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He'll either lobby Congress for legislation or file a federal lawsuit

Tesla CEO Elon Musk is determined to win the fight against auto dealers and sell his company's vehicles directly to customers, but if he doesn't succeed at the state level, he's willing to make it a federal case. 

"If we're seeing nonstop battles at the state level, rather than fight 20 different state battles, I'd rather fight one federal battle," said Musk.

According to Musk, he will likely take one of two approaches if it comes down to a federal matter. He will either lobby Congress to pass legislation for the direct sales of EVs made by startup companies like Tesla (and tie it to an energy or transportation bill) or file a federal lawsuit to fight the state restrictions as unconstitutional violations of interstate commerce.

However, The National Automobile Dealers Association (NADA) said it will continue to defend franchise and consumer laws in the states.

"NADA will vigorously defend the franchise system," said David Westcott, chairman of the National Automobile Dealers Association. "A better option for Mr. Musk is to take advantage of the dealer network that already exists."

Musk has been pushing support for a recent bill in Texas, called House Bill 3351. This would allow distributors and manufacturers of electric vehicles (EVs) only to sell directly to customers without the use of dealerships. 

He has gone as far as offering to build a second manufacturing plant in Texas, and is even trying to appeal to Texas consumers by discussing a design for an electric pickup truck that would be stronger than any current gasoline truck.


In addition to Texas, Musk has had issues persuading other U.S. states to allow the auto startup to sell its cars directly. Some of its problem states include Colorado, Massachusetts, Minnesota, New York and Virginia. 

Musk could have a huge fight ahead, though. NADA said that 48 states have some sort of restricition on factory-owned dealerships. Musk went on to say that about 20 of those have restrictions that would make his business model difficult while about six others have restrictions that would make it extremely difficult. 

Musk has called the new Texas bill (and this overall business model of selling directly) a "life or death" situation for startups like Tesla. 

“For us this is life or death,” said Musk. “If we can’t go direct we will not be able to sell cars.”

In the past, Musk has said that he's open to a dealership model at some point when sales increase, since dealerships do promote competition and keep prices down. But at a startup level, he said this type of model isn't the best route. 

Tesla currently sells about 10,000 cars in North America, where about 1,500-2,000 are sold in Texas. 

Tesla is shipping over 500 Model S EVs weekly, and recently reported that the company is now profitable thanks to the Model S exceeding sales targets. Tesla Model S sales reached 4,750, which topped the sales outlook of 4,500 posted in the February shareholder letter.
 
In addition, the automaker is partnering with Wells Fargo and U.S. Bank to offer customers more financing options for Tesla’s vehicles. 

Source: Automotive News



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RE: Pretty pathetic
By HercDriver on 4/16/2013 12:38:45 PM , Rating: 5
I'm surprised to hear you say that. I figured you'd be more on the lines of "the dealerships do not have a "right" to someone else's profits". Why should a company be forced to use a dealership business model, if it will hurt their profitability? Also, consumers will have to pay more for the cars if they are sold through dealers. If I want to buy one of these cars, why shoud I have to pay "slick Willie" at the dealer a couple thousand bucks commission? Dealerships provide no added benefit to a company that only sells a few thousand cars. the people who want one do not need a dealer to "convince" them to buy one, thus "earning" their commission.


RE: Pretty pathetic
By othercents on 4/16/2013 12:48:00 PM , Rating: 3
Using the dealership model makes sense when you are moving millions of vehicles, but start-ups or companies trying to break into the US market have issues with this model. Hence the reason why they should change it to allow companies that produce less than 100,000 vehicles per year to sale directly. Most states allow motor-homes to be sold direct due to the lower number produced and a smaller market being sold too.


RE: Pretty pathetic
By ebakke on 4/16/2013 1:03:23 PM , Rating: 3
Or change the law to let each industry and each company decide for themselves.


RE: Pretty pathetic
By yomamafor1 on 4/16/2013 1:37:14 PM , Rating: 1
Because the banking and cable industries that adopt this model have worked well for the smaller guys.


RE: Pretty pathetic
By Samus on 4/16/2013 1:12:37 PM , Rating: 5
His cars also require virtually no maintenance. There are no filters, oil changes, belts/chains, etc. There is little incentive to buy it from a dealership you wont be going back too for years.

The only thing this car needs is tires, wipers, and brakes every 50k and a coolant change (battery pack/motor) every 100k.

The differential is "sealed for life" synthetic 75w140, the wear on the brakes is minimal because (like a Prius) the majority of heavy energy isn't absorbed into the rotors using friction material, but with regenerative braking through the drive train.

Batteries are the only real question.

Tesla already has a list of certified repair facilities on their website to do this.


RE: Pretty pathetic
By Nortel on 4/16/2013 1:52:25 PM , Rating: 2
quote:
a coolant change (battery pack/motor) every 100k.

