Dealership Commentator: Tesla's Going To Win In Every State 156
cartechboy writes Unless you've been in a coma for a while you're aware that many dealer associations have been causing headaches for Tesla in multiple states. The reason? They are scared. Tesla's new, different, and shaking up the ridiculously old way of doing things. But the thing is, Tesla keeps winning. Now Ward's commenter Jim Ziegler, president of Ziegler Supersystems in Atlanta, wrote an opinion piece that basically says Tesla's going to prevail in every state against dealer lawsuits. He says Tesla's basically busy defending what are nuisance suits. This leads to the question of whether there will be some sort of sweeping federal action in Tesla's favor.
Short answer - No. (Score:2)
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Not unless Tesla can outspend the dealers lobby.
They do have a considerable budget to work with. Here's to hoping!
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Re:Short answer - No. (Score:5, Insightful)
Citation coming up [marketplace.org].
Of course, the AC is wrong in most respects.
1. They're not selling 'carbon credits', they're selling ZEV credits(Zero Emissions Vehicle).
2. The price isn't $30k per car, the penalty itself is only $5k per missed ZEV, so logically Tesla has to sell them for less. Maybe $4k each.
It's not small change, but it's only about 5% of the vehicle.
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Not only you're wrong in the amount, but also you ignore the FACT that every company making ZEVs can sell those credits if they make only ZEVs.
And the credit is per ZEV, not a percentage of the ZEV price.
So Tesla is the company least benefited from the ZEV credit. Nissan making cheap ZEV gets a much better return on their investment.
And that takes us to the most important FACT about Tesla.
Tesla is a for profit company, but as far as for profit companies go, Tesla cares a whole lot about customer satisfactio
Facts, history, perspective (Score:5, Informative)
I highly recommend to everyone reading this discussion to listen to this 16-minute NPR Money Matters story:
http://www.npr.org/blogs/money... [npr.org]
Them if you have some time, This American Life tells the dealer's side of the story:
http://m.thisamericanlife.org/... [thisamericanlife.org]
I'll warm you now that your blood may boil, and you may turn into a rage monster thinking about the sheer absurdity and stupidity of the car-buying process.
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Thanks for the links. Was an interesting listen.
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Actually yes. In area, is there a competing phone company? Do they have dealers? And so....
What is good for Verizon, AT&T, etc -- no dealerships, must also be true and allowed for Tesla
Federal Overreach (Score:4, Informative)
As this is an interstate sale, federal action is actually constitutional. However, I don't see any reason we need Washington to command us how to sell cars; Tesla's approach (common sense and a bajillion dollars) seems to be working.
Re:Federal Overreach (Score:5, Insightful)
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Right. If there is one thing the federal government is good at is breaking up cartels.
Re:Federal Overreach (Score:5, Insightful)
I think you are trying to be ironic and are throwing your hands up. But try to disprove me on this claim: there is no more effective or prolific trust buster than the USG.
Re:Federal Overreach (Score:5, Funny)
Re:Federal Overreach (Score:4, Informative)
no one should have to sell their product through a middleman.
Tell that to Section 2 of the 21st Amendment.
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Profound analysis. By your logic, why don't we just give up on anything requiring centralized government then?
Exactly. Outside of keeping the states working together collaboratively, and providing national defense, there really isn't much that the Federal Government should be doing.
That is why the original Articles of Confederation were so weak - too weak to even enforce getting funding from the States; the US Constitution that replaced it was made stronger primarily to ensure the Federal Government was able to collect funding from the States and do a little more, but the intent of the Federal Government was sti
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What are you smoking? Regulating interstate commerce is a power directly allocated to Congress by the constitution.
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Maybe try reading the words?
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Ha! Whoops! Read that as unconsititutional. It took me about a dozen rereads to spot it... guess I'm just not used to anybody actually arguing that something is constitutional :)
Why so much fuss? (Score:2)
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No company should be prevented from selling their products directly to the public. Land of the free indeed.
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yes they should, but perhaps they SHOULD be required to maintain physical presence where their products are sold so that the customer does not need to be grossly inconvenienced when trying to obtain warranty service. doesn't need to be as extensive as, say, ford motor company's dealer network, but certainly more than one per state in most cases - especially given the proprietary nature of the product and its parts, and single source availability of them, as well as the lack of availability of necessary serv
Re:Why so much fuss? (Score:5, Interesting)
The dealer shill thus spake:
the local dealer may have overpriced their product so you buy elsewhere, but that local dealer is still obligated to do the warranty service (for which they are paid quite well by the manufacturers).
