Forgot your password?
typodupeerror
Transportation

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.'"
This discussion has been archived. No new comments can be posted.

Elon Musk Addresses New Jersey's Tesla Store Ban

Comments Filter:
  • 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.

    • by bill_mcgonigle (4333) * on Friday March 14, 2014 @05:10PM (#46487095) Homepage Journal

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

      Chris Christy isn't the only one with machinations.

      What, you don't think it's coincidence that the NJ State Flag has a severed horse's head at the top, do you?

    • Are you saying that Chris Christy is machinima? Move over Max Headroom, that's really good shit! Where's the Kickstarter for their next digital marionette?

    • You can't be serious, making an insinuation like that on a good man.

      Governor Christie is just concerned about the changes in traffic patterns that would be triggered by allowing electric cars to enter the state's vehicle markets unimpeded. Christie has a vision for the future of New Jersey and it is deeply important to him that municipal leaders across the state share his enthusiasm and goals. Enforcement along these lines would be impeded. Specifically, if the governor were to block off lanes to a bridge
  • when will we learn?

    • by Dak_Peoples (591544) on Friday March 14, 2014 @05:10PM (#46487109)
      “We need to talk about the fact that we are for a free-market society that allows your effort and ingenuity to determine your success, not the cold, hard hand of the government.” -Chris Christie
    • by pezpunk (205653) on Friday March 14, 2014 @05:13PM (#46487135) Homepage

      In New Jersey, you still aren't even allowed to pump your own gas, due to a successful lobby by gas station owners ... in 1949. it's all "full service". never underestimate the power of crappy special interest lobbies in New Jersey.

      • by MightyYar (622222) on Friday March 14, 2014 @05:25PM (#46487287)

        And yet the gas is cheaper than in next-door PA, where you have to get out in the cold. If you end up in NJ frequently, you even time your gas purchases for when you are on the Jersey side.

        • 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

      • If you approach a gas station in New Jersey and the guy standing next to the pump is 300 lbs overweight, be careful- it could be an ex-governor. Make sure to pull in slowly, give him some clearance, and fill up with 93. He may give you a strange piece of metal as a "gift". If it doesn't enter your skull at high velocity, take it (WTC steel, baby!). Then hand him a nice tip. Otherwise you might have to put the gas cap back on yourself a few blocks up the road- i.e. "self-service".
    • by AlphaWolf_HK (692722) on Friday March 14, 2014 @09:23PM (#46489087)

      How is it a free market when the law doesn't allow it to be? A free market would be Tesla being allowed to sell how they choose instead of being forced to go through third parties. A free market would be being allowed to pump your own gas instead of being forced to pay some tard to do it and then expecting a tip for something you may have preferred to do yourself instead of just sitting in your car doing nothing at all.

  • Car dealerships (Score:5, Insightful)

    by Anonymous Coward on Friday March 14, 2014 @05:06PM (#46487063)

    Car dealerships are an anachronism. They offer no real added value. If it weren't for state laws protecting them, they would have been gone years ago - especially with the creation of the Internet.

    The sales people are a nuisance, the parts section is to be avoided at all cost - and it really pisses me off when there are parts that are dealer only on rare occasions.

    Warranty work? That could be streamlined too by having a tech of your choice do it.

    I was hoping the Elon would take his billions and his cult of personality and crush the industry, but I guess that was a dream. I have the same dream for the elimination of Real Estate agents- another pointless middleman that just adds unnecessary costs to the consumer.

    • Re: (Score:2, Insightful)

      I feel the same about realtors and opticians (or whatever title in your area for the incredibly skilled people that put a thin metal frame on your face and charge 400$ for 5$ worth of plastic lenses that could be CNC fitted in-store in half an hour by a monkey.).
      • by timeOday (582209)
        Check out the 60 Minutes story on Luxottica [youtube.com]. Oh man, what a racket.
    • That said, I deal with a dealership that actually got my money based on quality of service and reputation. The added value there is that the sales person actually did homework to figure out which car would be right for my driving habits and future goals... on his own time. Told me to shop around while I waited for his quote and reasons -- so I did. Came back with his quote and said I felt it was a bit high, so he adjusted it, threw in some extras, and still beat what everyone else was offering. He ended

      • Came back with his quote and said I felt it was a bit high, so he adjusted it, threw in some extras, and still beat what everyone else was offering.

        This "make up a figure" pricing system and the need for purchasers to haggle down to the unknown real price is one of the things to hate car dealerships for.

        For pretty much everything else consumers buy, other than real estate, there is an advertised genuine price, and different vendors compete openly on that price.

        I welcome the fact that Tesla's lack of dealerships means honest pricing.

    • Re: (Score:3, Interesting)

      by Anonymous Coward

      very true

      Having just bought a new car 2 days ago and having to deal with their shenanigans. Even using the internet cant help in some instances as they still weasel in their own fees.

