Tesla opens a center on Native American land, selling cars straight to consumers(businessinsider.com)
businessinsider.com
Tesla opens a center on Native American land, selling cars straight to consumers
https://www.businessinsider.com/tesla-new-mexico-nambe-pueblo-tribal-land-direct-sales-ban-2021-9
291 comments
> The intent of the NM law that prevented Tesla from doing this e.g. in downtown Santa Fe was to prevent manufacturers from undercutting dealers who had done the work of proving a market by opening their own stores in direct competition. There are arguments for and against this, but it's not clearly a completely stupid idea on its face.
No, it’s pretty much a stupid idea on its face. This is one of many thousands of examples of cronyism in the country, but the political justification at least sounds nice (as they tend to do), in this case the sugar takes the form of protecting local businesses.
> and opening a new store is not undercutting any existing dealers
They wouldn’t be undercutting existing Tesla dealers because there aren’t any, but they would be going Mano-a-Mano with dealers selling other cars. There’s not a Tesla market and an automobile market separate from that.
The wording is irrelevant. The law is working as intended, although it can’t account for dealerships outside their jurisdiction (on Tribal land or out of State). It’s just a bad law.
No, it’s pretty much a stupid idea on its face. This is one of many thousands of examples of cronyism in the country, but the political justification at least sounds nice (as they tend to do), in this case the sugar takes the form of protecting local businesses.
> and opening a new store is not undercutting any existing dealers
They wouldn’t be undercutting existing Tesla dealers because there aren’t any, but they would be going Mano-a-Mano with dealers selling other cars. There’s not a Tesla market and an automobile market separate from that.
The wording is irrelevant. The law is working as intended, although it can’t account for dealerships outside their jurisdiction (on Tribal land or out of State). It’s just a bad law.
It could be argued that when it was initially written it was not as bad a law, but the reasons it's still on the books today come down to incumbent corporations paying for that to be the case to suppress competition.
We’re still talking cronyism whenever it was written, and we’re still talking cronyism whilst it remains on the books. Whether it was slightly better in the past is something you would have to explore through counterfactuals which is basically alt-history and not a good use of time, especially for so little of a point.
So it remains in the present that it is 1. cronyism, one of many thousands of forms of it in the country 2. stupid on its face and 3. basically indefensible, but people who have buy-in can be persuaded that it is very defensible.
So it remains in the present that it is 1. cronyism, one of many thousands of forms of it in the country 2. stupid on its face and 3. basically indefensible, but people who have buy-in can be persuaded that it is very defensible.
But now that these laws are on the books, the existing owners of dealerships actively lobby the state legislators to keep this as the status quo and reduce competition. The dealers, and lawmakers, hope that Tesla will give in and start selling through existing dealerships.
Reminds me of how the alcohol distribution system in some states causes ridiculous situations such as requiring Trader Joe's to sell their inhouse wine to a distributor and then requiring them to buy it back in order to sell it in their stores. Obviously the distributor loves this as they get to rent seek while adding no value at all. That gives them plenty of money to lobby with to keep them in the loop.
I can confirm this. I opened a distillery during the pandemic and had to pay a middle man during some online sales simply to cover legal requirements. The middle man never even handled the product. Very frustrating way to spend money.
Have you considered having your wife start a distribution company?
Clever idea!
I have no knowledge about any of this whatsoever, but would venture to guess that in states where this kind of thing happens, licensing to become a distributor may be very difficult. For example, the total number of licenses may be constrained.
I have no knowledge about any of this whatsoever, but would venture to guess that in states where this kind of thing happens, licensing to become a distributor may be very difficult. For example, the total number of licenses may be constrained.
You could provide this service to other companies. Flat rate, instant shipping $500 a year.
“Notify us when you want stock, and we will instantly order, receive and deliver your product to your warehouse. Flat rate charge no matter how large the order.”
“Notify us when you want stock, and we will instantly order, receive and deliver your product to your warehouse. Flat rate charge no matter how large the order.”
One difference is the alcohol rules are a remnant of (post-)Prohibition and are meant to make alcohol harder or more expensive to get.
Right, but if the goal is to make alcohol expensive and unavailable the ideal lever to pull would be a vice tax. Instead of that money going to random unaccountable middleman, it goes to the people - who are already shouldering much of the social cost of alcohol (healthcare, policing, etc). I'm not sure i support vice-taxes, but they're clearly better than just giving it to whichever random rich person or industry insider that manages to insert themselves.
Politicians get blamed for taxes. Middlemen are a safe hidden tax that has the bonus of padding their campaign funding.
Maybe we should get together an angry mob
I support vice taxes, at least insofar as their good intention is concerned - making it hard(er) to engage in the vice, while not prohibiting it.
However, consumption based taxes (direct or indirect) also disproportionately proscribe lower income people from engaging in such activities. Tax a carton of cigarettes? Worthless if I can just hit the Rez or hop to another town that doesn’t tax. Screwed if you don’t have that kind of mobility. There’s a disturbingly classist nature to them, which gets all the more concerning when it involves fundamental rights - if only the rich can afford to own a gun, get an abortion, speak freely, for example.
Additionally, vice taxes at some high point are effectively prohibition. Make alcohol too expensive (directly/indirectly) and bootlegging becomes more popular, with its attendant health risks, crime, etc. Make cocaine too expensive and meth gets more popular. Sell untaxed cigarettes and witness how laws are only enforced with an implicit threat of violence that may become explicit (ask Eric Garner).
Tough job, controlling societies.
However, consumption based taxes (direct or indirect) also disproportionately proscribe lower income people from engaging in such activities. Tax a carton of cigarettes? Worthless if I can just hit the Rez or hop to another town that doesn’t tax. Screwed if you don’t have that kind of mobility. There’s a disturbingly classist nature to them, which gets all the more concerning when it involves fundamental rights - if only the rich can afford to own a gun, get an abortion, speak freely, for example.
Additionally, vice taxes at some high point are effectively prohibition. Make alcohol too expensive (directly/indirectly) and bootlegging becomes more popular, with its attendant health risks, crime, etc. Make cocaine too expensive and meth gets more popular. Sell untaxed cigarettes and witness how laws are only enforced with an implicit threat of violence that may become explicit (ask Eric Garner).
Tough job, controlling societies.
Yup, agree with everything you said. Just want to add that all of those problems are also present with the “byzantine monopolistic middlemen” model.
all laws are enforced with threat of violence. dont beleive me try not filing your taxes. first you will get nasty letters from the IRS, fallowed by a court summons where you may end up evicted from you home by the sheriff/police try to resist and see what happens ultimately all laws are enforced with the threat of violence its only a matter of how polite the system is to you first
Yes, but it's vanishingly rare to see crimes like securities fraud enforced with ACTUAL violence. "Vice" laws disproportionately effect marginalized communities, down to the amount of violence used to enforce them.
That's probably because it's vanishingly rare that people physically arrested for securities fraud resist. That doesn't mean the threat's not there.
That's probably because it's vanishingly rare for people to be physically arrested for securities fraud.
Yes it's true that states want to reduce alcohol consumption; drunk driving, alcohol related illnesses and crime are all tied to alcohol use, so there is a public health aspect.
But like many things that are opined on on HN, it's a little more complex than what you wrote, in that they were also trying to prevent tied houses (1) and vertical integration wherein brewers would basically tie into every local bar, creating a local monopoly.
Washington State got rid of the common three tier (2) system in 2012, and it seems to have lead to higher prices. (3)
The options we have for alcoholic consumption might not exist without these sort of regulations.
To be clear I'm not an expert on liquor laws and their economic impacts, but my point is that it seems like there is a complex interplay wherein regulation, enforcement, and power relationships between companies can affect availability and pricing in complex and sometimes counterintuitive ways.
And that's not even getting into smaller regulatory policies that I don't know enough about to even throw out an opinion on. Unlike food, alcohol distributors aren't isn't pay for play slotting fees for shelf placement, and many states require distributors to post and hold prices for 30 days, for example.
1 https://en.wikipedia.org/wiki/Three-tier_system_(alcohol_dis... 2 https://en.wikipedia.org/wiki/Tied_house 3 https://www.ncbi.nlm.nih.gov/pmc/articles/PMC4608622/
But like many things that are opined on on HN, it's a little more complex than what you wrote, in that they were also trying to prevent tied houses (1) and vertical integration wherein brewers would basically tie into every local bar, creating a local monopoly.
Washington State got rid of the common three tier (2) system in 2012, and it seems to have lead to higher prices. (3)
The options we have for alcoholic consumption might not exist without these sort of regulations.
To be clear I'm not an expert on liquor laws and their economic impacts, but my point is that it seems like there is a complex interplay wherein regulation, enforcement, and power relationships between companies can affect availability and pricing in complex and sometimes counterintuitive ways.
And that's not even getting into smaller regulatory policies that I don't know enough about to even throw out an opinion on. Unlike food, alcohol distributors aren't isn't pay for play slotting fees for shelf placement, and many states require distributors to post and hold prices for 30 days, for example.
1 https://en.wikipedia.org/wiki/Three-tier_system_(alcohol_dis... 2 https://en.wikipedia.org/wiki/Tied_house 3 https://www.ncbi.nlm.nih.gov/pmc/articles/PMC4608622/
> Tesla will give in and start selling through existing dealerships.
What is stopping Tesla from structuring a corp owned dealership in NM? I know there are lots of "dealerships" that exist only on paper with no lot or cars that exclusively sell OEM parts online.
Why is Tesla going so far out of their way to avoid state laws here?
What is stopping Tesla from structuring a corp owned dealership in NM? I know there are lots of "dealerships" that exist only on paper with no lot or cars that exclusively sell OEM parts online.
Why is Tesla going so far out of their way to avoid state laws here?
to avoid setting a precedent that can be used against them in their fight archaic laws that have outlived their usefulness
This comment implies that manufacturers need 3rd party dealers/distributors. I think Tesla has globally proven their market.
In general the idea of laws essentially banning competition in the dealership market is a crap idea, manufacturer or otherwise.
Exactly... I hear people say that it was a good idea at some point in time, and I still don't understand it. Why did they need the law to protect them from competition back then?
Undoubtedly being protected from competitors is good for someone, but it is rarely the consumer that benefits. Its hard to see how car dealers could be the exception.
Undoubtedly being protected from competitors is good for someone, but it is rarely the consumer that benefits. Its hard to see how car dealers could be the exception.
This is just what I read off of the internet, but IIRC at the time the reasoning was in part because opening any is business is somewhat risky.
Thing was that by allowing dealers to open the business first, manufacturers could entirely offload that risk of opening a location that wasn't profitable, and watch the orders from the dealers. Anywhere that sold well, just open up your own store and undercut the dealer until he goes out of business and then return prices to what the dealer was originally selling for.
