Elon Musk: To the People of New Jersey
teslamotors.comPaternalistic meddling with free consumer choices is always fraught with peril.
Sometimes it is necessary to protect important principles in society. You can't discriminate based on race - that limits choice but who would support the contrary? You can't defraud people in selling products - ditto. You can't buy land to build a smokestack plant in a quiet residential neighborhood - ditto. Many other examples might be cited. In all such cases, the law intervenes to limit private choices. And there are few who would not applaud most such limits. Private choice is not the end all and be all of a society.
Yet, in a free society, private choice should be the overwhelming norm and it should require surmounting very large barriers before legal meddling can limit the choices people can make to serve their own best interests.
Unfortunately, in old-line industries, this idea got flipped and, for years, private choice succumbed to whatever a combination of big government, big corporations, and big unions dictated to the public. Back in the day, writers such as John Kenneth Galbraith even used to celebrate the idea of a "new industrial state" in which the old private competition would yield to ever increasing concentrations of power among government, industry, and labor, who would in turn find ways to "cooperate" with one another in ushering in a more enlightened form of carving up markets and their benefits than mere freedom and competition might provide.
Well, the bureaucratic edict in New Jersey is a relic of that old thinking, perhaps perversely and cynically applied to buy off lobbyists and influencers but rationalized nonetheless by the old paternalistic thinking that the consumer is ultimately best served by having his betters making his buying choices for him rather than being allowed to make them for himself.
Other than in this cynical sense, there is no possible way in which this outrage can possibly be characterized as "protecting" the consumer.
Perhaps the main contribution made by the tech revolution since the 1970s is that it ushered in an era of huge freedom in how people managed their private lives. The internet in particular has been a huge liberating force and so young people especially have come to take it for granted that they can freely make all sorts of choices without having to feel burdened or restricted by the heavy hand of the law. Of course, exceptions can and do remain because abuses can pop up in all sorts of ways without any legal restraints. But, that said, the overwhelming presumption today is that, yes, I can do pretty much what I feel is best for me unless there is a very good reason why I should be restricted from doing so.
And that means, if I live in New Jersey, I should be able to find a local Tesla outlet in which I can buy my electric car if I want. The thought that some politician or bureaucrat should be able to dictate serious limits on that choice is repugnant to anyone who thinks that way. And, in my view, rightly so.
Unfortunately, where the old political pull persists, the law can be abused to protect old-line market players under some guise or other that is a mere pretext for guarding them from competitors who might offer something better and wind up dislodging them in a free market. Legal regulation is not to be rejected out of hand, of course. Maybe the old-line taxi services ought not to have their business cherry-picked by new market entrants who do things differently. Maybe there ought to be some limits in an urban context on absolute free space-letting if this creates nuisances or the like. The line can sometimes be tricky to draw and can require careful and fair-minded judgments given the interests at stake. But how often do we have situations where nothing of the kind happens and instead the issues are decided, in essence, by who pays off whom and who has what degree of political or bureaucratic pull that can be used to protect systems and structures that are far inferior to what the new competition might offer.
I believe that, in these sorts of cases, the tech impetus will ultimately prevail and push things toward broader and freer areas of choice for consumers. Even with this rear-guard action in New Jersey, Teslas can be bought direct from the manufacturer just a short distance away or via remote ordering. And tech-inspired sales and distribution methods in this and a broad swath of other fields will mean that those seeking to limit consumer choice by protecting local turf through bureaucratic pull will be fighting what will ultimately prove to be a losing battle. As consumers, we are not bottled up anymore. If we don't like something that is really stupid, we can more and more work around it using other solutions.
And so we can, I think, basically see that what the local commission is trying to do in New Jersey is much more a last gasp for the old ways as opposed to being a harbinger that will limit Tesla (or any similar new-wave competitor) from accomplishing its goals. Tesla is right to oppose and fight it (and presents a compelling argument for its view). But the action stands out as so bizarre precisely because it is so out of step with the tech impetus that rules our day. It will stand legally (courts are loathe to intervene in such matters). But the longer-term political winds are against it, in my view, and it will prove a temporary obstacle at most as the modern tech impetus advances.
>Paternalistic meddling with free consumer choices is always fraught with peril.
Actually I'd say that governments typically get away with paternalistic medding with free consumer choices.
Elon Musk has the right of this argument, and it's heartening to see a CEO take aim at the politicians that are doing that paternalistic meddling.
But I don't see Tesla's CEO fighting back against paternalistic governmental meddling that artificially raises the price of gas cars while producing artificial revenue for Tesla:
http://blog.heritage.org/2013/03/04/cant-afford-a-new-car-wa... By the government’s own account, the stringent new CAFE standards will increase the average cost of a new car by $3,000 in 2025. The Energy Information Administration warned that new cars priced under $15,000 may no longer be available by 2025.
http://www.marketplace.org/topics/sustainability/teslas-secr... If a company comes up short, it has to pay a penalty of up to $5,000 per credit. Or it can buy credits from a company like Tesla, which happens to earn a lot of credits on every car it makes. Tesla has sold enough credits to post its first profit.
Conventional gas cars produce massive negative externalities that, if not accounted for (by charging any of the parties indirectly or directly involved in producing them), lead to market inefficiencies. The very nature of externalities makes it that they are very difficult to accurately measure, but rest assured, whatever extra cost new CAFE standards bring is not merely a drop in the bucket for the damage already produced and unremedied.
So here the government is ensuring a more efficient and free market, not doing any "paternalistic meddling".
Even if you're right about the "massive negative externalities," what makes you think the government's Absolutely Non-Paternalistic Meddling here gets it right?
Also, even Absolutely Non-Paternalistic Meddling can lead to other massive negative externalities by significantly increasing the cost of new cars (see my link above). Then consumers are less likely to purchase newer cars that, all else being equal, tend to be safer. So we have more deaths.
So, again, even if you're right about these "massive negative externalities," presumably meaning environmental effects, does that justify killing your fellow citizens by dooming the less affluent to drive older, less-safe cars?
Yes, economists will argue that gasoline taxes are a more efficient and effective way of getting what we want (an efficient amount of gasoline consumption that accounts for its external costs).
Politicians will counter that gas taxes are unpalatable for political reasons, so we have to do something else that's kinda like an indirect gas tax (reduces consumption, makes using it more expensive). I'm open to arguments about us going too far here, but at the same time I don't think the perfect should be the enemy of the good.
>> Politicians will counter that gas taxes are unpalatable for political reasons What does that mean (in plain language)? Why should people accept it as an excuse for not choosing the more efficient solution?
It isn't about what people should accept, it's about what they will accept. Voters aren't rational, and they're more likely to kick up a fuss about fuel taxes than vehicle taxes because it affects more of them in the short term.
Maybe taxes on vehicles are more likely to be passed, and not much worse than taxes on fuel. In that case they may be worthwhile as a compromise solution. They're certainly not a better solution, though.
Holding politicians to account for not being sensible is laudable, but more important is to make noise. Demonstrate that voters are rational in a way that they can recognise, and they might listen. Voting isn't enough, it just gets lost in the noise.
> Voters aren't rational
Huh? Voters are quite rational. If you mean they don't pay attention to everything that's happening in Washington, D.C. or state capitols, that's perfectly rational. (Remember you're more likely to win the lottery than to have your vote changing the outcome of an election.) Economics call this, correctly, "rational ignorance" http://en.wikipedia.org/wiki/Rational_ignorance
Politicians and bureaucrats are also rational. Unfortunately this rationality means they put their private interests above the public interest (whatever that means). The influence of special interest groups, the revolving door between .gov and lobbying, these are all elements of it: http://en.wikipedia.org/wiki/Public_choice
Ugh. It was clear when I said that "voters aren't rational" that I meant "Voters as a class do not vote in their own best interests." No reasonable person reading my post and trying to understand what I meant would have interpreted that statement to refer to the fashionable (and absurd) game-theoretic definition of "rationality".
(Not to mention that "rational ignorance" doesn't explain current voting patterns. Nobody informs themselves politically according to a mixed strategy, and deliberately uninformed people do not abstain from the voting process.)
> > Voters aren't rational
i think that's generally taken to mean that the voters do the most optimal thing for themselves, but the whole system ends up being sub-optimal. Some call it the tragedy of the commons.
Voters also don't make laws directly, exactly for this reason.
Infrastructure and people's lives have been organised around today's tax regime. America's historically low gas prices mean houses, jobs and retail are spread out over more area, and public transport is comparatively poor.
If gas prices trebled tomorrow, you'll find a lot of hard-working poor people who have to pay three times as much to get to their low-paying jobs.
There will be sob stories on the news about regular people people who can't afford to move closer to work (houses there are expensive now due to high demand) and who can't afford a more efficient car (as they can't pay off the loan on their SUV which is now worth less than the loan value).
Maybe some young people get fuel efficient motorbikes, like in the developing world. There's a rise in road deaths, of course; everyone knows motorbikes are dangerous.
And it won't just be people commuting to work. It'll be more expensive to get to the shops for food - bicycling or walking isn't an option for the hard-working american mother who has to shop for the family, and who has a newborn baby to look after (which is what your political opponents' attack ads will show).
And how do you think that food gets to the shop? On a gas-powered truck of course. And farm machines run on gas as well. Order everything online? The delivery truck runs on gas. You get your trash picked up? Someone's paying to gas up the truck. You're doing construction? Those backhoes and generators all run on gas. Tradespeople like plumbers and builders? Can't carry that roofing ladder on a bus you know. Fire trucks, police cars, ambulances? Gee, I guess they all run on gas. Buses and removal trucks? Same thing. It costs so much to get Jenny to soccer practice now, and how is little Jimmy supposed to get his double bass to after-school orchestra?
Now everything is more expensive, and everyone has less disposable income. People have to get by with less, so they don't go to the restaurant, they make the old car last a few years longer, and the restaurant and car plant have to lay people off, and you've triggered another recession.
Meanwhile, your busy job as a legislator means you still get driven everywhere, so you come across looking like a huge hypocrite.
Now you've put a regressive tax on getting to work, you've caused a rise in traffic accidents, you're anti-family, you've raised the prices of everything, you've triggered a recession, and you're a hypocrite. In exchange you've got the support of the green lobby, but many of them are having second thoughts.
Good luck with your re-election campaign.
Aren't the CAFE standards to offset the emissions and damage caused by them since you can't directly bill that to an individual user of a specific car? It seems like it would be better to just add a carbon tax to gasoline but I assume that is significantly more unpalatable than the CAFE standards. Tesla's portion of a tax with similar intent is baked into the cost of electricity so consumers pay for it gradually rather than in a lump sum when purchasing the car.
>But I don't see Tesla's CEO fighting back against paternalistic governmental meddling that artificially raises the price of gas cars while producing artificial revenue for Tesla
Tesla is benefiting from government intervention much more directly. I'm surprised that nobody else has mentioned this yet.
http://www.usnews.com/opinion/blogs/economic-intelligence/20...
Elon Musk is a hypocrite and no friend of free market capitalism.
While I agree with the spirit of your post and that of Mr. Musk, there's something missing here.
Contrary to Mr. Musk's assertion of conspiracy, what seems to have happened here is that there were some unfortunate laws on the books that weren't being enforced. Various business interests (ie the car dealers) complained to the Motor Vehicle Commission. The MVC created a new regulation to reflect the laws already on the books.
Unfortunate? Yes. Should that law get repealed? Absolutely. Should the Governor get involved and push to get the law fixed? Yes.
Conspiracy? No. Suggestions of mafia-like behavior? Childish and insulting, but definitely gets headlines and attention.
Christie didn't say "I wish this is repealed, but it's my duty"; he said it's for the good of the consumer. It is industry protection.
There are all sorts of laws on the books that we've agreed are idiotic and are no longer enforced. It's up to the executive to determine which those ones are, and, as time progresses, some laws become so outdated that no rational minded person would ever think of enforcing them.
What if the law had suggested that Office and Automotive equipment could not be sold directly (perhaps harkening back to a time when the Large Automotive and Office Equipment resellers had built up their distributorship); are you seriously suggesting that means Apple Stores should have been shut down in New Jersey?
There are all sorts of laws on the books that we've agreed are idiotic and are no longer enforced. It's up to the executive to determine which those ones are, and, as time progresses, some laws become so outdated that no rational minded person would ever think of enforcing them.
Europeans (mostly Germans) I've talked to about how we do this in the US shake their heads. These shenanigans along with the "speed limit+9mph" informal rule make them comment that the US is really a stealth police state.
EDIT: There's a precedent for "two sets of laws" in the US, some of the most prominent of which are related to civil rights and sexual orientation.
Just to clarify for any europeans who might have read this, ""speed limit+9mph" informal rule " - is a rule (at least in California) for what your minimum speed on the freeway/highway should politely be.
Anybody traveling slower than this needs to be in the slower right lanes to avoid getting tailgated or inspiring road rage.
I've often wondered if anybody traveling at (or just over) the speed limit on the freeway has ever been pulled over by the police for obstructing the flow of traffic.
I'm european and i can tell you that you will get tailgated, headlight-flashed and all around road-raged if you drive at the speed limit in the left-most highway lane in EVERY SINGLE EU country.
You won't get pulled by cops tho.
so true
Some states have laws that restrict use of left lanes for passing. Many states have laws requiring drivers who are moving slower than the rest of the traffic, regardless of the speed limit, to keep right.
Most of the time if somebody is going the speed limit for any length of time in the left lane, there often is legitimately is an issue that they can be ticketed for.
I'm pretty sure that "speed limit + 9mph" refers to the unwritten rule that you are allowed to exceed the speed limit by 9mph and not get a ticket. Cops don't typically pull people over for less than 10mph over the limit on the freeway. They are allowed to (and do at times if they have a particular bug in their hat or have a quota to fill) but that is not the norm.
Based on the California driving code you are supposed to keep up with the flow of the traffic on the road around you so if the rest of the road is going 70mph in theory you could get a ticket for doing 60mph.
Generally unless you are the only car on the road or you are weaving dangerously between cars at high speed its unlikely you will get a speeding ticket if you are part of a pack of cars for this reason.
Then again I'm not a lawyer so don't go off my knowledge ;)
I'm reading this as a half joke or deliberate troll. "Speed limit + 9" is the typical speed on most of the Bay Area highways I drive on.
