Want to read Slashdot from your mobile device? Point it at m.slashdot.org and keep reading!

 



Forgot your password?
typodupeerror
×
Businesses The Courts The Almighty Buck Transportation United States Hardware Your Rights Online

Tesla Sues Michigan Over Sales Ban (usatoday.com) 261

An anonymous reader quotes a report from USA Today: Electric automaker Tesla Motors filed a lawsuit Thursday against Michigan state officials, escalating its multi-year battle to sell vehicles directly to consumers. Tesla's action comes less than a week after Michigan Secretary of State Ruth Johnson effectively rejected the automaker's application for dealership and service facilities by asking for proof that Tesla is a franchised dealer. Tesla, unlike other automakers, sells its cars directly to consumers through company-owned stores in other states. "Tesla Motors brings this lawsuit to vindicate its rights under the United States constitution to sell and service its critically-acclaimed, all-electric vehicles at Tesla owned facilities in the State of Michigan," the automaker said in its complaint in federal court. The California automaker named Johnson, Michigan Gov. Rick Snyder and Attorney General Bill Schuette as defendants. Tesla submitted an application for a dealership license in fall 2015 with a plan to open a retail gallery in Grand Rapids, Mich. In a Sept. 7 hearing, a panel of administrative law examiners heard arguments. Last Thursday, they rejected the license for Tesla. "The license was denied because state law explicitly requires a dealer to have a bona fide contract with an auto manufacturer to sell its vehicles," Johnson said in a statement. Tesla wants to sell its high-end battery-powered cars directly to consumers without a franchised dealer, much like Apple sells its products. The automaker's lawsuit asks a federal judge to declare that the state violated the due process and equal protection clauses of the Fourteenth Amendment and the constitution's commerce clause. Snyder signed a law in October, 2014, that prohibited Tesla from selling cars directly to consumers by requiring all automakers to sell through a network of franchised dealers.
This discussion has been archived. No new comments can be posted.

Tesla Sues Michigan Over Sales Ban

Comments Filter:
  • by sinij ( 911942 ) on Thursday September 22, 2016 @08:36PM (#52943521)
    I am cheering for Tesla to disrupt dealership system, as these dealerships are substantial and unnecessary added expense and hassle. They are there to sell you electronic rust modules and turbinator options that you don't want and rip you off on oil change "service" packages. Manufacturers should be able to sell directly to customers.
    • by AK Marc ( 707885 ) on Thursday September 22, 2016 @10:01PM (#52943875)
      Gulf States Toyota put undercoat on all cars. And way overcharged for it. The dealers were not allowed to buy anywhere else, and Toyota was banned by law from interfering with the dealers. They got in their position of power due to the insane laws, and are now one of the forces against change.
    • by AmiMoJo ( 196126 )

      Have you seen the cost of Tesla services? Considering there is so little to maintain on an EV, they are a massive rip-off. They don't even need to do many checks because it's all monitored in real time remotely.

      To be fair Nissan charge silly money for Leaf servicing as well.

      • Tesla is the automotive equivalent of Apple. Cheaper alternatives will come along (such as the Chevy Bolt).

        • Tesla is the automotive equivalent of Apple. Cheaper alternatives will come along (such as the Chevy Bolt).

          Except Tesla probably have a significantly higher BOM than most car makers, due to low volume and new tech. Apple have no such excuse, using no more advanced tech than anyone else, and having massive volume to boot, yet still charging a massive premium.

          A better analogy would be Ford charging Tesla prices for their everyday cars, and people still buying them.

    • You know, I was okay when the dealer told me my muffler bearings needed replaced. When they mentioned something about blinker fluid, I started to question them a bit...
  • vote (Score:4, Informative)

    by mabu ( 178417 ) on Thursday September 22, 2016 @09:09PM (#52943695)

    People need to stop voting for asshats like the MI governor. They should be allowed to do business. The fossil fuel industry is intent on dragging us into the abyss and their minions need to be kicked to the curb.