Putting in laws was meant to put a stop to that practice. Like I said, it's just something I vaguely recall reading on the internet so take it for what it's worth.
Thing was that by allowing dealers to open the business first, manufacturers could entirely offload that risk of opening a location that wasn't profitable, and watch the orders from the dealers. Anywhere that sold well, just open up your own store and undercut the dealer until he goes out of business and then return prices to what the dealer was originally selling for.
Putting in laws was meant to put a stop to that practice. Like I said, it's just something I vaguely recall reading on the internet so take it for what it's worth.
Interesting, what you describe as the motivation of the law sounds suspiciously familiar to what Amazon does to 3rd party businesses.
Amazon needs regulation, severely, before it becomes a genuine monopoly. It's already at the stage of effective monopoly, but competition still exists, technically. It won't be long before they're driven under or bought out too though.
But I wouldn't bet on it, since Amazon already has all the people capable of doing anything in their pockets anyways.
But I wouldn't bet on it, since Amazon already has all the people capable of doing anything in their pockets anyways.
That sounds like a very interesting hypothetical.
Was there any legitimate basis for this fear though? Was this a tactic that was ever provably executed by a manufacturer? Or was it just a made-up scenario by dealerships to push these laws that massively benefit them?
Was there any legitimate basis for this fear though? Was this a tactic that was ever provably executed by a manufacturer? Or was it just a made-up scenario by dealerships to push these laws that massively benefit them?
This is a tactic still used by e.g. Amazon today. Let 3rd party entities establish a viable online market for niche items, then start selling them "directly", undercutting 3rd parties.
Amazon of course denies that it does this, but the anecdata seems irrefutable to me.
Amazon of course denies that it does this, but the anecdata seems irrefutable to me.
Early on 'dealers' would set up shop and build up the market for a particular car brand. In many cases the manufacturers would see which markets were 'best' and then setup their own sales floor directly competing with the car dealers.
They could easily undercut the dealers and drive them out of business. The law was designed to protect the dealers from the manufacturers.
We are seeing it more and more now in many markets and niches as manufactures are cutting out dealers that built the markets and selling 'direct to consumer'. The difference is that most manufacturers saw what happened to the car companies and are trying to carefully avoid having the same thing happen to them.
They could easily undercut the dealers and drive them out of business. The law was designed to protect the dealers from the manufacturers.
We are seeing it more and more now in many markets and niches as manufactures are cutting out dealers that built the markets and selling 'direct to consumer'. The difference is that most manufacturers saw what happened to the car companies and are trying to carefully avoid having the same thing happen to them.
Yea but this works, what, once? And now the manufacturer has to deal with the things the dealer was doing like customer service, hiring sales staff, training technicians, etc.
“Oh don’t open a Chevy dealership, in 6 months they’ll come in and undercut you”. And then there it is. Either you don’t open a dealership (fine) or the manufacturer builds a reputation for not undercutting dealers (also fine).
IMO the law was protecting special interests from the start. This is an example of poorly regulating capitalism.
“Oh don’t open a Chevy dealership, in 6 months they’ll come in and undercut you”. And then there it is. Either you don’t open a dealership (fine) or the manufacturer builds a reputation for not undercutting dealers (also fine).
IMO the law was protecting special interests from the start. This is an example of poorly regulating capitalism.
Dealers have franchise contracts with the manufacturers that provide some short term protection, I'm pretty sure the story of the laws is that once dealers were organized enough to lobby they asked governments to make laws protecting their businesses from their suppliers, not that governments saw the burning need for dealers and decided to protect them from this one narrow case.
No. They wait a few years, dealerships are everywhere, then move in and take the most profitable regions.
When did they do this?
Yes, I would think this as well. If your company is known for dicking over your dealers, then no one will open up a dealership for you.
Then again, Apple dicks its partners over and hasn't suffered much.
Then again, Apple dicks its partners over and hasn't suffered much.
Not really comparable in situation nor scale.
There are Apple stores but they don't really compete with the big box stores that sell Apple products. Though I would be interested in seeing data on where most Apple products are purchased from.
There are Apple stores but they don't really compete with the big box stores that sell Apple products. Though I would be interested in seeing data on where most Apple products are purchased from.
You say "early on" but... Are there any actual cases of this strategy being executed by a manufacturer at any time in history?
If so, I guess I'll have to eat my words, but it just really sounds like a hypothetical scenario the dealerships would have cooked up to try and push these laws that massively benefit them.
If so, I guess I'll have to eat my words, but it just really sounds like a hypothetical scenario the dealerships would have cooked up to try and push these laws that massively benefit them.
The car manufacturer can undercut a dealership, because they have fewer costs. At the time these laws were written, having a dealership was vital to get timely repairs. In Tesla's case, timely repairs might still be an issue - you cannot get a general mechanic to work on them. Therefore, it was designed to ensure sales were locked into a repair system.
Electrified garage and Gruber don't exist? Tesla will even sell access to service manuals and most parts afaict.
High voltage parts are a little different, but I expect that even that will change as demand grows and training becomes more readily available. Right now there are some real safety concerns there.
High voltage parts are a little different, but I expect that even that will change as demand grows and training becomes more readily available. Right now there are some real safety concerns there.
> Why did they need the law to protect them from competition back then?
It kept more profits in the states with dealerships versus car manufacturers.
It kept more profits in the states with dealerships versus car manufacturers.
That reasoning doesn't make sense to me. Am I missing something?
Let's say non-manufacturer revenue over a car's TCO is X. The largest portion of X will be spent on non-local goods and local labor regardless of who takes the profit, which has to be low enough to prevent stronger 3rd party service. It isn't like all cars would be shipped back to the factory for service.
Let's say non-manufacturer revenue over a car's TCO is X. The largest portion of X will be spent on non-local goods and local labor regardless of who takes the profit, which has to be low enough to prevent stronger 3rd party service. It isn't like all cars would be shipped back to the factory for service.
How?
Car dealership owners are among the richest people in many rural and blue-collar towns in the USA. While you can conceivably tax the profits of company-owned stores on the state level, dealership owners may spend their profits in their local area (building their houses, purchasing local entertainments, visiting local stores, etc.), rather than having the profits go to Detroit and being spent there.
They are also generally speaking the largest political donors in rural and suburban areas.
Bingo.
There is no law of the universe saying both noble and base motivations can't be true simultaneously :)
I don't see how a law restricting new dealers aids that goal?
They needed the law to create competition - otherwise the natural state of things would be a monopoly for the manufacturer. The conditions under which competition is good for consumers (a free market) generally only happen under careful regulation.
I don't know about this argument. There's already competition for the manufacturer in the form of other car companies. More middlemen on top of that seems unnecessary.
In the uk we don’t have this law and manufacturers don’t have a monopoly - We have a system of dealerships, so I think you can have a system without careful regulation?
The UK doesn't really have dealerships competing with each other (there will generally only be one x dealer in each town, and while the manufacturers do compete with each other to a certain extent, nearby dealers tend to be targeting different segments - in contrast to e.g. banks or supermarkets where you often get two very similar direct competitors right next to each other), and you absolutely do get charged monopoly rents as a result. There are strong consumer protection laws that mean people do generally have access to repairs, which blunts the worst impact, but I wouldn't hold it up as an example of a system that works well.
This hypothetical of manufacturers swooping in and undercutting the dealers out of business sounds real spooky - but has it ever happened?
What do you mean? Car sales have very low margins. If the manufacturer swoops in and under-prices you after you setup a dealership to prove the market, you’re going to get screwed.
Yeah you sure would be screwed if that did happen.
But did it ever actually happen before those laws were put into place? Or was it simply the justification of the richest man in town creating a monopoly for himself?
But did it ever actually happen before those laws were put into place? Or was it simply the justification of the richest man in town creating a monopoly for himself?
If someone underprices a dealership the general driving population (90% of Americans) would benefit while people that own dealerships (1% of Americans) would suffer.
I fully agree with your viewpoint. But it’s also important for someone to take the risk, otherwise that market might not even be served by anyone (dealer or manufacturer).
Which would discourage manufacturers from developing a reputation for undercutting their own dealers.
It's almost like the interests of the market lead it to self-regulate or something...
It's almost like the interests of the market lead it to self-regulate or something...
> The intent of the NM law that prevented Tesla from doing this e.g. in downtown Santa Fe was to prevent manufacturers from undercutting dealers who had done the work of proving a market by opening their own stores in direct competition. There are arguments for and against this, but it's not clearly a completely stupid idea on its face.
Proving that there was a market for cars? If so that seems unlikely that you'd need to prove that there's a market for them in NM. So perhaps the dealers proved the market for specific types of cars, like Fords and GMs. In that case, they never did that for Tesla, so it's not a fair law. In any case, this belongs in a contract, not the legal code.
Proving that there was a market for cars? If so that seems unlikely that you'd need to prove that there's a market for them in NM. So perhaps the dealers proved the market for specific types of cars, like Fords and GMs. In that case, they never did that for Tesla, so it's not a fair law. In any case, this belongs in a contract, not the legal code.
> it's not clearly a completely stupid idea on its face
A law to protect a useless middleman? Seems completely stupid to me.
A law to protect a useless middleman? Seems completely stupid to me.
They're not all that useless... dealers took on the initial risk of starting the business.
To come in and undercut dealers is much less risky! the manufacturer would be effectively be avoiding the risk (proving the market) and stealing the reward.
I have zero idea of whether or not it's good to regulate against that type of thing, but there's logic there.
In the case of the law, it seems ridiculous that there's no room to say "well clearly this is an exception that doesn't violate the reason the law exists" - is this a matter of dealers pushing to uphold the law because they don't want competition?
To come in and undercut dealers is much less risky! the manufacturer would be effectively be avoiding the risk (proving the market) and stealing the reward.
I have zero idea of whether or not it's good to regulate against that type of thing, but there's logic there.
In the case of the law, it seems ridiculous that there's no room to say "well clearly this is an exception that doesn't violate the reason the law exists" - is this a matter of dealers pushing to uphold the law because they don't want competition?
Best Buy sells Apple Products. Apple has Apple stores. Best Buy took the same risks. I don't see the logic.
Best Buy also sells a million other things.
The car dealers are free to sell other cars? Or dashboard bobbleheads, perhaps?
It’s not feasible to stock a thousand different cars, and provide servicing and support for all of them. You really can’t make random comparisons, it doesn’t further the discussion.
allmiwe(1)
it's not clearly a completely stupid idea on its face
It wasn't a stupid idea to provide some protection to dealerships from the manufacturers they represent, but it is stupid to use it to block manufacturers that have no dealers.
It wasn't a stupid idea to provide some protection to dealerships from the manufacturers they represent, but it is stupid to use it to block manufacturers that have no dealers.
