
New Jersey legalizes direct Tesla sales - dr_
http://blog.caranddriver.com/new-jersey-governor-chris-christie-legalizes-tesla-direct-sales/#.
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bko
This is great news. People often forget that dealerships often abuse their
power and take advantage of consumers. This is especially true since
purchasing a car is a large purchase with information asymmetry (although new
resources have made this less true). It's especially appalling how dealerships
often discriminate on race and gender [0]

I am disappointed that this move only applies to zero-emission vehicles but
hopefully this will lead to future legislation undoing the protection granted
to dealerships.

[0][http://islandia.law.yale.edu/ayres/Ayres%20Siegelman%20Race%...](http://islandia.law.yale.edu/ayres/Ayres%20Siegelman%20Race%20and%20Gender%20Discrimination%20In%20Bargaining%20%20for%20a%20New%20Car.pdf)

~~~
kbenson
>This is great news.

It is!

> People often forget that dealerships often abuse their power and take
> advantage of consumers.

I doubt many people forget that. Car salesmen have some of the worst
reputations of any profession in the US. Purchasing a car can be nerve-
wracking. The research I felt compelled to do beforehand felt like I was
preparing myself for battle, because I knew the incentives were diametrically
opposed.

~~~
bnejad
The best way to buy cars is option out exactly what you want and get the
invoice price. Personally I've used carsdirect.

Now with invoice price in mind, send emails to all dealers in your area.
Simply explain you want X car @ X price and that you are emailing many dealers
and will move forward with the dealer that has the best deal. Its important
that you compare cars across dealers by the difference from invoice price as
small options will change the price of the car slightly.

As you get quotes, you can forward those to other dealers if they have the
specific color you want, etc.

Once you lock in a price, take care of financing through your local credit
union. Show up to dealer, decline all warranties/addons, sign the papers
making sure price is the same you agree, and off you go.

Just did this about a month ago and it worked out great. Remember to calculate
exactly how much DMV fees will be(usually around 2-3 hundred dollars) which
will likely be on top of the price you negotiated unless you specify
otherwise.

Don't tell them you have a trade in until you show up at the dealer to buy.
Then you can negotiate the trade in value without them trying to move numbers
around with the car price.

I like this approach because there is zero advantage to negotiating the car
price in person. Via email you can take your time to research and also field
many more offers and quotes than you would ever be able to if you visited each
dealer physically.

~~~
mikeash
The _best_ way to buy a car is from Tesla. Configure your car exactly as you
want it online. See the exact price you will pay. When you're ready, click the
button and put down a deposit using a credit card on their web site. When the
car is delivered, pay the balance with an ACH transfer. Drive it home.

You certainly can do well with traditional dealers if you're prepared. It's
just crazy that you even have to worry about it.

~~~
speby
I'm surprised no one has yet mentioned CarMax. I won't argue as to whether
CarMax is _best_ or not but I can attest that it is a very straight-forward,
no-haggle, and pretty fair-priced way to buy a car. Even if you don't feel
they are best-priced, you definitely will 100% avoid all of the anxiety and
nerve-wrackiness that comes with going into traditional dealerships. That
alone might be worth a slightly inflated price to avoid that experience
anyways.

~~~
bnejad
True and they will ship cars around their lots for you. That said, you pay for
it if you don't end up purchasing the car but I think it opens up a lot of
inventory to sift through.

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benmw333
Why only (4) stores? Why only "zero-emissions" vehicles?

There should be zero limitations on direct to consumer sales for any
manufacturer of any product.

~~~
andrewtbham
because the dealership's concern is not Tesla, whom they consider a niche
player. Their concern is their manufacturers GM, Toyota, Ford will set up
their own stores and compete with and undercut them. The dealerships have
poured a lot of resources into their dealerships over the years and it is an
anti-trust issue for them to compete directly with the much more powerfule
manufacturers.

~~~
maratd
If they can't compete, that means they're not providing sufficient value. What
value would I, as a consumer, enjoy by doing business with a local dealer
rather than the manufacturer?

I don't think the fear here is that they would "undercut them". I would do
business directly with Ford, Toyota, etc. even if the price were the same.
That's what they're afraid of.

~~~
ericd
My understanding is that these laws were put into place so that the
manufacturers couldn't have it both ways - they couldn't enjoy the low
startup-capital requirements of the franchise model, and then after using the
franchisees to grow and scout out the best spots, cherrypick the most
lucrative spots for manufacturer owned dealerships, driving out the
independent dealerships by using their lower end-to-end costs. Because the
franchisees are usually completely at the mercy of their chosen brand.

