Not that any political party is at all clean in these kind of sweetheart deal shenanigans, but any pol who praises free enterprise on the one hand and on the other restricts the market to favor the existing model and incumbents like this ought to turn in his or her membership in the Adam Smith Club.
Georgia dealers want Tesla store shuttered for selling too many Teslas
Imagine owning the most popular automaker in the United States. Now imagine a special interest group eliminating your ability to serve over 10 million Americans unless you did business with their unique cartel. That’s in essence what happened right before Labor Day weekend, when the Georgia Auto Dealer Association filed a petition with state officials seeking to cancel Tesla’s right to sell its cars in the state of Georgia.
Crony capitalism
On the other hand, Charles Lane notes in passing (before discussing the New Jersey issue) that Tesla is no free enterprise champion either. http://www.delawareonline.com/story/opinion/columnists/2014/03/13/christie-vs-tesla-car-dealerships-win/6384497/
"Tesla’s success would have been impossible without a big assist from government: a $465 million, low-interest Energy Department loan (since repaid); substantial tax credits for purchasers; tens of millions of dollars’ worth of air-pollution credits awarded by California regulators to Tesla and sold to competitors who, under state law, had to buy them.
"The (dubious) policy rationale is that a shift to electric cars would lower carbon emissions significantly and that the way to achieve such a shift is by subsidizing the manufacture and sale of a luxury vehicle that only the 1 percent can afford."
+John E. Bredehoft True enough — though I think an argument can be made that encouraging electric cars is net-net a good thing, and positioning them initially as luxury vehicles (vs. golf carts) will help that adoption.
Perhaps it's because of my preference, but loans and tax incentives to support startup industries feel different from regulated markets that block said startups because it would impact other folks' profit margins.
Valid point – and it's possible that the incentives were written in such a way that the big boys can take advantage of them as much as Tesla can.
http://www.bbc.co.uk/news/blogs-echochambers-29038650
@LH – Sounds like Commie-nism to me!
Right. And the dealership laws are, as far as I can tell, simply a way of forcing you to pay money to a dealership. If there's any actual public benefit, I haven't heard it.
+Rick Gary, if I recall correctly, the dealers claim that their very independence somehow assures the customers of superior service. Or something like that.
+Rick Gary, +John E. Bredehoft, the rationales given in this article (http://www.bloomberg.com/news/2014-03-10/tesla-s-direct-sales-push-raises-auto-dealers-hackles.html) are:
"The franchise model … protects the investment of dealers who spend millions of dollars on facilities and inventory … and creates strong local employers. The consumer gets to comparison-shop at multiple franchises and benefits by having dealers serve as advocates on warranty issues in a way manufacturers may not …."
"The Ohio dealer group argues that Tesla’s sales model creates unfair competition with established dealers and puts their investments at risk. That, they say, threatens the 830 franchised motor vehicle dealers in Ohio who employ more than 50,000 people with a payroll exceeding $2 billion, collect more than $1 billion annually in state sales taxes and pay millions of dollars in business taxes."
The basic argument seems to be that having franchised dealerships, rather than being "company stores," somehow gives an advantage to consumers because the dealerships compete with each other (to a certain degree) and somehow represent the customers to the manufacturers (which makes very little sense to me).
(I suspect the manufacturers are very supportive of state dealership associations suing and lobbying to block Tesla.)
The other argument is that they employ a lot of people (salesfolk, administrators, mechanics). As did, of course, buggy whip manufacturers.
As part of that, they also generate a lot of sales and business taxes. But I'd certainly expect Tesla would be required to do the same.
I think there's probably room for car dealerships in the model — having a manufacturer-certified mechanic shop right there is an advantage, as is being able to drive off the lot, or see multiple models of the vehicles in person in different colors and feature sets. But all that seems to be a customer convenience that can and should rise or fall on the basis of who gets the customers, not on the well-financed fiat of state legislatures.
Good info. The comparison shopping argument had more purchase before the Internet.