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Transportation Government United States

State of Iowa Tells Tesla To Cancel Its Scheduled Test Drives 335

puddingebola writes: Conflict continues between state governments and Tesla. From the article: "Iowa joined a growing list of states tussling with Tesla Motors' business model when it told the company to cut short three days of test drives earlier this month in West Des Moines. The Iowa Department of Transportation said the test drives were illegal for two reasons: Tesla isn't licensed as an auto dealer in Iowa and state law prohibits carmakers from selling directly to the public." While the article touches on the legal restrictions on selling cars in Iowa, it seems that Tesla was only providing test drives.
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State of Iowa Tells Tesla To Cancel Its Scheduled Test Drives

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  • Rent a Tesla for $1 (Score:5, Interesting)

    by istartedi ( 132515 ) on Saturday September 27, 2014 @05:01PM (#48010623) Journal

    Rent a Tesla for $1. This is a one-time offer. Limit one per customer. Problem solved.

    • by Frosty Piss ( 770223 ) * on Saturday September 27, 2014 @05:16PM (#48010677)

      Rent a Tesla for $1. This is a one-time offer. Limit one per customer. Problem solved.

      I like this idea, but there must be some reason that Tesla is not doing it. Also, I think Tesla should focus on breaking these absurd laws. Tesla has shitloads of cash available from its founder, Tesla should take a "scorched earth" approach and start suing, and take all the way up.

      • That's a good point. Tesla probably has the ability to fight and win outright.

      • Re: (Score:2, Flamebait)

        Tesla should take a "scorched earth" approach and start suing, and take all the way up.

        Properly targeted campaign donations would almost certainly be more cost effective.

        • by Frosty Piss ( 770223 ) * on Saturday September 27, 2014 @06:35PM (#48011019)

          Properly targeted campaign donations would almost certainly be more cost effective.

          Apparently, they are not doing this or it isn't as effective as the money from local business?

          State and local politicians know who elects them, and it ain't Elon Musk.

          The courts are the only way for Tesla out of this bullshit.

        • by pupsocket ( 2853647 ) on Saturday September 27, 2014 @08:38PM (#48011481)

          Advertising revenues from local news is the largest source of income for most local television network affiliates and local car dealerships are the foundation of their revenues. (TV stations get little or nothing for carrying national programming, just the right to borrow the audience for a couple of hours.)

          Local television economics is a political protection racket with car dealers as the collection point for funds, precisely as kings and shahs and sultans handed out exclusive franchises for cloths and dyes and wines and every manner of goods.

          Car dealers fund a local-news system that ensures that Congressional representatives and state governments are rarely reported on.

          Threaten laws protecting car dealers, and get you a lot of enemies who don't want to show their faces.

      • by khallow ( 566160 )

        Also, I think Tesla should focus on breaking these absurd laws.

        You have to break them too (or at least get blocked from acting due to the laws) in order to gain standing for any court actions. But it's also worth noting here that states have a great deal of latitude in creating rent seeking arrangements like what car dealers have all over the US. Lawsuits might overturn some of that, but I doubt it'll overturn all of it.

        Events like the three days of test rides can be the seed for political and legal campaigns to overturn the present order. I wouldn't be surprised if

      • by Sycraft-fu ( 314770 ) on Saturday September 27, 2014 @06:51PM (#48011095)

        They know this is an issue they'll win in the long run. There is no justification for the states doing what they are doing, they've just been paid off by the auto dealers. Tesla has won every fight about this I'm aware of. So they want it, they want to get this straightened out in the courts.

        If you try to do something to skirt the law, you risk it biting you in the ass later. If you get a court ruling saying "You are allowed to do this, the state has to F off," then you are good to go.

        Also, you might notice it gets them press. Nothing like looking like the poor trod on underdog to get more people sympathetic to your cause an interested in your product. They go about everything above board, get stepped on, fight back, win, and then get their way, plus good PR.

        Have to take the long view on these things.

    • by plopez ( 54068 )

      How about "Come to an Educational event intended to raise awareness of the possibilities of electric vehicles". Throw in a few displays of photos of how the technology works and perhaps including a historical perspective on electric vehicles and the problem is solved. No more test drives, but rather "hands on learning demonstrations".

    • Re: (Score:2, Interesting)

      by Dcnjoe60 ( 682885 )

      While I agree that not allowing the test drives is stupid, the whole dealer thing was to protect the consumer from purchasing a vehicle and not having any support for it. If the dealer requirement is removed so direct sells are allowed, expect an influx of inexpensive vehicles from SE Asia with no means of warranty repair or service. Yes, buyer be ware, but really, is it a good idea for the masses to be purchasing vehicles from Amazon?

