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.
Rent a Tesla for $1 (Score:5, Interesting)
Rent a Tesla for $1. This is a one-time offer. Limit one per customer. Problem solved.
Re:Rent a Tesla for $1 (Score:5, Interesting)
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.
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That's a good point. Tesla probably has the ability to fight and win outright.
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Though that may take 20 or 30 years.
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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.
Re:Rent a Tesla for $1 (Score:5, Interesting)
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.
Car dealer: money-media nexus in local politics (Score:5, Insightful)
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.
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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
They want the court fight (Score:5, Informative)
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.
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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".
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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?
Re:Rent a Tesla for $1 (Score:5, Insightful)
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.
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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
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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.
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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.
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Where are you where it's not allowed to get warranty work covered under warranty from a 3rd party? There may be some places in the US where you couldn't claim lack of access to an authorized shop, but that doesn't change your rights and their responsibilities.
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... except for the tens of thousands of independent mechanics, garages, and body shops.
I don't know about your area, but here, warranty work is handled only at a dealership.
So if there are cars that don't have significant warranty service, but are so much cheaper they can still compete, then there is no problem there. Warranty isn't a free lunch, it is something that a minority of car buyers pay for. (most people buy used cars with no warranty, or buy a new car and keep it past the warranty)
This isn't like a "lemon law" situation where buyers are being "taken for a ride," this is a simple matter of competition where there is no accusation of confusion or fraud.
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I don't know about your area, but here, warranty work is handled only at a dealership.
Not for Tesla cars, because there are no Tesla dealerships. There is no reason that warranty work cannot be done by any qualified mechanic.
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Not only that, but you can always take it to a Tesla Service Center [teslamotors.com].
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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.
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That will work up until it gets before a judge who's an intelligent human rather than a letter-following law robot...
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"We don't live in a democracy, and never have."
As popular as it is to make this gripe this country was founded on democratic process. It's only somewhat recently that we became an oligarchy.
" The only way this will ever change is through aggressive 'petulance'"
Whatever that is, a better tactic would be to aggressively contribute to Lawrence Lessig's movement.
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As popular as it is to make this gripe this country was founded on democratic process.
Yes, a "democracy" where only rich old white men could vote.
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So, we've gone from a society where "only rich old white men could vote" to a society where "only rich old white men can get elected".
This is improvement?
Re:Rent a Tesla for $1 (Score:4, Informative)
No. You could say that our Constitution was designed as a counter-revolutionary reaction to the Articles of Confederation, designed to keep any important decisions out of the hands of ordinary citizens. It's "democratic" in the sense of people being able to vote, but everything from the electoral college to the Senate to the Supreme Court were designed as safeguards against the will of the people.
There were democratic movements in various eras in the US, the most recent being in the decades after WWII when women and blacks both had the right to vote, but everything today is pointing away from "the Will of the People". From our legal system which every year creates millions of adults who cannot vote to the new spate of voter suppression efforts in Red states throughout the country to the recent movement by conservatives to repeal the 17th Amendment, which allows for the direct election of the Senate. Even the recent Citizens United opinion was designed to reduce electoral participation. When it's clear that a handful of the richest donors control the electoral process from school boards all the way up to the Presidency, why bother voting?
Nosirree. We were not founded as a democracy. We've been something other than democratic from the day the Constitution was ratified, not by popular election, but by a group of wealthy white slave-owning men. "Democracy" is a fairy tale we tell school children in the hope that they'll someday enlist in the military and be willing to go die in some foreign hellhole to protect the assets of the wealthy.
Re:Rent a Tesla for $1 (Score:5, Insightful)
I agree, claims of voter suppression and racism are bullshit. Is it suppression for all the other things that require ID in the modern world? I hope you never have to fly, buy alcohol, medicine, cash a check, or do anything else either.
As far as us being a democracy, our founding fathers had a healthy fear of it. The direct election of senators for sure messed up the system of government. If we want only representatives elected by the people, just drop the senate altogether. The house already represents the will of the people. The senate was supposed to represent the states, and now it doesn't... It represents the people, but in a horrible proportion unlike the house. In what world does that make sense?
Re:Rent a Tesla for $1 (Score:4, Informative)
In fact, there is a count. There have been investigations into voting fraud in every state and at the Federal level by both Republican and Democratic administrations. The number has never been more than a handful.