We did present it to the legislators that way. They didn't care. The way it works is, the lobbyists for the dealers go and meet with the legislators behind closed doors or in the hallways of the Roundhouse (NM State Capitol) and they tell them not to vote yes on a bill in committee. They provide a few talking points as to why. Usually these legislators already take money from the lobbyists. (Dealers give like half a million a year to the legislators' campaigns; it's all disclosed.) So by the time the committee has its hearing, the votes are already decided. The whole "debate" and the testimony from witnesses is largely theatre. You wind up with anti-Tesla legislators all rattling off the verbatim talking points of the dealers, as if the whole thing is scripted. We pointed out that Tesla has no franchisees so how does this law apply, etc. Doesn't matter. Falls on deaf ears. They're already bought. Their mind is made up.
A lot of people complaining this is a stupid law, but if you substitute dealership with startup, manufacturer with Amazon, and cars with managed service running on AWS, then maybe it’s more relatable?
In general though, I’m always elated to see sovereignty of native nations.
In general though, I’m always elated to see sovereignty of native nations.
In order for that scenario to be an issue, I'd need to have made an agreement with Amazon to sell AWS out of a building and then Amazon decided to open up an Amazon AWS store in the strip mall 2 roads over, right?
Think what they're really protecting here is that dealerships must house, maintain, and purchase a lot of very expensive merchandise (vehicles) and if a more "official" distribution channel popped up in town, that'd hose dealerships that have invested a lot in a particular brand(s).
Think what they're really protecting here is that dealerships must house, maintain, and purchase a lot of very expensive merchandise (vehicles) and if a more "official" distribution channel popped up in town, that'd hose dealerships that have invested a lot in a particular brand(s).
Tesla doesn't "sell" it's cars to company-owned stores. Tesla has a D2C business model like Warby Parker. The stores are mainly for show and tell and consumer education, they're not dealerships. People just order online.
Somehow I think their understanding would jump exponentially for ICE autos, but not for Tesla or any other EV builder. That seems to be the bespoke irrationality for this market segment.
Laws to protect middle men? Not very free market of them.
[deleted]
Regulations that make 100% sense the day they are enacted, often become less and less relevant over time, and after a few decades they've set in stone some ancient order that is bad for most everyone.
But usually it's very hard to change them, and so they pile up as so much Legacy Code.
But usually it's very hard to change them, and so they pile up as so much Legacy Code.
Indeed. And eventually they just go unenforced but still on the books.
Often waiting for a clever law enforcement officer or lawyer to use them to their advantage.
Often waiting for a clever law enforcement officer or lawyer to use them to their advantage.
I think I understand the motivation for having a law prohibiting auto makers from selling straight to consumers. I’m sure it has more to do with money than ethics.
My question: Why autos, but not other consumer goods? Should I be restricted from buying an iPhone from an Apple store, rather than Greg’s Phone Emporium?
My question: Why autos, but not other consumer goods? Should I be restricted from buying an iPhone from an Apple store, rather than Greg’s Phone Emporium?
spend some time in a small town. specifically a small town in farm or oil country, where trucks are an essential work vehicle, and everybody buys a new one at $70-80k every 5 years.
the guy who owns the local car dealership runs the town. he's got money unlike anybody else in town does. some towns have rich farmers, or rich people who've made their money elsewhere, but unlike them the guy who owns the car dealership knows that his revenue stream depends on maintaining a good relationship with the town, and so he spends money like nobody else does. every local event, sports team, church function, whatever, it's always sponsored by at least one car dealership. and every congressperson who represents one of those districts knows that they really don't want to get on the wrong side of the car dealers.
Apple only dreams of having as much distributed local political power as the car dealers do.
the guy who owns the local car dealership runs the town. he's got money unlike anybody else in town does. some towns have rich farmers, or rich people who've made their money elsewhere, but unlike them the guy who owns the car dealership knows that his revenue stream depends on maintaining a good relationship with the town, and so he spends money like nobody else does. every local event, sports team, church function, whatever, it's always sponsored by at least one car dealership. and every congressperson who represents one of those districts knows that they really don't want to get on the wrong side of the car dealers.
Apple only dreams of having as much distributed local political power as the car dealers do.
Like most laws its not rooted in logic but a byproduct of historical business decisionmaking.
When car companies got their start, it was difficult to scale what we know dealerships do today: advertising, service, sales, inventory management, order management. It was cheaper for ford to use a dealer and have them worry about these things, than to perform their own local market analysis for things like advertising and operate their own dealership.
Eventually, dealerships saw that the writing was on the wall, and that one day these auto manufacturers would become large enough to operate their own dealerships themselves. They ended up lobbying for a law that made direct car sales illegal, and won, codifying their industry into law.
When car companies got their start, it was difficult to scale what we know dealerships do today: advertising, service, sales, inventory management, order management. It was cheaper for ford to use a dealer and have them worry about these things, than to perform their own local market analysis for things like advertising and operate their own dealership.
Eventually, dealerships saw that the writing was on the wall, and that one day these auto manufacturers would become large enough to operate their own dealerships themselves. They ended up lobbying for a law that made direct car sales illegal, and won, codifying their industry into law.
> My question: Why autos, but not other consumer goods? Should I be restricted from buying an iPhone from an Apple store, rather than Greg’s Phone Emporium?
Given how bad Apple are about third-party repairs, yes. This law should extend to anything that's complex enough that it can only be repaired by a specialist.
Given how bad Apple are about third-party repairs, yes. This law should extend to anything that's complex enough that it can only be repaired by a specialist.
It's very clear - because Greg's Phone Emporium does not hold local political power like car dealers do. They excel at it.
Regulations on various types of alcohol distribution are pretty interesting, too. https://en.wikipedia.org/wiki/Three-tier_system_(alcohol_dis...
The biggest reason has to with cost. The average consumer does not need to take out a loan to buy a phone, but most do for cars. Cars are seen as a large investment that needs added protection, and instead of doing it at the auto manufacturer level, they added dealerships to serve as middlemen to bargain with auto makers on your behalf.
Back in the day, a vehicle was a pretty big purchase so you wanted to know that you could get service & maintenance throughout the life of the vehicle. If the dealership is nothing more than a front for the manufacturer then they might move the store if business is slow, etc. Forcing the use of franchised stores meant that the dealerships are owned (always?) by local people so they can't just move away.
Now days other laws pretty much make this a non-issue although you could argue that the repair/service process for Tesla's is exactly what these laws were intended to prevent; who would want to own a Tesla dealership if you can't get the parts to fix your customers's cars? e.g. Your son's basketball coach is going to keep calling until you get his car fixed.
In your example, you would be restricted to buying from Greg's Phone Emporium because Greg is thought to care more about repairing your phone than Apple.
Edit: The biggest issue with the current dealership system is that it, of course, just evolved into rent seeking and over-complicated purchase process. The auto companies have systems to make sure dealers sell cars no matter what and the dealerships have ways of extracting extra profit from their customers.
Now days other laws pretty much make this a non-issue although you could argue that the repair/service process for Tesla's is exactly what these laws were intended to prevent; who would want to own a Tesla dealership if you can't get the parts to fix your customers's cars? e.g. Your son's basketball coach is going to keep calling until you get his car fixed.
In your example, you would be restricted to buying from Greg's Phone Emporium because Greg is thought to care more about repairing your phone than Apple.
Edit: The biggest issue with the current dealership system is that it, of course, just evolved into rent seeking and over-complicated purchase process. The auto companies have systems to make sure dealers sell cars no matter what and the dealerships have ways of extracting extra profit from their customers.
The reason why direct sales are illegal has nothing to do with that, it's because dealerships lobbied for a law that would preserve their industry and got it.
> Forcing the use of franchised stores meant that the dealerships are owned (always?) by local people so they can't just move away.
Local people close down their local businesses all the time, though. In fact, the manufacturer, because of vertical integration, is more likely to make profit than independent dealer, and so less likely to close down.
Local people close down their local businesses all the time, though. In fact, the manufacturer, because of vertical integration, is more likely to make profit than independent dealer, and so less likely to close down.
The local franchise doesn't cover you either. They get resold and can even close down if an area just isn't profitable. I have seen this happen within my lifetime but don't want to provide a citation as the situation might still be rare and thus could dox myself.
> Forcing the use of franchised stores meant that the dealerships are owned (always?) by local people so they can't just move away.
Just like foreign countries levying fines on "evil foreign tech companies", it was an older attempt at rent seeking from the "foreign" faraway auto manufacturers.
Just like foreign countries levying fines on "evil foreign tech companies", it was an older attempt at rent seeking from the "foreign" faraway auto manufacturers.
This suggests an enormous opportunity for Native American land, normally mired in poverty. Establish free trade zones, not subject to the anti-business, heavily taxed rest of the states.
So rich outsiders abuse a loophole until the states find some way to work around it, leaving all of the rich to abandon the reservation with virtually all of the profit. Really not seeing now the Natives benefit from this.
Even if it happens like you suggest, things will simply return to status quo, and the Native Americans won’t be worse off than they had been before. In fact, they will benefit during the period from the free trade zone set up to when the state/federal government wreckers figure out how to screw them too. This is still better off than the status quo, where they simply never benefit from it at all.
I'm not seeing how they benefit even in the short term. The businesses would all be owned by people outside the tribe, the entire point is to have low/no taxes, and the infrastructure built is unlikely to be useful after the business is gone.
Maybe they hire some tribe members for jobs, but I would bet only for the untrained jobs. Possibly they'd benefit some from selling/leasing the land and other set up fees, but even that they might pull the usual corporate "tax break" scheme.
Besides, it's entirely possible the way the state fixes this "loophole" puts them in a worse position than currently. The history of renegotiating often doesn't end well for the Natives.
Maybe they hire some tribe members for jobs, but I would bet only for the untrained jobs. Possibly they'd benefit some from selling/leasing the land and other set up fees, but even that they might pull the usual corporate "tax break" scheme.
Besides, it's entirely possible the way the state fixes this "loophole" puts them in a worse position than currently. The history of renegotiating often doesn't end well for the Natives.
As someone who has owned a business on reservation land, the tribe benefits like any community does from business. They tax the sht out of you, you employ their constituents, you create value for your customers that are local and non-local, & the non-locals buy food or rent a room at the casino. The value for the tribe is absolutely enormous.
As a person who is Native from S. America and knows about Native-American issues: I second this, YES they benefit. Don't know many tribes that wouldn't accept such an offer.
> I'm not seeing how they benefit even in the short term. The businesses would all be owned by people outside the tribe, the entire point is to have low/no taxes, and the infrastructure built is unlikely to be useful after the business is gone.
For Tesla at least, taxes are not so much an issue as the regulatory regime prohibiting them from operating outside of reservation altogether. They are happy to pay higher tax, if the alternative is inability to sell cars at all.
