Tesla Motors: Trouble in Missouri

JuanHamez · PostMay 08, 2014#12014-05-08T22:15+00:00

Tesla motors recently posted on their website notice of a major issue they are having with the legislature in Missouri:

http://www.teslamotors.com/blog/trouble-missouri

We have just become aware of a last-minute attempt by the auto dealers lobby, via pressure on legislators, to bar Tesla from selling its vehicles direct to consumers in the state. This extraordinary maneuver amounts to a sneak attack to thwart due process and hurt consumer freedom in Missouri.

In the last week before Missouri’s legislature ends its current session, dealers proposed new language in an existing bill that would force Missouri consumers to purchase new vehicles only through middleman franchised dealers. The bill, HB 1124, has been in circulation since December 2013. It was passed by the House on April 17 without the anti-Tesla language. Last night, the bill with the new anti-Tesla language passed the Senate after zero public consultation and could soon move to the House floor for a final vote, essentially without debate.

Apparently, this is a huge and hidden effort to thwart the sale of Tesla vehicles within the state without public input. I am writing to my public representatives this evening about this issue and suggest others do the same if they have an interest in this debate (or believe that this should be debated at all and not just ninja'd into a bill)

arch city · PostMay 08, 2014#22014-05-08T22:24+00:00

So much for being a "Pro-Business" state.

If Tesla take off, like it seems to be doing, new production plants will be needed.

Missouri can forget about it.

onecity · PostMay 08, 2014#32014-05-08T23:32+00:00

I have mixed feelings about this. Remember the big push for antitrust legislation a hundred years ago: Business tycoons that owned the mines that supplied the metal to the foundries they owned that made parts to send to stores they owned on railway lines they owned. It's possible the consumer gets a better price in a direct sale, but dealers provide at least a handful of decent-paying local jobs. Tesla is great, but Tesla is better if people in my own town or city get a significant cut of the action. Unless Tesla's stores are going to employ people in my town as much as a conventional dealer, I think the legislature may actually be right, as painful as it is to say so.

MarkHaversham · PostMay 09, 2014#42014-05-09T12:12+00:00

I'd be more sympathetic to car dealers if most of them weren't essentially con artists.

markinlondon · PostMay 09, 2014#52014-05-09T14:20+00:00

So the legislative session ends in about one week. The bill was originally unrelated to car sales, but a last minute change was made?

Is this another case of Missouri resisting technology? Sounds to me like the auto dealerships could have influence over our politicians. I recall the Fiat showroom that was forced to close in downtown St. Louis due to another law.

rbb · PostMay 09, 2014#62014-05-09T15:28+00:00

For the record, Tesla is facing this fight in several states. They're really going their own way by selling direct, and seeing a lot of push-back nationally.

-RBB

PostMay 09, 2014#72014-05-09T15:49+00:00

Here's an article from the Boston Globe about Tesla's direct-sales battle in Massachussets. They were ultimately allowed to continue there.

Minnesota also fought against Tesla's direct-sales model, but eventually Tesla prevailed. Same with North Carolina and they're making progress in New York.

On the other hand Arizona, Colorado, Georgia, New Jersey, Ohio, and Virginia have either placed restrictions or have banned direct vehicle sales outright. This Forbes article gives a decent, if not wholly complete summary.

-RBB

onecity · PostMay 09, 2014#82014-05-09T15:50+00:00

There are two questions that matter in this debate:

1) How many net jobs does a Tesla dealership create?

2) How much do those jobs pay compared to jobs in other dealerships?

I don't know the answers to either. Does anyone?

http://www.glassdoor.com/Salary/Tesla-M ... E43129.htm

I'm assuming here that "Product Specialist" is the job title of showroom workers, and it is $12 to $15/hr, according to Glassdoor. May or may not be accurate. How does that compare to typical car dealership pay?

How intimate can a product specialist be with a product it would take them more than two years' salary to afford?

jstriebel · PostMay 09, 2014#92014-05-09T16:05+00:00

Personally, I don't care how many jobs a dealership would create for Missouri. Policies that violate free market in the strict name of giving other people money are BS. Regulate for safety and regulate in the name of competition. This isn't that (as far as I can tell).

onecity · PostMay 09, 2014#102014-05-09T16:07+00:00

Policies that violate free market in the strict name of giving other people money are BS.

Who cares about the market? It's 100% about people. And helping people set the floor for wages higher than "natural" market forces might is okay. More money in working peoples' pockets is always better.

jstriebel · PostMay 09, 2014#112014-05-09T18:57+00:00

onecity wrote:
Policies that violate free market in the strict name of giving other people money are BS.
Who cares about the market? It's 100% about people. And helping people set the floor for wages higher than "natural" market forces might is okay. More money in working peoples' pockets is always better.

I disagree. That's a great way to stifle innovation. If someone comes up with a better business plan, they ought to be able to execute it if it's safe and maintains fair competition. In the long run I believe this is not only most fair and keeps us moving forward but will encourage new opportunities for jobs.

I'm firmly against forcing things into an outdated system just for the sake of preserving it. This goes back to some of the issues with the MTC and Lyft.

I think when you regulation like that limits if not eliminates progress.

markinlondon · PostMay 12, 2014#122014-05-12T18:45+00:00

So according to the STL Business Journal, it was State Senator Mike Kehoe who "worked to include the amendment". According to his website, he served on Ford Motor Company's National Dealer Council. It looks like Kehoe owned a Ford dealership in Jefferson City, but sold it to someone else in 2011.

quincunx · PostMay 12, 2014#132014-05-12T19:28+00:00

Imagine if the computer stores successfully lobbied to get the legislature to ban Dell and Gateway from selling computers in the 90s. Or banning Apple sores.