So to answer your question, "Who are these people"? They are the people who live in your imagination and the imagination of AM radio talk show hosts.
The Voter Fraud Myth:
http://www.newyorker.com/magaz... [newyorker.com]
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"If you loved renting it in California, did you know you could buy it here?" is a typical pitch.
I have rented cars hundreds of times. Never once have I receive that, or any other, sales pitch.
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The only time I've ever had a rental car was when somebody side swiped my 1996 salvaged title Lexus LS400 that had a lot of miles on it. The rental company would only give me a 2011 Dodge Sebring since the Lexus was only worth (blue book) about $3,000.
Although the interior looked nice as the car was basically brand new, overall it drove like a piece of shit compared to my (much cheaper) Lexus. If they would have thrown such a pitch at me, I would have happily told Dodge how much even their new cars suck hai
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Off topic...but yea. The late 90's Lexus' can be had for under 5k and are great buys for cheap cars.
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Dodge don't care what you think because you are (probably) never going to buy a new car. Buying used cars is a much better financial proposition in most (but not all) cases and it's only the cachet of having a new car that keeps people going into the showrooms.
The "old boys' club" (Score:5, Insightful)
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?
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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.
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"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
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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.
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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
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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.
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This isn't interstate commerce though.
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
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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.
Re:The "old boys' club" (Score:4, Informative)
Er, yes, of course it is. Tesla is not an Iowa company. Iowa customers are. When they buy off Tesla, that's an interstate commercial transaction.
it's pretty damn hard for a state like iowa to tell Tesla what they're doing is illegal when Tesla can point to a federal ruling that preventing car manufacturers selling cars to the public is legal. Until Tesla have that ruling all they can point to is legal opinions which carry a lot less weight.
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Commerce among the several states (Score:3)
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Tesla Motors is headquartered in Palo Alto, CA. They are trying to sell in as many states as possible, and this article is about them conducting commerce in Iowa. Last time I checked, Iowa and California were different states. Furthermore, Tesla is building a battery factory in Nevada and their assembly plant is in Fremont, CA. While obviously California-centric, they are involved in multiple states.
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Commerce is either interstate or intrastate.
Many of their business operations might be interstate - and thus subject to federal law - but a sale in Iowa from Iowa to Iowa is not.
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How is a California company selling to an Iowa customer not interstate commerce?
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Proof, are there any blue laws in your area? Good, now open a store that violates them. Then claim that you are selling beer from out of state, thus it's interstate commerce and unregulatable by the local/state government. You can argue all you like. You may even be right. You will lose.
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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.
Either corporate or franchised dealers (Score:2)
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There is no "right" to have a "franchised" dealer. That is something demanded by these laws.
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Re:The "old boys' club" (Score:5, Informative)
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.
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Across the state line (Score:2)
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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.
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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.
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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.
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direct selling (Score:2)
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
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OK, so set up a tiny company owned "dealership". (Score:3)
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.
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Tesla does not want to the pay the dealer fees just to sell cars, since the fees benefit their competitors.
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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
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That's prohibited under Iowa law.
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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.
No wonder Arizona and Texas didn't win Gigafactory (Score:4, Interesting)
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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?
What do test drives have to do with it (Score:3)
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?
Another way to deal with the problem (Score:2)
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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
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Tesla should give their motor a rotor (Score:2)
Capitalism? (Score:2)
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.
Read it and weep ... (Score:2)
... because it's illegal.
Nothing else matters at all. If it's against the law, then it is what it is.
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... 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,
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The Iowa Department of Transportation said the test drives were illegal for two reasons: ...
See, was that so hard?
The Iowa Department of Transportation is not a judge. And they tend not to listen to their lawyers. We'll likely see what an actual judge thinks, before it's all over.
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Oh, and the two quoted reasons? They're not a dealer and manufacturers can't sell cars.
They're not selling cars.
So who cares what some random bureaucrat thinks. The law doesn't say what the bureaucrat thinks it says. The law is quoted elsewhere in the thread. It does not forbid test drives. It's actually very simple language.
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Tesla seems to care. They are pissed that what they were attempting to do is illegal, so they are not doing it because Tesla cares, right?
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Only licensed dealers may engage in the business of selling cars at retail. Test drives are probably considered to be part of that business; there's not many other cases where a company will lend you a vehicle for free to drive a couple of miles.