No - I was absolutely serious. If you travel slower than Speed Limit + 9 in the left-most lane when traffic is clear, you will annoy people, cause people to swerve around you, and generally increase the odds of an accident.
Drivers who are driving slower than this speed need to move over rightwards. Speed Limit + 9 is a minimum speed for the leftmost lane.
It's actually more like speed limit + 15-20, in the fast lane.
Try going less than 80mph in the fast lane on 101, 280 or 880 when traffic allows for it. Just try.
I always stay out of the fast lane.
You should get tailgated, headlight-flashed and all around road-raged if you drive at any speed in the left lane and you are not passing.
I'm not particularly well versed in the specifics of the Tesla situation, and I'm not a lawyer, by any means; I'm saying this as a general consideration. I would tend toward thinking that the selective enforcement or reinforcement of antiquated laws could be seen as just as negative, if the outcome is the same.
New Jersey has a lot of these strange laws. They also force you to have full service at the gas station. The lobbies force the issue.
I believe you can fill your own car if it takes diesel fuel.
(This is probably not that interesting to most people, not even those who live in New Jersey, but it might be some evidence for - or, perhaps, against... - the idea that this is a strange law.)
The last time I was in NJ, the full-service gas there was the same price as the self-serve in suburban NY. Maybe that's changed, but given the hug number of commuters in NJ, I conclude it likely that holy hell would have been raised of full-serve was significantly more expensive.
Those low prices are largely because NJ has some of the lowest gas taxes in the country (48th) whereas NY has the highest.
Additionally many U.S. oil refineries are right in NJ so they don't have to pay anywhere near the logistical costs that other states have to.
States impose different taxes on their gas. Presumably if NJ allowed self-pump, those prices would be slightly lower.
However, in the grand scheme of things, the eliminating the payroll costs from the gas price in NJ would barely have any impact.
At a normal gas station which is neither busy nor desolate, an attendant may be able to serve, let's say, 30 cars an hour. If they each get $20 worth of gas, and the total cost of the employee per hour is $20, then the prices would go down only a fraction of a percent if he was eliminated.
$20 / ($20 * 30) = 3.3%
Woops! I downgraded my estimates and never updated my text :(
This doesn't take into account the missed sales when stations are closed, nor the cost to the community of having police officers police this (yes, they do even though the pumps shut off automatically).
last time a saw a full service station I was 5 years old
Get out a pump your own damn gas.... jeeze
It's the same in Oregon. You're not allowed to pump your own gas even if you want to.
Unless you're on a motorcycle. Then none of the attendants want to deal with you -- they hand you the gas pump nozzle and you do the filling.
I don't know what the party line is to justify the gas attendant rules. If it's "consumer safety" then it's bullshit.
> I don't know what the party line is to justify the gas attendant rules.
Blatant employment protectionism. Every time it comes up on a ballot the "statement in favor" is always primarily employment protectionism. The arguments are generally of the form "if we allowed self service, nobody would pay for full service, and those jobs would go away".
As with many similarly obnoxious laws: Portland votes for it, the rest of Oregon votes against it, and Portland wins.
I figure this will change soon enough, now that $15 minimum wage laws are becoming popular causes in this neck of the woods. The broken-window fallacy is about to get really expensive for Oregonians.
All they need is a good advertising campaign. Another poster put the cost of a dedicated pumping employee at a 3.3% of fuel served. That's 11-12 cents per gallon in Oregon. Consumers would be all for that, assuming they knew about it (and could be confident it would be passed on to them.)
Who actually lobbies for it? I can't imagine that gas station attendants themselves have much sway, and I don't see why station owners would want to keep it that way.
Is it just regular old people in Portland who honestly believe it is best, even without any lobbying or propaganda?
People aren't smart. They like full-service, and they know it'd disappear if it wasn't the law. What they don't realise is that the reason it'd disappear is that they don't like it enough to pay extra for it.
The stations themselves might not be against full-service, either (at least away from state borders.) It's an extra cost, true, but it's paid by all of their competitors, too, so it just drives prices up. Demand is pretty inelastic, so profits aren't much affected. This might change with electric and fuel-efficient cars becoming more common, but it's hard to think long-term when you're selling oil.
Alternatively, it could be that people do like full service enough to pay for this, but act irrationally at the pump, not the ballot box. I.e. people undervalue their own comfort and do things themselves because the idea of paying more seems so objectionable.
This has occurred to me with airlines as well - we relentlessly optimise for cheap flights, and then complain that we're crammed in to tiny seats while flight attendants hawk duty free goods to us. Maybe we'd actually be happier if the cheapest flights were actually 50% more expensive and nicer, even though that's not what we choose.
Cool idea. Reading your post I thought, "This is obviously wrong," but it's growing on me the more I think about it (making it the best kind of comment to read.)
I experience the same thing with charitable giving. While I think I give a reasonable-ish amount out of pocket compared to most people, I absolutely don't give enough to match my ideals - fundamentally, the money is there, in my pocket, and it's hard to part with. On the other hand, at the ballot box, I always vote for parties that tend more redistributive (and since I earn decently, likely to raise my taxes). It's a much easier decision to make when there's that degree of separation.
Shouldn't you vote for the party that's best for the less-well off, and not the one that most redistributive? (OK, if you are eg in the US, there's not that much choice in the first place.)
I live in the UK, which like the US has serious problems with income gaps and class mobility. When I say redistributive, I should clarify that I don't just mean 'here poor person, have some money', but more that I would aim towards a more Scandinavian-style economy, where more money/effort is spent on social programs.
There are a couple of petrol stations near me that have recently started offering optional attendant service at peak periods, for no extra charge. This has been some time coming, I must say; last time I saw attendant service, it was probably the mid 1980s, and that petrol station was famous for being the only place in town that offered it. But anyway - even if it's got rid of, it may yet come back.
(I have no idea what's caused this. My personal theory is that it improves throughput at busy periods; many UK petrol stations have closed over the past 10-15 years due to the wafer-thin profit margins so those that are left can often get quite busy. But that's just a guess.)
Yeah, last time I filled up in NJ one of the attendants was smoking at the pumps. Never been so nervous!
I have tried to light gasoline with a cigarette. After several hours of trying, I finally figured out how to do it. It requires smoking the cigarette with vacuum cleaner, while spraying compressed oxygen. You then get a small flame on the paper which will ignite the gas.
My tests suggest pumping gas wearing a sweater is probably more dangerous than smoking. Igniting vapors with a static spark is actually much easier.
If you car is newer than 2006, there is basically zero chance you are in any danger. The ORVR systems are a really nice piece of engineering that is mandatory.
The problem is not the cigarette itself but the flame used to ignite the cigarette in the first place.
I once had a sweet, innocent, virgin girlfriend who was raised in New Jersey. She arrived in Califirnia, and We started to go out. As I got to know her--I saw the New Jersey upbringing peak out. I started slowly. Her major in college changed to business. She believed it was O.k. to cheat in order to pass a test. She believed it was just fine to step on people to get ahead. She would make a sandwich, after sex, and always give me the smaller half. Oh yea, she really didn't care about the homeless, animals, or anyone other than herself and mom. At first--I just thought she was young and naive, but after awhile I think New Jersey rubbed off? I always thought what I would say to her if I ran into her. I think it would be, "Let's go to France and live out The last Tango in Paris, without the fingernail scene, and the gunshot." Yea--She had a body that was well spectacular.
I don't think anyone could a write a less accurate depiction of John Kenneth Galbraith's writings if one were trying. He did not argue against competition. He argued that modern industries tended to anticompetitive behaviors and that they could not be trusted to preserve free, competitive markets. He was right. Proof is in the behavior of the auto dealers.
I understand Galbraith is a Libertarian boogeyman and Adam Smith is viewed as the opposite, but they share a heck of a lot in common. It's sad to see such easily refuted ignorance elevated to the top of HN comments threads.
"You can't discriminate based on race - that limits choice but who would support the contrary?"
If someone refuses to serve or otherwise interact with me on account of my race, I would not use the threat of deadly force to change his behavior, nor would I advocate that anyone else do that on my behalf.
That is not to say that I approve of racial discrimination, or that I would do absolutely nothing about it. I am only stating what I would not do about it.
> An even bigger conflict of interest with auto dealers is that they make most of their profit from service, but electric cars require much less service than gasoline cars. There are no oil, spark plug or fuel filter changes, no tune-ups and no smog checks needed for an electric car. Also, all Tesla Model S vehicles are capable of over-the-air updates to upgrade the software, just like your phone or computer, so no visit to the service center is required for that either.
Gotta hand it to Musk - that's some smooth salestalk in what is supposed to be just voicing a public opinion against shady politics. I was halfway through the third sentence when I caught myself thinking - "indeed, that does sound like such a better dea--- Hey wait a minute!". Musk, you sneaky bastard! Never missing a chance to remind me why I want a dang tesla.
He is right and it's a terrific salespitch. That's the best kind of right.
An even bigger conflict of interest with auto dealers is that they make most of their profit from service
I am old enough to remember what owning a car was like when things were changing away from mechanical devices one could understand and tinker with and becoming nondescript hunks of plastic you had to buy from a manufacturer. (I'm talking about the ignition system, as one specific example.) There was always a bit of a sinking feeling for me along with a sense that the world was being dumbed down and manipulated for profit. As programmers and technical people, we should be able to see many parallels!
That said, dumbing down the world in some ways is not necessarily a bad thing and can be exceedingly positive. One might miss the twisty, dusty country road in leisure time, but curse it when it's raining and the road has turned into an impassable morass. Reliable, boring, convenient transportation is great sometimes, like when you're driving someone going into labor to the hospital.
Maintenance free electric cars that drive themselves will be one of those positive simplifying things.
Yeah, I remember those times, too; perhaps less nostalgically than you do. Take your ignition system example. Sure, one could dig in there and replace and adjust the points. But you did it because you had to, you had to do it regularly, and it would be adjusted correctly exactly once: after you did the job. From there, the points immediately started wearing and it would not be exactly right until you did it again. Solid-state ignition, please.
Synchronizing three Weber carbs? Oh, yeah, good times. Good times that involved poisonous mercury to boot. Port fuel injection, please.
Don't get me wrong, there was a time I liked working on cars, too. So much so, I was a professional ASE-certified mechanic for a while. I also like my Scion xB that in 70K miles we've done nothing to except insert gas, change the oil, and put a set of tires on it. I don't miss having to slap new points and plugs in it before a weekend trip.
And for the Tesla tie-in, our Leaf is about as much of an appliance as you're going to get in a car. There's something to be said about a car whose maintenance schedule doesn't fill a page.
> Reliable, boring, convenient transportation is great sometimes, like when you're driving someone going into labor to the hospital.
Or great even for something as simple as getting to work in the morning. I've owned my share of Triumphs and Fiats. I enjoy my dumbed down existence that doesn't involve a late-night session under the hood because I have to be at work the next day.
I mean, I see your point. But if most folks are like the cranky, older version of me now, if they wanted finicky transportation that needs constant maintenance they'd buy a horse.
Hah, I'm glad you mentioned points and carbs. Those are the two examples of systems I just don't want to have to screw with ever again.
Carbs are great until something in the environment changes and they're not perfect anymore. I want MAF's, o2 sensors, etc, thanks.
I think my favorite car was my late 80's toyota truck with a 22RE. For my taste (which would vary wildly for another person) it had the perfect blend of technology while keeping things reliable and easy to work on. But it was still just something I enjoyed working on because I enjoy working on things.
For a day to day car, I'd rather have something I never had to touch. I'm hoping the move to electric vehicles picks up speed.
Toyota trucks of that era were great mechanically, and the 22RE was a great little engine, but they would rust out in no time. OK for the south but not a good choice for anyplace that salt is used.
Hmmm, I drove mine in St. Louis. It was there for at least a decade. I never had any major rust issues with that particular truck, but I was better to my vehicles at the time. There was some bubbling around the quarter panels, but nothing major. It was an 1987, and was pretty beat up, so I wasn't worried about it being perfect.
The thing with the toyota truck I noticed mostly, is that despite cosmetic flaws, it still ran great and was pretty sound functionally at 230k. I had a dodge dakota that fell apart around me and spun a bearing at 160k. The drivers side door hinges actually rusted completely out.
I had a 1987 MR2 in St. Louis for four or five years as well, and my friend had it for three or four before that. It had issues with the rear quarter panel as well, but otherwise was good.
All anecdotal, and the St. Louis winter isn't a Michigan winter or anything like that, but there's my experience fwiw
I heartily believe there's a market for both. Compare a Macbook Pro with a custom built Linux desktop. The MBP is very user friendly, plug n play, and has very little customization capacity. The custom Linux desktop is an absolute tinkerer's paradise, with everything from hardware to software being open for customization.
The car equivalent of these used to exist for daily drivers, but are now relegated mainly to closed course competition vehicles (much to my delight). The Radical SR is probably my favorite one, consisting of a modular vehicle that can be built from a kit shipped in boxes of parts [1].
There is extreme pleasure to be had from driving both a Tesla, and a Radical SR. But both have very different uses, and very different performance and maintenance criteria.
For those interested:
> Compare a Macbook Pro with a custom built Linux desktop. The MBP is very user friendly, plug n play, and has very little customization capacity. The custom Linux desktop is an absolute tinkerer's paradise, with everything from hardware to software being open for customization.
It's not fair to say Macs are less customizable or less of a tinkerer's paradise just because they are more user friendly.
I think it's fair to say that. In my opinion, Linux wins on kernel configuration options alone. Would you like a tickless kernel? Soft real-time? Hard real-time? A different scheduler, may be?
It's pretty easy to boot Linux on a Mac.
My guess is he was talking about the retina MBPs that are impossible to change RAM on and damn near impossible to do anything else with.
You can do a lot with them. What you're talking about is doing things to them.
Meh, you knew exactly what I meant, as did most people that read that discussion I'm sure.
Who said that it's because of user friendliness? But they are intentionally made uncustomizable and not for tinkerers hardware-wise, that 1/10 repairability score (http://www.ifixit.com/Teardown/MacBook+Pro+13-Inch+Retina+Di...) isn't an accident.
But even for Linux, Ubuntu is trying really hard for you to not have to go into the command line. They would love for it to be a tinkerer's paradise but also usable. They want it to be a muscle car and a Tesla. Computers have the advantage of being both of those.
Computers have the advantage of being both of those.
They're still muscle cars. Tablets and phones have been making inroads, but the inmates still run the asylum.
