If you haven’t heard, Tesla has been in an ongoing battle to sell its electric vehicles directly to customers in all 50 United States. The practice differs greatly from having authorized third-party dealers sell its vehicles to customers. This week, the EV startup’s battle saw a setback in Connecticut, with General Motors lending a not-so-helping hand.
A Connecticut bill (SB3) that would have allowed Tesla to sell its vehicles directly to customers was close to falling through on Monday. That’s when the EV maker promised a regional distribution center in the state that would create 150 jobs, if it were allowed to sell cars in the state.
“New car dealers and GM are powerful lobbyists.”“Tesla is prepared to make a real and lasting commitment to Connecticut”, said Tesla’s government relations manager Will Nicholas. “We want to invest here. We want to create jobs here. And we want to serve Connecticut customers.”
But after hard lobbying against SB3 by local car dealers and General Motors, the bill fell through.
“Without an agreement I couldn’t bring it to a vote in the Senate”, Senate majority leader Bob Duff was quoted as saying to the CT Post. “New car dealers and GM are powerful lobbyists.”
At this point, there’s a possibility that the bill will get another hearing next year.
Comments
How DUMB, protectionist policy! Tesla should be able to sell however they please (and so should GM)!!!
Well here is the issue many totally miss or are are blinded to by their devotion to Tesla to what is really in play here. .
Here are all the facts.
#1 there is not a MFG that would love to get rid of all their dealers and sell direct trough the web today. The system of dealers were force onto them nearly 100 years ago and they never wanted it in the first place.
But with that said how do you undo the damage that is already in place. The existing companies with the history of the law are saddled with thousands of dealers they can not just cut off because the government will not let them and can not afford to buy out due to the large number of them.
If the Government said today you can cut off all your dealers and sell direct there would be no argument.
Also many want to make this about Tesla. Well it is about Tesla at the moment because they are the on going tto court but the real issue is the threat of the Automakers in China flooding the American market with cheap cars sold direct at even lower cost with no dealer cost or losses of profit.
That is the issue. Tesla is only a 50K cars a year that don’t make money but if China automakers come it will be millions of high profit cheap cars that would damage the automakers much.
GM should be allowed to do this as any other automaker but until they address the issues at the other automakers it will be a stale mate. This is more about even footing for all automakers.
The fact is GM could care less about Tesla selling out of trunks of cars but it is the real threat of cheaper imports. Even the Japanese MFG do not want to see this.
So until the government gives the present MFG the ability to remove the franchise system at no buy out cost to them they will fight to keep the system in place till they get even rules for all.
The 800 pound gorilla in the corner is China and their automakers. Right now the automakers really don’t want to be involved with them but with out their growth of their markets most companies would be in bad shape. Those who go to China stand to remain profitable those who don’t risk dying do to the lack of market growth else where.
I wish these stories would tell the whole story as so may people just do not understand all the issues in play.
A likely explanation as to why Musk is trying to set up manufacturing facilities in China and Europe …
Well he needs a lot more capacity for production as he does not have the room in the present plant now to meet the numbers he will need.
Also to make cars cheaper he has investigated making he 3 in China and importing them. Also if you build in China it is much easier to do business in country. But it comes with a price as you have to share all the intercultural property with the government and partner with an existing MFG in country.
Sharing should not be an issue as there really is no secrets in the Tesla that anyone else already does not already know. The partnership may be an issue.
As for Europe I am not sure what the move is unless he is just shopping for cheap property, plants and tax breaks. Countries will offer you a lot to come in so I suspect he is shopping the idea to see who offers what. It could be leverage to get more from our government too.
But the China connection has a lot of strings and I know he has tried to avoid it but he has met with a lot of resistance in doing business there.
Hi Scott3, thanks for your insults to me (as Andrew) about the anti-Bern tow truck driver on Autoblog the other day – I didn’t insult your disabled father, I didn’t even know your father was disabled, and I’m happy to read he had an honorable life.