The perversion of the law is that Tesla has never had franchisees, and they're
still being blocked by the laws in many states, contrary to the original
intention.

I hate buying from dealers as much as anyone, but the law as I understand it
makes some sense. I'm sure it varies from state to state and doesn't make
sense in some.

~~~
maratd
> and then after using the franchisees to grow and scout out the best spots,
> cherrypick the most lucrative spots for manufacturer owned dealerships

This is easily resolved on the contract level. Knowing this, nobody with half
a brain would start a franchise unless the parent company guaranteed the
territory. That's how it works in virtually every other franchising market.

~~~
brc
Yes, this seems like a well-solved problem as nearly every franchising model
includes company-owned stores.

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brianstorms
Great news yes, but there are other states that are still big problems.

Among them, one that the media appears to not even know about: New Mexico
(maybe they don't realize it's a state).

In NM, the NMADA (New Mexico Automobile Dealers Association) has basically
crafted the laws such that no manufacturer can have a single store OR service
center anywhere in the state. All have to be franchises. Because, you know, we
have to protect the dealer franchises, otherwise we might have better consumer
choice and better consumer experiences and that would be a nightmare.

If one owns a Tesla in New Mexico, and ever needs service, a Ranger has to
drive down from Denver. If they're available. If the weather cooperates.

Range anxiety? Meh. RANGER anxiety is a huge problem.

Imagine finding out you could not buy an iPhone or even find a Genius Bar in
the State of New Mexico because the franchises selling other mobile phones had
bought the legislature and banned iPhone from the state. That's the situation
with Tesla. And nobody knows about it, and nobody seems to be doing a damn
thing about it.

~~~
mikeash
I thought maybe this had changed, since Tesla's "Find Us" map has a "Coming
Soon" service center in Albuquerque. Upon further research, it looks like
that's just an expression of desire and optimism on Tesla's part, and they're
still not actually legally permitted to build one.

~~~
brianstorms
Nope. That "coming soon" is wrapped in an Elon-style reality distortion field
and should be interpreted as "we intend to have one there one day."

What they don't tell you is they cannot open it. And that there is NO WAY it
is opening soon.

How do I know? Well, I contacted the Governor of New Mexico's office, and I
contacted the Global VP of Sales/Service at Tesla. That got me a call from a
Tesla regional manager who told me plainly, "New Mexico is worse than Texas"
and that the laws are set up in such a way that there isn't much that can be
done. The law on the books states that the dealerships are protected by the
force of the State Police and should any young whippersnapper auto
manufacturer, say, Tesla, come sneakin' into town and try to set up shop, well
the dealers will be there with the full force of the state government behind
them, to make sure Tesla crawls back into the hole it came from . . . in some
other state.

The New Mexico legislature won't consider new proposed laws until Jan 2016.
You can bet I will be working on my representative in Santa Fe to introduce a
meaningful law modeled after the legislation recently passed in other states
that has allowed Tesla to do business including service its existing
customers.

It is remarkable how protectionist these auto dealers are. They're staring
into the future and the future is staring right back, and the future has no
sympathy. They must know they're on the wrong side of history. They don't
care.

~~~
mikeash
I think I may have come across a forum post from you when looking at what was
actually going on there.

Good for you for pushing against the dealers. This stuff seems to be changing
at a (relatively, for political stuff) rapid pace at the moment. NJ now, looks
like CT soon, VA just relented a bit and allowed a store, and it looks like
things are moving in Texas. Maybe seeing other states ditch these laws will
help push things in New Mexico.

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shiggerino
What prompted this law in the first place? Can someone from the US shed some
light on this?

I just don't understand how you can ban selling what you manufacture to
whomever you like outside of a planned economy.

~~~
rayiner
The regulatory capture argument someone made below is hard to square with the
history:
[http://www.americanbar.org/publications/franchise_lawyer/201...](http://www.americanbar.org/publications/franchise_lawyer/2013/summer_2013/has_traditional_automobile_franchise_system_run_out_gas.html).
At first, cars were sold directly to consumers by manufacturers, and
independent dealerships were rare. It's really hard to explain using a
regulatory capture or lobbying model how car manufacturers, huge incredibly
profitable companies at the time, _lost their bid_ to preserve the status quo.

In reality, these were consumer and economic protection laws. States didn't
like how much money was flowing from their economies to Detroit, and by making
direct consumer sales illegal they gave a lot of leverage to franchises, which
are local businesses. They also justified the laws on consumer protection
grounds--local car dealers would be a lot more responsive to customers than a
megacorp in Detroit.