An apt analogy. I moved from Linux-based machines to Macbook Pros. I love the ability to tinker in Linux. I hate the requirement to tinker in Linux, just to get normal desktop stuff working.
Somewhere inside you is something that misses the Webbers. Every night under the bonnet, day in the rain covered in oil and every bizarre breakdown (the rotor disintegrated again?!) was worth it for the induction notice, smell of warm oil and exhaust note... I think... Tuning Strombergs is another dark art.
I agree with the idea in principle, that electric cars are a net positive for reliability and minimizing service costs.
However, when you talk nostalgically about the good old days of cars being "mechanical devices one could understand and tinker with", and then turn around and talk about the new generation of electric cars being somehow equivalent, it seems a little logically inconsistent to me.
Make no mistake, a Tesla is just as much of a "hunk of plastic" when it comes to fixing or modifying it yourself. Expecting any complex piece of modern electronics to be similarly hackable to a car from the last century is a little unrealistic.
EDIT: sounds like we're basically in agreement on this. I misunderstood the previous comment.
Tesla is just as much of a "hunk of plastic"
That is exactly my point. Did you actually read the whole comment you are responding to?
I did read it - it appears I misunderstood you though, sorry! For some reason, I interpreted the last two paragraphs as saying they were similar.
I hope that emerging manufacturing technologies will allow what has happened to software over the last 25 years to happen to hardware over the next 25 years.
It is possible to run a completely open software stack, and very easy to run an almost-completely open software stack.
My hope is that open-source hardware (both electronic and mechanical) will be abundant enough in the future that I could feasibly fabricate a new ECU from scratch, or 3D print a new evaporator for my AC.
I too hope so, but not for automotive. I want to 3D print the hull for a high speed catamaran. Every year I wait is another year laser sintering gets cheaper, 3D printing gets better, and the cost of technology drops.
As long as the carmaker is open about things, the increasing complexity doesn't have to be bad news for tinkerers. It's not officially released yet, but https://github.com/timdorr/model-s-api shows the promise of Tesla's commitment to openness. It won't allow the "how does my car work?" type of tinkering, but it allows the "how can I use my car in interesting ways?" tinkering.
It's much the same as computers. The original Apples were understandable devices. The lack of miniaturization meant that hackers could figure out how everything was working and play with it. That activity would be ridiculous with modern-day CPUs/components as the complexity has increased by orders of magnitude and the miniaturization has reached levels where specialized equipment is needed to look at what's going on that costs well beyond what can fit in a hobbyist's budget. Yet modern-day computers are still programmable and people are still learning and hacking. The only difference is that this learning is happening a few abstraction levels removed from the actual hardware. The same will be true with cars, provided manufacturers are as cooperative as Tesla seems to be.
> An even bigger conflict of interest with auto dealers is that they make most of their profit from service
Musk is too smart to know hes comparing oranges to apples.
He is only partially right. I say to Mr. Musk - I will agree with your complain when you sell me your car for $18,000 - an average price for an average car in the US. Why it doesnt cost $120,000, like your models, you ask? Well, exactly because of what you mentioned: they use cheaper parts with less engineering that are bound to break faster and then they will make up some profit on the parts. That's why Mr. Musk, they profit from service on car that is TEN times less expensive than your car.
If you asking me I prefer to pay cheaper upfront and be able to treat it like a pair of shoes that I will be able to exchange for a newer model in 2-3 years, when this gets me bored or wears out.
Other than that -- always love to hear brilliant people sticking it out to the lobbyists and corrupted over-bureaucratized politicians! At this stage of things within US, Musk is sticking it to so many groups (building rackets "10-times cheaper than otherwise tax payers would've paid") and pissing off so many powerful people, that I wouldn't be surprised to see him dead sooner or later (although of course I wish him all the best!)
It kind of feels like the opposite is happening today with the "maker" movement. With those "blobs of plastic" falling left and right to arduinos and 3d printers, it seems like the makers are on a tear to bring the "good old days" back again.
Funny enough, quite a few programmers who have become burned out with the mainstream tech industry move into automotive related industries as cars are becoming more and more computer driven.
I think I bought my "frugal-mobile" from one of them.
Tesla's site is a bit frustrating. I get most of those same benefits driving a Nissan Leaf. So I'm not really interested in a "true cost" comparison to a gas vehicle I wouldn't be buying anyways.
Turns out the Model S at $1,466 as optioned is more expensive than a Leaf. :) Not that I wouldn't kill for a 300 mile range...
I'm sure the Leaf is a fine vehicle. But I see them directed at two different audiences. That logic would also question why get a Porsche 911 when you can get a VW Beetle for a fraction of the price? They are both German engineered gas vehicles, after all.
Fun fact: The Beetle was originally designed by Ferdinand Porsche, so you'd even drive a "real" Porsche in both cases.
Not to mention that 911s look like smooshed Beetles anyway. I kid, I kid...
That's not much of a coincidence: The 911 is actually a fairly old design (early 1960s) and the follow up to the Porsche 356 [1] where the similarity is even more striking. They are also from a technical point of view fairly similar: Both have an air-cooled boxer engine in the back which certainly influences the design. There's also the "Berlin-Rom-Wagen" [2], a sports version of the beetle which was built for a planned long distance race from Berlin to Rome. It already looks very much like the Porsche 356. So the history of the two cars is actually quite mixed up.
It was no coincidence that I picked those two vehicles. :) Although I was more thinking the new model years since both are currently being produced.
do you realize how much money you could make from networking opportunities that arise from driving around a Tesla? invest in your future
Tesla is the new Country Club membership? (They are also being granted as perks of employment.)
An old-man Jaguar costs a fraction of the price. Does a Model-S come with the country club membership? I'm in!
Does a Model-S come with the country club membership? I'm in!
It's more likely to come with a hackerspace membership.
It is a terrific salespitch, especially in how it raises the subject of OTA updates while adroitly waltzing you past the obvious worry that a poorly tested OTA update will brick your car.
How does the distribution mechanism in itself affect the quality? It's just a way of getting new software on the car. You can have the exact same standards of quality for an update installed over the air as one installed at a service centre.
Except at a service center there's presumably the opportunity to replace the firmware chip or board if they brick it during the update whereas a bad OTA update leaves you little option.
OTOH I'd risk a bad OTA update 1% of the time if it meant avoiding the service center the other 99% of the time. And I'm sure a bad update is just a call and a tow away from a fix at a Tesla service center. Unless you're on a road-trip I guess.
With the march of Moore's Law, it should currently be feasible for automobile controllers to actually run under a kind of hypervisor and keep a copy of the old system so that it can roll back. (Including by request of the owner.)
Yeah - I would not expect Mus to not have the foresight to do this...
I'm supposing that was sarcasm?
They could make the previous firmware easily restorable - like the BIOS on post-2008 computers - all of them have a shadow copy that can be restored if the new BIOS does not work. Hold two buttons and start the car or something :-)
You might want to turn off updates during road trips.
How about registering your "garage coordinates" with your car's computer so that it can detect when you're on a road trip and give you the option of installing an update or not? (When you are stopped and have parked the car, of course.)
Exactly. In the same way my computer remembers which monitor I plug into it (work, home office one, home office two, etc) and recalls the configuration of the second screen... the car should know when it is plugged into your home charge port. Various features should only be available when plugged into your home charge port.
You don't really take Teslas for roadtrips(at the moment - when the supercharger network gets finished...maybe)
I feel like you've uncovered a horror movie plot from the future. Teen girls take off on a road trip in their Tesla Model Z, when an unfortunately timed OTA update leaves them stranded in a land of backwoods hillbillies... with secrets they'd rather stay secret.
Cue dueling banjos?
The easier it is to update software, the less important that it is bug-free.
Until that bug causes a car to drive unexpectedly into a wall in the interim time until you've sent out a patch. The importance of being bug-free is much more driven by the potential damage caused by a bug than how quickly you can update the software.
do you think that the gasoline cars don't have software updates? their engine is nowadays all software controlled and theres a fw update plug, generally under your driving wheel.
and they'll update it when they service the car. how is that software any safer than the OTA?
its not.
I never said that. I was responding to "The easier it is to update software, the less important that it is bug-free."
Fear monger. What if what if what if... I'm not saying it couldn't happen, I'm just saying that possible new issues are no reason to persist the old issues
No. It's a car, and has the power to kill people on software malfunction, making it a critical system. Critical systems are tend to go through a much greater and more robust form of testing.
The destructive potential of a car exceeds that of a lot of handguns one can buy.
There have long been techniques for writing software as formal proofs of correctness. As far as I can tell, they haven't been popular with mainstream programmers because they are simply too different.
That is a really neat bit of fact; but, what does that have to do with what I was talking about? I really would like to know, it sounds like a really important insight, I'm just not sure what train of thought led to that.
This is utter nonsense, "possible new issues" are every reason to carefully evaluate and weight new options.
No, but "Cars do uncomfortable things at high velocity" is not exactly an edge case.
Right. So, what happens when you are the one in that car, the car that teaches them better?
I would say that the easier it is to update software, the more likely it is to be bug free.
It's easier to test one change in isolation than to try to figure out which of these 20/200/2000 commits broke things.
For one thing, an OTA update mechanism is obviously more subject to third-party spoofing than an update delivered by physical ethernet from the dealership.
(BTW, do Teslas apply OTA updates while the car is underway, or store them up for application when parked? If the former, then applying even a correct update to a car in motion could have all sorts of nasty consequences if it resulted in a sudden change to, say, response characteristics of the suspension or brakes.)
I'm sorry, but no. No, most manufacturers update processes aren't actually secure in any meaningful way. Tesla's OTA process seems to use (I've not checked it myself) web standards, encryption, and signatures to verify that the OTA update is correct. The "Physical ethernet cable" that is used by traditional manufacturers can be done by any hobo on the street, in pretty much the same time. It's really only a matter of time before a script-kiddie-ready device that you plug-in and starts the car shows up; There's no security, no signature verification, etc. on the traditional manufacturers updates.
Source please regarding teslas OTA process.
Here's a pretty good summary from someone who sniffed the WiFi traffic from a Tesla doing an OTA update: http://www.teslamotorsclub.com/showthread.php/22294-Sniffing...
"do Teslas apply OTA updates while the car is underway"
Even your cellphone doesn't update when it's 'under way', what makes you wonder a moving automobile will? If you hazard a guess as to how OTA's are applied to automobiles, I would guess it'll be in Parked, plugged in, and prompted to update by pressing an "Accept & Update" button.
There are realtime kernels that can update the apps, the OS, and install a new kernel without dropping a beat. VisualWorks Smalltalk had a system for loading code into a shadow of the running class hierarchy, then atomically committing the code changes. If you defined some functions for the transformation of existing objects, you could start a transaction in one version, then finish it in another.
We keep forgetting that lots of "advanced" features were actually invented decades ago.
Is that true though? I mean, in my mind OTA makes it a given that the firmware is going to be fully signed and the channel will be fully authenticated. Whereas if a dealer is installing it, they could dismiss concerns with "we trust our service technicians." Seems the latter opens the door to a lot of social engineering possibilities.
But I was responding to a claim of the update being "poorly tested", not insecure. That's orthogonal to it being over the air. A poorly tested update delivered through a service center can also brick your car.
No, of course it does not apply the update while under way. When there's a firmware update available you get a nice big dialog box telling you so and button that says "would you like install tonight at [3 AM]". You can change the time or even cancel the update.
Furthermore, the message tells you it won't install unless the car is plugged in or has a certain level of charge.
GM's latest recall (faulty ignition switch) killed 303 people and covers 1.6 millions vehicles; I think they'd love to have an OTA update method right now, even with the possibility of "bricking" the vehicle.
http://www.latimes.com/business/autos/la-fi-hy-autos-303-dea...
Don't know if an OTA update would fix what is essentially a mechanical problem.
If it cut the ignition and effectively bricked the car the 303 dead and their family and friends would be pretty stoked right now.
> a poorly tested OTA update will brick your car
This is possibly true (though I'd be surprised if they didn't have serious precautions in place to prevent a total firmware brick, even fairly cheap electronics are difficult to really brick these days, with multistage/multipartition bootloaders and such).
However, given the amazingly large amount of costly meatspace work they would cause themselves by sending out an OTA that bricks cars, I'm sure they are well motivated to avoid that possibility.
a poorly tested OTA update will brick your car
It should be possible now to have a rollback function built into engine controllers.
A poorly performed service at a dealers will brick your car too.
We trust the manufacturer to correctly service our cars, manually or OTA.
Yeah. I am completely uninterested in owning a vehicle which is 0wned by the manufacturer.
whats the difference? 20% of Americans lease their cars from manufacturers right now, when you lease something by its nature you don't own it. Another 60% make use of financing when they buy, in which case the bank owns your car.
If you are trying to make an argument about control then make it and maybe give us some more information than just the conclusion of your thoughts.
Sorry if my reference was unclear - I meant "0wned" in the hacker sense, in that ultimate control rests not with you, the owner, but with the manufacturer, who in the case of Tesla can apparently just pump new code out which your car will install. That seems seriously creepy and weird to me. When I buy a car, its previous owner should have no further control over it. OTA updates for a car sound really wrong.
Here is the changelog: http://www.teslamotorsclub.com/showwiki.php?title=Model%20S%... These changes sound worthwhile to me, even if the mechanism is creepy.
Also just think; how long did it take for the first iphone jailbreaks to come out, cydia for your car. Alternately replaceable ROM's for your car a la android. Where there is a closed eco system there are 100 people just staring at their computers until they figure out how to break it wide open.
If the separation between the UI and the backend electronics (the stuff that would be critical to safety) was strong enough, Tesla could even embrace a hackable UI portion of their system. It would be up to you if the Bluetooth phone worked, or if the climate controls worked, or if any other feature worked on the main display. (I assume the cluster display would be controlled by a different virtualized process.)
Of course Tesla would still supply a standard UI that the vast majority of people would use, but it could be forked on Github if you preferred. (I assume that third-party apps would be separated.)
For all the 'speculation' about Apple merging with Tesla, acquiring a significant portion of Blackberry/QNX would be a better choice. Detroit could end up buying their interactivity from a subsidiary of Tesla.
cydia for your car.
Just what my car is missing, fifty thousand anime ringtones and a SNES emulator with all-you-can-eat ROMs.
Yeah definitely, the whole statement played alot more sarcastic if you were sitting with me in the office.