But, in general, even if the tax rates on tribal lands are lower than on regular state lands, the tribes still benefit, because it is them who collect the tax, rather than the State. Many polities would rather have a smaller bite of a cake rather than no cake at all. Look at Ireland, for example, which is greatly benefiting exactly from being a EU tax haven: sure, it collects less from Google or Apple than, say, France or Italy would, but they still benefit from their low tax policy.
> and the infrastructure built is unlikely to be useful after the business is gone
If you read the casino, you’ll find that Tesla is actually renovating and using a former casino facility.
> Besides, it's entirely possible the way the state fixes this "loophole" puts them in a worse position than currently. The history of renegotiating often doesn't end well for the Natives.
Yeah, that’s sadly correct: the governments tend to screw small people over when it sees its power and revenues diminished.
For Tesla at least, taxes are not so much an issue as the regulatory regime prohibiting them from operating outside of reservation altogether. They are happy to pay higher tax, if the alternative is inability to sell cars at all.
But, in general, even if the tax rates on tribal lands are lower than on regular state lands, the tribes still benefit, because it is them who collect the tax, rather than the State. Many polities would rather have a smaller bite of a cake rather than no cake at all. Look at Ireland, for example, which is greatly benefiting exactly from being a EU tax haven: sure, it collects less from Google or Apple than, say, France or Italy would, but they still benefit from their low tax policy.
> and the infrastructure built is unlikely to be useful after the business is gone
If you read the casino, you’ll find that Tesla is actually renovating and using a former casino facility.
> Besides, it's entirely possible the way the state fixes this "loophole" puts them in a worse position than currently. The history of renegotiating often doesn't end well for the Natives.
Yeah, that’s sadly correct: the governments tend to screw small people over when it sees its power and revenues diminished.
I was replying to someone saying the tribes should "Establish free trade zones, not subject to the anti-business, heavily taxed rest of the states," not really talking about Tesla's store in particular.
Other than that, tax havens have more independence than reservations do. They have theoretical sovereignty, but the federal government largely controls things like police and education. Like when one tried to legalize recreational marijuana the feds immediately threatened a raid.
Other than that, tax havens have more independence than reservations do. They have theoretical sovereignty, but the federal government largely controls things like police and education. Like when one tried to legalize recreational marijuana the feds immediately threatened a raid.
The tribes have their own police forces.
Tribal police have power over their enrolled members (arrest, jail etc.) some power over outsiders (they can arrest but not hold or sentence people? I think? but maybe they're fighting about this?) and they, like all police forces, can't interfere with Federal agents (though they aren't obligated to enforce federal laws.)
While I'm sure there are some with a local police force, they are all overseen by the Bureau of Indian Affairs Police.
Weed is legal on many (but not all) of the reservations in my state. It's legal in the state too though, which probably smoothed things out.
They benefit because this whole scheme operates only at the pleasure of the local tribe. They have all the leverage and should be able to extract fair compensation.
It’s not even the taxes that are the biggest issue, but silly regulations that only exist because of bureaucratic inertia or, worse, lobbyists. As (somewhat?) sovereign nations, reservations can get around that. And they should.
Native Americans already do things like operate profitable casinos where they would be otherwise not allowed outside of reservation land. If there were more low hanging fruit to do more on this land they would be doing these opportunities by now.
Being a sovereign nation, there ought to be plenty of business advantage opportunities available, not just casinos.
They aren't sovereign nations, they are domestic dependent nations with certain governing privileges. If things were straightforward they would be done by now.
You have fallen prey to a well-known thought-terminating cliché.
A group of people are walking down the street when one person among the group points out a 20-dollar bill on the sidewalk. The armchair economist in the group says, "There is no 20-dollar bill here, because if there were, someone would have picked it up by now." Everyone in group defers to their friend's brilliant insight and keeps walking.
A group of people are walking down the street when one person among the group points out a 20-dollar bill on the sidewalk. The armchair economist in the group says, "There is no 20-dollar bill here, because if there were, someone would have picked it up by now." Everyone in group defers to their friend's brilliant insight and keeps walking.
Maybe it's not straightforward, but that doesn't mean opportunities don't exist. This Tesla thing is a perfect example; that particular opportunity only exists because of the relatively new development of Tesla's business model. I'm sure there are other relatively new developments in society and technology that could create similar opportunities.
Reflect on why the First Nations might not be interested in engaging in that kind of business in the first place.
I didn't say they were (although I certainly think some are), only that I expect more opportunities exist.
My mistake, should've said indigenous Americans, forgot First Nations was more of an indigenous Canadian thing.
So pretty much what they’ve already done with casinos?
> So pretty much what they’ve already done with casinos?
No, what they've done with casinos is leverage demand plus state prohibition to eatablish heavily regulated, heavily taxed, licensed local monopolies, that extract monopoly rents from consumers, and from which the native governments likewise extract monopoly rents (leaving sufficient remainder for the operators to be happy with the deal.)
Casinos are pretty much the opposite of the proposed “win the race to the regulatory and revenue extraction minimum” game suggested for the “free trade zones”.
No, what they've done with casinos is leverage demand plus state prohibition to eatablish heavily regulated, heavily taxed, licensed local monopolies, that extract monopoly rents from consumers, and from which the native governments likewise extract monopoly rents (leaving sufficient remainder for the operators to be happy with the deal.)
Casinos are pretty much the opposite of the proposed “win the race to the regulatory and revenue extraction minimum” game suggested for the “free trade zones”.
There's so much more than casinos.
I think a Tesla Store might attract a different crowd.
Sounds great, until you need a fire department, police department, medical services, schools for the children of your employees, etc.
> This suggests an enormous opportunity for Native American land, normally mired in poverty. Establish free trade zones, not subject to the anti-business, heavily taxed rest of the states.
What's the opportunity there? The opportunity to attract economic activity without capturing revenue from it, while incurring all the environmental costs?
Seems to be an anti-opportunity.
What's the opportunity there? The opportunity to attract economic activity without capturing revenue from it, while incurring all the environmental costs?
Seems to be an anti-opportunity.
Successful businesses always attract an ecosystem to support them in providing goods and services to them.
I.e. plenty of opportunity for the locals.
I.e. plenty of opportunity for the locals.
Yeah. As one example, depending on the business, you could require a certain percentage of staff be locally hired. Or perhaps incentivize local hiring with a tax on outside payroll (which would also generate revenue). You could have a "free trade", low tax zone without having to eliminate taxes entirely.
You do see how that is clearly a tautology, right?
I'm overjoyed by this. There are a boatload of Teslas in New Mexico (including mine) and all of us had to buy them in Phoenix, Denver, or El Paso and that's where we have to go for service. Or had to until now.
This is an ingenious solution to bypass a stupid law. The car dealers in NM who want to keep Tesla out can pound sand.
This is an ingenious solution to bypass a stupid law. The car dealers in NM who want to keep Tesla out can pound sand.
The law isn't to blame for your inability to get local service.
The law is exactly why we were not able to get local service here in NM.
What is then?
They are probably talking about the other side of the coin, which is that Teslas are made like iphones. Nobody other than Tesla can repair them.
Tesla can open service centers in all 50 states or allow other vendors to service them. Tesla doesn't want you to have the freedoms that Magnusson-Moss guarantees you.
Nice planet you're on. Not Earth, though.
New laws and loopholes and being created for car dealerships even today. For example, WA state has a new Capital Gains tax of 7% that applies to almost every gain in the state except for personal homes and... car dealership sales.
If Tesla can activate their own showrooms in more reservations across the U.S. and drive a stake through the heart of third-party dealerships, that's a positive development.
I hope that Tesla (and other auto manufacturers) can go one step further and provide lasting, meaningful employment and other opportunities to local residents in the reservations. Casinos often fail or extract exploitative concessions and demands on local tribes.
I hope that Tesla (and other auto manufacturers) can go one step further and provide lasting, meaningful employment and other opportunities to local residents in the reservations. Casinos often fail or extract exploitative concessions and demands on local tribes.
They don’t have to do this in most states. Only a few states have laws against selling cars factory-direct.
https://finance.yahoo.com/news/cant-buy-tesla-states-1613182...
As of Oct 2018.
>Where Tesla is banned
>Here are those states: Alabama, Arkansas, Connecticut, Iowa, Kansas, Kentucky, Louisiana, Michigan, Montana, Nebraska, New Mexico, North Dakota, Oklahoma, South Carolina, South Dakota, and Texas.
>Then there are nine states that limit the number of dealerships Tesla can open: Colorado (limit: one), North Carolina (one), Virginia (two), Georgia (five), Maryland (four), New Jersey (four), New York (five), Ohio (three), Pennsylvania (five).
As of Oct 2018.
>Where Tesla is banned
>Here are those states: Alabama, Arkansas, Connecticut, Iowa, Kansas, Kentucky, Louisiana, Michigan, Montana, Nebraska, New Mexico, North Dakota, Oklahoma, South Carolina, South Dakota, and Texas.
>Then there are nine states that limit the number of dealerships Tesla can open: Colorado (limit: one), North Carolina (one), Virginia (two), Georgia (five), Maryland (four), New Jersey (four), New York (five), Ohio (three), Pennsylvania (five).
If my count is correct, that's a full half of states in total. And the states in the second group are all large enough that it's a meaningful limit to be only allowed a handful. For comparison, there are 7 Toyota dealerships just between the Denver and Boulder Colorado areas (using their "find a dealer" tool makes it hard to be more thorough than that).
In Colorado there is no limit as of 2020 for Tesla. Any EV-only manufacture is allowed to direct sell in CO.
I'm guessing the Texas situation might change given how much Tesla and SpaceX are investing in Texas right now.
North and South Dakota have big reservations.
The one problem is many reservations are nowhere near cities. The federal government tended to want to put Native Americans on land away from the settlers.
The other problem is how the tribe implemented its TERO (Tribal Employment Rights Ordinance or Office) rules. They can often be particularly odious to business ventures on the reservation.
The other problem is how the tribe implemented its TERO (Tribal Employment Rights Ordinance or Office) rules. They can often be particularly odious to business ventures on the reservation.
Can tribes create embassies? This sounds like a great boon to tribal economies: Buy land, turn into embassy (sovereign land), lease building to Tesla for dealership, profit.
The Navajo Nation has one in DC, but its not really a true embassy with all the diplomatic privileges and it isn't considered part of the tribal land.
As to adding land, its complicated https://www.bia.gov/bia/ots https://www.fns.usda.gov/fdpir/distinction-between-reservati...
As to adding land, its complicated https://www.bia.gov/bia/ots https://www.fns.usda.gov/fdpir/distinction-between-reservati...
> Can tribes create embassies?
No. Just as US states can't (tribal “sovereignty” is even farther from that of independent states than that of US states is.)
> Buy land, turn into embassy
Even for entities that can create embassies, that's not how they are created. You can't just acquire fee simple title and then at-will promote it to embassy status.
No. Just as US states can't (tribal “sovereignty” is even farther from that of independent states than that of US states is.)