In no other industry is this true. In electronics, white goods, etc, there are "certified warranty service centers" where you can call up and get them to fix your stuff. For example, you don't have to go to an Apple dealer to get your high-priced computer fixed under warranty - you can bring it or ship it to one of many service centers.
https://www.apple.com/lae/supp... [apple.com]
Please note that the requirement to become a service center does not include having to be an Apple reseller.
Ford, Volkswagen, Jaguar, Chevrolet, etc., should be able to certify garages for warranty work. But no, the automobile industry is the only industry where you have to go to a dealer to get warranty work done.
Leeches, all of you. Die already.
--
BMO
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Re:Why so much fuss? (Score:4, Insightful)
Why shouldn't the consumer be allowed to decide for themselves what constitutes "gross inconvenience?" Is your mommy government somehow uniquely qualified to do that?
Re:Why so much fuss? (Score:5, Interesting)
No company should be prevented from selling their products directly to the public. Land of the free indeed.
So, you are starting out as a small manufacturer. You've got a product you think people would like, but you don't have the money to build a network of your own retail outlets. So you shop around for a general retailer willing to put your stuff up on a shelf.
The minute your product gains any market share, part of that agreement will be that you don't compete with the retailer within a certain geographical area. And when you start moving large volumes of product through a retailer, your cost to get to the equivalent market goes up. So its a barrier to entry.
That's why many manufacturers' outlet stores are way out in the sticks. No existing retailers cover that area, so outlet malls spring up.
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Re:Why so much fuss? (Score:5, Informative)
That's a reason why you should protect dealer networks if a company decides to start with that business model.
That's not a reason to protect those dealer networks from an upstart company that never had that business model. Just because GM and Ford made a deal with the devil 50 years ago shouldn't bind a new company to that same business model. Tesla has never had a dealer franchise agreement with anyone, them selling directly does not break any contractual agreement they've entered in to. They have no obligation to respect an agreement Ford or GM made with their dealer network to not compete.
Also as a counter point, Apple sells plenty of things through the half dozen Best Buys in my town. There's also two Apple stores within a 20 minutes drive. Just because a company sells through channel partners doesn't immediately preclude them from selling direct, it depends on the agreement they made with the channel in the first place. Even car dealer arrangements started out with the dealers protected by the franchise agreements themselves, elevating them from simple contract law to specific legislative protections came later.
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That just smacks of dumb contracting.
Contracts are written by both parties. Don't like the terms? Try asking for something different and see who will sign.
option for renewal
Yes, but who has the option? Most often the dealership, to protect what is to them a large investment. Manufacturers won't be affected by a few dealers coming and going to the same extent.
So, if you want to invest a few million into a dealership, will you sign an agreement that might get you cut off at the end of a term? Interesting note: In the past, dealership franchise contracts prohibit
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The existing car companies are still going to be prevented from selling directly.
How do you know this? If Tesla can do it why can't other car companies? Those existing companies could easily sue and win if Tesla is allowed to bypass dealerships. Laws are not so overtly tailored to one company as to make Tesla special.
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I wonder if existing manufacturers can pull dealership agreements and then come under the same rules a Tesla. There are also existing car companies that do not have dealership agreements that might want to sell directly.
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That might make the guy who has that current agreement with Audi very sad.
I think that the odds are good that the car companies might be required to buy the dealers out.
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If Tesla can do it why can't other car companies?
Because dealer franchise agreements give individual dealers a defined geographical area in which they are the only sales outlet for that particular model. And that contract language is difficult for manufacturers to break*. Tesla had no such agreements in place.
*Not just manufacturers. We had a road realignment project here in Seattle that was stalled for years by the existence of a Buick (I think) dealership smack in the middle of where they needed to build the new road. Moving it even a few miles would h
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Because dealer franchise agreements give individual dealers a defined geographical area in which they are the only sales outlet for that particular model. And that contract language is difficult for manufacturers to break*. Tesla had no such agreements in place.
Well, if it doesn't suit them, they'll likely just revise the language, or allow the agreement to end at its expiration date, and terminate the contracts; if they don't suit the manufacturer.
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Agreed. There's no value in the name recognition and reputation of those brands and buyers would have no hesitation in jumping in and buying a car under a new label.
Re:Why so much fuss? (Score:4, Insightful)
They're afraid that a Fiat or a Mitsubishi coming back to the states without a dealer presence will just use a combination of the internet and maybe some Apple Store-style mall showrooms to eat their lunch, shipping the cars out of central depots, and avoiding all of the overhead of traditional dealerships.
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Well, if the dealership model really is better for consumers, then the dealerships have nothing to fear. Right?