    • by swb ( 14022 )

      Michigan is the land of car makers and there's still enough people employed in the automotive industry there that many of them will vote to protect the traditional automotive industry because it feels like voting for their own interests.

      Michigan also has enough weirdness that politicians can easily play politics with the electorate -- there's the upper peninsula which is almost a separate state, the train wreck of Detroit, and then the suburban areas around Detroit. Ladle on a thick helping of racial polit

  • by aneroid ( 856995 ) <gmail> on Thursday September 22, 2016 @09:27PM (#52943753) Homepage Journal

    Adam Ruins Everything - The Real Reason Car Dealerships Are the Worst [youtube.com].

    Summarising the vid: dealerships have pressured/lobbied Congress (in the US) to pass franchise laws. Which make it so you can only sell new cars if you're a car dealership. And there are dealership "territories" so it's illegal to open a new one in another dealership's territory. So car manufacturers in most (all?) states can't sell directly to customers.

    (Though I'm not quite sure how Tesla has been able to sell cars directly to customers in states other than Michigan.)

    • Mod +1 Informative!

      I haven't seen "Adam Ruins Everything" or truTV but looks like a great channel !

    • Which make it so you can only sell new cars if you're a car dealership.

      Just curious... is there anything that prevents Tesla from classifying their cars as "used" but simply providing all the benefits of a new car purchase? For example in one previous country I lived in, if the seller is a business (as opposed to a private seller), government laws provide the buyer with a 30-day warranty period with any purchase of a used item, however new items are required by law to come with a minimum of a 1-year warr
      • by aneroid ( 856995 )

        IANAL, but the part that probably wouldn't go well is insurance; even though Tesla can continue to give it the "new car" warranty which it currently does.

        Tesla could make a car used by driving it for, say, 100 km (62 miles)* either on the road or in the factory. And then sell it as a used car to get around the law (if the used car law works that way). Thing is insurance payments would not be as low as for a new car and the insurance coverage would also not be as high. There might also be an issue with the c

        • by fedos ( 150319 )
          The "other dealerships" are the ones who created the anti-consumer system in the first place. Of course they're going to complain if someone tries to get around.
      • Which make it so you can only sell new cars if you're a car dealership. Just curious... is there anything that prevents Tesla from classifying their cars as "used" but simply providing all the benefits of a new car purchase? For example in one previous country I lived in, if the seller is a business (as opposed to a private seller), government laws provide the buyer with a 30-day warranty period with any purchase of a used item, however new items are required by law to come with a minimum of a 1-year warranty. However there is nothing preventing a business from providing longer warranty periods for either used or new items. If a business wants to sell a used toaster and provide a 2-year warranty on it, they can. If Tesla sells their car as "used" but offers warranty terms identical to a new car, would that work? I'm assuming not, but would like to know what legislators threw into the law to prevent such a workaround.

        Why can't they just spin up their own dealership business and operate it basically as a tesla shop.

        • by PRMan ( 959735 )
          This is how mortgage companies get around the "you can't own Escrow companies" law. ABC Mortgage... meet ABC Escrow, an "independently-owned" corporation which only works exclusively with ABC Mortgage.
  • by Gordo_1 ( 256312 ) on Thursday September 22, 2016 @09:35PM (#52943787)

    They're really just repair shops who've applied with an auto manufacturer to become a local monopolist middle-man for a brand of automobiles and associated parts. They make the bulk of their money on repair work (in-warranty from the manufacturer and out-of-warranty on highly marked-up fees charged to consumers).

    As far as I'm concerned, the sooner we move to a world where all cars can be purchased online direct, the better.