I was just saying the tow truck driver (who refused to tow a disabled person because of a bumper-sticker) should put his truck where his mouth is and not use government roads if he thinks the government is his enemy. Sorry if you don’t agree Scott3, the government builds the roads, and if you hate any government no matter who they are, you don’t want to pay tax, then don’t use tax-funded government services like roads. That Towie should only use private roads on private property for his towing business, or tow everyone who calls for a tow.
About your comment here regarding dealers. Again, you argue directly against yourself, which is called Hypocrisy.
“#1 there is not a MFG that would love to get rid of all their dealers and sell direct trough the web today.” So why does GM cooperate with these dealers and pay millions for lobbyists and court cases to do the exact opposite??? Either you or GM are wrong, you can’t argue both ends of this one.
“But with that said how do you undo the damage that is already in place.” – You get politicians to get rid of laws which prevent direct sales, which is exactly what Connecticut politicians were just about to do, before GM deliberately (and openly) stopped them. The “history of law” you say can’t be derailed was just about to be derailed, but GM deliberately and openly stopped that.
“Saddled with thousands of dealers” – If GM doesn’t own the dealers, therefore they aren’t “saddled” with them. GM doesn’t owe them a living, if the law allowed direct sales and GM dumped them, they would sell used cars, make less profit, and continue to moan about everything and hate their customers like they already do.
“If the Government said today you can cut off all your dealers and sell direct there would be no argument.” – the Connecticut government was within hours of doing exactly that. Once again, it was GM that stopped it.
China flooding our market with cheap cars – well Japan did it in the 70’s and the cars were higher quality and the US car makers had to respond. GM’s current portfolio excellence (and they are truly excellent right now, the Alpha and Omega chassis, the quality of the Malibu, Mary Barra’s management, all have been world-leading) is partly because they had to do a better job to beat Japanese quality. The J-car (Cadillac Cimarron) vs the Camry & Accord really changed the car business.
Also, bad products from China routinely get taken off the US market and their importers get fined – by who? Oh, that would be the government and their regulators. Want to prevent dangerous imports? Pay tax and employ customs inspectors. This argument is so clear-cut that you really would have to be a Dunning-Kruger victim to say it out loud or write it on Autoblog.
If the law changes and allows direct auto sales, GM would not be forced to buy-out their dealers. They could continue as-is. In many dealer-supporters opinions this is the most efficient and profitable method anyway, let them continue.
As I stated there Get Over it.
As I can see you are ill informed again.
#1 the MFG never wanted franchised dealers the law put it on them. Killing the law just opens up Pandora box for the existing companies with the dealer franchises they have and puts them at a disadvantage vs any new MFG entering the market. Just saying you can sell direct is not the end all fix for companies like GM, Toyota, Ford etc.
#2 Yes GM does not own dealers but the point is they are franchised dealers of GM and for GM to shed them they would have to buy out the franchise they sold to these dealers at fair market value. Other wise the court cases win or lose would cost even more. I would recommend you read up on just how the dealer system really works.
China is not Japan and if they are not forced into the Franchise system the Japanese companies were forced into they will dominate in price in not only lower labor and material cost but also in retailing. Take an economics class.
No GM would not be forced to buy out franchises but they would be put in a economical disadvantage to any incoming MFG from overseas with no established franchise system in this country today.
The whole issue is this I would love to see all companies sell direct but the cause and effect of changing the law has many consequences and would leave the present dealers in a bind with lower retail profits unless they could eliminate the dealers system. It is not easy eliminating a system that has existed for nearly one hundred years.
Sorry if I insulted your socialism support but I believe in self reliance on as much as I can do myself. I do not expect the government to do it all for me.
I work hard for what I have and I earn every dollar and I choose not to give it away to support a bunch of people who just want to vote the treasury. Today I now have guys with Cell Phones begging for a dollar that the off ramp with about $2K in tats on him. He also has a car across the street to as I have seen him drive away.
If I insulted you over being a Bernie Socialist then I am not sorry.