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Not sure why these dealers are so scared.
Because if Tesla can sell direct, then so can Ford, GM, Toyota, etc. In a decade, there will be no car dealerships, except for used car lots.
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Ford, GM, et al would be competing with dealerships that they sold franchises to in the first place, it would be unfair competition.
Tesla hasn't sold any franchises, and doesn't compete with any dealerships.
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Two reasons
1: They probablly see this as the thin end of the wedge, the first step would be botique car manufacturers selling directly. Then perhaps the major car manufacturers would look into how they can set up an "independent" company that isn't bound by the parent company's dealer relationships or look into how they can end the current dealer relationships and hence become a "dealer-free" manufacturer.
2: tesla may be a botique manufacturer now but what happens if and when battery costs drop or fuel cost
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The dealers are scared because if this "directly selling to customers" thing takes off, they (the dealers) won't be needed anymore. It's the same reason that the RIAA ran scared from digital music. Middlemen don't like when efficiency makes them obsolete.
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1) "only" 200 miles is FAR FAR FAR more than the vast majority of people need.
2) You are apparently unaware of Tesla's plans to keep building lower and lower priced cars to break into more affordable markets.
Not in Tesla's favour (Score:2)
This leads to the question of whether there will be some sort of sweeping federal action in Tesla's favor.
I'd say that's a poor choice of wording. If any such action was taken, it would be AGAINST dealers. It won't be in favour of any single company. It should be fair for all.
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This leads to the question of whether there will be some sort of sweeping federal action in Tesla's favor.
I'd say that's a poor choice of wording. If any such action was taken, it would be AGAINST dealers. It won't be in favour of any single company. It should be fair for all.
It should be. But history (e.g. the "only sell through registered dealers" laws) says it won't be. It'll be in favor of whoever pays the most bribes to the right officials.
Thoughts (Score:5, Informative)
One thing is that in most states the laws were written to protect franchises against the car manufacturers but in this case there are no franchises to protect to often these laws don't apply.
This podcast gives a lot of insight as to why the dealerships are so anti-consumer blood sucking parasites.
http://www.thisamericanlife.or... [thisamericanlife.org]
One other thing to keep in mind is that the dealership model has changed significantly. It used to be a bunch of mom and pop dealerships throughout the country. These aren't the dealerships complaining about Tesla. Instead it's the huge dealership conglomerates that have gobbled up and consolidated many of the smaller independent dealerships. These are also huge political donors in many states, getting laws written to protect them, often to the detriment of the automobile manufacturers.
Part of it is the way the car manufacturers have the dealerships competing against each other, giving them huge incentives to sell a certain number of cars by the end of the month, etc. The dealerships also make a lot of their money off of service, whether it be warranty service or just plain service.
Tesla does things differently. The people who work at the showrooms do not earn commissions on cars sold. Their job is to show the car, not play all these silly games pushing cars that people don't want to get their numbers.
Also, Tesla generally does not maintain an inventory of cars. Every car is built to order with only the features the buyer wants. They don't have huge lots of cars that they have to push since every car is already spoken for.
Their service is also different. They have publically stated that their goal is not to make a profit off of service. I have had to have things repaired that were not covered by warranty (I broke some clips). The cost to repair was actually fairly reasonable and was much less than what the cost would have been had the same sort of thing happened to my Prius.
My biggest complaint about service is that there is often a long wait to get an appointment because they're having trouble keeping up with the growing number of cars out there.
Tesla took a cue from Apple with the Apple stores. They want to provide a consistent experience for their customers without all of the hassles and problems often encountered at dealerships. The company has also consistently bent over backwards in favor of their customers. When news of the fires hit they quickly extended the battery warranty to cover fires caused by hitting objects then actively worked on methods to mitigate it. They retroactively increased the drive train warranty to unlimited miles.
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Pretty sure they hit the '25,000 electric cars to the people' mark. ;-)
As for buying cars from dealers, I've been in quite a few purchases myself. The only dealer I had a reasonably good experience with was Saturn.
With Lexus, Jaguar, and BMW, there was a lot of negotiation. I had to go to several dealers to get competing prices (which were *always* with a spread of $2-3K). In addition, the push was always to buy something either off-the-lot or something that they could have brought over from another deal
Why can't anyone compete? (Score:2)
If a car maker would sell regular cars the way Tesla does, why couldn't they compete in a major way and dominate the younger generation demographic?
I suppose the barrier here is all the big auto makers are so set in their ways with and entrenched in regulatory capture that there is no incentive for them to change to a new "model".