As for the "planned economy" aspect--remember that the ideas of what
constituted unreasonable interference in the economy were very different back
then. The revolution of applying economics principles to government didn't
really happen until the 1960's and 1970's. Before that, quite extensive
interventions in the economy were routine. For example, prior to the 1970's,
the Civil Aeronautics Board set airline ticket prices! That would be amazingly
controversial in the U.S. today, on either side of the aisle, but was par for
course back in the day.

~~~
mr_luc
Sure, they didn't _originate_ with regulatory capture.

But the actions to prevent Tesla from selling direct now, today, have
definitely been the result of regulatory capture.

The original interventions created a kind of local businessman, who knew he
owed his existence to these local regulations.

And now that these laws have been made unnecessary due to the availability of
both information and exposure -- and incontrovertibly unnecessary in the case
of for instance a large city or densely populated state, where healthy
competition exists -- the reason that they hang on and prevent companies from
Tesla from opening shop is absolutely regulatory capture.

~~~
DougBTX
> regulatory capture

There doesn't seem to be much disagreement about the facts, just the
definition of "regulatory capture".

The idea which "regulatory capture" describes is when regulations fail to do
what they are intended to do, when instead of restricting they empower.

But the regulations have not "failed", they are still restricting
manufacturers and empowering dealers, so this isn't "regulatory capture", just
bog-standard monopoly-granting.

~~~
jessriedel
No, that's not the normal definition. Wikipedia, for example:

> Regulatory capture is a form of political corruption that occurs when a
> regulatory agency, created to act in the public interest, instead advances
> the commercial or special concerns of interest groups that dominate the
> industry or sector it is charged with regulating

Enforcing barriers to entry is a _huge_ aspect of regulatory capture. A
regulation that creates $1 million/year of compliance costs nominally
"restricts" all players (and certainly doesn't "empower" them), but that money
is often a pittance for large companies while effectively squashing new
entrants, greatly to the large companies' benefit.

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grandalf
The NJ car dealers are extremely rich and powerful so this is quite a
significant event. It's too bad that it takes something as exceptional as a
Tesla to incentivize the public to fix the system, but at least it is
happening.

Disclosure: I think my current car might be my last non-Tesla

~~~
themartorana
Tesla didn't do anything really. Christie has national ambitions and knows
that keeping Tesla out of the NJ market and bending over to support the
current NJ regime won't play well on the national stage.

His story was different when Tesla was first banned. But then he wasn't
running for national office.

~~~
twoodfin
_His story was different when Tesla was first banned. But then he wasn 't
running for national office._

That was 11 months ago. I'm pretty sure Chris Christie's political ambitions
haven't radically altered in the meantime.

The original "ban" was a perfectly reasonable reading by a regulatory body of
the existing law. Regulatory bodies shouldn't be in the business of rewriting
unpopular laws; that's the legislature's job, which appears to be what
happened here.

~~~
krschultz
"Regulatory bodies shouldn't be in the business of rewriting unpopular laws;
that's the legislature's job, which appears to be what happened here."

Thank you. This point needs to be made 100x more often. These days it seems
that the regulators & judges bail out the legislatures mistakes all too often.
The onus is on people to convince their elected representatives to rewrite
laws that are flawed or outdated.

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DEinspanjer
I can understand why they would have needed to limit this bill to only the
exclusive manufacturers of ZEV just to get it through legislation, but I'm
curious whether it would allow the other manufacturers to spin off the ZEV
portions of their businesses into subsidiaries and then be eligible to sell
directly as well.

It is a very contentious subject, but some people argue that part of the
reason the existing big manufactures don't put enough effort into making and
offering ZEV is because they can't rely on the dealers to actually sell them.
Reasons given for this is that the ZEV compete directly with the hybrid and
gas vehicles on which the dealers have far greater inventory and profit
margins, so they have little to no incentive to sell the ZEV.

If ZEV subsidiaries of the manufacturers could be guaranteed a chance to sell
them then that might be cause for them to spend more effort on making them
work.

~~~
frandroid
Manufacturers can make hybrid inventory contingent on ZEV sales, or offer all
kinds of other incentives.

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spiralpolitik
It's the 21st century. I find it amusing that I can order my computer build to
order in less than 30 seconds and I know I'm getting the same price as
everybody else. Yet to order a car I have to spend days/weeks of research,
spreadsheets, emails, phone calls and I still won't get the car I want.

The auto industry is ripe for disruption. The sooner the dealership model is
replaced by something more consumer friendly, the better.