Yea, just a new battery and motor every 100k... Probably costs about the same as a coolant flush right?


RE: Pretty pathetic
By Dr. Kenneth Noisewater on 4/16/2013 4:55:17 PM , Rating: 3
The parent post referred to the coolant, not the entire package.

You do know that electric motors are far more reliable than combustion engines?

Changing fluids is a lot cheaper than cleaning valves, replacing timing chains, etc.

(or was that your attempt to be humorous?)


RE: Pretty pathetic
By Spuke on 4/16/2013 6:48:06 PM , Rating: 1
quote:
Changing fluids is a lot cheaper than cleaning valves, replacing timing chains, etc.
Who does this on their gasoline engine? I've owned nothing but timing chain engines and have NEVER replaced one of them. Also, never got my valves cleaned either. How exactly is that done?


RE: Pretty pathetic
By Reclaimer77 on 4/16/2013 7:00:43 PM , Rating: 2
quote:
Also, never got my valves cleaned either. How exactly is that done?


Seafoam :)

Something you'll all have to be infinitely more familiar with the more these fascist push Ethanol and other "green" fuels onto us.


RE: Pretty pathetic
By theapparition on 4/17/2013 10:13:38 AM , Rating: 3
Seafoam is some good stuff. Just don't do it in the garage.

Wait for a nice windy day.


RE: Pretty pathetic
By Kazinji on 4/16/2013 8:27:16 PM , Rating: 2
They have yearly scheduled maintenance. Can have a Tech come to your house. http://www.teslamotors.com/service#/tesla-service


RE: Pretty pathetic
By FITCamaro on 4/16/2013 2:24:25 PM , Rating: 2
I believe the reason states require cars to be sold through dealerships is so consumers aren't screwed when the car breaks and without a service center. I live in Charleston, SC. If I bought a Tesla, I'd have to ship it to Raleigh, NC to get it serviced if anything goes wrong.


RE: Pretty pathetic
By 91TTZ on 4/16/2013 3:57:27 PM , Rating: 3
Why would you ship your car somewhere else when there are mechanics all over the place that can fix it for you?


RE: Pretty pathetic
By Spuke on 4/16/2013 6:51:17 PM , Rating: 2
Where are all these Tesla mechanics located?


RE: Pretty pathetic
By FITCamaro on 4/17/2013 8:46:06 AM , Rating: 2
Uh...because warranty repairs generally have to be done at an authorized service center....


RE: Pretty pathetic
By Reclaimer77 on 4/16/2013 5:27:09 PM , Rating: 2
quote:
I'm surprised to hear you say that. I figured you'd be more on the lines of "the dealerships do not have a "right" to someone else's profits". Why should a company be forced to use a dealership business model, if it will hurt their profitability?


I agree with you.

My problem is that Musk isn't challenging the rule et-all, he's just fighting for (yet another) special exemption simply because he's offering EV's.

Do we want level playing fields or not? I'm a bit confused.


RE: Pretty pathetic
By Reclaimer77 on 4/16/13, Rating: -1
RE: Pretty pathetic
By lelias2k on 4/16/2013 6:02:22 PM , Rating: 5
When you are fighting 100-year old companies, with a product that challenges one of the most - if not THE most, powerful industries in the world, I think you are entitled to try to play by the same rules.

Especially since what he is proposing is something that I see eventually becoming common practice.

I sold cars and I honestly hate the whole dealership experience. I would love to simply go online, put my car together, get financing, and wait for it to arrive. Screw the middle men, as they are not adding anything positive to the process. Unless you think that all the things they try to put down your throat are any good. In which case let me know and I'll be happy to sell you your next car.

And let be honest, we already are half-way there. A lot of my customers used to arrive knowing if I had the car they wanted, what would be a good price to pay, etc.

So, in the end, killing dealerships would benefit everybody but the dealership. But why would Musk fight for an industry that is clearly against him?


RE: Pretty pathetic
By seamonkey79 on 4/16/2013 6:53:12 PM , Rating: 2
I am about completely turned off dealerships, enough that I'm still fixing my car myself to keep it going while I figure a way around dealing with a dealership. Salespeople in most businesses are a bit shady, but car dealerships still ooze that classic used car sales stereotype of the 60s/70s television shows, only they're trying to sell you a new car.


RE: Pretty pathetic
By Spuke on 4/16/2013 6:55:33 PM , Rating: 1
quote:
When you are fighting 100-year old companies, with a product that challenges one of the most - if not THE most, powerful industries in the world, I think you are entitled to try to play by the same rules.
Yes, exactly and one of those rules is to open a dealership like everyone else in the auto field.


"So if you want to save the planet, feel free to drive your Hummer. Just avoid the drive thru line at McDonalds." -- Michael Asher














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