> Buy land, turn into embassy
Even for entities that can create embassies, that's not how they are created. You can't just acquire fee simple title and then at-will promote it to embassy status.
> drive a stake through the heart of third-party dealerships, that's a positive development.
For Tesla to kill third-party dealers, they'd have to do everything third-party dealers do, and then they'd be indistinguishable from third-party dealers.
It's fashionable to think Tesla has the Better Way and that auto dealers are universally bad, but consumers largely don't agree.
For Tesla to kill third-party dealers, they'd have to do everything third-party dealers do, and then they'd be indistinguishable from third-party dealers.
It's fashionable to think Tesla has the Better Way and that auto dealers are universally bad, but consumers largely don't agree.
I'm probably in the Minority here, but I prefer the franchised dealer model over Tesla's for 2 reasons:
1. When I've a Tesla problem, they simply don't respond. They don't answer emails. They don't answer the phone. They don't return calls. It's literally impossible to remedy a problem. It took 6 months of unbelievable frustration to resolve an obviously incorrect lease issue ("You owe X.", "No, I already paid. Here are the receipts."). This same issue with a BMW, Porsche, or Lexus is resolved in 2 minutes in a normal model.
2. The franchise model - at a maco level - keeps more money locally. I like money staying local, seeing kids sports teams sponsored by Bob's Ford, and generally support anything that promotes a broader distribution of wealth. The extraction of wealth out of a community and simply concentrated up to the already mega-wealthy disturbing. This is Standard Oil putting local gas stations out of business by price dumping, only to later swoop in unchallenged.
1. When I've a Tesla problem, they simply don't respond. They don't answer emails. They don't answer the phone. They don't return calls. It's literally impossible to remedy a problem. It took 6 months of unbelievable frustration to resolve an obviously incorrect lease issue ("You owe X.", "No, I already paid. Here are the receipts."). This same issue with a BMW, Porsche, or Lexus is resolved in 2 minutes in a normal model.
2. The franchise model - at a maco level - keeps more money locally. I like money staying local, seeing kids sports teams sponsored by Bob's Ford, and generally support anything that promotes a broader distribution of wealth. The extraction of wealth out of a community and simply concentrated up to the already mega-wealthy disturbing. This is Standard Oil putting local gas stations out of business by price dumping, only to later swoop in unchallenged.
>I like money staying local, seeing kids sports teams sponsored by Bob's Ford
In theory that sponsorship money could stay local, if the people who saved money by buying cars direct from Ford gave it personally to the local sports teams instead of giving it to Bob first.
In theory that sponsorship money could stay local, if the people who saved money by buying cars direct from Ford gave it personally to the local sports teams instead of giving it to Bob first.
bob sponsors a kids sports team to advertise the local dealership to the parents.
tesla's advertising campaign is unlikely to sponsor a local sports team, because the scale is too small and there's too many local sports teams for a corporate to deal with.
The parents themselves will not see value in doing a local sports team sponsorship - they might donate just to keep it alive, but if that was possible, the sports team would not have needed sponsorship in the first place!
Under no scenario would the parents who saved some money from buying a car would give that savings to the local sports team the same way a sponsor would.
tesla's advertising campaign is unlikely to sponsor a local sports team, because the scale is too small and there's too many local sports teams for a corporate to deal with.
The parents themselves will not see value in doing a local sports team sponsorship - they might donate just to keep it alive, but if that was possible, the sports team would not have needed sponsorship in the first place!
Under no scenario would the parents who saved some money from buying a car would give that savings to the local sports team the same way a sponsor would.
If only there was some way to collect money from car sales & use it to maintain local youth programs. Or better yet: A percentage of every transaction. We could call it "sales tax." ;)
and yet, a lot of people are opposed to sales tax due to it's regressive nature (they tax the poor proportionally more than the rich - which then is "fixed" up by adding exemptions to sales tax for goods that the gov't considers the poor to need, such as food etc).
> I like money staying local
If Ford sells cars for $5k, and Bob's Ford sells cars for $6k, then when you buy a car from Bob, he has $1k left over. That's $1k of money that "stays local".
Alternatively, if you buy it from Ford for $5k, you have $1k left over. That's $1k of money that "stays local".
What's the difference? Why would you rather fund Bob than keep the extra yourself?
If Ford sells cars for $5k, and Bob's Ford sells cars for $6k, then when you buy a car from Bob, he has $1k left over. That's $1k of money that "stays local".
Alternatively, if you buy it from Ford for $5k, you have $1k left over. That's $1k of money that "stays local".
What's the difference? Why would you rather fund Bob than keep the extra yourself?
> It's fashionable to think Tesla has the Better Way and that auto dealers are universally bad, but consumers largely don't agree.
There wouldn't need to be laws restricting Tesla from selling direct to consumer if that was the case.
Let the consumer decide what they want.
There wouldn't need to be laws restricting Tesla from selling direct to consumer if that was the case.
Let the consumer decide what they want.
> There wouldn't need to be laws restricting Tesla from selling direct to consumer if that was the case.
That's just not true. Consumers wouldn't have a choice if an automaker was allowed to make their new vehicles only available from a direct showroom.
That's just not true. Consumers wouldn't have a choice if an automaker was allowed to make their new vehicles only available from a direct showroom.
They would have a choice of buying one of the numerous other car brands out there.
I don't have a choice when it comes to buying a tesla - am I losing out as a consumer?
I don't have a choice when it comes to buying a tesla - am I losing out as a consumer?
[deleted]
Sorry what value does a third party showroom provide that a direct showroom wouldn't?
And currently car companies compete with each other. If one saw third party showrooms as something the consumer wants, then they would continue doing it to compete.
And currently car companies compete with each other. If one saw third party showrooms as something the consumer wants, then they would continue doing it to compete.
You seem to have missed the part of my comment where I said "if an automaker was allowed to make their new vehicles only available from a direct showroom". If the automaker didn't allow other dealers to sell new vehicles, they wouldn't be able to compete. It's very simple.
I don't understand what you're saying.
Do you think manufacturers of products should be forced to sell items to any business?
The competition that matters is against other automakers.
Do you think manufacturers of products should be forced to sell items to any business?
The competition that matters is against other automakers.
Dealers could buy the cars at retail and then mark the cars up for the cost of their value add, if it's actually worthwhile to customers they have nothing to worry about.
That becomes ticket scalping problem. The hottest cars would get bough up by dealerships and charge a huge markup.
Why is it a problem? If they were charging more than MSRP and still move the cars, it means that the market values the cars at a higher rate than MSRP and someone can make money off of the difference - isn't that the whole point of capitalism?
How's that someone get chosen though? Quality of their work? Level of effort they put in? How much money they have? Outright bribes? Threats of violence?
Where car dealerships are passed down from father to son, for generations, and is locally one of the most powerful organizations, to the point that competition is outright prohibited, it's not a free market, which is one of the cornerstones of capitalism.
Where car dealerships are passed down from father to son, for generations, and is locally one of the most powerful organizations, to the point that competition is outright prohibited, it's not a free market, which is one of the cornerstones of capitalism.
You open up a competing car dealership on the opposite side of the street and sell for cheaper (assuming that you have access to wholesale prices from the car manufacturer - that is the part that needs to be regulated).
> For Tesla to kill third-party dealers, they'd have to do everything third-party dealers do, and then they'd be indistinguishable from third-party dealers.
What do third-party dealers do that Tesla does not?
What do third-party dealers do that Tesla does not?
I suspect part of Tesla's plan is to build solar power facilities on the reservations, which would be great for the tribes if they can sell the power to the grid. (The tribes in NM and AZ have a tremendous solar resource.) Transmission lines would be the potential holdup with that plan though.
Yes, positive. Now all businesses can start using reservations to circumvent laws and regulations, and before you know it that reservation land just becomes the latest trend in ways for America to further destroy Native American traditions and prosperity. Not even to mention that most tribes now operate essentially corrupt pyramid organizations where the money often doesn't flow down and many tribe members never see any of the profits or benefits.
That’s denying the fact that Native American nations have agency and they welcomed this development. L
Who do you think is making these decisions at various tribes? There is corruption throughout in all systems.
They elect their leadership. You really saying that their decisions are illegitimate? That they cannot govern themselves?
Yes but thanks to Andrew Jackson most reservations are in the flyover states in the middle of nowhere far away from the big metro areas. So I'm not sure if it will matter much.
I hazard a guess that Tesla's are sold on the East and West coast.
I hazard a guess that Tesla's are sold on the East and West coast.
This is wrong, reservations or tribals lands are sometimes within the greater MSA of some cities or otherwise adjacent to populous areas, (Tulsa is the most prominent example, Kansas City, south Florida Miami area, Mobile AL, Charlotte NC to list a few). In the context of the dealership laws, these are significant exceptions.
Of the 10 states with outright bans on manufacturer sales, all but Texas and West Virginia have tribal lands that theoretically could be used as a helpful loophole to this protectionism. Maybe not always Tesla’s the first choice of location, but a 50 mi drive beats a 300 mile drive, and sufficient to break the teeth of these laws.
Please dont be dismissive of “flyover states.” The lack of dealerships and service centers certainly impairs the sales process, and then California’s extremely generous (and unnecessary?) EV incentive gives many people from other states an incentive jump through some hoops and papering to purchase and title their vehicle there.
Of the 10 states with outright bans on manufacturer sales, all but Texas and West Virginia have tribal lands that theoretically could be used as a helpful loophole to this protectionism. Maybe not always Tesla’s the first choice of location, but a 50 mi drive beats a 300 mile drive, and sufficient to break the teeth of these laws.
Please dont be dismissive of “flyover states.” The lack of dealerships and service centers certainly impairs the sales process, and then California’s extremely generous (and unnecessary?) EV incentive gives many people from other states an incentive jump through some hoops and papering to purchase and title their vehicle there.
Tulsa may not be the best example of tribal lands being near a major city, as it looks like a Supreme Court case last year found that much of Oklahoma (including Tulsa) is supposed to actually be tribal lands.
https://en.wikipedia.org/wiki/McGirt_v._Oklahoma
https://en.wikipedia.org/wiki/McGirt_v._Oklahoma
Yep it’s a fascinating case of “well, what happens now?” and thanks for linking. But I think it only supports my primary point that some cities are intermingled with tribal lands and that these lands aren’t “just in the middle of nowhere.”
> Please dont be dismissive of “flyover states.”
Especially since the Wright brothers are from a flyover state. No one would be "flying over" without them.
Especially since the Wright brothers are from a flyover state. No one would be "flying over" without them.
https://en.wikipedia.org/wiki/Shinnecock_Reservation
I think there are multiple reservations in San Diego County. e.g. https://en.wikipedia.org/wiki/Pala_Indian_Reservation, https://en.wikipedia.org/wiki/Rincon_Band_of_Luise%C3%B1o_In...