But Tesla CAN'T sell cars in Iowa. There is no one from Tesla in Iowa who will take your money. So by definition Tesla test drives are not selling cars. There's guaranteed never to be a sale in Iowa.
Tesla's lawyer will no doubt dig up case law to that effect, but I don't see the need. It's black letter law. No Teslas are sold in Iowa, therefore Tesla's activities are not selling cars, therefore those activities are legal. Yes it's a loophole, but it's a legitimate loophole. You can promote whatever y
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... 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?
Meanwhile in California...... (Score:3)
Gov Jerry Brown signs 6 bills in favor of EVs
http://www.greencarreports.com... [greencarreports.com]
So, import it (Score:2)
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)
Not a safety thing. (Score:4, Insightful)
Tesla cars are allowed on the roads in Iowa. Iowa will even register a Tesla car and issue you license plates, etc. They've passed every safety test & regulation that any other car has.
You just can't *buy* a Tesla car in Iowa because of dealer-sponsored 'franchise' laws. It seems pretty weird that those laws cover giving out test drives--I'm sure Tesla's lawyers will look into that.
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It's a safety thing. Tesla has more tests it needs to compete to say it's as safe as existing brands or close enough to be allowed on public roads. Sometimes the government has to say "We know you want it... but nobody knows what you're getting!"
Can I be the first to call Bullshit? Tesla has met and surpassed DOT standards. what safety issues need to be addressed before the Tesla can be sold? Even the fires that Tesla has experienced are at a much lower percentage than the fires that are fairly commonplace in gasoline cars. So please enlighten us on the "Safety Issues" that need to be addressed before the Tesla can be sold in Iowa.
Dealer as union (Score:2)
Re:Dealer as union (Score:4, Insightful)
I had a problem with my brakes. On my Subaru Impreza WRX, they didn't work when I went over wet railroad tracks with the brakes applied (the ABS back-off algorithm wouldn't allow best braking). This would, on a road I regularly took, double my stopping distance. It was a major safety issue. When I noticed the problem, I looked online and found it a common problem. Subaru issued a voluntary recall to replace the ABS controller (the entire ECU, since they were linked). I called the dealer, scheduled the repair, gave the TSB number and confirmed they'd have the parts in. They called back "when the parts were in" and I took it in.
The next day, they called and asked me for the TSB number, as there were "no recalls for my vehicle". I took in two separate TSBs (the one I wanted, and one more I got that I didn't care about). They confirmed that there were, in fact, "TSBs" for my car, but the two I had marked "voluntary recall" were not recalls.
Despite giving the TSB number and indicating it was an ECU change and to not schedule me without having the parts in, I picked up my car that day, and waited another 3 months for them to get the part in. When it was finally changed (with a bill of $150 for warranty safety recall work done, because they needed to charge for their test-drive time), the car stopped much better, despite the TSB assuring me the NTSB didn't see any fault in the ABS, nor improvement with the new ECU. Apparently stopping with 100 ft to spare or rolling into an intersection because the brakes didn't work was all in my head.
But Thank God for Continental Subaru, who saw to my safety by scheduling me for a service without the parts on hand to complete it, being ignorant about what TSBs are issued for the cars they sell, arguing with me about which TSB I wanted done, and charging me for getting a safety recall done. Though I'm not sure a manufacturer could do any worse if they tried.
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> probably consumer protection in some way.
You mean estabished dealer protection.
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Re:Good to see this kind of crap (Score:4, Informative)
Conservatives are criminal-minded hypocrites and voters should wake up and vote them out.
Car dealer franchise laws are common in both conservative and liberal states. Iowa, the subject of TFA, is a moderate swing state.
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Uh no. Iowa has been right wing for a long time.
Tom Harkin is likely the most left wing senator. Iowa elected him repeatedly for decades. The legislature is balanced, with Democrats controlling the Senate, and Republican the House, neither with much of a majority. The governor is Republican, but the last two were Democrats. Iowa may be right wing compared to, say, France, but by American standards it is centrist.
In addition. Nearly all of the other states, are rabid right wingers in control.
Two of the states with the most strict car dealer franchise laws are Maryland and New Jersey. Tesla is locked out of both states.
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Sorry...but that would probably require a corporate inversion and the our draconian IRS cannot allow that.