
Texas won't allow Tesla to sell electric cars directly - MikeCapone
http://www.treehugger.com/cars/texas-wont-allow-tesla-sell-electric-cars-directly.html
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thrownaway2424
For the record, you also cannot sell dildos in Texas. I don't know why people
are always crowing about how Texas is the land that respects individual rights
and free enterprise. It's not. It's the land of unlimited corporate
malfeasance, unchecked pollution, and a ban on fire codes.

~~~
TamDenholm
This doesnt contribute to the OP's discussion but i thought i'd mention it
anyway.

Texas love executing people. Since 1976 Texas executed 498 people, the state
in second place is Virginia with 110. Also, their supreme court does not hear
criminal matters, only civil, because it makes the appeals process for
executing people faster.

But yeah, the law is a strange thing.

~~~
blktiger
Texas has a little over 3x the population of Virginia with 4.5 times the
number of executions. Keeping in mind that crime isn't necessarily consistent
from place to place I don't think that is a drastically larger number
proportionally.

~~~
thedufer
That's assuming, of course, that Virginia is at all representative of the US
as a whole. The median execution rate by state is about 1 per million
residents since 1976. Texas's, while not the highest, is almost 1 per 50,000
residents. Its not the worst, but its still something of an outlier.

The worst, incidentally, is Oklahoma, at about 1 per 40,000 residents.

~~~
hotpockets
Restating your numbers in consistent units (number per million) for easier
comparison:

Median 1

Texas 20

Ok 25

------
hvs
All too often, the media as well as average people mistake support for
corporate interests as support for "free enterprise." When large corporate
interests are essentially writing bills for lawmakers, "free enterprise" is
precisely what is _not_ being practiced.

~~~
bob13579
Other car manufacturers can't sell directly. Why should Tesla get special
rules?

~~~
koenigdavidmj
"In its majestic equality, the law forbids rich and poor alike to sleep under
bridges, beg in the streets, and steal loaves of bread."

-Anatole France

~~~
bob13579
Tesla currently has a market cap over $10B. That is larger than Fiat's.

~~~
Shivetya
doesn't answer the question, why should Tesla be granted an exception not
available to other automakers? Chrysler has had all sorts of problems with
franchise law in California in regards to operating their own.

~~~
gknoy
From a different perspective, what's wrong with car manufacturers operating
their own dealerships? (I'm curious: there very well may be a down side, but I
haven't thought of it yet.)

~~~
bodyfour
It's mostly a historic artifact.

Early on, cars were sold by local dealers. Later, when manufacturers wanted to
sell direct they learned that local politicians cared more about the business
down the street than some giant company in Detroit. Therefore, all manner of
state and local laws got passed to protect dealerships' turf.

In a lot of ways, car dealerships are perfectly suited to exercise power in
state legislatures. No matter what poduck district a state lawmaker comes from
there are probably several car dealers there. They're often some of the most
locally famous people thanks to the amount of advertising their businesses do.
I couldn't name my gradeschool teacher from 30 years ago but I sure could tell
you who owned the largest car dealership in the area... and sing his radio
jingle.

By contrast, few state lawmakers have a Ford or GM plant in their district.

------
utnick
Funny how similar it is to the alcohol situation. Its illegal for a brewery to
sell beer directly to the public in Texas, they have to go through a middleman
(distributor) that doesn't really provide value.

Although in the last legislative session the rules got relaxed somewhat (
especially for brewpubs ), its still pretty similar.

~~~
bob13579
Funny how you single out Texas for doing this. How is this different from
other states?

~~~
koenigdavidmj
Texas, the state being discussed here, is generally touted as a free-market
success story, without having an actual free market.