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In addition... small or local car dealerships should not complain about Tesla for killing their business model. They should look to those car mega-dealers that completely shit on their customerbase in order to make a dollar. No wonder so many people despise all car dealerships.
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The big barrier (for other auto manufacturers) here is that all of the big auto makers have already sold franchises to dealerships, giving dealerships a right to sell their cars, so if the manufacturers of said cars started selling direct to consumers, they would be competing with the franchises that they sold to dealerships in the first place. This is unfair competition, and why it is illegal.
However, Tesla hasn't sold any franchises, and so wouldn't be competing with any of the dealerships in any kind
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Tesla hasn't sold any franchises to any dealers, so there's no dealership it actually competes with.
Now theoretically, big auto manufacturers could pull their franchise lciense renewals and wait for the existing ones to expire before selling direct, but they probably would take a large financial hit in doing so, and its unlikely to be in their best interest.
I'm going to enjoy this...... (Score:2)
Conservatives in America (Score:1)
Tesla's model is, as far as I understand, direct and open competition with their fellow automobile salespeople/dealerships. Tesla is doing everything right (that we know) and should be al
Comment removed (Score:5, Insightful)
Re:Spot on (Score:5, Insightful)
Amazon is a middle-man. You're not buying from a manufacturer.
I'm sure Amazon would be happy to sell you a car. Just make sure you order when they have free-shipping deals on.
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Amazon is a middleman. But you have a choice. For example, if you do not like Amazon, you can go to Ebay, or Alibaba, or you can use internet to reach out the manufacturer of whatever is that you looking for.
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The proper form of competition would see the manufacturer required to sell its products at a wholesale price in a transparent and unbiased way. If the manufacturer wants to sell its own product it would have to set up a subsiduary company which would be subject to the same rules as everyone else.
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Re:Spot on (Score:4, Interesting)
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http://www.amazon.com/gp/featu... [amazon.com]
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Because they sold the rights to sell those items with restrictions on competition (franchises called dealerships) in various areas of the states and laws have been created to both enforce those rights and restrictions and protect the consumers from the fraudulent acts of unaccountable people.
And actually, they likely can deliver right to your door, they will do it the same way 1800 flowers does business and use a local dealer as the intermediary who actually procures the vehicle and delivers it. I'm not sur
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Just because FooCo sold franchise rights to its dealers doesn't mean that BarCo should be legally required to create franchises. That doesn't protect FooCo's franchises from FooCo's bullshit, it doesn't protect consumers from FooCo or BarCo, and it's against the most fundamental tenets of free enterprise.
There are good reasons to create franchise networks, but they should have to compete with other models. The current system was put in place for only one purpose: to artificially create a need for dealers.
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I never said bar is bound to a dealership. Ford and the rest are because of it though. This is after all, what the GP was griping about.
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Sure, but right now Bar *is* bound to dealerships, even where none exist, at least in all of the states that Tesla hasn't won concessions in.
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The states have been regulating comercial car sales new and used for a long time now. In fact, ghey do it for most major purchases. I do not see why anyone should be able to skirt that. Perhaps that is reason enough.
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The sticking point isn't that they regulate sales (all sales are regulated at some level), but that they expressly forbid manufacturers from direct sales.
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You mean they will not let a manufacturer open a car lot in their state? Or is it that they will not allow yhem to act as one without a physical presence the state can regulate?
This seems a lot like Uber and Lift were people want every business regulated then are shocked to find they are subject to regulation if they act like a business or that their favorite business is regulated too.
Re:Spot on (Score:5, Insightful)
In many cases they're specifically prohibited from opening one. Cars must be sold through dealers, and dealers must have an arms-length relationship with the manufacturer and can not simply be the manufacturer or a subsidiary of the manufacturer.
Those laws were basically written because while franchise agreements between dealers and manufacturers protected the dealers from direct manufacturer competition, the dealers believed they weren't strong enough and eventually manufacturers and their brands would become strong enough that manufacturers would find a way around them, or simply wait for the agreement to lapse and refuse to renew with that term, that dealers got them codified into law.
Which puts us back to the original point. The law was intended to protect existing franchises from existing dealers. They never anticipated a new manufacturer showing up who didn't want to sell through dealers. The law should not bind Tesla or any other new manufacturer to a business model GM and Ford designed many decades ago that puts the new entrant at a competitive disadvantage.
New car companies are very difficult to start (Score:2)
They never anticipated a new manufacturer showing up who didn't want to sell through dealers.
