Not only has the bill not been brought to the floor, it would need to be approved by both legislative bodies and then signed by the governor. The probability that the dealer lobby will sit idly by and let this pass ... is unlikely.
Regardless, you can buy a Tesla in New York, Pennsylvania, or online. If you go to a Tesla showroom now, you'll see a huge sign that says "pay 0% sales tax", which makes sense if you buy it online. Why would I want to pay 7% more even if I had the option?
All of this is just bullshit, on both sides. The dealers already lost. They lost when buying cars over the internet became a viable option.
The pay 0% sales tax is surprising to me. At least in New York whenever you register a vehicle, you pay the sales tax; no matter what state you bought it in. Even if you didn't have to pay the tax to register, my guess is that the NJ law would be written as a sales and use tax; and you would be responsible for it anyway. It wouldn't exactly be hard for the state to figure out who has a Tesla with registration records, but who had neglected to pay the sales tax and slap them with additional fines and penalties.
>The dealers already lost. They lost when buying cars over the internet became a viable option.
It will be a long time before people are comfortable buying a car online.
I just purchased a new car; the process is unbelievably anachronistic, but it still exists and prospers for a reason. There's very much a "this is how it's done attitude". That's because the majority of the world doesn't accept "technology" liker the denizens of HackerNews.
This seems like a 'one off' deal. Tesla can come in, zero emissions exception, but conventional competition against the franchised dealer model is still prohibited. This is solely because of embarrassment, but it doesn't right the real wrong.
Hmmm... Surely it would be better to do something like "a car manufacturer can not have a store within x miles of a franchised dealer licensed to sell that manifacturer's cars" rule, so Telsa can come in and do what they do (since there are no dealers to protect), dealers are happy because they are still protected (which I think is wrong, but their lobby groups are probably to strong and hopefully this way does pave the way to dealers dying out because of market forces)
Question for those who understand this, why can the government force a middle man to exist in the first place? It seem to a layman to violate several other rights.
I'd really like to know what the legal framework is for securing a market position by law.
I constantly hear the argument that by codifying contemporary business models they've secured jobs.
Using this logic we should still have manually switched phone networks where people move around cables on giant boards all day long and rooms full of people using typewriters who have to start over again if they have a spelling error. There should be artificial $1 taxes for emails to keep the physical post in business and other nonsense.
I really don't see how the argument is valid.
I'm just surprised that there isn't some landmark labor case that would invalidate laws which artificially perpetuate inefficient vestigial processes or explicitly ban a market from evolving.
What would the legal argument for invalidating the law be? There is no constitutional right to efficient markets that would lead the supreme court to strike down the law. I think the court would declare this a "political question" and refuse to grant cert thereby not ever hearing the case.
I was thinking it would have been from English Common law - you know, from like the 14th century or so.
I find the reasons presented for these types of laws to always be patently absurd when generally applied and it just seems like an obvious shoo-in that should have been there since like the hundred years war.
Why would there have been anything about efficient markets back in the hundred years war? Adam Smith wasn't publishing until around the French and Indian war (AKA 7 years war) 300 years later.
Also, what leads you to believe that creating economic inefficiency to the benefit of some special interest is somehow against ancient and established traditions?
Well, that is the logic. And you'll note that, despite that logic, we have the internet, cell phones, and the national postal services are going bankrupt.
There's a tenuous balance between maintaining global competitiveness and promoting technological advance, and making sure that your middle-class have blue collar jobs that afford them the ability to participate in the financial gains of of your nation.
The changes will occur; you can't hold them back. But sometimes you have to ease them in. It does the world no good to put thousands of "luddites" out of work overnight. The idea that they'll "find other work" makes sense on the macro level, but not the micro level; transitions take time.
Car manufacturers created the franchise system as a way to avoid them having to carry the cost of vehicle inventories and repair facilities across the country. Having done so, the dealerships lobbied the state legislatures to formalize their status in law, so that they couldn't be disintermediated by the manufacturers later.
I believe that the argument in their favor, other than blatant self-interest, was that dealerships provide post-sales warranty service, which would otherwise not be readily available. In some states, IIRC, the statutes are written to say that vehicles can only be sold from a location that also offers warranty service.
Dealerships have always felt to me to be some of the sneaky-est, deceptive and sometimes shady businesses I've had experience with. I think direct sales from manufacturers makes more sense...
I think the part most people are having trouble with is not what is contained in your first paragraph, but how the legislature/executive goes from there to "Every manufacturer, including those that never set up franchise agreements, must sell through a dealership." The especially galling part of the New Jersey kerfuffle is that Tesla was defined to be a "franchisor" despite the fact that they have never entered into a franchise agreement!
If Tesla attempts to prevent independent service facilities from providing warranty and service work then be very worried. Laws exist to give consumers the choice for a reason.
