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Elon Musk Addresses New Jersey's Tesla Store Ban 229

Posted by Soulskill
from the let's-argue-about-regulations dept.
An anonymous reader writes "On Tuesday, we discussed news that New Jersey is trying to ban Tesla stores, which would force the company to sell through car dealerships instead. Now, Elon Musk has prepared a response: 'The reason that we did not choose to do this is that the auto dealers have a fundamental conflict of interest between promoting gasoline cars, which constitute virtually all of their revenue, and electric cars, which constitute virtually none. Moreover, it is much harder to sell a new technology car from a new company when people are so used to the old. Inevitably, they revert to selling what's easy and it is game over for the new company. The evidence is clear: when has an American startup auto company ever succeeded by selling through auto dealers? The last successful American car company was Chrysler, which was founded almost a century ago, and even they went bankrupt a few years ago, along with General Motors. Since the founding of Chrysler, there have been dozens of failures, Tucker and DeLorean being simply the most well-known. In recent years, electric car startups, such as Fisker, Coda, and many others, attempted to use auto dealers and all failed.'"
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Elon Musk Addresses New Jersey's Tesla Store Ban

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  • Bada boom bada bing (Score:5, Informative)

    by ackthpt (218170) on Friday March 14, 2014 @04:58PM (#46486981) Homepage Journal

    They'll make you an offer you can't refuse.

    Chris Christy isn't the only one with machinations.

  • Re:In Soviet USA (Score:2, Informative)

    by Man On Pink Corner (1089867) on Friday March 14, 2014 @05:18PM (#46487203)

    That's a bit of a double-edged comment, though, considering the subsidies Tesla has taken in the form of loans. When you encourage government to pick winners and losers, you can't be too surprised when they insist on doing both.

    That said, good on Elon Musk for calling bullshit on this particular issue.

  • by Anonymous Coward on Friday March 14, 2014 @05:18PM (#46487219)

    That's not correct. Unless there are some really weird laws in that region of the country you pay tax *only* in the state in which you register the car. Dealers typically collect this tax at purchase because they also take care of your registration paperwork but if you aren't registering in the same state then you don't pay tax at purchase time.

  • by damacus (827187) on Friday March 14, 2014 @05:22PM (#46487253) Homepage

    Imagine if you wanted an Apple computer you had to buy it through Best Buy or Radio Shack, and dealing with their personnel. The companies that do business this way are maddening. Elsewhere, companies like Cisco choose not to sell directly to buyers, making them go through a partner or reseller. This may have been an acceptable model years ago, but these days it's tedious and I think people expect more; they don't want to deal with a third party whose interests are not wholly aligned with their own. At least when you're talking about tech vendors, you can opt to deal with someone else who does business differently. Government enforcement of a given model is quite wrong-headed and needs to be stopped. It smacks of protectionism to me.

  • Re:Saturn (Score:5, Informative)

    by Ralph Wiggam (22354) on Friday March 14, 2014 @05:30PM (#46487335) Homepage

    Saturn was never a "startup". It was always a subsidiary/brand of GM.

  • by Anonymous Coward on Friday March 14, 2014 @05:32PM (#46487375)

    There's already a White House Petition for this. If this reaches it's target this will be the second time a pro Tesla petition has reached 100k plus signatures - https://petitions.whitehouse.gov/petition/inform-new-jersey-markets-should-be-free-tesla-motors-and-everyone/ptHTHYMP

  • According to the New Jersey MVC [state.nj.us] (PDF), if you purchased a vehicle in another state and paid sales tax on the vehicle, you provide MVC with the receipt. If you paid 7% or more sales tax in the other state, you pay no sales tax to New Jersey. If you paid less than 7%, you pay the difference to New Jersey. In practical terms, if the purchaser buys in the states neighboring New Jersey, there is no additional cost — New York State sales tax is 4%, Pennsylvania sales tax is 6%.

    For example: Alice, who lives in Atlantic City, buys a Tesla in middle-of-nowhere Pennsylvania (6% rate) for $60,000. Alice pays Pennsylvania sales tax on that vehicle in the amount of $3600. If she had purchased the vehicle in New Jersey, she would have to pay $4200 in sales tax. So when registers her vehicle with the MVC, she'll owe the difference ($600), plus title fee ($60) and registration fee ($59 assuming it weighs under 3,500 pounds, see here [state.nj.us]), and possibly, if Christie is really an a-hole, a 0.4% Luxury Surcharge ($240). Keep in mind, if she purchased the vehicle in New Jersey, she'd pay the same sales tax, but all of it would go to New Jersey. If she purchased the vehicle in New York (4% sales tax), she would pay $2400 in tax to New York and $1800 in tax to New Jersey.