There are also reservations in Riverside Country - isn't that close to LA? e.g. https://en.wikipedia.org/wiki/Agua_Caliente_Band_of_Cahuilla...
I think there are multiple reservations in San Diego County. e.g. https://en.wikipedia.org/wiki/Pala_Indian_Reservation, https://en.wikipedia.org/wiki/Rincon_Band_of_Luise%C3%B1o_In...
There are also reservations in Riverside Country - isn't that close to LA? e.g. https://en.wikipedia.org/wiki/Agua_Caliente_Band_of_Cahuilla...
Hmm… the Salt River reservation is nearly downtown Phoenix. It covers like a fourth of the metro area.
Car dealers provide a lot of utility. They let you test drive cars, help with financing, provide warranty service, buy your trade in, etc. Even without these archaic laws these utilities would still be needed. However, the market would likely find far more efficient business models than the currant car dealer.
It is time to end these laws that stop competition. Let America innovate with better business models. The only losers are current car dealership owners that refuse to adapt.
It is time to end these laws that stop competition. Let America innovate with better business models. The only losers are current car dealership owners that refuse to adapt.
Interesting take on services, Tesla do provide all these services test drive, financing, repair, warranty, trade in
The lack of a network of competing dealerships and independent mechanics means that Tesla gets to charge whatever they want for repair, with no ability of the market, or competition to drive down costs.
This isn't a good thing.
This isn't a good thing.
I completely agree we need alternatives for car repair that being said dealership competing on repair is hard to accept. Hopefully independent mechanics steps up and a way to certify that work would be great.
Right. Hell, Tesla will even drive to my house to fix things if they can. I’ve never had a Honda or BMW dealer do that.
And yes this just shows those services are valuable, and likely at reduced costs as well.
And yes this just shows those services are valuable, and likely at reduced costs as well.
Where have you owned a BMW? Honda, no, but in areas where there are fewer people rich enough to own a BMWn(maintenance on those things adds up), they'll go the extra mile, with pickup, and loaner cars.
Honolulu, Hawaii. This was in 2009/2011 or so.
When my temperature sensor stopped working I had to drive it down for them to fix it. They gave me a loaner too, some early 2000s Honda CRV.
But just to be clear my comment was more so directed at the general services aspect. Don’t count my single experience to be a good data point. :)
When my temperature sensor stopped working I had to drive it down for them to fix it. They gave me a loaner too, some early 2000s Honda CRV.
But just to be clear my comment was more so directed at the general services aspect. Don’t count my single experience to be a good data point. :)
Like Ford did in Turkey/Baltimore (updated per comment below) with the Transit Connect import tariff circumvention, makes me wonder if Tesla built a "factory" on tribal lands to circumvent the 200,000 EV federal tax credit limit as a separate manufacturer that licensed the technology and bought the parts from Tesla, Inc, and did some "final assembly" nonsense like put the rear seats in.
https://en.wikipedia.org/wiki/Ford_Transit_Connect#Tariff_ci...
https://en.wikipedia.org/wiki/Ford_Transit_Connect#Tariff_ci...
Do you mean to refer to the Turkish Transits imported as passenger vehicles and converted to cargo use? The move to Mexico would bring them in alignment with tariffs to directly import cargo vehicles.
The next-generation Transit Connect, due for the 2022 model year, will be fully assembled for North America in Mexico at Hermosillo Stamping and Assembly. Like all future Ford products built in Mexico, it will comply with the 75% US/Canada/Mexico content rule of the new USMCA trade deal set to take effect in 2020.
The next-generation Transit Connect, due for the 2022 model year, will be fully assembled for North America in Mexico at Hermosillo Stamping and Assembly. Like all future Ford products built in Mexico, it will comply with the 75% US/Canada/Mexico content rule of the new USMCA trade deal set to take effect in 2020.
Yes thank you, I was mixing the two
The chicken tax (the tariff in question) is also why the Subaru BRAT had those ridiculous seats in the bed.
https://en.wikipedia.org/wiki/Subaru_BRAT#Jumpseats
https://en.wikipedia.org/wiki/Subaru_BRAT#Jumpseats
This is really nice.
And more generally speaking, having much smaller states where you could drive 10mn to the state next door to do things your own is too dumb or too corrupt to let happen is a fantastic idea.
Competition FTW !
And more generally speaking, having much smaller states where you could drive 10mn to the state next door to do things your own is too dumb or too corrupt to let happen is a fantastic idea.
Competition FTW !
That's basically New England; in college we would make the short drive from Connecticut to Massachusetts for legal weed all the time!
Extend that to countries and you get some Snow Crash-like distribute republics :)
Here is how laws banning direct sales of cars came about: https://www.newyorker.com/magazine/2006/09/04/dealers-choice...
Well that's a much better use of these loopholes than fueling gambling addictions with casinos.
States could kill two birds with one stone and allow manufacturers to open up one factory store for every N independent service and repair shops which have full access to manufacturer documentation and the full parts supply chain.
States could kill two birds with one stone...
The laws preventing manufacturers from going straight to consumer are there because of lobbying, there is no indication most states would desire killing one bird much less two.
The laws preventing manufacturers from going straight to consumer are there because of lobbying, there is no indication most states would desire killing one bird much less two.
Say what you will about Elon but this move is such a gangster move, such a finger “on both hands up” to the face of the dealership lobby. I’ve a ton more respect for him now.
Dealerships are places where one has some of the worst experiences.
Dealerships are places where one has some of the worst experiences.
How weird it is that "Company Finds Legal Loophole That Allows Them to Sell Things To People" is news!
It's Tesla so it's a Good Thing.
It's a good thing because it's a stupid law. People would praise any company that took advantage of this loophole. Though yes, other companies wouldn't get the headlines that Tesla gets for doing it.
I agree. That was my point - I meant that it shouldn't be news because we should be able to take it for granted that you can buy and sell stuff without being forced to use a middleman.
How stupid is it to try to stop e.g. Ford from undercutting existing Ford dealerships, and repatriating income and profit from e.g. NM back to e.g. MI ?
Stupid? I don't know. But it's legislation that forces the existence of a third-party middle man for sales and completely prevents the option of having it optimized away.
I believe that its intent was not to force the existence of 3rd party middlemen, but rather to acknowledge their existence (and the role they had played for manufacturers by assuming a large part of the risk), and prevent them from being swept away by direct sales after doing that.
I don't believe that this should apply to Tesla, because they do not use dealers anywhere.
I don't believe that this should apply to Tesla, because they do not use dealers anywhere.
Are you suggesting that direct to consumer sales should be banned across the board? Everything anyone buys should have to go through a middleman?
Not at all. I'm just saying that if a manufacturer relied in the past on non-company owned businesses to establish markets, it's not clearly wrong to prevent the manufacturer from undercutting those businesses by opening company owned stores in the same locations.
I think that Tesla should be allowed to open a store wherever they want (subject to other rules & regulations), since they have never used dealers.
I think that Tesla should be allowed to open a store wherever they want (subject to other rules & regulations), since they have never used dealers.
Why should the laws protect their outdated business model in that scenario? What is this principle called? Too...old to fail?
It's interesting to me that these are laws and not contract provisions between the dealers and the manufacturers.
Then again, way back when, dealers may have been the weaker party in contract negotiations, so the law was intended to protect them. That almost certainly isn't the case today, though, given the proliferation and (local) political power car dealerships tend to have.
Then again, way back when, dealers may have been the weaker party in contract negotiations, so the law was intended to protect them. That almost certainly isn't the case today, though, given the proliferation and (local) political power car dealerships tend to have.
Horse buggy salesmen were not protected from cars...
Do you believe we should still have attendants everywhere to pump gas? That Netflix should still be distributing DVD's? That elevators should still be hand-operated?
It doesn't seem right to force an inefficient, outdated situation to continue to exist purely because it benefits a group that would otherwise be outcompeted.
It doesn't seem right to force an inefficient, outdated situation to continue to exist purely because it benefits a group that would otherwise be outcompeted.
That cash staying in NM is not at Fords expenses. It comes from the local buyers.
How is that any different from Apple selling the iPhone in their own stores versus a third party store? Or literally any other consumer good?
Its an interesting and creative strategy to a law from a bygone era currently abused to keep Tesla out of the market. Not only that, its investing in an economy that doesn't typically receive investment outside of gambling.
I don't see how this keeps Tesla out of the market. Can't they also use dealerships like GM or Ford?
Actually the galling part to me is the people who consider "Tribal Sovereignty" a clever loophole.
That's the point... the tribes have the right to decide what happens on their land. It's like calling "free speech" a loophole when someone notices the first amendement.
That's the point... the tribes have the right to decide what happens on their land. It's like calling "free speech" a loophole when someone notices the first amendement.
Anyone know why this isn’t a loophole for all kinds of laws? They’re basically their own countries right?
They are sovereign nations, but often use a state compact. This "loophole" exists because of what was done to Native Americans.
> They are sovereign nations
Yes, but not in the sense that the US is sovereign. Or even the sense that US States are sovereign. “Sovereign” in US domestic law means a lot of different things, and tribal governments are pretty much the least sovereign of all the US’s sovereginties.
Yes, but not in the sense that the US is sovereign. Or even the sense that US States are sovereign. “Sovereign” in US domestic law means a lot of different things, and tribal governments are pretty much the least sovereign of all the US’s sovereginties.
It already is for gambling laws, obviously.
Well, not exactly. They are absolutely ruled by the Feds, and each tribe has a compact with the state that determines what kind of gambling can be done. As an example see https://500nations.com/Montana_Casinos.asp
Year-round fireworks stands are another common one
It is, but in order to exploit the situation you have to get the tribal council on your side. So you can't set up a brothel on tribal lands because the tribe won't allow it.
... because it isn't profitable enough?
I can only speak to weed, but the tribal reservation that I was on would not allow weed production for a couple reasons, one is that they receive quite a lot of federal funds and assistance, importantly they let the DEA run drug enforcement/stings, and the tribe doesn't want to rock the boat unless there is a very clear and well supported upside.
Not everyone in the tribe would be supportive, i.e. it would be a political risk. You would probably generate some tax revenue, but especially in the early days (in Oregon), it wasn't clear how much you'd make, whether banks would support you, whether the DEA would get angry about "interstate" commerce, regardless of their actual jurisdiction etc.
So their answer was, at the time no, you cannot grow weed commercially even though there wasn't really anything stopping them at that point. However they, and many other tribes, operate casinos(against the law in their state) and sell fireworks, potentially against state law or city ordinance; the latter because the ATF doesn't care, and the former because it represents over 80% of the tax revenue of the tribe and there is a history already built there between regulators and the tribe.