Knowitall · PostMay 13, 2014#142014-05-13T00:10+00:00

The amendment was pulled, tesla to countinue doing business as usual

tech840 · PostMay 13, 2014#152014-05-13T01:46+00:00

I think we should ban Amazon for selling directly and make all of us use Best Buy, Sears, and Macy's so we can hire salespeople in all of these stores. Maybe netflix should be banned and we open up blockbuster stores around the country so we can go and pickup CDs. If we are not going to prevent these companies from disruption, I do not understand why we are supporting dealerships except that they have better lobbyists. Also do not underestimate that traditional automakers and oil companies are supportive of slowing down Tesla.

onecity · PostMay 13, 2014#162014-05-13T01:57+00:00

Amazon et al do provide a price benefit to consumers, but it comes at the cost of tens (hundreds?) of thousands of the middle income jobs that make the economy hum. I'm not opposed to innovation, but the disruptive effects of innovation can have a profound positive or negative impact on people, and that shouldn't be overlooked. The problem with the jobs created by those types of companies is you have a small number of tech/creative/leadership positions, and a large number of menial positions, and no positions in your hometown. So as we do on this forum, we hope Google or another heavy tech player sends a data processing center here or there. Technology is great. Don't forget it has a downside.

Why can't/shouldn't Tesla establish a normal dealer network with adult money jobs?

pat · PostMay 13, 2014#172014-05-13T13:12+00:00

The "dealer" is an antiquated model. People are more intelligent buyers. Most people know enough about cars to buy them without help, especially those who are buying Teslas. And regardless of all that, Teslas aren't cheap. Having the middleman of a dealer drives up the price of the car more. In order to stay competitive they shouldn't be forced to drive up their costs just to provide jobs.

jstriebel · PostMay 13, 2014#182014-05-13T17:11+00:00

onecity wrote:Why can't/shouldn't Tesla establish a normal dealer network with adult money jobs?

It's really not about why they can't or shouldn't, it's about why they shouldn't have to.

Artificially created systems like this are a detriment to the seller and the consumer. To me that's reason enough not to force it, no matter what the gain is to the community. Find another way to get jobs in the community. If you start creating regulations just because it creates it's jobs, you might be going down a slippery slope.

moorlander · PostMay 13, 2014#192014-05-13T18:25+00:00

pat wrote:The "dealer" is an antiquated model. People are more intelligent buyers. Most people know enough about cars to buy them without help, especially those who are buying Teslas. And regardless of all that, Teslas aren't cheap. Having the middleman of a dealer drives up the price of the car more. In order to stay competitive they shouldn't be forced to drive up their costs just to provide jobs.

It's expensive for a manufacturer to carry a national sales force. It's almost always better suited to distribute your product using existing sales channels. If your comment thoughts were true more manufacturers would sell direct and right now almost no one does it as their primary sales channel.

jstriebel · PostMay 13, 2014#202014-05-13T18:58+00:00

moorlander wrote:
pat wrote:The "dealer" is an antiquated model. People are more intelligent buyers. Most people know enough about cars to buy them without help, especially those who are buying Teslas. And regardless of all that, Teslas aren't cheap. Having the middleman of a dealer drives up the price of the car more. In order to stay competitive they shouldn't be forced to drive up their costs just to provide jobs.
It's expensive for a manufacturer to carry a national sales force. It's almost always better suited to distribute your product using existing sales channels. If your comment thoughts were true more manufacturers would sell direct and right now almost no one does it as their primary sales channel.

Someone always has to come first.

I suspect if Tesla is successful, we'll see other manufacturers explore this option. That doesn't mean they'll switch as everyone has different issues to deal with, but it might spur something.

Or maybe Tesla won't be successful and they'll switch models.

But we shouldn't legislate one or the other as the only option.

onecity · PostMay 13, 2014#212014-05-13T19:00+00:00

Are we the kind of people that take care of one another, or are we the kind of people that take care of Elon Musk?

jstriebel · PostMay 13, 2014#222014-05-13T19:08+00:00

onecity wrote:Are we the kind of people that take care of one another, or are we the kind of people that take care of Elon Musk?

That seems like little more than propaganda diverting attention away from the principles at hand.

It's not about taking care of Elon Musk. It's about protecting the consumer (which certainly qualifies as "one another") from the cost of the middleman and not over legislating for artificial results.

quincunx · PostMay 13, 2014#232014-05-13T19:45+00:00

If dealers add value, they will endure.

pat · PostMay 13, 2014#242014-05-13T20:59+00:00

Are we the kind of people that take care of one another, or are we the kind of people that take care of Elon Musk?

Kumbaya my lord...

It's expensive for a manufacturer to carry a national sales force. It's almost always better suited to distribute your product using existing sales channels. If your comment thoughts were true more manufacturers would sell direct and right now almost no one does it as their primary sales channel.

Maybe, but technology has also helped lower consumers costs in many industries. With this being the age of the internet, I doubt you need a sale force on the scale you may be imagining. Tesla certainly isn't doing that. My comments could very well be true. I would imagine it being much cheaper for a new car company to sell direct rather than an established car company to change selling methods it's had in place for decades.

onecity · PostMay 13, 2014#252014-05-13T21:20+00:00

Kumbaya my lord...

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