      • by ShanghaiBill ( 739463 ) on Saturday September 27, 2014 @06:26PM (#48010977)

        the whole dealer thing was to protect the consumer from purchasing a vehicle and not having any support for it.

        Not true. It was to prevent manufacturers from running their own dealerships, which would have, arguably, provided even better service. My experience is that a dealership is the worst place to get your car serviced. Almost any independent mechanic will do a better job for less money.

        expect an influx of inexpensive vehicles from SE Asia with no means of warranty repair or service.

        ... except for the tens of thousands of independent mechanics, garages, and body shops.

        is it a good idea for the masses to be purchasing vehicles from Amazon?

        Yes. They would likely get a better purchase price, and better quality service than from the existing rigged cartel.

        • the whole dealer thing was to protect the consumer from purchasing a vehicle and not having any support for it.

          Not true. It was to prevent manufacturers from running their own dealerships, which would have, arguably, provided even better service. My experience is that a dealership is the worst place to get your car serviced. Almost any independent mechanic will do a better job for less money.

          Actually, in the early days, dealers did sell direct. They switched to franchising dealerships because it brought in capital through franchise fees - auto manufacturing being a high capital endeavor. At the time, it allowed the manufacturers to worry about building vehicles and slough off all the rest of the selling of vehicles it involved. Franchises aren't unique to auto manufactures, many if not most retail establishments are franchised. Maybe McDonalds should just sell direct to people, too?

          As for the

          • Maybe McDonalds should just sell direct to people, too?

            They do. 85% of McDonalds restaurants are franchises. The other 15% are company-operated [wikipedia.org].

            Whether franchising is a good idea or not, there is no reason that it should be a required business practice, either in fast food or automobiles. It is estimated that car dealers add about 8% [wikipedia.org] to the cost of a car. In surveys, a majority of consumers have said they would prefer to buy direct even for NO savings, since they perceive that dealerships add no value whatsoever.

            • by sconeu ( 64226 )

              7-11 is (or was) the same way. Back when I worked there ('82-'83), there were company stores (that were also used for training) and franchises.

      • While I agree that not allowing the test drives is stupid, the whole dealer thing was to protect the consumer from purchasing a vehicle and not having any support for it.

        Shouldn't this be a +5 funny?

        oh......you were serious. my bad.

    • by ljw1004 ( 764174 )

      That will work up until it gets before a judge who's an intelligent human rather than a letter-following law robot...

  • by Chas ( 5144 ) on Saturday September 27, 2014 @05:04PM (#48010637) Homepage Journal

    The sooner Tesla breaks open this idiotic "members only" crap, the better.

    I'm not saying dealers don't provide a valuable service. Or that they didn't provide protections to consumers at one time.
    The fact is, one angry consumer, TODAY, has orders of magnitude more power to make an automaker acknowledge a grievance than we EVER had in the past.

    One nasty little YouTube video can, potentially, reach millions of consumers.

    Wheras 80 years ago, if Joe Blow in Podunk, Idaho got shafted, what was he gonna do? Drive to Detroit and crash the gates?

    • You don't understand. Tesla is trying to sell to the public... and states are saying "You're not ready!" so they have to use member-only sales to get this on the road in the few places that's allowed... Tesla is getting legislated out of existence in most places.

      • by 7213 ( 122294 )

        "Tesla is getting legislated out of existence in most places."

        Please explain.

        The laws denying auto manufacturers from selling directly to consumers are ancient & GM blamed them too some degree for their bankruptcy back in 2008.

        There are also laws forbidding movie studios from owning movie theaters, based on similar reasoning.

        These aren't NEW, they aren't getting 'legislated out of existence' they failed to build a business model that fits the current laws. Either they modify their model & sign up de

        • Anytime Tesla gets close to a legal sale, they get these kinds of legislative headaches like this one in Iowa. They just can't get the licenses they need, and new license requirements that say no one else can ever get close to Tesla's ideas are passing.

        • by AK Marc ( 707885 )

          GM blamed them too some degree for their bankruptcy back in 2008.

          Like they blamed unions. The unions formed in response to their poor treatment of workers. Then every union contract that was in effect was signed by GM. But it's the union's fault GM forced them into existence and worked with them.

          GM backed the creation of these rules. It was an anti-competitive rule to raise the barriers of entry against smaller makers. GM helped make those laws, then complains about them years later, like they had no hand in making them.