Not everyone in the tribe would be supportive, i.e. it would be a political risk. You would probably generate some tax revenue, but especially in the early days (in Oregon), it wasn't clear how much you'd make, whether banks would support you, whether the DEA would get angry about "interstate" commerce, regardless of their actual jurisdiction etc.
So their answer was, at the time no, you cannot grow weed commercially even though there wasn't really anything stopping them at that point. However they, and many other tribes, operate casinos(against the law in their state) and sell fireworks, potentially against state law or city ordinance; the latter because the ATF doesn't care, and the former because it represents over 80% of the tax revenue of the tribe and there is a history already built there between regulators and the tribe.
Cars purchased on a reservation generally don't qualify for state EV incentives. Reservations are sovereign to a degree but are not their own countries; they are still subject to federal laws so they are essentially equal to states (see https://www.bia.gov/frequently-asked-questions). If reservations were were their own countries buyers would have to pay import duties if they took items purchased on reservation land off reservation lands.
As for the eligibility guidelines, see CA's guidelines: https://cleanvehiclerebate.org/eng/eligibility-guidelines
As for the eligibility guidelines, see CA's guidelines: https://cleanvehiclerebate.org/eng/eligibility-guidelines
> Cars purchased on a reservation generally don't qualify for state EV incentives.
Citation? Are you also claiming that if i live in NM but buy my Tesla from CA, there's also no state EV incentive?
Citation? Are you also claiming that if i live in NM but buy my Tesla from CA, there's also no state EV incentive?
Yes, because state EV incentives are limited to state residents.
See, for example, from CA's EV incentives page: https://cleanvehiclerebate.org/eng/requirements/919, or the more readable version: https://cleanvehiclerebate.org/eng/eligibility-guidelines
See, for example, from CA's EV incentives page: https://cleanvehiclerebate.org/eng/requirements/919, or the more readable version: https://cleanvehiclerebate.org/eng/eligibility-guidelines
So, selling to non-state residents won't provide an incentive to the buyer, but buying from non-state residents would?
I can buy my car from a foreign person and still receive incentives because I live in a state that offers them? This has little to do with selling cars on tribal lands if so.
I can buy my car from a foreign person and still receive incentives because I live in a state that offers them? This has little to do with selling cars on tribal lands if so.
No, both the buyer and the seller must be residents of the the state providing the incentive.
Tribal land is not state land, so sales by tribal dealerships do not qualify for state incentives. This is decades-old established law across the U.S.
This is just another example of Musk thinking he's found a clever loophole without realizing why nobody else was doing it in the first place (hint: because it doesn't work, and Tesla would have learned this spending less than an hour consulting with someone who handles tribal law).
Tribal land is not state land, so sales by tribal dealerships do not qualify for state incentives. This is decades-old established law across the U.S.
This is just another example of Musk thinking he's found a clever loophole without realizing why nobody else was doing it in the first place (hint: because it doesn't work, and Tesla would have learned this spending less than an hour consulting with someone who handles tribal law).
There are 500+ Of these distinct microstates in the US which aren’t even on any map.
They all have their own separate case law, legal structure, processes.
There is no chronicling or comparison of any of this.
Current Indigenous people recognition suffers from overinclusivity, grouping many distinct cultures as one - which has been necessary for representation but is counterproductive in many ways. (For example, do all headdress wearing tribes care about who wears a headdress, how do you know one didnt create a licensing system specifically sanctioning random people wearing it for whatever reason, if they did sanction it are they the proper authority to sanction it, should a century long squabble between two tribes over this issue matter to us? These are the kind of nuanced questions that aren’t being asked)
The infrastructure is very low in practically all.
It doesn't have to be.
Each one has to be approached distinctively.
There is much that has never been challenged.
There is no specific reason. Although there is a shared general distrust of those who look like the people in the majority.
They all have their own separate case law, legal structure, processes.
There is no chronicling or comparison of any of this.
Current Indigenous people recognition suffers from overinclusivity, grouping many distinct cultures as one - which has been necessary for representation but is counterproductive in many ways. (For example, do all headdress wearing tribes care about who wears a headdress, how do you know one didnt create a licensing system specifically sanctioning random people wearing it for whatever reason, if they did sanction it are they the proper authority to sanction it, should a century long squabble between two tribes over this issue matter to us? These are the kind of nuanced questions that aren’t being asked)
The infrastructure is very low in practically all.
It doesn't have to be.
Each one has to be approached distinctively.
There is much that has never been challenged.
There is no specific reason. Although there is a shared general distrust of those who look like the people in the majority.
> There are 500+ Of these distinct microstates in the US which aren’t even on any map.
There are approximately 326 Indian land areas in the U.S. administered as federal Indian reservations [0]
https://biamaps.doi.gov/indianlands/
https://www.bia.gov/sites/bia.gov/files/assets/public/webtea...
[0] https://www.bia.gov/frequently-asked-questions
There are approximately 326 Indian land areas in the U.S. administered as federal Indian reservations [0]
https://biamaps.doi.gov/indianlands/
https://www.bia.gov/sites/bia.gov/files/assets/public/webtea...
[0] https://www.bia.gov/frequently-asked-questions
Thanks yes that would more accurately convey the semi-sovereignty available
There are more tribes still seeking this
There are more tribes still seeking this
It's highly complex. Tribal governments function sort of like limited U.S. states. Generally, federal law applies, but not the hosting U.S. state.
tax free tobacco, fireworks and gambling are what I have seen
It is a loophole for lots of laws. Casinos are huge on reservations in states where gambling isn't illegal. There have also been many notable cases of shady payday loan companies moving onto reservations to escape regulations on interest rates and other fair practices around lending.
> They’re basically their own countries right?
No. While they have their own laws subject to US federal law, that law has limited authority over non-Indians, especially on non-Indian owned property, on Indian reservations.
No. While they have their own laws subject to US federal law, that law has limited authority over non-Indians, especially on non-Indian owned property, on Indian reservations.
No, sometimes, and yes. Its really a complicated relationship. To give a specific example, look at all the things in a police stop according to the latest SCOTUS ruling https://www.scotusblog.com/2021/06/affirmation-of-inherent-t...
The reservations answer to the Feds and have compacts with the states. Tribal sovereignty is complicated.
The reservations answer to the Feds and have compacts with the states. Tribal sovereignty is complicated.
Here's hoping Musk tries the same thing in Michigan to get around the hold that the auto dealers have on the state legislature. I know there are tribes in Battle Creek and Mt. Pleasant who would probably welcome a Tesla dealership, especially if it drew traffic to their casinos.
Getting the law changed would be hard. Sounds like a win for Tesla and the Native band.
Anyone know why Tesla is trying to intricately jump through all these hoops rather than just, you know, use dealerships themselves like Ford does? I think Elon just thinks the idea of independent dealerships is too much of an anchor and thinks he can force a change in the law. Let's see how he does. This has been something that every auto manufacturer selling to the US market has tried to get overturned for the past 100 years, so I'm not holding my breath that he will find much success unless he gets some serious allies from Detroit to stand by his side in Washington.
They have said that only Tesla can best explain the best advantages of their cars, a similar justification that Apple gave when they opened up their own retail stores. And while I can now buy Apple laptops at Best Buy, I do usually pick Apple stores and prefer that experience.
I will say as a consumer, I dislike the typical car dealership user experience. Lots of back-and-forth games on pricing, getting upsold on random add-ons or financial products, having to wait around a lot while your rep checks in the back about yet more paperwork, etc. Maybe some people feel this bazaar-like experience helps them nab a good deal, but I doubt I'd be worse off paying a standard price set by the manufacturer, delivered to me by a store that's not trying to squeeze out their own margin through those add-ons.
I will say as a consumer, I dislike the typical car dealership user experience. Lots of back-and-forth games on pricing, getting upsold on random add-ons or financial products, having to wait around a lot while your rep checks in the back about yet more paperwork, etc. Maybe some people feel this bazaar-like experience helps them nab a good deal, but I doubt I'd be worse off paying a standard price set by the manufacturer, delivered to me by a store that's not trying to squeeze out their own margin through those add-ons.
> Lots of back-and-forth games on pricing, getting upsold on random add-ons or financial products ... I doubt I'd be worse off paying a standard price set by the manufacturer
While this sounds good in theory, what's to prevent the manufacturer from doing the same ? If you look at Google Fi, it probably wanted to be different from the usual carriers, but in reality they are not that much different and worse in many ways. They peddle the same overpriced phones/payment plans and try to keep you on the network, blurring the line between device cost and plan cost. They also distinguish between regular data and hotspot data. If you go back to AOSP in Nexus days, AOSP didn't have any distinction between the two.
While this sounds good in theory, what's to prevent the manufacturer from doing the same ? If you look at Google Fi, it probably wanted to be different from the usual carriers, but in reality they are not that much different and worse in many ways. They peddle the same overpriced phones/payment plans and try to keep you on the network, blurring the line between device cost and plan cost. They also distinguish between regular data and hotspot data. If you go back to AOSP in Nexus days, AOSP didn't have any distinction between the two.
How do you think Tesla's are being sold now? They've already overturned these stupid laws in almost all the states except for Texas and a couple others. These laws were meant to restrict car dealerships from having unfair advantage over dealerships that they sold to. Tesla doesn't sell to dealerships, they sell D2C so obviously doesn't apply to them. I'm glad we're not being forced to deal with car dealerships and paying a higher price thanks to an unnecessary middleman. All others will have to follow Tesla's lead or go bankrupt.
The conventional wisdom has been that dealers wouldn’t prioritize Tesla cars and Tesla would end up having to heavily discount/incentivize them to move them off lots, as other electrics tend to require.
Ultimate success remains to be seen but their direct sales method has done surprisingly well and Tesla centers don’t have the reputation typical of car dealerships yet.
Ultimate success remains to be seen but their direct sales method has done surprisingly well and Tesla centers don’t have the reputation typical of car dealerships yet.
Many dealerships sell only one brand of car.
To finish the thought, many dealerships have locations devoted to one brand, which is a bit different. e.g., this group operates a brand-exclusive location near me. This is not the kind of focus Tesla wants and the gravity of the larger operation would not lend itself to radically different operations and employee education. https://www.napleton.com/mobile.php
Because dealership model is stupid. Why would consumers want to haggle with a car salesman at a dealership and pay a premium for an unnecessary middleman when they can buy directly from manufacturer for cheaper?
I suppose the original title:
> Tesla opens a showroom on Native American land in New Mexico, getting around the state's ban on automakers selling vehicles straight to consumers
Was too long, but could I suggest somehow including the link between 'on Native American land' and 'selling directly'? Perhaps it's clear for those in the US, but my reading was more like the act of building on NA land was illegal, and the direct selling was an unrelated detail.
> Tesla opens a showroom on Native American land in New Mexico, getting around the state's ban on automakers selling vehicles straight to consumers
Was too long, but could I suggest somehow including the link between 'on Native American land' and 'selling directly'? Perhaps it's clear for those in the US, but my reading was more like the act of building on NA land was illegal, and the direct selling was an unrelated detail.