I disagree. I think they (meaning the dealers) understood this possibility perfectly which explains some of the current fighting. They just never had to worry about it much because starting a successful new car company is damn near impossible. Plenty have tried but it takes very deep pockets to get into that business, particularly in mature markets like the US. Tesla is really the first company to try.
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It most certainly should bind them. If you don't like the law, get it changed. But any law on the books needs to apply to everyone equally. Every other automobile company has to play by those same rules. think of how much cheaper toyotas would have been if they were mail order back in the day (and they were both cheaper than American ca
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There is more to it than that. Buying and selling car between commercial entities is highly regulated. For instance, you need a special license to open a new or used car lot, even if that lot is your driveway. Many states even have laws that consider you to be a commercial sales entity if you purchase and sell more then so many cars in a year (5 or 6 in my state).
But you also need special licenses if you want to purchase junk cars, salvaged vehicles and so on. The regulations by the state goes well beyond d
Bad laws (Score:2)
The states have been regulating comercial car sales new and used for a long time now.
Regulation does not require the use of a mandatory middle man. Particularly one that adds as little value as most dealers do. The reasons we have the dealer system we do are largely historical and anachronistic. Regulations can come in many form and pretty much all (legal) transactions are regulated to some degree (see the Uniform Commercial Code). I have no problem with states requiring manufacturers to play nice with their dealers but I have a HUGE problem with states requiring me to buy a car through
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Because they sold the rights to sell those items with restrictions on competition (franchises called dealerships)
Baloney. Tesla never sold any franchise rights. Other recent entrants only established franchises because they were required to do so. It is reasonable to have laws regulating how franchises work, so small dealers don't get unfairly crushed after they build the market. It is not reasonable to require a manufacturer to establish dealer franchises.
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I suggest you read the GPs comment who didn't mention Tesla then take your balogna and put it between a couple slices of bread then eat it.
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The only way I'd be for a "Tesla Dealership" is only if it was a general fully street legal and CAPABLE electric vehicle dealership, so Teslas, BMW i3 Electric, Mercedes B-Class Electric, Ford Focus Electrics, Mitsubishi i-MiEVs, Nissan Leafs, Smart Electrics, Zero Cycles, Harley Davidson Livewires etc. Just none of the glorified golf carts.
If these where t also have full supercharger station capability for all brands of electric vehicle and had properly trained electricians to work on the cars should anyth
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I buy damn near everything over the internet. I get exactly what I want from a competitive marketplace. Why can't I buy a car to my exact specifications direct from the manufacturer? If Amazon can deliver almost anything to my front door, why can't GM, Ford and Toyota deliver a car to my door?
In your scenario your going to hate it when you need warranty work and the dealers tell you that you need to take it to an authorized warranty repair center for directly purchased cars. BTW that service center is three states over.
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I buy damn near everything over the internet. I get exactly what I want from a competitive marketplace. Why can't I buy a car to my exact specifications direct from the manufacturer? If Amazon can deliver almost anything to my front door, why can't GM, Ford and Toyota deliver a car to my door?
In your scenario your going to hate it when you need warranty work and the dealers tell you that you need to take it to an authorized warranty repair center for directly purchased cars. BTW that service center is three states over.
You mean like how I can't get warranty repair on my Dell because I'm nowhere near Texas? Oh wait, I can. Hell, I can get the tech to come right out to my office and do it on-site, I don't have to take it anywhere. Funny what happens when there's a competitive marketplace, and the ease or difficulty of getting service and support is something consumers consider. Or were you imagining a scenario where car buyers worry less about server than computer buyers? Cars are so cheap, after all. Oh wait...
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In your scenario your going to hate it when you need warranty work and the dealers tell you that you need to take it to an authorized warranty repair center for directly purchased cars. BTW that service center is three states over.
Why? Tesla has repair/maintenance centers located even in areas where it can't legally sell it's cars due to the stealership laws.
Second would be to simply authorize independent repair shops to do warranty work, who the manufacturer would pay standard rates to in order to do it.
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While it wasn't directly from the manufacturer, the first new car I bought in 1998 _was_ to my exact specifications, and I basically ordered it over the Internet. Through an "auto broker", which I guess is YET another middle man, but I knew exactly what I'd have to pay, and it was a painless process.
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Primarily because it's a logistical pain in the ass and having a drone deliver it only accounts for some of the problems with delivery.
Re: ok...let's say Tesla wins....then what? (Score:2)
Huh? What's your point? Are you being sarcastic?
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So why doesn't he just say that instead of the verbal diarrhea ?
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citation needed
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Try again:
"Tesla is new, different, and shaking up the ridiculously old way of doing things."
"... basically says Tesla is going to prevail in every state against ..."