EDIT: Typo, correct 'marker' to 'market'.

~~~
LanceH
The difference is that Texas isn't actively writing these laws today. States
like Cali and Mass are passing new laws to create barriers to entry.

The car dealer, alcohol and sex laws are all from a long time ago. The alcohol
and sex laws are being changed rapidly here.

If only place Texas politics gets really weird is with education and
schoolbooks where a small, vocal group concentrates its effort.

------
btilly
This is Interstate Commerce, pure and simple. What would be really nice is for
Congress to pass a law saying these state laws are illegal and suddenly the
floodgates would open.

Of course all of the car manufacturers will protest that, and their lobbyists
are more powerful than Tesla's.

But the real plan is for Tesla to make cars and sell them where it can. In
time as people see more and more of them being sold and winning awards, they
will ask why they can't buy them. Tesla has to lay the groundwork for that now
in as many states as it can, but at the moment production seems like more of a
bottleneck for them than marketing and sales.

~~~
proland
It would be the car dealers protesting... I'm sure other car manufacturers
would love to be able to sell their cars direct to consumer again.

~~~
btilly
You may be sure, but I'm not.

First of all, smart companies understand that the key to profit margins is to
have barriers to entry. The need to develop a dealer network is a huge barrier
to entry, and car manufacturers have an interest in preserving that.

Secondly, choosing to expand vertically can be a fast route to chaos. For
instance suppose that Ford decided to get into running its own dealerships.
All existing Ford dealers would get nervous, many would switch brands, and
others already sell multiple brands and would direct their customers away from
Ford. Therefore Ford would have to be very, very careful about opening its own
dealerships.

Thirdly, even if car manufacturers want to get rid of the dealership model,
none want to say this where any dealers might hear. Because of fear of the
same kind of chaos as before.

So for all three reasons, there is no way that Tesla is getting any support
for this from other manufacturers.

------
bratsche
There's already a Tesla store in Houston. How did they open that store, and
will they be able to keep it open? I've seen a couple Teslas driving around
Dallas, and am hoping to see more.

~~~
Rudism
I remember reading some time ago that Tesla's loop-hole for opening
storefronts is that they don't actually sell cars to people there... they just
inform people about the cars and answer their questions. When it's time to
actually buy one, they sit you down at a internet terminal and you order over
the web just as you would if you were purchasing from anywhere else.

~~~
jonknee
I don't believe Texas even allows for in-store internet sales. Last I heard
Tesla couldn't even inform people in the store how much the cars cost. Tesla
also cannot deliver the vehicle to the customer, the customer must provide
arrangements. Oh, no test drives either. It's absolutely ridiculous. I assume
they opened the store just to have a better argument against the dealership
cartel.

[http://stateimpact.npr.org/texas/2013/04/24/tesla-has-
eyes-f...](http://stateimpact.npr.org/texas/2013/04/24/tesla-has-eyes-for-
texas-but-will-the-state-make-oblige/)

~~~
gknoy
I wonder if they could get around the "no test drives" rule by opening a
"Tesla Car Rental" chain, where you can rent a Tesla for a day. This way they
are neither selling nor testing cars, but people who are interested would be
able to try it out.

~~~
jonknee
Regardless of the crazy dealership laws I would love to rent a Tesla for a
day.

------
ywang0414
This is simply ridiculous. I won't even dare to imagine what our country will
be like if our president is from that idiotic state. oh wait, it has happened,
and it got us into shitty wars and trillions of dollars in debt.

~~~
stephenhuey
Greetings from Texas! I tried to be friendly but was modded down, so I'll just
be straightforward: Your insult of our state is unkind and inaccurate.

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pxlpshr
What's not very clear in this article is that Texas has always been pretty
good about keeping politicians out of office.

So depending on your view of government, that's either a really great thing or
really terrible one.

~~~
lukifer
That doesn't make any sense. Are politicians born with a magic birthmark that
allows one to differentiate them from non-politicians?

Politicians adapt themselves to the carrots and sticks of their environment,
just like CEOs, blue-collar laborers, and everybody else. For better or worse,
they are a reflection of their constituency.

~~~
pxlpshr
There is a difference between politicians that work for the people, and career
politicians that work for themselves.