    • by pellik ( 193063 )
      While the system isn't perfect, ensuring there is a parts distribution center at the same place you bought your car is a boon for consumers. Manufacturers are not set up to sell individual car parts to every car owner as they have to handle their own logistics (too big for UPS). If you buy a car online and the nearest dealership is hundreds of miles away you might just be completely screwed when it comes to maintenance.
    • by PRMan ( 959735 )
      A guy on my street runs a repair shop at a dealership. According to him, they make all of their money in the finance office, because people can't math.
  • Musk is going to get wise, hire a fleet of limos and drive prospective customers out of state to pick up the cars they bought/put a downpayment for online. America isn't THAT big, and most people are never more than an hour or two from a state line unless they're in the middle of TX or something.
    • America isn't THAT big, and most people are never more than an hour or two from a state line unless they're in the middle of TX or something.

      Although most people in Michigan do find themselves within just an hour or two of Ohio and Indiana, there are populous areas in Northern Lower Michgian and the UP that are anywhere from 4 to 6 hours from the nearest state line, and many wealthy people who might like to own a Tesla have homes up there. Michigan is entirely peninsulas (except for the islands, of course), and that has a funny way of physically isolating you from other states - maybe not as much as in huge states like Texas, but still.

      Now

  • by AaronW ( 33736 ) on Thursday September 22, 2016 @10:03PM (#52943887) Homepage

    I must say that my experience with Tesla is the polar opposite of my experience with a local dealership. In both cases I had to wait 6 months to get the car I wanted. With the dealership I ended up with my 3rd choice of color and they kept pushing me to take a white car either missing options I wanted or with extra options I did not want. When I picked up my car they tried to sell me a bunch of stuff I didn't want. After I got the car they would frequently try and push extra service the car didn't need or didn't bother trying to find a very common problem the car had. Then just after the 3-year 36K warranty the HID headlights started burning out, another well-known problem with the car I bought. Despite the fact that I had a 7 year, 100K warranty and that the headlight bulbs were well under the rated lifetime they wanted to charge me $200/bulb ($50 on Ebay) plus a ton of labor. I have since sold the car to my father and the center display touchscreen stopped working. The dealership wants $5K to replace it, much of that for labor. The touch screen costs a fraction of that and I found a youtube video where a woman shows how to replace it in around 20 minutes with simple hand tools.

    With my Tesla I got exactly what I wanted. Up until they made my car I could pick and choose what options I wanted through the web site with it immediately updating the price. This is unlike a dealership where I'd have to wait until they got something in inventory or found a car elsewhere with my requirements. With Tesla, most cars are made to order so there's no inventory sitting on dealer's lots other than test drive vehicles and loaner cars. The people running the showrooms do not earn commissions and there were no high-pressure sales tactics. They were there to show the car. I would say most people there were simply looking and probably not going to buy one but they treated everyone I saw there with the same respect they did me.

    For loaner cars, which are always fairly new and usually with many bells and whistles there's always the option of trading in your car for the loaner car.

    Tesla has always treated me well when it comes to service. My car had a number of issues, mostly rattles and other noises since my car was one of their early cars. They learned a lot and made a lot of improvements since I got mine.

    Last spring I got a hole in the sidewall of my tire out in the middle of nowhere and the closest tire center was 62 miles away. I called Tesla which has free towing for up to 50 miles. They sent out a tow truck and put it on a flatbed to the tire center I selected after calling around between Tirerack and the tire centers and asked the tow truck driver how much I had to pay to make up the difference. He said Tesla covered it even though it was over their limit. Tesla also called me back to make sure everything was OK. The biggest hassle was the fact that I have low profile performance tires that aren't commonly stocked.

    They have always gone above and beyond with service and when I have had to pay for it like when I broke a clip on my car they did not gouge me parts or for fixing it unlike the Toyota dealership.

    Another time I had a blow-out and bent rim due to San Jose's poor excuse for a road at 3am. I called them up and they sent out a tow truck with a replacement wheel and tire until I could come back at my convenience and have them replace it (I bought tire and rim insurance through Tesla).

    The last time I had service done on my car they dropped my car off where I work and picked up the loaner.