You always have the choice whether to install updates. If you don't want the update, just decline it.
If you don't trust the manufacturer and their software, why would you think declining an update would prevent them from "0wning" you?
Enjoy your horse, then... but only if you're an atheist. :-P
I have an old car, which has a little bit of non-upgradeable firmware in its ECU, and a motorcycle, which has no electronics more complicated than the turn-signal flasher relay. Even an electric car doesn't have to be built with some crazy upgradeable touch-screen computer; it could just be a car.
Don't even have to call it a "salespitch". A good product will sell itself. And it's quite clear a Tesla is a good product.
Point taken, but then again - it really is a salespitch in what is supposed to be a statement on a political issue.
He's done a very good job of spinning around the publicity for an improved public opinion of Tesla. Impressive.
The man is nothing if not a smooth salesperson.
His best line:
> 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.
Nicely done, Elon. Nicely done.
This really is one of the nicest pieces of PR -- corporate, political or nonprofit -- I've seen in a while; I appreciate how he starts off with a soft pitch ("the auto dealer franchise laws were originally put in place for a just cause") and only shoves the knife in once he's got the reader in agreement. Beautiful writing.
Although personally satisfying for the writer, that is a pretty good example of something never to write in a letter that you want to positively influence a situation. Referring to a scandal by a politician when lobbying isn't really going to work, and all letters addresses "to the people" are lobbying.
I gather from the suggestion at the end that the only option available to Tesla is through the court system, so it probably doesn't matter what he writes about the governor. If the only remedy is legal, you've lost political lobbying as an option. Save for votes, but the midterms are still 8 months away. Voters are forgetful.
I think it does a good job of reminding everyone that there's a trend of corruption in his opponent's administration, which is a pretty useful political trick.
Elon Musk is not running for governor of NJ, so viewing it as "a trend of corruption in his opponent's administration" is not advisable.
The other problem with this is that the Gov is still has popular support and Mr. Musk probably negatively influenced those people. Further, making this an actual political fight is really not something Mr. Musk should be looking towards because their is a fair amount of material the Gov can use on Mr. Musk.
Think of every attack that can be levied against the elitism of Silicon Valley and personify it in the person of Elon Musk. It could get quite nasty and the valley doesn't really do well in political games.
I think you may have misunderstood my comment, they're only political opponents in the sense that Musk wants to rally Christie's constituents to push back on this decision, and the battle is over public policy. Of course Musk isn't running.
Christie has a lot more to lose by his constituents seeing a bad trend in Christie's record than Musk has by any personal character attacks Christie could send back his way. Musk's job certainly isn't in any danger from bad things coming out about him in NJ.
I really don't think Christie has more to lose. I am sure he could "stick up for the people against the Silicon Valley boy billionaires" in some pretty interesting ways that would spread quickly. I can seen a "electric tax" as step one. After all, rich owners of electric cars should pay for the road like working class gas car owners. I'm sure he and his could come up with something else. The interesting part is how far any "reforms" NJ implements can spread. Politicians love new revenue streams.
As a consumer who may consider a Tesla in the future, I like and appreciate this dig. Christie did something underhanded again, let's bring it up to strengthen Tesla's claim that something fishy happened.
I can't agree with calling this underhanded on Christie's part. The law, while stupid, actually is the law, not a creation of the governor's or regulator's discretion. See his justification:
"This administration does not find it appropriate to unilaterally change the way cars are sold in New Jersey without legislation and Tesla has been aware of this position since the beginning."[1]
It would be far more underhanded for the governor to exempt a single organization from the rules. Yes, the rules are stupid, but tomorrow it's going to be a time when you do agree with the law, and it amounts to giving a bad guy some special privilege.
[1]http://www.itproportal.com/2014/03/13/new-jersey-bans-the-sa...
>Governor Christie had promised that this would be put to a vote of the elected state legislature, which is the appropriate way to change the law. When it became apparent to the auto dealer lobby that this approach would not succeed, they cut a backroom deal with the Governor to circumvent the legislative process and pass a regulation that is fundamentally contrary to the intent of the law.
How is this not underhanded? It'd be unilaterally preventing the changing of the law since he didn't even allow it to enter the regular legislative process.
He saw it coming and shut it down before it could go through the normal legislative process. Yes, that is underhanded.
I stand corrected. I didn't know that part of the story.
that is a pretty good example of something never to write in a letter that you want to positively influence a situation.
Right. It does close the door to Christie deciding to do a turnaround and adopt the issue as a crusader for the people. Actually, considering that Gov. Christie is a politically powerful man with an apparent history of underhanded retaliation, I think it's really the last thing you want to do.
Alternative viewpoint: Christie may already be on his way out or on his way to becoming a lame duck. Musk clearly sees no future for Tesla as long as Christie's admin is calling the shots.
Remember, this letter is to "the people of new jersey" and not "the current governor of new jersey". Musk is choosing his venue, the court of public opinion - an arena where Christie is taking some major hits.
If he expects a different result with a Democrat then he hasn't looked at the political contributions of the NJ auto dealers.
Progress and expansion isn't built with "expectations", it's built by repeatedly working on opportunities and winning where it was wasn't thought possible before.
It is because being a milquetoast is such a popular tactic that people like Christie are able to retain power once they achieve it.
"All that is necessary for the triumph of evil is that good men do nothing." -Edmund Burke
Is this just your opinion, or do you have something to back that up? Because I thought it was a pretty effective piece of writing.
Personal experience with watching the consequence to someone who caused about the same offence.
You've got a good point. If he wants to appease Christie, this is not the way to do it. But if he wants payback, well, keep twisting that knife.
Its really not much of a knife. A Silicon Valley billionaire comes with quite a bit of baggage these days. That happens when journalists need a new villain. Those bus articles aren't a cause they're a symptom.
A rockets, cars and solar billionaire has a very different public image than a big data billionaire though.
I literally gasped when I read that line. I can't speak to it's political effectiveness, but it's good writing.
Could you explain the reference please?
Gov. Christie's office ordered the most heavily trafficked bridge in the country (if not the world) closed for political revenge. He is desperately trying to throw his staff under the bus to avoid accountability for this. It's a very delicate subject for him right now, and Musk bringing it up is cruel and yet at the same time (imho) totally fair play.
I love it, personally. Elected officials should be dragged over coals publicly for crap like the bridge closure AND this sneaky legislative practice he used to get the anti-Tesla laws in.
Completely fair play. To me, Musk is just pointing out that Christie is a corrupt bully (who would absolutely play this exact same card if the situations were reversed).
To be fair, 2/3 toll lanes were closed, not the whole bridge.
What everyone else said re: Bridgegate (thanks!) + the original line, which is a reference to the conman George C. Parker, who would sell things like the Brooklyn Bridge to unsuspecting tourists, which, according to Wikipedia, gave rise to the line "If you believe that, I've got a bridge I can sell you."
I used to work in NJ.
Chris Christie's administration closed 3 lanes of the George Washington Bridge for a bogus "traffic study", making tons of Traffic. It was political payback against the city of Fort Lee who has a mayor who wouldn't endorse Christie when he was running for governor. Christie says he didn't know about it but some in his administration have left or been asked to leave over it.
Gov. Christie is currently being investigated for closing lanes down on a highway bridge during rush hour as a form of retribution.
I really hate how every scandal now has "-gate" appended to it.
Mitchel&Webb: Watergategate
There was a scandal in NJ where Chris Christie's underlings were caught closing a bridge when they didn't get political support from a mayor.
http://www.motherjones.com/politics/2014/01/chris-christie-b...
He starts off pretty neutral, addressing an issue of course, but not in a mean way. And all of a sudden you notice this subtle knife twisting in your ribs.
Just last week, Elon argued against a different legal monopoly, for national security launch services by the Boeing-Lockheed joint venture. [1]
It's amazing how much building a new company in a supposedly free market requires arguing against politicians who claim to champion free market economics, but who actually use government to give cushy monopolies to incumbents with big lobbying budgets.
"Crony capitalism" isn't an accurate term for this; it's more like economic central planning by way of lobbyists instead of communist bureaus.
1. http://www.spacex.com/press/2014/03/05/elon-musks-statement-...
http://www.bloomberg.com/news/2014-03-05/musk-makes-washingt...
Why isn't Crony Capitalism an accurate term for this? Seems like exactly the term to me.
Let's just play economist and call it http://en.wikipedia.org/wiki/Rent_seeking
> In public choice theory, rent-seeking is spending wealth on political lobbying to increase one's share of existing wealth without creating wealth. The effects of rent-seeking are reduced economic efficiency through poor allocation of resources, reduced wealth creation, lost government revenue, national decline, and income inequality. Current studies of rent-seeking focus on the manipulation of regulatory agencies to gain monopolistic advantages in the market while imposing disadvantages on competitors.
The term "rent-seeking" is accurate within the study of economics, but is bound not to be understood accurately by lots of non-economists. It resembles a competing, everyday meaning that is inocuous: buying a property or other asset and renting it out is a valuable service, whereas "rent-seeking" is destructive. The term is economists' jargon that euphemizes the problem. If I were the chief of the rent-seeking lobby, I would want everyone to keep calling it "rent-seeking."
The term "economic central planning" emphasizes that it's fundamentally opposite to free market economics, and that its practitioners and defenders are hypocrites.
Except that the terms "economic central planning" and "rent seeking" are orthogonal, even if the results are the same. You could, in theory, have economic central planning without rent seeking -- though it may not work that way in practice.
I think the above poster had it correct; refer to it as "crony capitalism" to non-economists.
"crony capitalism" is just regular capitalism.
Because it's all crony, no capitalism.
> Because it's all crony, no capitalism.
Well, except that it demonstrates exactly the characteristics of the system in which the holders of capital hold society captive to their interests which led to its criticism by the people who coined the term "capitalism" for that system.
it's all crony, no capitalism
crony capitalism == crony "capitalism"
Americans are just lousy with punctuation.
Having bought a Nissan LEAF, I can say with confidence that traditional auto dealers are where electric vehicles go unsold. Numerous members of our electric auto owners group share the same exact stories.
You go to the dealer specifically asking for an electric car and the salesman tries to make you change your mind to another vehicle. Considering the bonus structure at most dealerships, there is no incentive to sell an electric vehicle.
First, the dealership may choose not to participate in selling electric models at all.
Second, there is usually only one or two people allowed to sell an electric vehicle because your salesperson was not trained. Who wants to lose a customer and a bonus to another salesman?
Third, it takes longer to sell an electric vehicle because you have to explain everything that gas car owners already take for granted. You make less money by spending more time. This also leads most salesmen to push for 10% over MSRP, harming sales.
Finally, some very corrupt dealers go so far as to deliberately discharge their vehicles and leave them that way so they won't have to try selling them. Dealers have little incentive to sell the entire lineup of manufacturer vehicles if they have to train and hire more sales staff for one model. Some dealership owners may even may be politically opposed to the idea of electric vehicles.
It's amazing to think that even with all of this horrible experience at Nissan dealers, the Leaf is still selling so well. Imagine how strong it would be if they had real retail support.
Actually, the worst stories came from Ford and GM dealers. Among Nissan dealers, it was more likely they either chose not to participate, told you to come back later for the right salesperson, and/or charged 10% over MSRP and refused to offer the base model.
It blows my mind that in a country that preaches a free-market economy, the government is preventing a company from selling a superior product. I'm pretty sure people will still buy the car if they want to, and in time, those car companies will go under anyway, but why slow down progress?
Remember that the US is not pro-business, it's corporatist. It's a government that is able to be easily captured by incumbent, monied interests. Starting businesses and operating them on a small level is much easier in other developed nations.
Acting in favor of individual businesses is usually orthogonal or antithetical to acting in favor of the free market.
Big businesses and the politicians who love them often rely heavily on erasing the perception of that difference.
It depends whether you're describing "the free market" religion or "the free market" reality.
In practice, most politicians mean an economy tilted in favor of multinational corporations when they use these dog whistle terms. It is an offense to everything Adam Smith stood for, but it's what they really mean by "free market." The real Adam Smith believed modern-style multinational corporations were a recipe for corruption.
"The directors of such [joint-stock] companies, however, being the managers rather of other people’s money than of their own, it cannot well be expected, that they should watch over it with the same anxious vigilance with which the partners in a private copartnery frequently watch over their own.... Negligence and profusion, therefore, must always prevail, more or less, in the management of the affairs of such a company."
dog whistle terms
That's a great phrase. I look on in trepidation at the almost mechanical way folks in their teens and 20's react to memes. I find parallels in the way programmers parrot half-truths and untruths. And of course, there's the joke that passes for political discourse on TV.
Really, we 1st world people aren't that much more sophisticated than 19th century Russian peasants chanting "Constantine and constitution" thinking "constitution" was Constantine's wife.
The relevant government in this case is the state of New Jersey, not the United States of America. There is a lot of variation between state governments.
Like the Economist wrote about George W Bush: "Being pro-business is not the same thing as being pro-market".
> the government is preventing a company from selling a superior product
There is some bias there. You judge Tesla a better product, so of course all the regulation that are against its sales are going to feel unjust.
I have difficulties to really follow this whole stuff (I live in EU, the whole buying a car in the US seems a very 'exiting' experience, at least when reading about it on Reddit), there does not seem to be any sort of nice non-partisan explanation of the problem and why those regulations where put in place.
Actually Musk is the clearest answer that is not either: "Tesla great, fuck the regulation" or the opposite, "Musk dick, cannot follow the regulations like everybody else", but what's PR and what's factual ?
Edit: Just realised why it irked me this time. I was reading about EU decision of standardizing the power plug for smartphone to micro-USB. People were all happy for regulation there. When people complained that now the we would get stuck with micro-usb forever, people dismissed it saying the EU will just change the plug when a better one comes up as if the EU/US hadn't got an awful track record at keeping their regulation and spec up-to-date, like in this case for example.
"If you build a better mousetrap, the world will beat a path to your door, unless its run by mice." --me
I think it would be better to say "unless it's run by the current mousetrap manufacturers."
Hm, I thought that by now most people would have got that:
* Free-market is for the poor (in every sense: money, political power, etc.)
* The rich (again in every sense) know that in order for you to become obscenely rich you need a state-protected, but not state-owned monopoly.
That's how wall street works actually: We share the loses, they get the winnings... It's risk free win-win for them.
Because existing businesses are afraid of change and politicians are afraid of possibly eliminating jobs. People are afraid of change because it means that they will have to adapt.
