Tesla:1 - Auto Dealerships: Zero

Now if only MA could keep sales tax, the other states would change their minds pretty quickly

 

"Keep sales tax"? Why?

Tesla is pretty smart putting their cars in malls. As people shop around, they see the car on display & learn about it. (In a Tesla dealership the car would go un-noticed by all but a few enthusiasts.)

 

you pay the sales tax when you register the car.

 

Will be interesting to see if other states follow suit. If Tesla is also successful in other states in challenging rulings like this, I wonder what will happen to dealerships in the long run.

 

The norm in most states is that Tesla has no problems selling their cars.
The dealers have protested in some states and have succeeded in some states, lost in others.

 

These dealer lawsuits are not about Tesla per se, but are meant to be reference cases to prevent Detroit/Japan/Korea manufacturers from competing with their dealers.

 

How so? There are already laws on the books to protect the dealers from manufacturer direct stores. In what way does citing these laws to attack Tesla make them stronger against the manufacturers? To show them that the dealers will fight if they try?

 

IANAL

My understanding of US tort law is that precedent, if not completely binding is very influential. It forces defense of any and every subsequent challenge out of court to prior ruling. We see it in practice when big corporations sue little penny businesses over TM infringement like using a similar sounding brand name. If the corp does not force the little guy to concede then the next infringement by a real competitive threat is much more likely to win in court.

 

I understand it regards to TM and copyright. I just don't see the similarities between the two. If it were about trademarks, Tesla wasn't infringing on the dealers' own TM. Tesla's TM might be more appealing, and a threat in taking market share from the dealers. So dealers try claiming Tesla is violating their TM when most people can see that there is no TM infringement is going on. Thus they lost.

The franchise protection laws have been in place for decades. Presumably the manufacturers already had a chance fight it. Perhaps they did and lost, or perhaps they felt it wasn't wrought the fight. Whatever, the dealer franchises have legal protection from direct manufacturer franchiser competition, and there wasn't much of any rumblings of the manufacturers contesting this with Tesla now on the scene.

So if this was more than hindering Tesla from competing with them, and setting precedent in the case the manufacturers felt the need to get around the franchise protection laws, it seems to have been a poor reason to do so. I think new GM tried to get around it arguing they were an all new company without franchises, but that didn't fly. That would be a precedent for this case I think.

Losing to Tesla has set the precedent for other new car companies to the market to not having franchise dealers. Like Elio. Maybe the dealers were looking farther ahead. They expected to win and such a ruling could be used against somebody big coming in like Tata.

 

My point in mentioning copyright squabbles is that a company cannot decide to fight some and not others.

 

it's okay for tesla, they only have one model. for a large mfg., it's much more difficult to expand into distribution. the competition is fierce, and hq can't get a real handle on all the individual markets around the world.

 

My point is that if using anti-capitalistic tactics to fight competition wasn't the primary concern, Tesla selling direct would have no bearing on future cases brought by the current auto makers because laws that would be in dispute simply don't apply to the situation.
Manufacturers-"Tesla can sell direct."
Dealers-"Tesla is a brand new company without a previous history or pre-existing franchise dealer network. The laws that protect us from you didn't apply to them."

Yes, now that the dealers have a losing decision backing that up, would strength there defense from any current car company trying to go direct. It also tips the decision balance of any new company to the US market in favor of skipping the franchise.

 

it's like jet blue picking and choosing the profitable routes and delta being stuck with the unprofitable ones.

 

You are not understanding. The key point is *having* to contest. Not taking on Tesla would have been the precedent.

 

In most cases the dealers aren't looking for precedence based on current law, they are trying to change the laws.
Precedence is very well established to prevent manufacturers from direct sales IF they have franchises. I don't think dealers have anything to fear from that.

 

I understand. What part of the Tesla situation doesn't apply because the situation has no bearing on current laws is hard to understand? These are a collection of state laws. Some might be written in a way that the dealers have to fight, bust the gist is generally to prevent a manufacturer for opening a store when there are franchises are already in place.

If it was about precedent and protecting their franchises, why not fight McDonalds? They opened up company stores in franchise areas, and an individual resturaunt's biggest competitor is likely another McDonalds.

 

"Car manufacturer sells direct to customers."

I'll say that is a fairly clear cut precedent, but you are welcome to disagree. And I do grasp that Tesla does not have a dealership network or franchisees -- that has been their argument in court. The point -- once again -- is that the dispute had to be taken to court. The Tesla win is not a defeat for the plaintiffs insofar as case law delivered with Tesla as the defendant continues to uphold the block in competition between car manufacturers and 'their' independent dealerships.

 

The base assumption is if the law doesn't outlaw it, it is allowable.
The precedent would be to outlaw direct sales, which a couple of states have done.
The dealers are not trying to prevent/defend from Tesla setting a precedent, they are actively trying to set their own.

As mentioned previously, other businesses already operate with both the direct sales and franchise models.