With multiple dealers at least you can choose which one to buy from, who has better people, better service, and better pricing. Why people want Tesla only stores is beyond me, one choice means no choice.
It's not about wanting only Tesla stores. It's about wanting Tesla stores at all.
If consumers really do value dealers, then dealers will continue to exist. The reason that dealers are scared is that the dealers themselves do not believe that they provide a valued service.
TL;DR: To save y'all from listening to the (interesting) Planet Money podcast:
Back in the early C20 depression the auto makers were the biggest companies in the USA. And they'd force the franchisees to purchase cars or lose their franchise.
So states enacted legislation to ensure the auto makers couldn't close a franchise. Nor could the auto maker grant a second franchise in the same location. And (I think I'm inferring as I can't remember hearing this explicitly) could not open their own dealership that competed with the existing franchise.
The equal protections clause, as other people are not required to sell through an independent middle-man. Perhaps the due process clause as well, depending on how the statute is written and enforced.
I don't believe the equal protection clause would be applicable. All residents of New Jersey are subject to the same standards, and the state would be able to articulate a rational basis for the restriction (ensuring consumer access to repair and warranty service, for example). Same with the due process clause, the state merely needs a rational basis, or a "legitimate governmental interest", which is reasonably trivial for consumer protection legislation.
State commerce seems like a much more reasonable limitation on states rights as dealerships are in effect a tax on imports from another state. Presumably, consumer protection rules like forcing any place that sells cars to also repair them, but states can't for example prohibit someone buying a car in another state.
Middlemen implies no or little value derived from the middleman's place. A stable, powerful and secure government is required for value of any meaningful value to exist in the first place.
> ... would allow a start-up electric car maker, like Tesla, a reasonable period of time to ramp up operations (or sales volume) before they conform their business operations to the franchise model," [president of the New Jersey Coalition of Automotive Retailers Jim Appleton] said.
> "Should there be some kind of time limitations within the bill or are we setting the stage for a situation where the historic dealership model is going to be hurt 10, 20 years up the road?" [State Sen. Brian Rumpf (R-Ocean)] said.
Proof positive that the "captured agency" in regulatory capture[1] is actually the entire government, or at least the entire Republican Party. Government officials don't even try and hide that they're opposed to hurting established industries. The only difference is that in the 21st Century its not a railroad and oil company they're constantly trying to shield from competition.
Is there data in the wild regarding how much less maintenance a Tesla S needs than a comparable gas-powered luxury sedan? Logically I believe the premise, and I know Tesla has discussed this numerous times over the years, but I haven't come across any comprehensive studies covering this aspect since the S went on sale.
Sorry for being a bit off-topic but I'm fascinated by Elon's boldness in claiming that hydrogen fuel-cell tech is a dead end for automakers even though they are doubling down in it's investment.
I would love to be knowledgeable enough to have a reasonable opinion on this topic. Could anybody recommend reading material where I could learn about some of what Elon is doing, what automakers are doing and what the pros vs cons are of both without getting too intimidated by the science behind it?
Any form of government intervention in the markets is out of line with pure capitalism, e.g. farm subsidies; import taxes; bailouts of the auto and finance industries; medicare; medicaid; social security... one could make an argument for Fannie Mae and Freddie Mac as well.
That's not to say that the above are not reasonable policies for an advanced western economy, just not that they could reasonably be considered purely capitalist.
No, there is no "purely capitalist". You confuse "laissez-faire capitalism" with "capitalism". If what you say is true, "laissez-faire" would be a superfluous adjective, like calling it "capitalist capitalism".
There's no American law stating "the US economy must be capitalist." "Capitalism" is just the rough description we assign to the US economy. The principles are there, but there are many exceptions.
Can anyone explain to me why Telsa should get an exemption from the law and not other car manufacturers? Seems to me - that everyone should have to play by the same rules. I'm a Tesla fan, and I'm not a fan of car dealers, I just don't understand why Tesla should get an exemption just for them? Nobody seems to want to talk about this....thoughts out there other than: government should support electric cars? Should GM be able to sell the volt direct, but not other cars? Someone please explain!
Yes, that is what they're saying: GM be able to sell the volt direct, but not other cars.
Every company would be treated the same ("play by the same rules"). They can all sell zero emission vehicles direct to consumers at a maximum of four locations in NJ.
Why does Tesla get this exemption? Because corruption is only acceptable by the population is everyone is doing it. In this case, NJ is one of only a handful of states that is blatantly protectionist of this established industry.
"The bill will need to pass a few more of New Jersey's legislative processes to become law, but things are looking up for Tesla."
Poor reporting job by TechCrunch (http://techcrunch.com/2014/06/06/tesla-wins-back-the-right-t...). They made it seem like the bill was voted into law.