There's a big difference between "preaching a free-market economy" and "preaching a free-market economy except in cases where I think there shouldn't be a free-market economy." The latter is the norm in the United States and every other country in the world that I know of.
> preaches a free-market economy
Those who preach, rarely practice.
Only some portions of the electorate and politicians preach free-market economy.
while "superior" is subjective, i agree it's best to let the market decide naturally, instead of putting up barriers...
Things like the Consumer Reports ratings and the Motor Trend "Car of the year" award are pretty objective. You're right that it's subjective, but there's empirical evidence that a lot of people feel it's superior.
I dont trust either. I dont know who paid off who to get a good rating. ;-) And who knows what biases are there in the reviewer?
Besides, I may not purchase a vehicle based on any of the same factors as the average person that these ratings/awards are targeted to. To some people a car has to have a certain feel. How much more subjective can that be?
It's like product reviews on the internet. Almost wish they didn't exist they're so fake most of the time. we digress...
The quality of awards/ratings aside, that shouldn't even matter here. Tesla or any other manufacturer should be able to sell directly to the consumer if that's the way the two parties want to do business. I can buy apple products directly from Apple and not have to go through Best Buy or anyone else. Why do cars have to be different, still, in 2014?
I wouldn't call Consumer Reports that objective. They probably have a significant pro-United States bias.
It doesn't blow your mind, it happens the whole time. Car imports are a similar example.
> 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 part works better as an argument for "don't start a car company" than anything else.
I mean, yes, Tucker and DeLorean and Fisker et al used dealers, and they all failed, but that doesn't mean that they failed because they used dealers. The people who worked for them all consumed oxygen, too; it doesn't follow that we'd all be driving DeLoreans today if only we lived in an artificial vacuum.
I appreciate where he's coming from, and I think he should be allowed to sell his cars directly to anyone who wants to buy one that way, but shoddy "correlation equals causation" arguments don't help his case.
You make a valid point. In Musk's defense, I can't think of any car manufacturers that have used direct sales on this scale, so while the correlation does not prove causation here, it doesn't disprove it either. He seems to simply be stating that this aspect of their business model (direct sales) is a key part of Tesla's business and one that he believes is essential to its survival.
Just wondering though, what is preventing them to sell a franchise of Tesla and just provide the seller the appropriate incentive - like keep a fraction of the sales. I suppose they still have the right to put some restriction to the franchisee like they do in the food industry ( like you will not see a McDonald selling KFC )
What's preventing them? If they did that, they'd have to give up a fraction of their sales. Also, it's not easy to set or agree on a commission percent when Tesla and the dealerships have such opposing interests to begin with.
In other words, they are not trying this simply because selling direct is a better choice.
I just wouldn't think he'd want to compare his car to a shitty DeLorean.
Musk is massively disingenuous and rather insulting to our intelligence. But he's a heck of a salesman and makes a wonderful car. Like many persuasive people he arrives at an answer and backs into rationale but makes it appear the other way around.
I'll give you just one example. The law of the land in NJ is that you can't sell in NJ unless through a dealership. That's the current law. Those laws need to change to allow a direct to consumer sale. Map that to this quote "ended your right to purchase vehicles at a manufacturer store within the state." Brilliant. "You lost something you had" is so much more powerful than "We need to persuade the legislator to make a change to add something new"
Seriously, I dig his cars. And his vision. And I suspect that to attack such large entrenched markets you have to have this kind of maniacal drive. I just hate being misled and manipulated - no matter who the person.
"Musk is massively disingenuous and rather insulting to our intelligence. But he's a heck of a salesman "
Agree. And makes you wonder a bit about the marketing materials surrounding these cars, huh?
He's trying to make as if he's acting in the best interest of the people of the state of NJ. When it is very clear that his motivation is his own interests and selling his car. And making more money for himself. Most businesses don't make it that obvious.
Another word I will use is immature. His argument sounds like a spoiled kid who doesn't get what he wants and is going to call out the teacher at school hoping to berate them into just caving in. [1] Real life doesn't work that way. Not to mention the fact that there simply aren't enough people in NJ [2] that care about buying a Tesla to protest and make change on this.
[1] "Hey great argument no I don't mind if you insulted me because you are right!".
[2] Guess what? In Pennsylvania there are many more people that don't want to buy liquor at state stores (which they have to) and that hasn't changed yet.
> When it is very clear that his motivation is his own interests and selling his car. And making more money for himself. Most businesses don't make it that obvious.
You cannot possibly be saying that with a straight face.
Pretty sure Musk has the high road rather solidly booked all to himself when it comes to his credibility concerning trying to change things for the better when you compare him to any other auto corp.
He's trying to make as if he's acting in the best interest of the people of the state of NJ. When it is very clear that his motivation is his own interests and selling his car.
I don't see how these goals are mutually exclusive. And saying that he wants to sell his car is falling into the realm of ridiculously obvious.
Most businesses don't make it that obvious.
Really? Most business make merely a token effort at pretending every action they take isn't just about the bottom line. I don't see how pandering to customers makes one business any 'better' than another.
What is amazing to me about your comment is that you have harsh words for Musk without any defense whatsoever of why the law is just.
What is "immature" about calling out a stupid and corrupt law?
I think you missed the part where they instituted new rules effective starting in April, which is when the existing Tesla stores will be reduced to galleries.
In your vigor, you seem to have misled only yourself.
Tesla stores are already galleries (with a small repair facility). Purchases are made over the Internet.
See above or below.
They're currently selling Teslas in NJ (without a middleman) and not having any legal problems because of it, so your example's premise seems to be flawed.
You have to dig deeper on the story than his post. They've been told for a long time that the license shouldn't have been issued and would be revoked and that a change in legislation was needed. Again, Musk knows all this. But it doesn't fit the dialogue.
Apparently what Tesla was initially told when NJ "discovered" a problem with their not-entirely-clear dealership law was that they would allow Tesla to keep selling until the legislature had a chance to clarify the issue.
Recently they were told differently: that the executive has made the decision, and they're shut down. Not much wonder that Elon's unhappy with the situation. Nobody likes the rug removed from under their feet. Plus it feels like (and probably is) inside ball when something like that happens.
>They've been told for a long time that the license shouldn't have been issued and would be revoked and that a change in legislation was needed.
Shouldn't have been issued according to who? According to law, it should've been issued, otherwise you don't need a law change to revoke it.
Still, they do actually have the option now and they are losing it in the future. If the prospect was that they were going to keep being able to buy directly from Tesla, and that this was foiled by a backroom-deal (to put it in his words), then he is technically correct.
I can understand what you mean, but to the end consumer they are going from being able to buy a Tesla directly to not being able to.
> The law of the land in NJ is that you can't sell in NJ unless through a dealership. That's the current law.
Are you suggesting that Tesla is actively breaking the law in NJ right now? The rule change doesn't take place until April 1st, which is why they have to close their store by then. If they aren't operating illegally right now, then the commission has ended our ability to purchase these cars.
Secondly, if you can only sell through a dealership, why can't Tesla just own some dealerships?
Are you suggesting that Tesla is actively breaking the law in NJ right now?
That's how a lot of government rule-making works. The law says something general and the specifics are left to departments and commissions. In this case, it's not clear that this particular rule is outside the plain meaning of the law; they just hadn't gotten to writing it before because Tesla presents a novel circumstance. Of course, it's difficult to hold somebody accountable for breaking a rule that hadn't been written yet, so "actively breaking the law" is probably overstating it.
Secondly, if you can only sell through a dealership, why can't Tesla just own some dealerships?
I am not an expert, but I imagine the law was written in such a way that "franchise" is defined as an entity independent of any manufacturer.
Here's another view worth reading: http://mashable.com/2014/03/12/new-jersey-tesla-dealers/
I really appreciate you being one of the lone voices here who doesn't just want to heap praise on Musk, and I definitely appreciate a link to a story that isn't one sided. But I have to say that it's not so simple as "Tesla was violating a law that is now going to be enforced", and that therefore the state isn't changing anything and therefore Musk is disingenuous.
Unfortunately, these sorts of laws are often vague and confusing, and boil down a lot to the state's (sometime capricious) choices about what to enforce and how. The governor's ability to direct the state's executive branch is widely and correctly seen as a huge power.
So the law is vague and requires the New Jersey Motor Vehicle Commission to fill in the detail. In fact, the NJMVC itself granted a permit to Tesla to sell cars in the state (as stated in your article). But now the NJMVC has reviewed that decision at a higher level and has decided it made a mistake
http://mashable.com/2014/03/11/tesla-new-jersey/
If permits are being revoked, that sounds like a change to me.
You can say that a proper interpretation of the law would have always led to that outcome, and that Tesla doesn't have a right to complain that the law is finally being enforced correctly. But that presupposes that laws have unambiguous pre-existing interpretations.
Although the text of the state code isn't changing, it seems clear to me that "the law"--as in the actual regulatory environment experienced by Tesla--is changing in a negative, albeit somewhat predictable manner. Was Musk glib in describing this in his letter? Sure. But I don't think it rises to the point of being disingenuous.
This comment exemplifies why I come to Hacker News. The ability to be for a cause, yet still call out any bullshit is unfortunately quite rare.
It seems it was the calling out that was bullshit. :)
No, it was not. The law, which has been on the books for a long time in New Jersey, prohibited direct sales.
It was possible to read part of the law as being written in a way that would not apply to Tesla, but would apply to nearly all other current makers. (I mentioned this in a Reddit discussion, and someone pointed out that another part of New Jersey law made it so that reading was clearly not correct, and the law prohibiting other makers from selling direct did pretty clearly cover Tesla).
The new rule is basically clarifying that yes, the current law does indeed also apply to Tesla, and anyone who issued any permits or otherwise had approved Tesla's sales was in error.
Misled? There is a bullshit law on the books he wants repealed.
I have no idea where you came up with this line of thought.
Nice try, New Jersey auto salesman.
Seriously, how can you be on the "we've got to enforce current law" side? It's so ridiculously anti free market that I'm sure all the Tea Partiers are having cognitive dissonance over this.
Hah! I'm objecting to Musk misleading us. And he is misleading us. Look at many of these comments and you'll see why. Grab the pitchforks and head to NJ!!
It was lost, when the auto dealer franchise laws were put into place along time ago.
> 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!
One of the things I love about Elon Musk, besides the fact that he has the balls to tackle hard, capital-intensive problems, is that he has a pragmatic, realist approach. Getting SpaceX NASA contracts was not something everyone would have done, not when many were marching to the drumbeat of "private space exploration is superior to public." And apparently, he's not being above throwing a recent scandal in Chris Christie's face.
The whole article is a great play though. Note that he starts by explaining the rationale for the existing laws, validating their original purpose, then showing why that rationale doesn't apply to Tesla. This is wonderful persuasive writing.
The truth is, car dealerships, which are mostly locally owned, are a way for a state to boost revenue capture and generate jobs. In New Jersey, not being able to pump your own gas is the same deal.
Look at the economics of a Tesla dealership, for every car sold in New Jersey, how much of that money stays in New Jersey? And let's be honest, being a car salesman is not the most lucrative or respectable of trades. The jobs are usually temporary so down on their luck folks can try and earn some money while looking for something else. Ensuring a state has dealerships possibly out of work people can fall into for temporary jobs is like having a social welfare program without having it on the books.
It sucks, but if you were a legislator in NJ, would you rather Tesla's profit went all out of state to Tesla, or if your citizens could get a crack at some of it and have it circulate around in the local economy for a bit.
It's unpopular, and us tech folks don't like it, but from a NJ legislator's position it's pretty rational.
The correct answer of course is to foster a local auto industry and get a company to make and build and sell cars from out of NJ elsewhere. But that's too impossibly forward looking.
>It sucks, but if you were a legislator in NJ, would you rather Tesla's profit went all out of state to Tesla, or if your citizens could get a crack at some of it and have it circulate around in the local economy for a bit.
I was making a similar point earlier. In fact I wouldn't be surprised if over time we start seeing more laws passed to encourage more of the money citizens of states spend to stay in-state. I think this is going to become a serious concern over time, how are local economies going to thrive if we keep buying stuff online and all the major online companies are somewhere in SV?
Right, it's actually the job of the legislature to try and pass laws and create regulations to advantage their market over external competitors -- even if that means creating local monopolies. It sucks that New Jersey has to think of California as a competitor (after all, aren't California and New Jersey domestic territories of the same country?), but resources are finite.
And if you, as a legislator, think bringing money and jobs into your state doesn't matter, you have another thing coming:
https://www.google.com/search?q=%22attract+business+to+the+s...
You'll find endless concern from every state about how to attract businesses and jobs to their state. It's not a coincidence that Hyundai opens a manufacturing plant in Alabama instead of someplace cheaper or more recognizable.
http://www.enquirer.com/editions/2002/04/06/fin_alabama_put_...
The problem with New Jersey doing this vs. Alabama is that the mechanism for Alabama to get Hyundai is pretty direct and pretty clear. Offer incentives to Hyundai, get a plant and a couple hundred jobs (plus the indirect halo effect on the economy outside of the plant).
For New Jersey it just looks like they're protecting shady car dealers by generating an artificial monopoly. The optics on it are terrible, it looks corrupt and petty, and the public rationale "it helps the consumer" is clearly false, but the practice is pretty much the same.
There's absolutely nothing that prevents Tesla from setting up a franchised dealer network in New Jersey, selling their cars cheap to the dealers and then having the dealers keep a cut while generating jobs in the state. It's "spreading the wealth around" from CA to NJ a bit. The only thing that prevents Tesla from doing this is that Tesla wants to maximize the profit share they see from the car sales.
The thing is, because Tesla has been very public about it, they know there is room in that large 25% profit margin per vehicle (Honda makes about 15% per hybrid) to "share a little".
> Tesla wants to maximize the profit share they see from the car sales
While true, it's also universally true of just about everything. Yes, using resellers/dealers/etc. means that you have to give them a slice of "your" money. It also frees you from having the scale up the infrastructure and employees yourself. Which is why franchise models (either pure or blended) are so popular.
I suspect the more pressing motivation is that Musk wants to have complete freedom to do things his way without filtering by a middleman who would likely be strongly influenced by the way that auto dealers have historically operated.
That said, a couple of points.