~~~
ams6110
how do you know you are getting the same price as everyone else? online sales
certainly are not immune to pricing tailored to the individual buyer... in
fact they are in the best position to do that compared to a brick-and-mortar
retail seller.

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pc86
Here's the question - can I, as a PA resident, buy a Tesla directly in NJ now
and simply transfer it to PA?

~~~
dangrossman
You can. You can also buy one in-person at Tesla's five retail stores in
Pennsylvania, or from your computer anywhere.

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rcarrigan87
Can someone please shed some light on the arguments from the other side. How
were these dealership protection laws ever justified by politicians?

~~~
higherpurpose
"Jobs" is probably the "official" argument. If the middlemen go extinct,
people will lose _those_ jobs.

~~~
notwhereyouare
which never technically existed in the first place for that company, so the
"people" who would be out the job, wouldn't have that job in the first place

~~~
djrogers
I'd have to imagine that the number of jobs created at a Tesla franchise
wouldn't dramatically exceed the number of jobs created at a Tesla direct
showroom...

~~~
sp332
Wouldn't they need mechanics and financial people, and not just
showroom/dealer people?

~~~
wmf
I'm pretty sure Tesla has service centers that employ mechanics.

------
AustinDizzy
Meanwhile here in West Virginia, our legislature just banned Tesla and Uber
from operating in-state. This is the same legislature that changed the motto
of the state from "Wild and Wonderful" to "Open for Business" only to have the
constituents petition and vote to change it back.

Our policymakers make no sense at all, I'd like to replace most of them.

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dhimes
Interesting. As a co-developing story, a post a few days back led me to the
Berkshire Hathaway (Buffet's group) web site, where I read their latest
newsletter. It seems they just bought a car dealership company.

[http://www.berkshirehathaway.com/news/MAR1015.pdf](http://www.berkshirehathaway.com/news/MAR1015.pdf)

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kevster
Will be interesting when Apple with all their cash starts to fight these laws
when they want to sell their i-car.

~~~
lordbusiness
Agreed on this point.

How will the balance of power manifest when Google, Apple, Uber, others with
deep pockets start selling cars without haggling or BS in a 'car store'?

The future is bright after all!

------
tw04
It's definitely a win for the people but it's sad the only reason this
happened is Christie's advisor told him his presidential bid was dead in the
water without it. This guy is a grade-A crook of the worst kind. I don't know
that I've ever seen a bigger fraud.

------
danvoell
There must be a big election coming up.

------
jpatokal
> at up to four locations in the state

Hooray for dismantling pointless regulation, but why leave this part in then?

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ck2
Does Tesla do free firmware upgrades for all owners, regardless if they are
the second, etc. owner?

Because that is another thing that will crush dealers. Gas car manufacturers
will not update ECU software unless the car is either in warranty or its an
actual recall.

~~~
alimoeeny
To my limited knowledge most (maybe all) of the software in Tesla model S can
be updated over the air, using cars cellular internet connection.

~~~
mikeash
That's correct. It's possible for a service center to load software over a
wire, but that's only necessary when something goes wrong. In the normal
course of events, the car pops up a little alert saying there's a software
update available, and asking when you want to install it. Updates are free
forever (although one expects that updates for older hardware will stop being
made eventually). It's basically like an iPhone in this regard.

------
Butah
Too bad Utah can't get their act together. Even after Tesla built a showroom
and stocked it with cars, the state legislators voted to keep the existing
stealership cartel laws on the books.

~~~
joshdance
I was following the vote. A few said they didn't have time to read it, didn't
know what the bill ramifactions were, but I agree, we have to get our act
together. :)

------
habitmelon
I'm surprised 4 hours have gone by and no one has made a joke about Teslas on
a bridge.

------
naskwo
Suggestion: go to Amsterdam Schiphol. Take a Tesla Model S to the city. Then
make up your mind about the "Apple of cars".

The consensus in NL is that you're better off with a Porsche Panamera than a
Tesla, most likely with a less painful (although still painful) amortisation.

Certainly, if you're taller than 180cm, drive before you buy into the hype.

~~~
vvanders
6'2" Telsa owner here. No idea what you're talking about on not fitting.

If it's a real concern get the panoramic roof which gains you another 3-4" of
headroom.

~~~
brc
I think the OP is talking about sitting in the back seat, not the front. I'd
say OP got into a Tesla taxi/exec car and didn't like the room.

But not sure why comparing to the Panamera is a good example, because it has a
low and sloping roofline, and is only a 4 seater. Weird choice.