------
joshdance
Was there a mistake in the article? It said that the legislative body would
not meet again until 2015? Also, I wonder what affect Big Oil had on the
outcome?

~~~
jfb
Texas has a part-time legislature. There's also no need to go looking for
pantomime villains; car dealers are hugely powerful in local and state
politics. They're the rock that Tesla will founder on.

~~~
jack-r-abbit
That is taking "part time" to the extreme.

~~~
jfb
I'm of two minds. Is it really OK to have fundamental decisions about a system
as large and complex as Texas' state government ultimately be decided by so
unserious a group of people? Or would they just do more damage if they were
around more?

I don't live in Texas, so I have no dog in the fight.

~~~
bjhoops1
It would be nice if Texas' governor only worked part-time. Rick Perry is an
utter moron. <http://www.austinchronicle.com/news/2011-10-28/just-say-no/>

------
cpursley
You mean 'free market' Texas?

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Nux
I wonder, do they allow Louis CK to sell his own tickets? :-)

~~~
freehunter
What does Tesla have to do with Louis CK?

~~~
nrb
I believe they were drawing a parallel to parasitic middle-men in other
industries, like Ticketmaster in live entertainment.

------
gcb0
Playing devil's advocate... I'd love if Google were forced to have a physical
presence after it started talking my money. I'm still using a phone with
several flaws that i tried to return/complain several times but never found a
phone number or email address that went answered. They just took my money and
run.

Now imagine that for a 60k car.

Maybe it's just reasonable that the state protects it's citizens and demand at
least one customer care or repair facility in its borders.

Imagine having to drive to California to a recall. If course that would be
hard given Tesla reputation, but without enforcing a local presence, how can
you be sure?

~~~
ghaff
I'm sure there's no law requiring that, say, a Land Rover dealer exist in your
state. This has nothing to do with whether a dealer exists or not but whether
a manufacturer can directly own and operate a dealership.

------
penland
I keep waiting for someone to mention that the Texas law is virtually
identical to the laws on the books in 48 other states. Also, Ford went to the
Supreme Court over this in 2001 and got the back of their hand.

The law is on the books for real consumer protection reasons beyond putting
money in dealers' pockets ( though, putting money in dealers' pockets is a
plus too ).

In this case, I think an exemption for the staggeringly different service
model of Tesla would be appropriate, while leaving on existing rules.

------
veritas20
Given the history of bankruptcies in the car manufacturing space, it would be
interesting to see how the effect of mandated dealerships affected the overall
profit margins and viability of the car manufacturers.

Think about it for a second. Requiring a car manufacturer to sell cars through
a dealership network naturally reduces profit margins for the car manufacturer
thus affecting their long-term viability.

------
segmondy
Please. Tesla will sell it over the internet and ship it. How many models do
they have? They can have showrooms that don't engage in any sales. Where
people can just go to look, test drive. This is such a non issue for them.
Hope TX is forcing every one that sells over the internet to her citizens to
pay her tax or else they will be missing those tax revenues too.

------
mc-lovin
I admire Tesla for playing hardball with these dealerships.

The deals between manufacturers and their own dealerships can be arranged with
contracts. There is no need for a blanket ban on dealers selling directly.

It's hard to think of a purer example of rent seeking than the protection that
dealerships currently have.

I hope Tesla continue to demand what is right and refuse to cut any deals with
the dealerships.

------
khawkins
This article is somewhat misleading. This is not a "Texas vs. Tesla" issue,
this is a "car dealerships want a monopoly" problem. This issue has been
around long before Tesla came on the scene.

[http://www.motherjones.com/politics/2009/02/why-you-cant-
buy...](http://www.motherjones.com/politics/2009/02/why-you-cant-buy-new-car-
online)

------
boot
You can listen to this podcast if you're interested in hearing more about how
corrupt the car dealership racket is.
[http://www.npr.org/blogs/money/2013/02/19/172402376/why-
buyi...](http://www.npr.org/blogs/money/2013/02/19/172402376/why-buying-a-car-
never-changes)

------
skaevola
This article is misleading - Tesla can and does sell cars in Texas (online),
their "physical stores" just can't sell them. Also, Tesla wasn't denied the
right, their bill was not voted on (an omission rather than an action).
They'll undoubtedly bring it back up next session.