      The example in my scenario. Used truecar and kbb to find lowest possible price for a new car that was paid, truecar has participating dealerships and one accepted to sell at that price. I go in, get that price and my trade-in evaluated. However starting with the very first piece of paper they brought me I was lied to since the

    • Re:Car dealerships (Score:4, Insightful)

      by Anonymous Coward on Friday March 14, 2014 @07:23PM (#46488363)

      Err... I think Elon is *trying* to crush the industry. What more do you expect him to do? The company is expanding, is making a profit, he's got the supercharger network thing going, retroactively increasing the warrantee to cover things that aren't really Tesla's fault, wrangling with the NTSB over the "Recall" that wasn't and about a perfect safety score that *under reports* the car's safety performance, taking on state legislatures about this dealership thing... That sounds to me very much like someone in the process of breaking the industry.

  • by twotacocombo (1529393) on Friday March 14, 2014 @05:07PM (#46487073)
    New Jersey isn't very large, and nobody is forcing Tesla to sell there. I'm sure a neighboring state would love to allow a showroom near it's border to collect all that tax revenue that NJ clearly has enough of, right?
    • by Anonymous Coward on Friday March 14, 2014 @05:10PM (#46487101)

      If you want to register a vehicle that you've purchased out of state in NJ, you have to pay sales tax on it, unless it was previously registered at your former address in the state where it was purchased. So basically, if you live in NJ and want a Tesla, you have to pay sales tax (and possibly registration fees) in the state you purchase it, and then pay sales tax AGAIN in order to register it in NJ.

      • by FreeUser (11483) on Friday March 14, 2014 @05:16PM (#46487167)

        If you want to register a vehicle that you've purchased out of state in NJ, you have to pay sales tax on it, unless it was previously registered at your former address in the state where it was purchased. So basically, if you live in NJ and want a Tesla, you have to pay sales tax (and possibly registration fees) in the state you purchase it, and then pay sales tax AGAIN in order to register it in NJ.

        That's true in most states. I got lucky in that I'd bought my car ~7 months before moving from New York City to Chicago...had I bought it 2 months later, I would have been stuck with sales tax in both states.

        That said, as egregious as this is, it is nothing compared to the bullshit New York City and New York State inflict upon their residents. When I moved out of the state, I had to pay a punitive tax for having the audacity of leaving New York state. I kid you not. At around $3k, it's enough to hurt, but just under the amount that would make a lawsuit overturning this doubtlessly unconsitituional tax financially worthwile. That said, after this experience I will never willingly live in New York state again.

        • by cbeaudry (706335)

          Can you give details zbout this tax? Is it fir everyone(i doubt it), is it for home owners?

          How do they apply it? How do they even know your leaving, until you dont file a tax return or renew your drivers license?

          • by slew (2918) on Friday March 14, 2014 @08:53PM (#46488945)

            NY isn't the only state with a so-called exit tax.

            One way that states apply an virtual exit tax is change the tax exemption status instead of pro-rating it. For example with property tax, such that if you leave the state, you end up paying a higher rate (e.g., lose the primary residence exemption on your property tax bill) vs if you moved within the same state you could pro-rate your exemption between 2 properties.

            Another way is to have a separate rate for a transfer tax for non-residents (meaning it applies if you die or move). California was proposing this.

            Another way is to blatantly add a surcharge (I think Yonkers has something like this)

            Even if there isn't any actual tax liability, if you move out of the state, they will often chase you around claiming part of your income was derived from the state and you owe taxes on that amount. Say if you file your tax return from 2010-2012 in NY, then in 2013 you move say to Nevada and file a 2013 part year tax return for NY thinking you are in the clear for NY. Later in 2014 you only file federal taxes in Nevada, sometime in 2015 NY discovers that you never filed a NY state tax return for 2014, but the Feds got a 2014 return for you. They immediately send you a notice in the mail, that they have noted on your 2014 Federal Return that you had $X amount of adjusted gross income, and since you didn't file a NY tax return they "estimate" that $Y was earned in NY and as a out-of-state residence you should pay taxes on this amount (one theory they use is non-deductibility of state income tax for non-residents) . You can either fight this shake-down and show that none of the income was earned in NY, or just pay $Y.

            • You can either fight this shake-down and show that none of the income was earned in NY, or just pay $Y.

              The state of Colorado does the same thing, as a matter of policy. Fortunately "fight it" is as easy as filling out a one page form and mailing it in and you never hear from them again. Don't know if NY is the same, but I would expect it to be.

        • by OzPeter (195038)

          Not that I didn't believe you, but I was curious to see what I could find out about that "Leaving NY" tax online. 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. I never even considered that I'd need financial planning in order to leave.

