in an effort to create/manufacture an exception to the rule of law that would prevent someone from operating their business or providing service for their own product.

These sort of tactics are all aspects of what would be the RICO prosecution I mentioned earlier and while I can sketch an outline of a defense for you, I won't be able to dial in an actual plan of attack without certain details/specifics (places, names, points of contention, etc.), but suffice it to say that Texas isn't going to get any play, @El Mirio, nor are any of those other 8 states, @mikea.

It's all hype, all subterfuge, all arbitrary BS.

bp | 5 avril 2019

I read through the proposed legislation and the current codes that are being modified.

It appears all the bill is doing is modifying the restrictions placed on dealers (who are registered with the state) and dealerships, allowing a dealership more flexibility in selling/servicing multiple brands and types of vehicles, and who owns those dealerships.

All of the changes only apply to dealers or dealerships.

Since Tesla is not a dealer (registered to sell vehicles in Texas) or a dealership, this bill should have no impact on Tesla.

The risk to Tesla is if there is an amendment to the bill that would apply to Tesla.

I'm not an attorney, so I may have missed something - but as far as I can tell, the current bill should not impact Tesla or Tesla's customers in Texas.

Tesla will still not be able to sell vehicles through stores directly to customers - which is somewhat of a moot point anyway, since Tesla is trying to shift all sales to online, even in states where they can operate stores. Tesla should still be able to assist in vehicle deliveries (for vehicles that are purchased online, with the service center not participating in the sales transaction). And tesla should still be able to service vehicles through their service centers.

If anyone can find something in the bill that applies to Tesla - please point it out.

Otherwise, this appears to be what it is - special legislation being done for a dealership owner who can only expand their business by loosening the current dealership restrictions.

blue adept | 5 avril 2019

@bp

>>> "Tesla will still not be able to sell vehicles through stores directly to customers - which is somewhat of a moot point anyway, since Tesla is trying to shift all sales to online, even in states where they can operate stores."

It is a "moot point" because, with the exception of an original owner person-to-person sale, all of Tesla's sales have always been online, ALL of them.

>>> "Tesla should still be able to assist in vehicle deliveries (for vehicles that are purchased online, with the service center not participating in the sales transaction)."

Any state attempting to restrict Tesla from servicing their product (cars) opens itself up to litigation for a variety of SEC violations, monopolizing the market, racketeering, and any number of other arbitrary violations which would result in VERY expensive penalties.

>>> "And Tesla should still be able to service vehicles through their service centers."

Unhampered inasmuch as they do not qualify as "dealers" or "dealerships", even under the state's legislative language.