    But, I could be missing something. If so, please let me know.

  • by lgw (121541) on Friday March 14, 2014 @06:51PM (#46488153) Journal

    Car dealerships are usually multi-brand. They're happy to see a new brand as long as they can profit from it. This is a big FU to dealership owners from Tesla, saying "we don't need you to sell our cars". And Tesla is right of course: they don't.

    Never underestimate the political power at the state level of car dealership owners. They have name recognition and a marketing budget that dwarfs any state senator, and everyone in state government sees this. As an elected official, you don't pick a political fight with someone who already has his name and face across half the billboards in a major city, and spends more on ads every week than you did on your entire campaign.

  • Re:Yes! (Score:4, Informative)

    by slew (2918) on Friday March 14, 2014 @07:00PM (#46488221)

    There's a BBC doc somewhere about the factories in China that make the "real" branded sunglasses. It's a bunch of Chinese workers in a nondescript white room operating injection molding machines. Some guy calls out "Switch!" in Cantonese, the workers swap out the dies, and it's Guccis for the next two hours.

    It's actually not hard to see why this is the case. What you see as many retail brands is really just a few companies...

    Luxottica [luxottica.com] (which also owns Lens Crafters), Marchon [marchon.com] (owned by VSP), and Safilo [safilo.com], plus a few smaller companies...

    I think together the top three make up over 70% of the market.

  • by Anonymous Coward on Friday March 14, 2014 @07:05PM (#46488255)

    It's not so cut and dry. The difference in price of gasoline in these two states matches up almost perfectly with the difference in state tax rate. Take out the taxes and gas costs the same (which would still suggest that NJ customers don't really pay any extra for full service). NJ charges about 14 cents per gallon while PA charges 40. The current difference in sale price is 28 cents.

    Tax rates: http://www.iftach.org/taxmatrix3/choose_tableq2.php
    Average prices: http://www.gasbuddy.com/GB_Price_List.aspx

  • by Anonymous Coward on Friday March 14, 2014 @07:14PM (#46488297)

    ...having multiple family members across multiple generations work for Chrysler in its various incarnations, I thought they should have folded. They were the weakest of "The Big Three", and the one with the least-relevant product line. I saw the dealership my grandfather was head mechanic at close, I saw all of the truly great products get morphed into "nostalgia-mobiles" for the mullet crowd.

    The existing car market is a convoluted mess - the more agile imports have forced the industry to shift. Even the major players have 'fooled around' with bypassing the dealer system, ironically usually with alternative-energy vehicles (EV-1, Prius Gen 2's original launch, Leaf's original launch, etc.) That system worked well.

    And nothing even says that Tesla will stay direct-only! If they expand to true "big player" status, they will probably be compelled to adopt a dealer strategy at least in part, to help their expansion!

  • by cbhacking (979169) <been_out_cruising-slashdot&yahoo,com> on Friday March 14, 2014 @08:01PM (#46488649) Homepage Journal

    LOL!

    Let's see... Well, the obvious counterpoint to your argument is that PayPal *did* succeed. I happen to hate what it's become (all the abuses of banks, plus a few others, but even less regulation), but back when Musk was starting it up the idea was pretty revolutionary. Even further back, though, there's his startup Zip2, which was sold for over $340 million back in 99.

    Since then, his *three* companies (people always forget SolarCity...) all seem to be doing fine. SpaceX has huge contracts, Tesla can't manufacture fast enough to keep up with demand, and SolarCity is one of the top installers of photovoltaic panels in the USA. Sure, they *could* fail, but so could IBM or Google or Coca-Cola. None of them are *likely* to, though. In fact, in the last decade Tesla is just about the only US-based car company that hasn't gone bankrupt...

    As for whether the NJ law is aimed at Tesla, you'd have to be a worse nutjob than you claim Musk is to not see it. Let's see, a proposed bill that prohibits a car sales model which happens to be used by exactly one company in the world, right as that company is getting hugely successful? Yeah, there's no evidence at all that this is aimed squarely at Tesla... </SARCASM>

  • by whoever57 (658626) on Friday March 14, 2014 @08:25PM (#46488817) Journal

    Sure I saw some stuff, but then *wham* I ran into something that will affect me eventually. It's HEROES EARNINGS ASSISTANCE AND RELIEF TAX ACT OF 2008, section 301 that says that if you emigrate FROM the US you have to pay capital gains tax on your possessions.

    Did you see the exclusion of the first $600,000 in section 3?

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