          These aren't NEW, they aren't getting 'legislated out of existence' they failed to build a business model that fits the current laws.

          The law says that a dealer in Iowa can't be t

          • As soon as Tesla set up shop in Iowa (the site they're doing the test drives from), it ceased to be interstate commerce.
            • As soon as Tesla set up shop in Iowa (the site they're doing the test drives from), it ceased to be interstate commerce.

              So that's why the drugs the people buy from their local pharmacy are regulated by state laws and not federal laws .... oh wait.

              The Supreme Court decided that just about anything can be interstate commerce. Growing weed in your own garden can be regulated as interstate commerce. Yeah, it's ridiculous, but that's the way things are.

          • The law says that a dealer in Iowa can't be the manufacturer. The federal law (should trump Iowa law) says that states can't restrict interstate commerce.

            This isn't interstate commerce though.

            Iowa says it's illegal for a Californian company to sell to an Iowan buyer. Iowa is violating US law to block these drives and sales.

            No, the law says t's illegal for a Californian company to sell to an Iowan buyer _in_Iowa_. That buyer can go to California or any other state where the sale is legal, purchase the car an

      • by Chas ( 5144 )

        That's great until they win a federal case.

        All Tesla needs is a good, solid win at the federal level and this shit goes away.
        Slowly, but it WILL go away.

      • You don't understand. Tesla is trying to sell to the public... and states are saying "You're not ready!"

        No, that's not at all what the states are saying. Auto dealerships have paid politicians to pass laws that prevent direct sales because it is a threat to their business model.

    • by __aaltlg1547 ( 2541114 ) on Saturday September 27, 2014 @06:13PM (#48010935)

      The State is right. Tesla is breaking the law:
      Iowa Code 322.3.1 A person shall not engage in this state in the business of
                  selling at retail new motor vehicles of any make or represent or
                  advertise that the person is engaged or intends to engage in such
                  business in this state unless the person is authorized to do so by a
                  contract in writing with the manufacturer or distributor of such make
                  of new motor vehicles and unless the department has licensed the
                  person as a motor vehicle dealer in this state in motor vehicles of
                  such make and has issued to the person a license in writing as
                  provided in this chapter.
      Iowa Code 322.3.14. A manufacturer or importer shall not directly or indirectly
                  be licensed as, own an interest in, operate, or control a motor
                  vehicle dealer. "

      You need to change the law first, THEN you can sell cars legally. Were I in Iowa, I wouldn't buy a Tesla. There's a risk that it may be impounded as evidence in a case against Tesla.

      • Not quite. See, they were not selling. They were advertising. This is similar to Harley taking their new electric motorcycle around to events to show it off. There is no law against letting people drive your car. People who liked it enough could drive to buy it in the next state over.
      • To drum up support for amending Iowa Code 322.3.14, would it work for Tesla to open dealerships along highways right across the state line from Iowa and advertise in the closest Iowa community to each such dealer?
      • Considering they were offering test drives, I fail to see where they are selling a retail motor vehicle, at least at this point in time.

        The question, from the above code that a manufacturer or importer cannot be licensed as a vehicle dealer is discriminatory and whether that is beneficial to the public. Depending on the judge and interpretation of the law, if no public good can be established it can be a reason to overturn a law.

      • by AK Marc ( 707885 )

        You need to change the law first, THEN you can sell cars legally.

        I take away from that that Tesla needs to have its only sales office in AK or OR (someplace without sales tax) and "sell" the car elsewhere and deliver it to the buyer. Moving the sale location invalidates the Iowa law, and is easier than changing law.

      • Nobody in Iowa can afford a Tesla.
      • A person shall not engage in this state in the business of
                                selling at retail new motor

        Ellon Musk should personally buy some cars and sell them at Auction as 'used cars, low milage' in Iowa.

    • by fermion ( 181285 )
      Tesla is part of the old boys club and they are playing it perfectly. First they create an exclusive product to sell to a privalidged few. Then they say they are going to create a product for anyone, any day now, and start crying how the states are oppressing them and keeping them for helping the impoverished masses. Then they play the old game of hustling states and end up with a deal that will result in the siphoning of 1.3 billion dollars of taxpayer money directly into Tesla's pocket, even if they ne
  • So Franchise W selling only Porsche/VW/Skoda, Franchise X selling only Ford, Franchise Y selling only Daewoo, Franchise Z selling only Hyundai, they're not subject to this shit either? Who are they franchised to, in exclusive sales contracts? SURELY NOT THE MANUFACTURERS!?