~~~
jack-r-abbit
> _They'll undoubtedly bring it back up next session._

Sure... in 2015. That is between 1.5 and 2.5 years away. That they don't meet
again until 2015 is really crappy. How do they ever get stuff done?

~~~
skaevola
It's kind of silly, but people here think that annual legislative sessions
will lead to a larger government. It's a real problem for budgeting, however.

------
bdcravens
I was in The Galleria mall in Houston Sunday, and they have a "showroom" with
2-3 cars in it (they were closing so I didn't have time to stop and look). I
wonder what the point was, and if they have any pending orders here.

------
bennyg
Why does Texas not want any sales-tax on Tesla sales and property tax on Tesla
locations?

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chris_mahan
Well, the Tesla dealership in Shreveport, Louisiana will be happy to hear
that.

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hippich
What prevents selling cars over internet and then just ship 'em?

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walshemj
Who knew that Texas was French deep down :-)

~~~
Luc
Excusez-moi? It appears you're making a very, very poor joke here, or do you
have some insight into the French car sales business we don't know about?

~~~
walshemj
Well its both a reference to bab5 and to the French tendency to pick and
support national champions conveniently ignoring the EU treaty's when it suits
them.

eg it was US multinationals that got raided over the 35 hour week

------
ck2
So Texas is not for "freedom" and "small government" ?

Who would have guessed.

------
maeon3
Tesla said it best: "Tesla will sell its cars the way it wants. If some states
don't allow that, then Tesla will simply sell them elsewhere."

When a piece of a neural network becomes corrupt and entrenched beyond repair,
(cancerous) the tumor or cancer fights to protect itself, there are two
solutions to these kinds of problems.

1\. One solution is what Musk is doing, treat the dealerships as a cancerous
growth in the mind, and pathways are built to bypass it, route around it.
Don't fight it, don't fix it, don't interact with it. Establish as many
barriers to its growth as possible and starve it so it doesn't grow.
Eventually the superior paths created by Musk are the preferred ones to use,
and the defective paths are garbage collected. The cancer will seeks to
prevent the growth of new pathways because it does not want to be garbage
collected.

2\. Remove the growth. When the surgeon finds a tumor or cancer in your brain,
it doesn't try to coax it to become better or try to "enhance it" to be
better. A hole is cut in the head, and lasers and scalpels are used to
physically remove the cancer.

These are the only two options to deal with cancerous growths working only to
maintain its take on the system.

~~~
ajross
The metaphor is cute, but maybe overstated. Tesla isn't doing this because
it's what a self healing network would do.

Tesla is doing this because it's a rapidly-growing startup whose production
facilities are heavily oversubscribed already. They have no net downsides to
giving up the "Texas" market for now, because they don't have enough cars to
sell even without Texas (and the handful of other such states).

Eventually that won't be true. Once ramped up, they'll want that Texas market.
And at that point someone will have to bend. Musk's bet is that at that point
Texas will cave because they don't want to deny their voters the chance to
purchase this great new car. Texas's "bet" (really the dealership lobbyists'
bet) is that Tesla ultimately won't be successful and that by holding their
ground here they will discourage other manufacturers from trying the same
thing.

IMHO, things make much more sense when you argue in fact instead of metaphor.

~~~
jack-r-abbit
> _Once ramped up, they'll want that Texas market. And at that point someone
> will have to bend._

My money is on Tesla coming out on top here. Musk strikes me as the type of
person that would rather give up sales while holding a huge "Fuck Texas" sign
than to give in.

Edit: Added the parent comment I was responding to. Yes, Tesla is playing nice
right now. That puts them in a better public opinion. But eventually they'll
either step up their game or walk away from Texas. I don't see them giving in.
But only time will tell here.

~~~
skaevola
Musk is getting along pretty well with the lobbyists here. See bill to close
the beach for his launch site.