"Tesla evades direct sales ban in New Mexico," maybe. It's a simple description of the company's behavior with the location for context.
Random comment: I get how manufacturing works (batch) but whenever I see rows and rows of brand new cars just sit on seller lots like that's crazy.
Why did it take so long? Seems like an obvious thing in hindsight?
> He told The New Mexican that the state's auto dealers had "absolutely opposed" the legislation. The bill ultimately fell through.
What is the charitable excuse for the law that enforces the use of third-party car dealerships?
Something about avoiding monopolies?
Something about avoiding monopolies?
Car manufacturers contracted with car dealers back when the car business was uncertain - they needed a local dealer network to sell and service their cars. Once dealers were established, they lobbied to get laws in place to prevent them from being disintermediated by the manufacturers, who could have easily just put them out of business and replaced them with manufacturer-owned stores.
Not a great reason …
Not a great reason …
I mean this is very Anti-HN zeitgeist, but it's a way to preserve easily accessible middle class jobs and prevent local profit pools from accruing to corporations headquartered elsewhere.
From a consumer perspective it reduces welfare (like most worker protections do), but similar to real estate agents, car dealerships are very active in lobbying local governments (in part b/c the amount of jobs they 'create').
From a consumer perspective it reduces welfare (like most worker protections do), but similar to real estate agents, car dealerships are very active in lobbying local governments (in part b/c the amount of jobs they 'create').
Not just jobs, but also sales tax revenue. Cities have their own sales taxes and/or get a cut of the overall take. Better to have that come from a local business to maximize your take.
> a way to preserve easily accessible middle class jobs
Wouldn't direct sales locations/showrooms operated by the manufacturers still need to hire salespeople, as well as automotive technicians to do the maintenance?
It seems that the jobs wouldn't necessarily be affected, the owners of the dealerships are the ones who would lose out on revenue.
Wouldn't direct sales locations/showrooms operated by the manufacturers still need to hire salespeople, as well as automotive technicians to do the maintenance?
It seems that the jobs wouldn't necessarily be affected, the owners of the dealerships are the ones who would lose out on revenue.
For every $500k we spend subsidizing dealers (according to economic studies), we waste resources that could be used to grow the middle class.
"Could be" is doing a lot of work in that sentence. Maybe this is actually the most efficient politically doable way to grow the middle class with those dollars.
That’s an interesting point, but usually rent seeking like this adds a lot of friction to the economy which reduces the velocity of money and makes people on average poorer.
The bigger problem is that taxes are so low, and that manual labor jobs (which the rich outsourced to other countries), just don’t exist at scale anymore.
The best solution is probably something like taxing productivity gains and then bending the benefit curve towards the workers who have received none of the gains by, eg, paying for their kids health and educational expenses, letting them have free training, giving them stipends to travel, etc.
The biggest problem has been that all the productivity gains have gone to the 1% essentially.
The bigger problem is that taxes are so low, and that manual labor jobs (which the rich outsourced to other countries), just don’t exist at scale anymore.
The best solution is probably something like taxing productivity gains and then bending the benefit curve towards the workers who have received none of the gains by, eg, paying for their kids health and educational expenses, letting them have free training, giving them stipends to travel, etc.
The biggest problem has been that all the productivity gains have gone to the 1% essentially.
>The biggest problem has been that all the productivity gains have gone to the 1% essentially.
Going back to the other commenters note on wishful thinking: your situation requires a major refactoring of American politics and governance.
'Subsidizing' car dealerships at it's worse makes cars slightly more expensive, which is probably a societal good (yes even electric cars).
Going back to the other commenters note on wishful thinking: your situation requires a major refactoring of American politics and governance.
'Subsidizing' car dealerships at it's worse makes cars slightly more expensive, which is probably a societal good (yes even electric cars).
Yes, if one is privileged I can imagine why one would say that a more expensive cars is a societal good.
For the majority of humans, this is not the view.
For the majority of humans, this is not the view.
You've got that backwards. The majority of humans are harmed more than helped by increasing car ownership. The people who own cars, or are close enough that cheaper cars would plausibly make the difference, are the privileged ones.
Hmmm, I see where you are coming from.
In the eyes of the humans of the world, would they want a car that is 100x cheaper so that they could afford one?
I’m guessing yes, but it sounds like you are arguing that it is in their best interest to not have that desire play out. This type of paternalism is common, especially for people that like to make decisions for others :)
In the eyes of the humans of the world, would they want a car that is 100x cheaper so that they could afford one?
I’m guessing yes, but it sounds like you are arguing that it is in their best interest to not have that desire play out. This type of paternalism is common, especially for people that like to make decisions for others :)
It's not paternalism. At every step of the way, a reduction in the price of cars harms more people than it helps, and the majority of the world would rightly be against it. Trying to bypass that by imagining a quantum leap to 100x cheaper cars without anything in between is just muddying the waters.
Listen, the libertarian troll Schtick works better when it’s not about the most obvious “tragedy of the commons” good in existence presently.
You don’t think society should do ANYTHING to combat traffic, global warming, vulcanized rubber micro plastics, parking scarcity in cities, auto-related deaths, OR global political instability tied to crude oil trade?
Ok boomer.
You don’t think society should do ANYTHING to combat traffic, global warming, vulcanized rubber micro plastics, parking scarcity in cities, auto-related deaths, OR global political instability tied to crude oil trade?
Ok boomer.
Ummm, as a non-car-owner it would be nice if there were more people/voters forced to care about public transit, but yeah I guess that is a privledged place to be.
I don't know why this is downvoted. I'm similarly confused. I'm guessing it's less about avoiding monopolies and more about making sure more of the money stays in the state, but I'm just speculating.
There's very little (if any) income at a dealership that couldn't be captured by a state with the right tax structure, and that would apply to a manufacturer owned dealership just as much as a private one.
It seems like the only person really losing in that scenario would be the dealership owner, which explains why they lobby so heavily to keep those laws in place.
It seems like the only person really losing in that scenario would be the dealership owner, which explains why they lobby so heavily to keep those laws in place.
> it's less about avoiding monopolies and more about making sure more of the money stays in the state, but I'm just speculating.
If that was the goal, then the state government should have opened their own dealerships and distributed the profits amongst the state's residents. Or better yet, simply operated the dealership at break even.
If that was the goal, then the state government should have opened their own dealerships and distributed the profits amongst the state's residents. Or better yet, simply operated the dealership at break even.
Americans generally don't like the government running things that aren't natural monopolies.
It’s an outdated law (IMO) meant to protect car dealerships from manufacturers opening up dealerships down the road and undercutting them.
I think it’s similar to the law preventing movie studios from opening theaters.
I think it’s similar to the law preventing movie studios from opening theaters.
That plus heavy lobbying and donations by car dealerships making a lot of money. Electric cars are also bad for their fat profit margins on service for ICE cars.
In what sense is it outdated? What has changed that means that it used to be relevant, and now no longer is?
Dealer's Choice[0] explains why these laws were originally passed; Ford and GM forced dealerships to accept new cars during the 1920 depression and the Great Depression. The laws persist because car dealerships are well-connected politically and donate heavily to campaigns; it's just a special interest group protecting their business model.
[0] https://www.newyorker.com/magazine/2006/09/04/dealers-choice...
[0] https://www.newyorker.com/magazine/2006/09/04/dealers-choice...
Emphasizing that it is my opinion, I think it’s easier to reach consumers directly. I haven’t researched the history of car dealerships, but I’m guessing (dangerous) that they came into existence because the locals knew the local market better. Now that they exist, they need to be protected to prevent too much unemployment too fast in local job markets. Anecdotal, but I haven’t heard people talking about the wonderful experience they recently had at their car dealership. I think some of that comes from legal protections and getting comfy.
and selling the exact same product to consumers for widely different amounts.
If I wanted the status quo, I'd argue that dealers have gained enough power to accomplish the same thing without state laws. Look at what happened when US manufacturers tried to decrease the number of dealerships for an example. They fought it out with a barrage of lawsuits and the efforts were only really minimally successful.
Its really unlikely that existing brands would be able to change at this point, at least the US brands.
Its really unlikely that existing brands would be able to change at this point, at least the US brands.
Maybe only perspective. In my view, car manufacturers should be competing with other car manufacturers, rather than independently operated dealerships. If a dealership provides a value to consumers then it should survive. If not, then the consumers are better off without them.
At the very least, I would like the option to buy directly, since I probably don't use the services provided by the dealership anyway.
At the very least, I would like the option to buy directly, since I probably don't use the services provided by the dealership anyway.
https://en.wikipedia.org/wiki/United_States_v._Paramount_Pic....
The "Paramount Decree" is lifted as of Aug 7, 2020 with a 2 year sunset period, so as of Aug 7, 2022, there is no law preventing studios from owning theaters.
The "Paramount Decree" is lifted as of Aug 7, 2020 with a 2 year sunset period, so as of Aug 7, 2022, there is no law preventing studios from owning theaters.
Suddenly Movie studios:theaters::Apple:AppStore comes to mind.
The most interesting part re/ movie studios is Disney. I seriously wonder when someone finally brings down the hammer on them... they own the production companies, the studios, the after-market entetainment (Disney World) and so many franchises that they can outright extort cinema owners to licensing terms that are extremely favorable towards Disney.
MCU, Star Wars, Avatar... get blocked from showing them as a cinema owner and you can close shop. Especially with how many new films the MCU alone will bring up over the next years.
MCU, Star Wars, Avatar... get blocked from showing them as a cinema owner and you can close shop. Especially with how many new films the MCU alone will bring up over the next years.
>I seriously wonder when someone finally brings down the hammer on them
Probably not anytime soon, since in less than a year, they will be able to own the cinemas.
Probably not anytime soon, since in less than a year, they will be able to own the cinemas.
At that point however I see antitrust action inevitable (pardon the pun).
Tesla really loves and breathes thinking outside the box.
One day they’ll be an interesting case study in business school.
One day they’ll be an interesting case study in business school.
LOL, this is beautiful!
They say sometimes the cahs what come outta theya, well sometimes them cahs drive ‘emselves.
The intent of the NM law that prevented Tesla from doing this e.g. in downtown Santa Fe was to prevent manufacturers from undercutting dealers who had done the work of proving a market by opening their own stores in direct competition. There are arguments for and against this, but it's not clearly a completely stupid idea on its face.
But of course, the law wasn't written to deal with a scenario where there's a new(ish) manufacturer that has no dealers anywhere, least of all in NM, and has no plans to ever have dealers. It only sells its cars in company-owned stores, and opening a new store is not undercutting any existing dealers.
Would the legislators who voted for the legislation have understood the difference if the idea had been presented to them back when this was passed? Would they have worded it differently?