1. As another poster noted, the auto dealer "experience" that many of us are familiar with doesn't necessarily reflect the experience one gets with a luxury car brand. Haggling over a Ford Fusion and walking into a $INSERT_LUXURY_BRAND dealership aren't the same thing.
2. I suspect a lot of folks are underestimating the degree to which Tesla will have to provide local services that look a lot like a dealership as it scales up and certainly as it introduces cars at more mainstream price points. For example, you need service centers--as they are building out today.
> I suspect the more pressing motivation is that Musk wants to have complete freedom to do things his way without filtering by a middleman who would likely be strongly influenced by the way that auto dealers have historically operated.
Ding ding ding. In this respect, the HN hive-mind is pretty schizo. Are you a phone company and trying to protect your profits? Burn them at the stake!
Are you a popular technologist who builds rocket ships on the side and are trying to protect your profits? Cheer him on!
> I suspect a lot of folks are underestimating the degree to which Tesla will have to provide local services that look a lot like a dealership as it scales up and certainly as it introduces cars at more mainstream price points. For example, you need service centers--as they are building out today.
That's also true. I'm not sure what the ratio of service center employees per Tesla vs. traditional automobiles. My guess is that you'll have to bring your Tesla back to the dealer for most maintenance needs, while I can bring my regular old family sedan to whatever gas station/service center is down the street.
We don't even know what the used car ecosystem for Tesla's will look like. Will anybody really want to buy a car they have to put a few grand of new batteries into? Will there be a used car service center ecosystem in place? When can I walk into the local Pepboys and buy a new sprocket or cog set for my Tesla? Never? Then bye bye Pepboys.
The network effects which contribute to the overall size of the auto industry, which is far more than just the manufacturers, is a pretty significant part of the overall economy in a given area. What will this ecosystem look like in 25 years with hyper sophisticated self-driving Tesla-likes all over the road? My guess is that it will be devastating to the system that's there even if an all new ecosystem replaces it. It's not a 1-to-1 map. People won't make the transition and that's a problem governments care about.
So now none of the money or jobs stay in NJ... I don't see the logic. If they wanted the tax money they would want Tesla to sell a lot of cars in NJ.
That's not the right way to think about it. Taxes are only a small portion of the economic activity a bunch of car dealerships in a state generate. A dealer gets to keep some of that profit margin that Tesla gets 100% of right now. They then pay the dealership owner (1 job), the receptionist (2 jobs), the finance guy (3 jobs) and pay the commission to the sales guy (4 jobs) and then you bring back the car to the repair center manager (5 jobs) the mechanic (6 jobs) the car wash guy (7 jobs). There's also the sales tax on the car + the income tax for those 4 people + the consumption taxes on those people as they go about their daily lives. All those people then go out in the local economy and eat pizza and do whatever other local economic activity people do with their money. Which also generates more jobs.
In the Tesla model, you eliminate all those for a "test drive experience genius" or whatever they call it, 3 or 4 to a "test drive experience center", NJ gets the sales tax on the car, and whatever they can squeeze out of the 3 or 4 guys who work at the Tesla dealership and the 2 mechanics who work in back.
If Tesla, an extremely minor player in the industry right now, gets to do this, why doesn't everybody else? Overnight all those endless seas of car dealerships, representing millions upon millions of dollars NJ wants to capture into it's state economy go bankrupt and now nearly all of the money is going to CA, Japan and Detroit with a handful of in-state jobs to man the direct-to-consumer "test drive centers". And now for the out-of-work accountant or phone engineer? He used to have a chance to at least work a commission only car salesman job for a few months till he found better work. Now he has nothing to go to in the interim and overall state unemployment ticks up a half percentage point.
As an engineer I see lots of built-in inefficiency in all this. So I understand the HN outrage. But NJ doesn't want efficiency, they want people in jobs and off welfare. Each person in a job is a chance for the State to capture a few hundred dollars off of each car sold -- not as taxes, but as GDP (which will eventually float the government's coffers as taxes anyways), rather than paying out for social welfare programs. It's in the interest of good governance to have an inefficient system, so that there's lots of places citizens in the state can reach into the car-to-consumer pipeline and extract some money from it. And they can do all this without having to put in place unpopular social welfare programs or increase taxes or some other public works program because they can regulate the private market to force it to be more inefficient than it should be.
From a macro perspective, NJ's behavior here is completely rational. I don't agree with it personally, I think there's better ways to do this. But it's easy to explain without resorting to name calling or disparaging thinking about the competency of NJ's governing officials.
Your fallacy is... http://en.wikipedia.org/wiki/Parable_of_the_broken_window
But in this case the amount (it is also time/frustration but lets keep it simple) I would save due to not having to deal with shitty car dealerships is x times lower than what I'll spend on the EV due to its much higher cost. Granted it is a better car etc., but from the point of view of the above argument, I'm not left with 6 francs I could spend on other things; I just spent 36 francs on the EV and am short of 30 francs I could save on other things. Of course if you can say that the additional taxes Tesla will pay due to this will go around/trickle down etc. but I think from NJ politician's point of view, that is a much longer/circuitous route compared to be seen as saving local accountant/receptionist jobs (which is attractive from election/vote point of view).
To be clear, I'm not supporting the move. EVs are the future and the sooner we embrace them the better. Just trying to see it in the light of the argument made above.
> A dealer gets to keep some of that profit margin that Tesla gets 100% of right now. They then pay the dealership owner (1 job), the receptionist (2 jobs), the finance guy (3 jobs) and pay the commission to the sales guy (4 jobs) and then you bring back the car to the repair center manager (5 jobs) the mechanic (6 jobs) the car wash guy (7 jobs). There's also the sales tax on the car + the income tax for those 4 people + the consumption taxes on those people as they go about their daily lives. All those people then go out in the local economy and eat pizza and do whatever other local economic activity people do with their money. Which also generates more jobs.
Other than the dealer keeping the profit all of those jobs and people would be in NJ if there was a Telsa dealership in NJ. Now there won't be and those jobs won't exist.
So where does the dealer live? In the current model, most of them live in NJ. Which means they spend that money in NJ.
Tesla's "dealer" lives in CA. GM's "dealer" lives in MI and Italy. Honda's "dealer" lives in Japan. Hyundai's "dealer" lives in South Korea. BMW's "dealer" lives in Germany. Mercedes' "dealer" lives in Germany. Toyota's "dealer" lives in Japan. Ford's "dealer" lives in MI. Suburu's "dealer" lives in Japan.
and on and on and on: Alfa Romeo, Aston Martin, Audi, VW, Cadillac, Fiat, Jaguar, Kia, Nissan, Porsche etc.
I don't know how many dealerships are in New Jersey, but let's say there's 1,000. You give Tesla the ability to sell direct to consumer, then everybody else will want to do the same. Franchise dealerships don't get their contracts renewed and every car maker moves to direct to consumer. Congratulations State Legislator jonknee, you've just cost New Jersey a minimum of 1,000 very lucrative jobs.
To give you an idea of how important 1,000 jobs are to a state economy, when Alabama was fighting for Hyundai to come open up a plant for 2,000 workers, with an average salary of just $40,000, Alabama offered around $253 million in incentives or over $115,000 per job. This is because of all the economic activity having just 1,000 employees running around with cash in their pockets would create and the network effects therein. Over 5 or 10 years, Alabama is set to make up that investment in spades.
I don't know how much your average car dealership owner makes, but I bet it's quite a bit over $40,000. I bet a 1,000 out of work bankrupt dealership owners is a pretty big slice of state economic pie. Over 5 or 10 years, I'd hazard they represent way more than $253 million in activity to New Jersey.
So congratulations, you've just cost New Jersey hundreds of millions of dollars in GDP and economic activity just by counting only the dealership owners and not all the rest.
Now you and I both know that when you go to 47 in Vineland, and there's mile after mile of car dealerships. They don't just have 1 or 2 sales guys. Each of those places employs a dozen to two dozen sales guys. A dealership can do that because they don't pay these guys almost anything except commission, so they can afford to keep a bunch of them around, grooming their power ties. So let's say there's an average of 12 sales guys for New Jersey's 1,000 dealerships or 12,000 people employed just selling the cars.
Well a Tesla style dealership doesn't want high pressure commission only power tie wearing salesmen. They want "car information experts". So they hire say 4 guys to mill around and direct potential customers to the interactive information kiosks. Let's say NJ is able to get all 4 of these guys from the pool of current car sales guys. What happens to the other 8?
So we have about 8,000 guys out of work. Congratulations. Let's use Alabama's model, you've just cost New Jersey a few billion dollars in economic losses. And now all those food trucks and restaurants and tie shops have to figure out how to get by with 1/3rd the number of customers. So that's even more people out of work and more economic losses.
How much economic damage are you willing to cause New Jersey, legislator jonknee, just so consumers don't have to haggle a bit when they buy a car every 7 years on average?
> The truth is, car dealerships, which are mostly locally owned, are a way for a state to boost revenue capture and generate jobs. In New Jersey, not being able to pump your own gas is the same deal.
That can be said to be true about everything. Why allow online software sales, or Amazon purchases? Force them to have local BNM shops.
Or hell, computers. Why is Apple allowed to have Apple stores in New Jersey, but Tesla is not allowed to have Tesla stores?
Don't think this isn't something every state legislator in every state is thinking about. But it's a hard sell to reverse the course of the river and keep your seat. With dealerships, they're already the established model and keeping the status quo is much less work.
In your example, states are actively trying to collect at least sales tax. New Jersey is no exception
http://www.northjersey.com/news/sales-tax-decision-could-be-...
Your apologism is incredible.
"Merely corroborative detail, intended to give artistic verisimilitude to an otherwise bald and unconvincing narrative.."
You need to read my entire comment before posting non-contributing responses.
I hope people don't forget the profit motive of Mr Musk. It seems technology entrepreneurs have adopted the rhetoric of "just trying to make the world a better place" while conveniently ignoring their own profit making motives. I am no friend of car dealers but I am also not going to be suckered by a self-serving sales pitch.
While I don't necessarily support the NJ move, I think we should start asking questions about economic value flow. If people live in one place yet all their economic activity is directed to some place on the other side of the country, what is the long term effect of this on their local economy?
I don't exclude myself, we all use these web services that are highly concentrated in SV, what is going to happen to our local economies?
Elon made enough off PayPal to never have to work.. ever again . Instead he put all of his money into Electric cars, solar power and rockets with a huge chance that he would loose it all (and almost did). I don't think that profit is his motivating factor.
I seriously don't understand people that get mad when someone makes a profit. Like are those people expecting to work and earn nothing? When you risk your capital, should you not get a return? And when you risk it on something crazy like electric cars, shouldn't the profits be even that much larger, to compensate you for the out of proportion risk?
No one's getting mad about profit making, the point being made is that when profit-making is the motive, it is disingenuous to position your argument as being about something else (such as pretending to be advocating for good government).
But its not about profit-making purely. Because if it was, there are easier ways to make a profit ... like the way these crony motherfuckers do it with their dealerships.
Let's not forget the $500M loan Uncle Sam, er, The American Taxpayers, made to Musk, which in the case of Tesla failing, would have been a write off for us, but in the case of Tesla succeeding, only makes us a bit of interest, while making a billionaire more billions.
Tesla repaid their loan nine years early and is the only American car company to have fully repaid the government ever. This is a company the American Taxpayer should be truly proud of.
Also, do you really believe Elon Musk started an electric car company, a company which builds rockets and one which is the largest residential solar power provider in the country, under the only premise to make more money?
I would prefer that if the government is using our money to support companies we should at least get an ownership stake. As it stands, E-Mizzle, who already had a large personal fortune, received a huge risk free loan from us.
Perhaps your government felt that there would be non-financial benefits to supporting efforts to make affordable electric cars. Can you not think of any?
Certainly. If you are in the business of making high risk low interest loans for no equity stake, please contact me immediately.
People complain about "corporate welfare" but Musk gets the "cool sustainable tech bro!" pass.
> I don't think that profit is his motivating factor.
People are allowed to have multiple motivations.
> I don't exclude myself, we all use these web services that are highly concentrated in SV, what is going to happen to our local economies?
They adapt, as all economies must to the changing winds.
That is an optimistic take, the evidence so far with the move of manufacturing to low-wage countries suggests otherwise.
Isn't that what we preach here as automation puts half the US workforce out of business? Oh, what's that? I'm a Javascript engineer making $100K+/year? It doesn't last forever (i.e 98-01 tech boom, the sands move quickly underneath us).
The future is going to be not only disruptive, but destructive, to industries and people alike. How we turn out as a society will be determined by the policies we develop around handling this turbulent time in human history.
Oh no! I might take a slight hit to my standard of living while the developing world massively increases theirs!
> That is an optimistic take, the evidence so far with the move of manufacturing to low-wage countries suggests otherwise.
Like Germany?
Making the world a better place, and making a profit shouldn't be considered divergent goals. You act as if profit motive should be treated with inherent suspicion.
Well, if local businesses choose the services that save them a lot of money it'll probably make them more profitable and allow them to grow and hire more people.
> I think we should start asking questions about economic value flow. If people live in one place yet all their economic activity is directed to some place on the other side of the country, what is the long term effect of this on their local economy?
What do you mean? Isn't there economic value in owning a Tesla? Just because the money flows the other way doesn't mean there isn't value in owning the product.
The problem isn't with owning the Tesla but rather that the economic transaction involved in acquiring the Tesla would leave nothing to NJ (except perhaps sales tax).
When you have a dealership, you have local folks working there thus some of the money that car buyers spend gets circulated locally, which would not be the case if all you have to do is point and click to get your car delivered.
This is a serious concern as more economic transaction is virtualized.
You don't forcefully create jobs when there are none required. Lets get rid of computers and hire thousands of accountants instead. Tesla still has service shops where the local people would be employed.
> the economic transaction involved in acquiring the Tesla would leave nothing to NJ
As I understand the sales will shift completely from local venues to point and click only after the laws in question come into power. The stores that are about to become galleries do employ local folks and a sales ban may imply reductions on sales-related positions, right?
I don't know if you are familiar with how car dealerships tend to be distributed but a gallery would not be an adequate replacement. Typically you have numerous dealerships in towns/cities, I suspect you won't have anywhere close to that many galleries.
In any case, issues like this I believe are just the beginning of a larger debate to come. I don't see how local economies are going to sit idly by and watch us do all our shopping on Amazon.com where the only part of the transaction's economic value that enters the local vicinity is perhaps the delivery truck, that is not sustainable.