    If THEY can operate in Iowa, who are the State to tell ME I can't approach Tesla and say "Five percent gross from each sale and I'll only sell your car"?

    Doesn't make sense? Ohreali? Am I the only one that sees gasoline favouritism by the S

  • by Dzimas ( 547818 ) on Saturday September 27, 2014 @05:40PM (#48010787)

    Car makers are prohibited from selling directly to the public because they could potentially undercut their own dealers. In Tesla's case, there are no dealers to undercut. That said, the solution would be to set up a small company owned showroom in Iowa that acts as the seller of record for all online and in-person sales within the state.

    • Tesla does not want to the pay the dealer fees just to sell cars, since the fees benefit their competitors.

    • So much like the firearms business...

      Your local FFL dealer can order a Savage rimfire rifle from one of several wholesalers. But lets say you want a configuration that the factory doesn't offer (say, heavy barrel, target iron sights, wood stock). You can call the factory, place your order, they will charge you full MSRP for it, and ship it to your receiving FFL dealer. He/she will do the paperwork and background check, charge you $10 to $100 dollars, and you have the rifle the way you ordered it from the

    • That's prohibited under Iowa law.

      • Iowa Code 322.3.14. A manufacturer or importer shall not directly or indirectly be licensed as, own an interest in, operate, or control a motor vehicle dealer.

  • by JoeyRox ( 2711699 ) on Saturday September 27, 2014 @05:49PM (#48010829)
    The article lists all the states that ban or limit Tesla's no-delaer business model and it includes Texas and Arizona, two of the four finalists for Tesla's new battery Gigafactory. Did those states think they had a chance when they support that crooked business cronyism?
    • Did those states think they had a chance when they support that crooked business cronyism?

      alternately, were those states only considered to begin with to rub their noses in the potential loss of business?

  • by russotto ( 537200 ) on Saturday September 27, 2014 @05:54PM (#48010847) Journal

    I can see that Iowa can prohibit in-state sales not through dealers, but why would that forbid Tesla from providing test drives and then, if the customer wants to talk turkey, refer them to e.g. a Missouri store, or an Internet site based in another state? This is how Tesla handles NJ; you want a Tesla in NJ you can test drive one and then hop over to NY to buy it.

    Is there some Iowa law against manufacturers allowing people to borrow cars for free?

  • While I support Tesla's efforts against these ridiculous laws, and would personally like to see them challenged and struck down, could they not just lease the cars through a subsidiary that would hold the title (turning the new car into a used car), then transfer the title after the lease period is up? Or are leases treated in the same way as sales, and prevented under state law as well?
    • Iowa Code 322.2.16. "Retail installment contract" or "contract" means an
      agreement, entered into in this state, pursuant to which the title
      to, the property in or a lien upon the motor vehicle, which is the
      subject matter of a retail installment transaction, is retained or
      taken by a retail seller from a retail buyer as security, in whole or

  • So is that Capitalism going on in Iowa? Why does somebody getting unemployment piss Iowans off....but car dealerships being protected form new competition does not piss Iowans off. Maybe Fox News tells Iowans when to be pissed off and when not to be pissed off.

  • ... because it's illegal.

    Nothing else matters at all. If it's against the law, then it is what it is.

    • ... because it's illegal.

      Nothing else matters at all. If it's against the law, then it is what it is.

      What are you on about? Test drives are not illegal. Selling cars without being a dealer in Iowa is illegal. Tesla wasn't holding a sales event. They were offering test drives.

      Let me explain it to you in small words, since you seem to have difficulty with the concept.

      You get in the car. You drive it around. You drive it back to where you got it. You get out of the car. You give the keys back to the company representative^W^W guy from the company. You walk away. You do not get to keep the car.

      See,

    • Tesla loses the 3 potential sales they had in the state. Poor bastards.
    • ... because it's illegal.

      Nothing else matters at all. If it's against the law, then it is what it is.

      So the American Revolution was illegal and should have never happened because nothing else matters?

  • by haruchai ( 17472 ) on Saturday September 27, 2014 @08:47PM (#48011507)

    Gov Jerry Brown signs 6 bills in favor of EVs

    http://www.greencarreports.com... [greencarreports.com]

  • Why wouldn't someone from Iowa just buy the Tesla from a neighboring state and import it... Iowa loses out on the sales tax because they are being stubborn.

  • Tesla... (Score:4, Funny)

    by Issarlk ( 1429361 ) on Sunday September 28, 2014 @03:59AM (#48012719)
    "so good it's illegal !"

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