          • by BitterOak (537666)
            True, but I think most people "forget" to declare most of their possessions. Unless you own a private jet or yacht, I don't think you'll have much trouble.
          • 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?

      • Re: (Score:2, Informative)

        by Anonymous Coward

        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.

      • You forget that Tesla also has to pay taxes, and I doubt New Jersey is entitled to taxes due by a business operating in another state.
      • by MAXOMENOS (9802) <[maxomai] [at] [gmail.com]> on Friday March 14, 2014 @05:44PM (#46487485) Homepage

        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 slew (2918)

          Actually, in many states, when you buy a car, you can get a out-of-state delivery rider on the sales contract and not pay sales tax in the state you buy the car in and just pay the use tax on the state that you intend to register/license the car in. This is often done to facilitate title transfer for car brokers (that don't register cars, but still need to transfer title and move cars interstate).

          I did this with one car I bought out of state (to simplify the paperwork and still not pay sales tax twice).

      • by kramerd (1227006) on Friday March 14, 2014 @06:30PM (#46487957)

        Actually, just like any out of state purchase, just tell the dealer you are going to register in another state, and they will give you a temporary tag instead of making you get one in the state you purchase. Then, you get 30 days to register in your state (and pay the sales taxes and registration fees). This usually helps negotiate a lower price on the car itself (in my experience anyway), because there is much less paperwork for the dealership to bother with.

    • by Software (179033)
      Sales tax is collected when the vehicle is registered, not sold.

      NJ isn't losing much, if any, tax revenue, because the existing showrooms are converting to "galleries" where you can do everything but negotiate a price or place an order.
  • Take the law to its logical conclusion: find out what the legal definition of a car is, remove the one part from the car that legally doesn't make it a car anymore. Sell the not-a-car for 5$. Across the street, open a store that sells the simple part for car price-5$, and there you go.

    No one's selling a car here.

    • Oops, I should have said my inspiration for this comes from the annoying stores selling electric scooters that are legal to ride on a bike path because they have pedals. Non-functional, turned inwards, and connected by the flimsiest drive train, but legally, it makes the scooter an assisted bicycle. Much to my chagrin.
      • by tlhIngan (30335)

        Oops, I should have said my inspiration for this comes from the annoying stores selling electric scooters that are legal to ride on a bike path because they have pedals. Non-functional, turned inwards, and connected by the flimsiest drive train, but legally, it makes the scooter an assisted bicycle. Much to my chagrin.

        Actually, those things also have a max top speed - they can't go over something like 30mph or they're classified as a motorcycle which requires insurance, registration, helmet, license etc.

        And

    • by Algae_94 (2017070)

      If it's really that simple a part, I think you could find it for a lot less than (car price - $5). You should probably switch those prices around.

    • They are making a 3-wheeled car, which doesn't make it a car anymore, but a Motorcycle or "autocycle" -- which will exempt it from a lot of the legal wrangling that forces most car makers to give up trying to sell in the American Market.

      Elio Motors. Google 'em.

    • by shentino (1139071)

      A car is whatever the judge damn well says it is.

    • Sure, don't register it as a motor vehicle...

  • "when has an American startup auto company ever succeeded by selling through auto dealers?" I thought Saturn was doing okay for a while, but looking briefly at wikipedia, I guess as GM took more control, it was doomed.
    • 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 MightyYar (622222)

      And GM had the advantage of using their existing dealers. They leaned on them to build new showrooms, but most were existing dealers. It really and truly was just a re-branding effort. The new relationship with labor was interesting, but never really produced an exceptional car.

      • by PRMan (959735)
        Not true. All Saturn dealers were new and Saturn-only at the beginning. They had GM's money to invest, but it was pretty independent for a while.
        • by MightyYar (622222)

          They approached existing dealers first. Only if existing dealers refused to build a dedicated facility would they offer up the territory to a new dealer. I'm sure you could find Saturn dealers who owned no other GM franchises, but I am under the impression that this was rare. I do know one Chevy/Cadillac/Oldsmobile/Pontiac/GMAC dealer who told them to go pound sand.

        • They had GM's money to invest, but it was pretty independent for a while.

          That's what makes it not count for Musk's question. A startup gets new investor capital and builds something from scratch. Saturn was built on GM's foundation of money and experience.

  • 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.

    • Imagine if you wanted an Apple computer you had to buy it through Best Buy or Radio Shack, and dealing with their personnel.

      That's actually how it was prior to about a decade ago when Apple retail stores started opening. And yes, it was miserable trying to talk to some of the Best Buy employees at the Apple store-in-a-store locations, since you didn't always get the guy who was trained in using/selling those products. These days, the guys working there are much better than they used to be, but the whole concept is still rather atrocious, and I'm glad companies are able to go directly to consumers with their products.