I do much of my shopping on Amazon and other online retailers.
It's one of the things that makes it practical and tolerable for me to live in a somewhat isolated, low-population-density town/area where I own a home, pay taxes, receive medical care and various other non-remoteable services, purchase prepared food and other perishable goods, all while working for a company based on the other side of the planet, bringing in a fairly high salary for the area.
My local economy receives far more value because Amazon makes it easy for me to live there than they would if Amazon didn't exist and I instead lived in a much more convenient large city.
You mean like buying billions of gallons of oil from the Middle East?
"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."
This is weird. Really weird. It's raw and exaggerated...almost a cartoon. I'd believe this is raw Elon Musk, but why is someone letting raw Elon Musk define this campaign? Remember raw Bill Gates? Did we learn nothing from that? Or maybe we learned a lot. And "we" have developed an affinity--a need--for the brash genius.
I'm probabilistically wrong--Tesla's doing well. But something about this appeal, the wording, makes me react atavistically, "Go fuck yourself. Nothing is obvious."
I had an argument here, but it didn't seem important, so whatever. Dogecoin and such. Also hyperloop. But really, hyperloop. But remember, I was right about New Jersey. Poor New Jersey.
Throwing it down publicly to Chris Christie - now that is confidence!
Given how low Chris Christie's political stock is at the moment, I'm not sure much confidence is required.
Chris Christie all but had the Republican presidential nomination sewn up before the bridge closure scandal.
Between that and this nonsense, his reputation as a "non-politician" has been tremendously tarnished.
Given that everyone in the US, starting at least a level below State Governor, is basically required to play political hardball just to survive, why does anyone in the US believe anyone's "non-politician" or "non-insider" political marketing?
Even Martin Luther King and Mahatma Gandhi knew how these things worked.
The best one can hope for are high functioning sociopaths who are somehow invested in the betterment of society -- basically Sherlock with better packaging. That's not to say there aren't real heroes and statesmen out there. Just good luck with distinguishing them from the hordes of sociopaths.
> Given that everyone in the US, starting at least a level below State Governor, is basically required to play political hardball just to survive, why does anyone in the US believe anyone's "non-politician" or "non-insider" political marketing?
Wishful thinking. Same reason a lot of people felt George W. Bush was someone they'd have a beer with, and considered this a relevant datum for supporting his presidency.
Schwarzenegger was basically elected as state governor off this notion. And it wasn't untrue so much as... stupid.
Chris Christie wouldn't have made it through the primaries. His polling numbers among the people who vote in primaries were not that good.
Yeah, he was always a leading favorite Republican candidate among non-Republicans. Primary voters? No way.
Aw, hell, if Chris Christie is "Republican Lite," what chance in hell is there for a non-sociopath Republican candidate?
To be fair, most of the "hardcore" conservatives are not sociopaths, they are just shallow ideologues :)
A true sociopath would appear to be a pragmatist, as that's the most practical approach.
The "bridge closure to sell you" zinger made me smile.
> the auto dealer franchise laws were originally put in place for a just cause and are now being twisted to an unjust purpose
... and Christie can argue that allowing Tesla creates a slippery slope whereby Ford and GM and other companies end up crushing the franchisees that the law intended to protect.
Musk is trying to find a middle ground that just doesn't exist unless you accept governments creating one-off laws that specifically recognizes individual corporations.
Its not clear that that's true. The law says "auto manufacturers can't sell cars" but it originally meant "auto manufacturers can't renege on franchise agreements (or otherwise abuse them)". Surely there's some way to codify the second one without resorting to the first?
The auto manufacturers can afford to eat into their normal profit margins and sell the cars at a much lower price (after deals) than the franchisees can, so it would be difficult to craft legislation that protects franchisees without allowing the manufacturers to massively undercut. The only real way to avoid abuse is to prevent auto manufacturers from selling in the first place
I do have to point out that lots of companies in lots of industries (including most B2B technology firms) sell both direct and through partners. Every one of them has to deal with "channel conflict" but that's what you do. It's a balancing act. The partners are never 100% happy but they add value to the manufacturer (or they wouldn't be allowed to stay partners) and the manufacturer can't routinely screw them over (or they'll depart for greener pastures). I'm guessing a mixed model wouldn't really make sense with autos though.
There is no slippery slope here if the law is states something like: "contracts between existing de-facto oligarchy of car manufacturers and dealers remain as is, new entrants are free to set their own terms".
Everyone is talking about how we can't trust Elon Musk since he is acting in his rational self-interest. Yet why should we assume that Christie is acting out of the pure goodness of the heart? Politicians too act in their self-interest and that kind of self-interest often involves maximization of power. The currency of politics is not just cash (that helps too, of course!), but also favours: you can be sure that in return for this favour, he'll ask something from the dealership industry which would beneficial to his political career (e.g., the first thing that pops would be to accept additional vehicle taxes, which would help Christie carry and receive donations from environmentally conscious voters in a liberal state susceptible to flooding)
(Edit: remove an incorrect assertion. Laws regarding specific individuals are constitutional, just not "bills of attainder")
Everyone is talking about how we can't trust Elon Musk since he is acting in his rational self-interest.
Except that Elon Musk's rational self-interest appears to genuinely involve a vision of the world I really like. Given all the money and effort he's put in toward that vision and the many hours of public speaking and personally answering questions consistent with that, you'd better hope he's the real deal.
Indeed, that's why I said rational self-interest and not just profit. His self-interest involves advancing science and technology.
"[I would] rather discover one cause than gain the kingdom of Persia." - Democritus
> One-off laws for specific legal entities (individuals or corporations) are unconstitutional, so no one is asking for a law that exempts Tesla and Tesla only.
As an aside, that's actually not true - laws that are intended to benefit one person are passed all the time. [1]
What the constitution forbids are bills of attainder, which are bills that declare a person guilty of a crime.
[1]: https://en.wikipedia.org/wiki/Private_bill#United_States
Isn't that easily avoided though? Surely you could protect existing franchises or franchise regions without constraining a manufacturers ability to sell without franchise, or in regions where no franchisee exists.
> all Tesla Model S vehicles are capable of over-the-air updates to upgrade the software, just like your phone or computer
It's an interesting future. We are approaching the age of malware infected cars. Does anyone have more info about what the limitations of this internet connected system is? What is possible if someone roots my car?
- Can they disable security system?
- Unlock the car? Lock me out of the car?
- Feed false data (slow destruction of car)? Feed false speed-data? False directions?
- Obtain the cars whereabouts?
- Disable breaks (would assume not)?
Hopefully those updates are signed, in which case as long as there aren't user install-able applications it should be fine.
Look beyond this local issue, and you'll see how we're in the middle of a huge power shift. It used to be that businessmen like Musk had to lobby, pressure and bribe, now they just need to appeal directly to the public, completely bypassing the political system in the process.
It hasn't started with Musk, of course. The most obvious display of such power was the website blackout that led to the SOPA repeal. That showed politicians who really holds the power. These companies barely flex their muscles either; just imagine what would happen if Google decided to get into public shaming in its homepage for entities trying to block its Fiber initiative.
The public no longer believes politicians, but they all believe Zuckerberg, Page and Musk. That makes for an interesting future.
> The public no longer believes politicians, but they all believe Zuckerberg, Page and Musk
People are given a lot of information from a lot of sources nowadays, which means they're better at analysing it and weeding out the bullshit(typically).
Your point assumes we're blindly following what they have to say without analysing it.
I can imagine a lot of people aren't. A lot of people may be annoyed with their rights or privacy taken away (SOPA), or laws being changed when it doesn't benefit them (this). At which point, people complain.
If any tech company tried to push a law that didn't benefit the public in an obvious way, I bet most people wouldn't like it.
>People are given a lot of information from a lot of sources nowadays, which means they're better at analysing it and weeding out the bullshit(typically).
Or people find the version of the "truth" they most agree with and just go with that. Given the huge industry of politically-charged "news" organizations, I think there's a significant amount of people that are doing this instead (sadly).
Right, exactly. People would probably do this whether their "truth" is coming from Musk or a politician, unfortunately.
The public no longer believes politicians, but they all believe Zuckerberg, Page and Musk.
I suspect they really only have a portion of the public -- including Musk.
Could someone explain to a European, in simple words, how the franchise-dealer-factory thing works?
If a dealer is the company who actually sales cars and the factory is the one that produces them, why do they need a franchise in between? And how come that a dealer is comparable to a manufacturer Tesla? Why do they have conflict of interests selling non-gasoline cars?!
It's not a franchise in between. The terminology makes it more confusing than it should be. The dealers buy franchise rights (right to sell that product) from the manufacturers, becoming "franchisees" - franchise owners. So my local Chevy dealership has a franchise from GM. Typically they also have rights to perform service and are certified for repairs on various brands.
thanks, clearer now. :-)
A dealer IS a franchisee. They've been given a franchise by the manufacturer to sell (and service and offer financing for) cars in exchange for meeting a variety of conditions. A similar model is followed for many types of chains, such as restaurants. So the dealer is a middleman that performs various tasks that the manufacturer would otherwise have to do themselves. US auto manufacturers originally went with this approach to avoid many of the costs associated with selling direct (and generally setting up their own manufacturer-owned dealerships).
ty :-)
Very saddened by the blatant corruption in our government. Where do I vote for a new government based on ethics and accountability (apart from New Zealand).
Government does not respond to a passive arrangement where you "vote for ethics" every so often. You have to participate more actively. This involves work.
Lets keep the discussion positive. Understand I'm not a political science major or a fancy debater, I don't claim to poses more than average intellegence, I'm just asking a question, hoping someone with more knowledge on the matter has an answer. After working to provide for the family I don't have a lot of free time to commit to politics if that's what you mean by 'participate more actively', is that the only course of action?
Do you contact your congressman, local government, or other representative body about how you want them to vote on any particular law? They're a phone call away.
That's a good idea. I've written a few letters before, but never felt like I had the skill set to argue about these points on the phone, I'm also an introvert so cold calling is not something that I choose to do very often.
Fortunately/unfortunately, there's no arguing on the phone involved. What happens is a junior staffer answers the phone and keeps a tally of which constituents come in on either side of an issue. Of course, if you're willing to make an extra effort, you can make an appointment to visit the congressperson's office, though unless you're a donor, you're unlikely to have much success meeting with the congressperson in person, but your voice would probably be heard louder nonetheless.
> After working to provide for the family I don't have a lot of free time to commit to politics if that's what you mean by 'participate more actively'
FYI, this is effectively deliberate. You're more useful to companies as a business asset rather than as a political force. It may be worthwhile for you to look into ways to pool resources with other people in order to get enough free time to commit more to politics.
Politicians (left and right) are pushed by strong forces. You can't just vote for someone who you believe is ethical and walk away, expecting that the power of that vote is sufficient to oppose those forces.
In other words, you were asking about a way to vote to fix this, and it's not fixable by a vote.
Voting is an administrative task, not an advocacy action. If you want to change how things work, start advocating. Voting is the end of a campaign, not the beginning.
The HN community should band together and buy an island and create our own government there.
What should actually happen is that the US-based tech crowd should put together a political action committee and start lobbying. That would have a better chance of real-world impact.
No, no they should not. You really don't want to be involved with those kinda guys:
http://en.wikipedia.org/wiki/Seasteading
It's the sort of hyper-liberterianism that looks and sounds like a passable option until you consider it for more than a second. And then there are the proponents for this kind of insanity...
"An even bigger conflict of interest with auto dealers is that they make most of their profit from service, but electric cars require much less service than gasoline cars. There are no oil, spark plug or fuel filter changes, no tune-ups and no smog checks needed for an electric car."
Well then what about BMW with bumper to bumper service as only one example. That's a high end car that you don't pay for service for (iirc) 3 years. They cover everything. Wiper blades you name it. I think last I checked the same was true for Subaru and I think even Jeep Chrysler is doing this (may be wrong about that one).
And that's not a conflict of interest but rather a business model. In the case of cars which do make money from service they therefore in theory have a lower price for the vehicle.
This argument is like saying that you are a better airline because you don't charge for luggage. Presumably that extra revenue allows you to offer lower ticket prices. And surprise that is what happens. Back when airlines were regulated (and had less competition) and they charged way higher prices they didn't have to nickle and dime you to make a profit.
More to the point, the things he mentions are not very expensive service items--to say nothing of the fact that there's no particularly compelling reason to have them done at the dealer if you don't want to. (And talking about "tune-ups" is pretty close to an anachronism at this point.)
Tesla, on the other hand, does have all its new electric car components which are all very impressive technically but about which relatively little is yet known about service life and long-term service costs.
Really, this is about Musk wanting control over the complete experience. Nothing wrong with that (see, e.g., Apple). And I'm no particular fan of the auto dealer experience. (Though I don't buy luxury brands today which, I've been told, unsurprisingly offer a better dealer experience in general.) But you'll end up with dealers of some sort one way or the other.
I buy luxury brands and have for a long time.
The dealer experience is pretty darn good.
I took delivery on a new Porsche. The transmission had a problem. So they flew a new one in from Germany by Fedex at a cost of perhaps $8,000 (after all it's pretty heavy) in air freight I was told. Loaner cars? Last time they gave me a brand new Cayman (I own a 911) with 300 miles on it. Other times Cayene Hybrids with 3k miles.
It's not without it's bumps of course (routine service maintenance was $450 to keep up the warranty Mercedes does something similar). But if you can't afford that type of thing you don't buy this type of car (at least not a new one).
The standards are higher for several reasons. One is that people with money don't take shit generally and are very demanding. So they keep the people working there in line and don't take bs answers and complain so much.
I brought the car in to fix a problem and when I was driving down 95 the repair broke. I called them they towed the car back and got the repair mechanic back from home (he had left for the day) and fixed it while I waited. I felt bad for him he was literally fearing for losing his job.
If you have a problem with your Tesla they will come to you and if required leave you with a loaner (the top end model of course). I'll take that over going to any dealer, no matter how nice it is.
(routine service maintenance was $450 to keep up the warranty Mercedes does something similar)
Mercedes in Houston charged you something like $175 or $250 just for bringing your car in.
Keep in mind that when a car has a warranty or includes free service for X years, the dealership that performs that service is still paid. It's sort of like a medical insurance model, where you don't get a bill, but if your engine blows out, the manufacturer still pays the dealership for all of the labor (at a pre-negotiated rate) to do the service. Dealers love those kinds of arrangements because it trains people to get their service at the dealer, so even after the warranty is over, they keep coming back for overpriced maintenance and repairs.
