
Tesla Buys a Company in a State Where It’s Barred from Selling Cars - doppp
http://techcrunch.com/2015/05/08/tesla-buys-a-company-in-a-state-where-its-barred-from-selling-cars/
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onion2k
_Yet this deal likely has little to do with reaching consumers, but rather
tapping into the state’s vast supply of auto parts suppliers._

They're indirectly making a link between Michigan jobs and Tesla's success. As
Tesla gets bigger it'll make that law look like it's holding Michigan's
manufacturing industry back rather than helping the state's car sellers defend
their businesses. People care about manufacturing jobs _a lot_ more than
retailers.

~~~
bsdetector
So why would Tesla even care about sales in Michigan? Musk always implies that
Tesla is production constrained (again just two days ago in Q1 earnings call),
and Michigan isn't one of the states with ZEV program, so a sale in Michigan
earns Tesla $30k less than a sale in California or Massachusetts or the other
8 ZEV states. Selling in Michigan _costs_ Tesla money.

And why is Tesla so against dealers? As long as Tesla is showing the "internet
price" then customers can see exactly how much the dealer is higher so buying
from a dealer wouldn't even be a bad experience. A Tesla dealer would be more
like CarMax, or at worst a Saturn dealership.

I think it's worth considering that Tesla may in fact be demand constrained
not production constrained, and that's why they _need_ to sell in these states
where they earn less. And they don't want dealers because they are much more
transparent about demand.

~~~
vvanders
Mind citing your 30k number? From most of the things I've seen the ZEV credits
are a pretty small percentage of total revenue on a Tesla.

I think the anti-dealer stance comes from dealers not having an incentive to
sell EVs when they are familiar with traditional ICE cars. There's been quite
a few stories of Nissan having issues with their dealerships not being very
interested in selling Leafs for instance.

~~~
bsdetector
It's hard to say how much they make on each car sold because they are
purposely obscuring this. If you listen at 6:15 to the earnings call you'll
hear them totally dodge a totally straightforward question on how many credits
per car:

[http://seekingalpha.com/article/3147926-tesla-motors-
tsla-q1...](http://seekingalpha.com/article/3147926-tesla-motors-
tsla-q1-2015-results-earnings-call-webcast)

Elon says credits sometimes sell for as little as 50%. They are rumored to be
getting 9 credits for most cars sold in ZEV states (most cars in US). Credits
are worth $5000 in offset fines. So $22k per car even at heavily discount ZEV
prices.

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rmason
This is huge news for West Michigan. Spoke with some entrepreneurs in Grand
Rapids and they were busting with civic pride. There are already rumors that
Tesla will make another purchase in West Michigan.

So now Tesla has motivated the economic development people in West Michigan to
push to repeal the law that stopped Tesla from selling cars because it will
mean more jobs for them.

I predict Tesla will eventually be allowed to sell cars in the state as a
result of this purchase so it is a double win for them.

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chiph
Going vertical on this is a good plan by Tesla management. Stamping dies are
hugely expensive, and this will give them lower costs in the long run -- the
dies wear out after a certain number of machine operations and have to be
replaced.

There's also a trade-secret aspect to this. Since Tesla previously had to farm
this out, there was a chance of a competitor seeing their dies at the 3rd
party company. Not so now.

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modfodder
Wonder if there is a move here where Tesla threatens to move Tesla Tool and
Die out of Michigan. Not sure if Riviera is big enough for that threat to be
viable, and also doesn't seem like a move Elon would make. (Just thinking out
loud).

~~~
toomuchtodo
Might make sense to move them to Freemont, or (less so) Reno near the
Gigafactory if they can batch shipments from both facilities together.

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javert
I hope Tesla immediately moves the business out of Michigan. They should not
subsidize, with their taxes, a state that treats them, and its own citizens
(who can't buy Teslas), like utter shit.

~~~
jsmthrowaway
Why punish workers and take their job due to strategic reasons beyond their
control? Worst idea I've ever heard.

The mobility we have as white-collar tech employees is rare. A blue-collar
Michigander is not going to follow Tesla out of state.

~~~
javert
> Why punish workers and take their job due to strategic reasons beyond their
> control?

This is blaming the victim (namely Tesla). The only blameworthy party is the
Michigan government and Michigan voters as a whole.

> The mobility we have as white-collar tech employees is rare. A blue-collar
> Michigander is not going to follow Tesla out of state.

That's false. White collar and blue collar workers are equally free to move
around.

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alrs
Tesla isn't banned from selling cars in Michigan, they're not allowed to sell
manufacturer-direct. No one in Michigan is allowed to sell manufacturer-
direct.

~~~
JoshTriplett
> Tesla isn't banned from selling cars in Michigan, they're not allowed to
> sell manufacturer-direct.

Which means they're banned from selling cars. They have to use intermediaries
to sell cars for them.

> No one in Michigan is allowed to sell manufacturer-direct.

Imagine if the recording industry had successfully lobbied for laws that
prevented anyone from selling music directly.

"IndieBandFoo isn't banned from selling music in the US, they're not allowed
to sell artist-direct. No one in the US is allowed to sell artist-direct."

This restriction is no less ridiculous.

~~~
alrs
I don't support the law, but I take issue with journalists that allow Tesla to
frame the debate as "barred" from selling cars. They could sell cars through
franchised dealerships, and they choose not to.

~~~
modfodder
Tesla is barred from selling cars in Michigan. They are not barred from
allowing someone else to sell their cars in Michigan.

~~~
diminoten
That's what he's saying -- the article and comments here are being made in the
thrust of "Teslas can't do their primary business in Michigan,".

That's not true.

~~~
modfodder
It is true, as Tesla's primary business is selling their cars directly to
consumers which Michigan has banned.

