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Background:

Tesla has designed some very innocative vehicles.

Tesla is selling these vehicles in a few states through their own retail stores.

Some states (Michigan being the latest) have now banned Tesla from selling their vehicles "directly" to the public and...is they wish to sell their vehicles...they must sell them through dealerships (e.g. car salesmen).

http://www.freep.com/story/money/cars/general-motors/2014/10/17/michigan-verge-banning-tesla-stores/17386251/

But a manufacturer who bypasses the traditional franchise system to sell directly, either in physical stores or online, is a threat, even a low-volume automaker like Tesla.

Now...ehile the article says

more than half the 50 states have similar franchise laws to Michigan that prohibit manufacturers from competing with their franchised dealers.

Does that not fly in the face of a "free market" or "capitalist" society?

Are not those laws and bans protecting the already established companies (GM, Ford, et al) from competition?

Now...while "protectionism" is traditionally defined as a country placing tariffs and taxes on imported/foreign goods to protect "home made" items from competition.....how is the banning of a new business model any different in this instance?

Question: are those laws specific to the auto-mobile industry or are they general laws?

I had never heard of them.

I heard about this. I also heard the arguments for the dealership system, and then I heard that all the benefits of said system were being provided through Tesla, making such an argument invalid.

I think what is essentially a single-manufacturer ban is remarkably messed up.

They should let them sell directly to the people and let the free market decide.

 Ouze wrote:
I think what is essentially a single-manufacturer ban is remarkably messed up.

They should let them sell directly to the people and let the free market decide.

Agreed.

It's blatantly protectionist.

Unfortunately we don't have a free market we have crony capitalism. Dealerships get protected because they contribute to politicians' campaigns and provide employment and tax revenue in the state/district. Remember when GM had to get rescued by the federal govt and reorganized? During that time the media reported on how GM had too many dealerships cannibalizing sales and requiring too much inventory and that part of the reorganization should include shutting down dealerships. Since the federal govt was running GM the dealerships were concerned that their current or previous affiliation with political donatoins would be used to decide who got shut down and politicians didn't want to shut down business within their district/state and have to take the heat for that decision during the next campaign season. Consequently most dealerships stayed open and we still have laws on the books protecting dealerships. The symbiotic relationship between the business and the politicians promotes stagnation instead of innovation and consequently hurts the consumer/voter. When a new start up like Tesla tries to come in and shake things up they have to fight both the competition and the politicians. This is unlikely to change because there won't be any large grass roots support for Tesla to make dealership protection laws a focal point of any elections and to push for changes to open up the market.

The other car manufacturers can afford to buy legislation that harms competition, and isn't that really what we should be celebrating?

This looks like a lame loophole law to me. I think the oil companies are behind it, looking for any way they can to screw over those hippy electric car guys.

If Apple can sell $1000 phones in their own retail stores, and you could go there to buy 70 of them if you want to, the same as you could if you went to a dealership like Best Buy... then you should be allowed to go to a Tesla store and buy 1 car that costs $70,000

I'm gonna be getting a new Jeep next year. I'd go to a Jeep store to buy it over a crappy stealership anyday. Too bad I'm not allowed.

PhantomViper wrote:
Question: are those laws specific to the auto-mobile industry or are they general laws?

I had never heard of them.

I am not sure... but somehow, I think they are pretty specific to the vehicle industry (owing that I've never seen a boat manufacturer sell it's own boats, they're all sold at boat shops. Same with RVs, ATVs, Motorcycles, etc)

Otherwise, Nike outlets, "the LEGO Store", IKEA, and the Apple Store would all be illegal (and of those, I really wish Apple stores were )

Crony capitalism is BEST capitalism!

Obama fault

*checks off block*

 Ensis Ferrae wrote:

PhantomViper wrote:
Question: are those laws specific to the auto-mobile industry or are they general laws?

I had never heard of them.

I am not sure... but somehow, I think they are pretty specific to the vehicle industry (owing that I've never seen a boat manufacturer sell it's own boats, they're all sold at boat shops. Same with RVs, ATVs, Motorcycles, etc)

Otherwise, Nike outlets, "the LEGO Store", IKEA, and the Apple Store would all be illegal (and of those, I really wish Apple stores were )

As would independent bakers, butchers, and Games Workshop.

Prestor Jon wrote:Unfortunately we don't have a free market we have crony capitalism.

Frazzled wrote:Crony capitalism is BEST capitalism!

Correction, you guys are using incorrect nomenclature.

No matter how much the socialist and liberals scream otherwise, we live in a Corporatist Oligarchy. At least according to the latest from Harvard.


Later,
ff

 Ahtman wrote:
The other car manufacturers can afford to buy legislation that harms competition

It's the American way.

It is a law designed to encourage Tesla to improve the range of the cars so you can go to another state to buy it and drive it home.

 Necros wrote:
This looks like a lame loophole law to me. I think the oil companies are behind it, looking for any way they can to screw over those hippy electric car guys.

Nope, nothing to do with the Oil industry. Probably at some point car makers have done something abusive towards dealerships, this law has been written and now there is unintended consequences.

This sounds like a law straight out of "Atlas Shrugged".

 Steve steveson wrote:

 Necros wrote:
This looks like a lame loophole law to me. I think the oil companies are behind it, looking for any way they can to screw over those hippy electric car guys.

Nope, nothing to do with the Oil industry. Probably at some point car makers have done something abusive towards dealerships, this law has been written and now there is unintended consequences.

It may have been the same law that kept the studios from owning theaters as well.

Musk wants to sell cars directly and has been fighting this legislative battle on a state-by-state basis.

So he wants his corporation to own a series of upscale car dealerships. This is not an innovative concept.

Specific language varies from one state to another, but more than half the 50 states have similar franchise laws to Michigan that prohibit manufacturers from competing with their franchised dealers.

Then don't franchise dealers. Problem solved.

I'm thinking its not problem solved...

Or franchise to a company called "Tesla Dealerships ltd" which happens to only own franchised Tesla dealerships?

 Frazzled wrote:
I'm thinking its not problem solved...

From Tesla's perspectives it seems as though it would be.