    Elon has stated on numerous occasions that they do not want to make a profit off of service. This is the exact opposite of how dealerships work. Most dealerships don't make much money selling cars. They make their money through financing and service. If there's any complaint I have about service it's that if it isn't something that needs to be taken care of immediately that there's often a wait since they seem to have problems keeping up with demand. Since I also use the service center at the factory, it is also busy helping prep new cars so certain times are particularly bad like the end of the quarter.

    • It's good to hear a detailed first-hand account of someone dealing with Tesla. They've always seemed to be a company who would go above and beyond to give top-notch customer service. It's good to see that's true. Once they get a model that's more in line with a normal sedan price (their current low-end models are still a bit pricey) I'd definitely (strongly) consider purchasing one.
  • Comment removed based on user account deletion
  • by mveloso ( 325617 ) on Thursday September 22, 2016 @10:25PM (#52943967)

    Car dealerships will lose in Federal court because it's harder to bribe the Feds.

    Car dealerships are generally the most consistent donors to local politicians, and thus are pretty much insulated from adverse laws at the local and state level. They haven't been as active at the Federal level, but if Tesla wins expect that to change...a lot.

    Dealers are slow to pick up on the negative effects of self-driving cars, but once they do they'll also start their Federal lobbying campaign.

  • If they cant get the laws in places like Michigan overturned via the courts or lobbying, set up independent dealers in those states.

    Put out an offer and say "if you are willing to follow all our rules, we will give you an exclusive license to sell Tesla cars in Michigan". Set the rules in a way that they comply with Michigan laws but dont hurt Tesla.

    Insist that the entity that is given the license is not allowed to have any connections to any other car company or dealership and must only operate and sell Te

    • Its not the selling of the cars as much as the service department. Dealers make the vast majority of their money in service. Tesla is a HUGE GIGANTIC THREAT to this model. First, the cars need little of traditional pricey service (fluids, pumps, transmission, etc) because it doesn't even have those components. Second, Tesla sees car repair as a net-0 profit. They don't want to make a single penny off servicing your car.

      The dealers know this. They make surprisingly very little off selling vehicles.

    • You can’t do it that way.

      Franchise laws exist to balance the power of the large parent company and the small independent owner. If not, the parent company could bully the independent franchise. You can’t have weak puppet proxies. While I don’t think Tesla should be forced to franchise, in order for franchising to work you need decent franchising laws.

      At this point I really want to find a film clip from Glengarry Glen Ross about steak knives.

  • should form a small LLC to act as a "dealership" - have it get dealership licenses in as many jurisdictions/states as it can, and then simply buy them or merge with them.

    "have a relationship with a car manufacturer" is a bullshit requirement if "BEING a car manufacturer" doesn't fulfill it.

  • California bans all imports from Michigan.

  • It seems that the freedoms that America once enjoyed are being increasingly eroded by lobbyists. I genuinely found the idea that you can't just sell what you want where you want hard to believe. Of course there must be regulation of things like drugs, making sure that they are only dispensed by qualified practitioners etc. But a car, I mean a frikin' car!
  • by DirkDaring ( 91233 ) on Friday September 23, 2016 @07:08AM (#52945631)

    "Hello Mr Jones, I see you are interested in a Model S P90D in red with XXX options. Just so happens our rental facility next door we have one for a 1-hour rental with the 1st hour free. It also happens that we just got in this rental and you will be the first one driving it! Once you get back from your rental you can buy this car through our Used Rentals Program, just like Hertz, Budget, etc, for $1 under new MSRP!"

  • Once in a while, someone comes along ...and shows us how it's done. ...and drives the used car salesman to extinction. Good riddance!

  • Tesla sells through its web site. It can sell to Michigan customers without having to set foot in that state*. Or pay taxes there either.

    *Run the in-state Tesla maintenance shops as subsidiaries, so the manufacturer has no physical presence there.

If entropy is increasing, where is it coming from?

Working...