      Also, Apple

      • by damacus (827187)

        What? I believe you've always been able to order directly from Apple. No middle-man required.

  • Zing! (Score:4, Insightful)

    by Bigbutt (65939) on Friday March 14, 2014 @05:24PM (#46487269) Homepage Journal

    The rationale given for the regulation change that requires auto companies to sell through dealers is that it ensures “consumer protection”. If you believe this, Gov. Christie has a bridge closure he wants to sell you! Unless they are referring to the mafia version of “protection”, this is obviously untrue. As anyone who has been through the conventional auto dealer purchase process knows, consumer protection is pretty much the furthest thing from the typical car dealer’s mind.

    Ow, that's gotta hurt!

    [John]

  • 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

  • by onkelonkel (560274) on Friday March 14, 2014 @05:36PM (#46487423)
    Forgive me if this is answered somewhere else, but why can't Tesla open their own Tesla dealerships? Have the incumbents rigged that too?
    • by Anonymous Coward on Friday March 14, 2014 @05:48PM (#46487557)

      It is illegal for a car company to open its own dealerships. That is the point of the law, they are required to have a middleman.

      Tesla could make a deal with John Smith to sell him cars wholesale, and have John Smith re-sell them to the public at a huge markup with hidden fees and sketchy high pressure sales tactics... That's what normal car companies do. Lots of people hate that system. I intend to buy a Tesla for my next car, because I've hated ever interaction I've ever had with a normal dealership -- even though Teslas are out of what I consider my normal price range for a car, even though the range limit is kind of a bummer, even though I don't really want an electric car, I'll accept those downsides just to avoid dealing with the scumbags that run car dealers around here. Apparently Elon Musk agrees that there's some kind of market value in selling to people liike me, which is why he is trying direct-to-customer sales.

      • The work around, in many instances, is to have a wholy owned but independent subsidiary that handles sales and marketing.
      • In other words: to be in the car business you have to be big from the start. Startups are locked out.

    • but why can't Tesla open their own Tesla dealerships? Have the incumbents rigged that too?

      Apparently the definition of "dealership" requires that two or more models be sold. Since Tesla only has the one model, they can't open a "dealership".

  • This is an issue of allowing car companies to sell their own cars, I don't see how it matters whether or not those cars are gas, electric or nuclear powered.

    There is an established (quite possibly corrupt) system, and Tesla is trying (possibly reasonably) to break it. I'm sure the dealers are happy to sell whatever makes them a profit, and of course resist any rules changes that will reduce that profit.

    Anyone know the motivation behind the original law? Presumably GM would also like to be allowed to sell i

  • ... maybe he should have called his company "Edison" ... maybe that way, he'd be facing less problems ...
    (check out the history of Edison and Tesla ... Edison was in part responsible for Tesla's failure in the end, even though Tesla had far more impressive inventions ... though many falsely aren't attributed to him ...)

  • Give me a break, Coda would have failed under any circumstances.

    Musk, if you want to keep credibility, don't say incredible things.

  • by Anonymous Coward

    ...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

  • I don't see why a dealership would rather sell a gasoline car rather than an electric car. They are not a gas station and Tesla is rather expensive, presumably resulting in a larger sales commission. On the other hand, buyers would benefit from having multiple options for returns, resale, repairs and bargin shopping for older models. Also, if Tesla goes belly up, there is still hope of multi-brand dealerships offering at least some continued services.

    • "I don't see why a dealership would rather sell a gasoline car rather than an electric car."

      A dealership has management and sales people that currently exist, so by default they excel at selling what they know: the gas cars.

      An unconscious bias, but it is a huge one.

      Would you want a Microsoft guy as a salesman for Apple or Linux solutions? He'd probably steer people towards Windows-based solutions because it is what he knows and is comfortable with.

      Likewise, a non-dedicated electric car dealership wil
  • Find the state with the least taxes. Sell each car bound for NJ to a buyer there. Let them sell it in the mall in NJ as a used car.
    • Some enterprising individuals are doing exactly that and selling "used" Teslas over list price. There are some buyers who are willing to pay the premium to eliminate the hassles of out-of-state purchase and to avoid the waiting list for a new one. (Yes, the tax on the resale is part of the markup).

  • 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.

    Tucker's failure [wikipedia.org] had to do with problems with the SEC and his own board of directors. Not because of anything having to do with dealerships but initially about selling accessories for cars he never produced. He had sold over 2000 dealerships at up to $30,000 a pop and it generated revenue, net inflow but because of these other problems he could never deliver the cars. The Dealerships weren't even a factor.

    The DeLorean failed [wikipedia.org] because of questions about the financial stability of DMC again by the SEC and

There are worse things in life than death. Have you ever spent an evening with an insurance salesman? -- Woody Allen

Working...