When a dealer sells you a "lemon" that racks up thousands of dollars in warranty-covered repairs it's actually a bonanza for them.
The conflict of interest Musk is referring to is that dealers won't want to sell extremely maintenance free cars because their revenue on the back-end would be miniscule.
BMW provides free service for 3 years, but few cars have major repairs during their first 3 years. The money in service is in the later years, when major repairs and maintenance occur.
You don't see any difference between not needing some types of service and building some types of service into the price?
Wiper blades are what, $30 a year if you really care about them?
My father worked for 30+ years in auto dealerships. He was a mechanic and in the end worked his way up as the service manager. It was made clear to him that sales had to make money and service had to make money and they didn't care how it was done. He is a good and honorable man and even quit one dealership because they pushed crazy service incentives on service writers to up-sell every kind of service you can imagine. That said in the end he retired early because the dealership he was at was bought by a consortium of dealerships and they let him know that his service shop wasn't as profitable as needed and that he needed to up-sell more services to the customers.
In the end dealerships are about making money from their clients by "adding value". Sadly most of the time that value is having the black car in stock -vs- someone down the street who only has the blue one.
It's sad to see a government more concerned about backing the establishment then creating an environment for free trade and new business models.
Our stores will transition to being galleries, where you can see the car and ask questions of our staff, but we will not be able to discuss price or complete a sale in the store. However, that can still be done at our Manhattan store just over the river in Chelsea or our King of Prussia store near Philadelphia.
"Cross an imaginary line a few miles down the road that the auto dealers can't access and everything will be A-OK!"
This is everything that is wrong with politics in a sentence.
the entire modern geopolitical setup is based on complicated networks of imaginary lines.
"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."
That's total BS. Any dealer who invests money in a new show room to sell a new brand of car (think of Mini which was picked up by many legacy BMW dealers and is sold in many mini only showrooms) is going to put in the effort to sell the product. We aren't talking about putting Teslas on the same floor as Mercedes. It would be trivial for Tesla to insist that the product be sold out of a dedicated facility which would cost a dealer money to construct. The idea that that dealer would simply push another product (or the salesman) in another showroom that he operates is ridiculous. And contrary to the behavior of existing multi line large dealerships.
So it seems you can still buy it online. Does that mean you can go into a dealership and just buy it on your phone?
AFAIK, everyone who's ever bought a Tesla car has bought it online. In the states Tesla is allowed to sell directly, the process of buying one in the store is being sat at a computer and being guided through your online order with a sales rep's help. They don't have cars on lots you can purchase and drive away. The stores are all basically showrooms whether they're allowed to sell cars there or not.
Ha! Maybe they could set up QR codes to link to the pages that discuss the pricing, or just have signs all over that tell people to go to teslamotors.com on their smartphones, and to contact their legislature if they think this is a stupid rule.
I wonder if they could get away with having iPads pre-loaded to teslamotors.com on-site.
This just got reposted on the NPR site, it's highly relevant and timely along with this law and Elon's response:
In it, some argue that "A no haggle, painless car buying experience will eventually come; but it won't be without your local dealers"
I wouldn't be so sure. As Elon states, the fundamentals of the industry haven't changed in quite a while. He's approaching it from one direction (The cars/manufacturing and sale of new cars), and others (like myself and partners) are going directly after the used car Buying/Selling process. Our goal is to make it as easy as possible for Sellers/Buyers to transact. Check us out here:
So much for the american "free market"...
What a joke.
As a european, i can't even comprehend how ludicruous it sounds that a business can't sell it's goods directly. It's so outrageously wrong, that I can't find words that fit adequately.
I agree, it sounds ludicrous. But there are plenty of ludicrous instances in the EU where free trade gets banned by some stupid law legalizing a monopoly. As much as I'd like it to be, the EU is hardly perfect in this.
What makes it ludicrous is how much noise US politicians on the right make about "free market" and how they vilify "socialism" then turn around and pass legislation that implements massive market-distortions. It's basically massive demagoguery and corruption.
So true. If conservative talking points would concatenate the String s = "except when it favors the 1%," they'd reflect reality.
"Free market regulation is bad for the economy " + s
"Government services are handouts and immoral " + s
etc. etc.
That's some good writing by Elon, by the way.
Perhaps it went through an editor or two, for typos and such, but I have to say I find his style engaging...
(Disclaimer: If I had the money I'd buy a tesla, and I am an investor.)
Perhaps it went through an editor or two
I 110% percent guarantee it did. No CEO of a decent sized company would not.
Your comment reminded me of the Whole Foods guy -- a counterexample.
http://www.nytimes.com/2007/07/12/business/12foods.html?_r=0
This is pretty standard for New Jersey. It's common for money from highway projects to get diverted, or tolls to go into people's pockets long after roads were paid for, etc..
Is it possible for Tesla to just create a shell "autodealer dealer" company in each state. I am guessing they thought of that and legal language prevents its from working.
The dealer cannot be owned by the manufacturer.
Shell company owning both the manufacturer and the dealers?
I think the major point is that we want to be on his side. As long as hes not saying or doing something completely wrong, I'm sure we all agree there are huge issues with the govt, laws and corruption and that any strong voice attempting to fix this is a good thing.
There's also a lack in innovation and lead from the US market in various technologies.
Elon Musk took all of these things head on and keeps doing so all the time. What's not to like, I would ask?
I am 100% behind the man as long as he keeps doing so.
I will be glad to move out of Jersey (likely next year). I live in Fort Lee and was trapped in "Bridgegate" traffic last fall. My cautious optimism over Christie has faded over the years as he has so transparently started focusing on positioning for 2016. This cave-in to the dealership lobby is just another reason to take my talents and tax dollars elsewhere.
In case you missed this last year, Tesla's vision for servicing and customer delight is refreshingly progressive: http://www.teslamotors.com/blog/creating-world%E2%80%99s-bes...
TL;DR: Elon Musk disagrees with the decision and viciously attacks Chris Christie , Auto Dealers, the State of NJ and compares their reasoning to the mafia. He also encourages you to buy a tesla car before the laws take into effect. Tesla will continue to lobby and possibly sue for a change.
The ugly side of capitalism. But that does not make the whole system bad. There are those who will always stall progress for profits, and there are those who will surmount the bullies. Go Elon!
It's interesting that Christie seems to have totally given up on being a viable national political candidate, after the drive slow thing with the bridges, this, and some other issues.
I think that oil is poison for humanity, it leads to resource conflicts and providing money for evil governments. Thus we need to get off oil to have long term peace on earth.
Elon Musk is a hero
It's not oil or other resource conflicts that are poison per-se. It's a system of conflict resolution that eventually and too often turns to armed conflict as "diplomacy by other means."
It's also a "human nature" that is prone to having one group of us kill another as a means of conflict resolution. Unfortunately, that is apparently a part of the natural behavior repertoire of Homo sapiens and Pan troglodytes.
I assure you that governments will continue to do evil things and will find the money to do so, but over time governments will become less evil.
I'm not opposed to what Musk is trying to do but how or why are auto dealers a monopoly? Those direct sales laws were originally created to preserve small business.
I thought he did a good job explaining why those laws were put in place and why they're not needed to be applied here. Even if you don't agree it's a monopoly, clearly in this case the law is not being applied as it should be.
Don't forget that Musk is completely biased here, and his representation of the history of those laws are likely to be tainted by that bias. I don't know the full history of why these laws were put into place, but I wouldn't trust Musk to tell me the full story when he's clearly trying to paint a very specific picture.
I was impressed by the fact that he bothered to offer an explanation of why the law was introduced and what purpose it served; it makes for a more compelling argument than some cookie-cutter rant about Big Evil Corporations wrapping their rent-seeking tentacles around the government.
Cookie-cutter rants are rarely published by people with skin in the game.
I suspect it's the same general mechanism as even the most liberal of recent US presidents strangely doing the bidding of the military-industrial complex. (Obama and Carter.)
Most dealerships would not count as "small" businesses. They are at the very least "medium enterprise" and at the most Fortune 500 companies[1].
Well, most dealerships are probably used car dealerships that almost certainly qualify as small businesses. Of course, that has little to do with our current conversation. I'm just feeling extra pedantic today.
Excellent link!
Some quick stats on the size of this particular "small" auto dealer company:
Trailing 12-month revenue: $8.9B Trailing 12-month gross profit: $1.29B CEO Pay: $2.5mm (for comparison, this is higher than the cash comp of the CEOs of GM and Microsoft)
I'm not sure this business needs regulatory protection from the likes of Tesla.
This Planet Money episode[1] gives a interesting of the history of autodealers, with some additional info regarding the latest twists that had come up due the fiscal crisis too.
[1] http://www.npr.org/blogs/money/2013/02/12/171814201/episode-...
That's a fairly one-sided view on the situation. Just some random points:
* Saturn tried the "no-haggle" new car buying experience. People generally liked this, though Saturn doesn't exist anymore.
* "closing a dealer is hard". Dealers have to pay for the land they own. The cars on their lot tend to be bought with money from the bank (a bank really owns the cars). The dealers just have to pay insurance/interest on the cars. The longer a car is on the lot, the more insurance and interest the dealer has to pay. If a dealer isn't selling cars to pay the bills, they will shutdown.
* Dealership "look". My knowledge is only from Texas.... Some brands, like Lexus and Cadillac set some very strict looks for the dealership. Specific signage, layout, etc... A manufacturer can set standards the dealer must live up to. Also, if a dealership ranks below a certain score on their customer surveys, the manufacturer can close them down.
* Pricing... yes, a middle man increases the cost of something. But that middle man can help explain features, is there to help deal with problems, and as they tend to be more locally rooted than an auto-maker, will try (hopefully) try harder to please their customers. Why do we have to pay real-estate agents so much? Good agents really help a buyer, same could (hopefully) be said for a car sales person.
* (edit addition) Why are sales people jerks? This will heavily depend on the dealership you are dealing with. Management of a dealership does a lot to shape the experience for their customers. A few things: sales people are paid a % of the money they hold over the cost of the car, so they are financially incentivized to keep the car price high. A car that has been on a lot for a long time has incentives added to it for a sales person. Sales people get bonuses based on number of cars sold. Sales people sometimes get bonuses based on their customer surveys (or are required to keep a certain average or be fired). Dealers are allocated new shipments of cars based on past sales, so a lot of dealers want to sell as many cars as possible (if they are trying to grow); dealers that don't care about growing will be less flexible about pricing.
Though, I agree that the car buying experience should adapt as information about cars is more easily accessible, it would require all of the states redoing the state auto franchise laws.
If a dealership middle man is providing so much value to the customer, why then does it need any legislative protection? Real estate agents are a bad example, as that industry is also dug in with legislative protections against more competitive business models.
NPR said it was due to Ford and other auto makers back in the 1920-1930 bullying dealerships. Ford threatened to cancel their business contracts with dealership if the dealerships didn't buy cars that they knew they couldn't sell. During that time, Ford kept their lines running at full capacity even though demand didn't warrant it. The states decided to step in and protect their local dealerships from the megacorp that was Ford and the other manufacturers of that time.
The auto makers of back then dug their own grave with their business practices.
Another argument I've heard is about sales tax. If an auto-maker could sell direct to customers, it could (possibly) be treated as interstate commerce and avoid directly collecting the sales tax. So it's in the state interest to keep dealerships around.
I understand the history, but in today's commerce environment the middle-men industries should provide their own value without legislative props, or they had better have a unique line of reasoning that is relevant to the modern world.
If you have a building or lot where people have to go to physically see the car (as Tesla does provide BTW), then it's difficult to imagine how sales tax would be avoided.
NPR said it was due to Ford and other auto makers back in the 1920-1930 bullying dealerships.
Why in heck do we let software companies bully OEMs?
A large part of the MS anti-trust suit in the US was over the pressures they placed on OEMs. An example, BeOS was going to be licensed to Compaq. MS pressured them by threatening to raise the cost of OEM licensed copies of Windows, which would have severely eaten into the profit margin of an already narrow-marginned industry.
It's probably worth pointing out as well that some dealers are predominantly or exclusively "no haggle" even when it's not mandated by the manufacturer.
I'm generally sympathetic to the notion that auto manufacturers should be able to sell direct subject to whatever contractual promises they may have made to existing franchisees. That said I'm unconvinced that, from the consumer perspective, there's going to be a huge difference between a luxury brand car dealership network such as those that exist for BMW and Mercedes and Tesla-owned and operated locations that do things like: service, helping to arrange financing, take trade-ins, showroom, offer test drives, etc. Sounds a lot like a dealer to me. As you note, it's really a false dichotomy between manufacturer-operated network on the one hand and an uncontrolled Wild West of franchises on the other.
Saturn went away because of GM's restructuring after 2008. It's hardly apparent that there's a conneciton between their "no-haggle" buying experience and their eventual dissolution.
EDIT: Spelling.
Saturn tried the "no-haggle" new car buying experience. People generally liked this, though Saturn doesn't exist anymore.
That's mostly due to internal politics at GM when they were going bankrupt. Even though Saturn was one of the divisions making a profit, they got the axe.
Once again, internal company politics being a terrible proxy for rational decision making.
My first reaction upon reading your comment was that there was no way you read the article before commenting. Basically, what you say is directly and effectively addressed in the article. I was going to give you the benefit of the doubt though until I saw that the article was posted 23 minutes ago. Your comment was posted 21 minutes ago.
Oligopoly more than monopoly. But if there is a single dealer lobby group then it's a collusive oligopoly (cartel) which will be able to wield monopolistic power.
The monopoly is that only dealers are allowed to sell cars. Whatever the original intent, they seem not only unnecessary but quite anti-American (most definitions) now.
Musk's sales around the country are probably going up thanks to this event, and his taking the opportunity to tout Teslas using facts :)
There probably aren't many people reading Tesla press releases other than (a) people that already own a Tesla car, and (b) people that don't need to be swayed, they just can't afford/justify the price of one.
"To the People of New Jersey".. I can picture a Marsian saying this. Oh wait, it's Elon Musk :)
NJ can just buy from nearby states. Not a good solution, but whatever.
Musk, you need to make donation to the right politicians. N00b.
such pleasure to read Musk. he's got that evangelial air... of course, it helps that he's in the right.
I wonder if he'll end up Emperor of Mars?