As for the tow driver. All I stated there is he should have towed her. But he refused and she should have just called another truck and got on with it. If the guy was being that stupid would you want him to hook your car? It is his choice and he made a bad one but that is the way it is. We do not need the government here just don’t use the damn guy to tow your car.
There is no reason to put so much drama into ones life. In the settler days most of the drama queens would have have died young as the have no self reliance or common sense.
In the past you pulled your full load all year or you died in the winter because you did not prepare or make smart decision. The more we bail people our for poor judgment the lower society sinks.
Just as the two driver just don’t use him as you should not give him your money and let him starve. No laws just survival. Poor service goes unrewarded and leave it at that.
The last time I went into a store it said we refuse the right to serve anyone we choose!
So why should this tow truck driver be any different? As for the insults I say bring it on!
It makes this site much much more interesting!
Are we a bit sensitive?
“Dealers and GM are powerful lobbyists” and apparently Connecticut VOTERS have no power at all. You know, actual people who are supposed to “own the government” actually have no power at all.
Tesla should be forced to sell cars just like the rest of the industry!
Car companies selling directly to the public? Probably have lower prices and better selection and service, a win/win for both.
Now many people are saddled with high priced dealers with salesmen that have no clue about what they are selling and a sevice department that isn’t capable to fix a wheelbarrow. I am presently blessed to have a really good GM dealer, my buddy with a different brand local dealer, not so much.
So if customers were to buy directly from the manufacturer then where would they get their cars serviced?
Somebody please explain why tesla should be able to sell cars in a different way then the rest of the industry?
That’s like saying their cars don’t have to be made with the same regulations as all the other manufacturers do.
Tesla should be able to sell cars differently because … America is the land of the Free!!! Freedom comes in many forms, one of which is being able to sell your product exactly how you want to sell it (as long as it isn’t dangerous to the buyer or general public, they deserve freedom too).
Servicing can be carried out exactly as before, with factory trained technicians, paid by the factory.
Buying and selling is NOT the same as building/making. People have a right to safely made products. Dealer principals don’t have a right to fleece “untrained” buyers who only use car-buying methods once a decade. The people who think that car buyers deserve to get ripped off unless they spend months and months training and researching are the problem, not the solution
There is no such thing as total freedom. If there was it would end up in a smoking heap.
At one time we were of a more single moral compass and beliefs but today that has changed a little.
Today there are freedoms but with some limitations for the greater good of all. Case in point you can own a gun but just don’t go out in public and waive it around in someone’s face.
Buying and selling as for the greater good of the economy and the welfare of markets is in play. For every action there is some serious consequences that need to be dealt with.
You may also find while some factory dealers could lead to better service it also may not meet the levels of some really good dealers out there today.
Most franchise dealers are held to a standard that some meet and some do not. It would be a help on those who do not. On the other hand I have had some dealers do things over and above what GM requires.
Case in point my fathers Olds had a computer failure just out of warranty. The dealer he was using was tops and fudged the Miles to cover the car that GM would have refused. I have had a friend who had an issue with a car they could not resolve but they kept on it at no additional charge and finally resolved the issue. A company story may or may not do this. To be fair it would help eliminated the poor dealers that refuse to follow the franchise agreements that have been a pain.
The fact is there is good and bad to factory stores.
While Companies would realize better profits they would still need put in service centers to deal with issues and have take more responsibility to manage them. Again good and bad here.
Like Tesla now there are few service centers and most of use will not find them on the way to work for a fast and easy drop off.
So your saying if I wanted to I could commit murder because this is a free country. Just because you want to be different doesn’t mean you should be allowed to.
The real reason why tesla wants this is because they don’t want to have to spends billions on dealerships that would eat into their profits. The other manufacturers had to spend money to set up a dealer network so should tesla be forced to do it also.
That’s why laws are put on the books so that there is a level playing field in the industry
Ridiculous that you can’t sell direct. And the Government is a bunch of do nothing idiots. Seriously, it will take another year to possibly revisit this in CT
I wouldn’t have a problem with it if the entire industry could do the same