Tesla To Sue Utah Over Restrictive Sales Guidelines

2 years ago by Mark Kane 39

Tesla - Salt Lake City - 2312 South State Street (Store, Service Center, Supercharger) (photo: Google Maps)

Tesla – Salt Lake City – 2312 South State Street (Store, Service Center, Supercharger) (photo: Google Maps)

Tesla is still struggling with direct sales in Utah after their $3 million store in Salt Lake City was prevented to start operations (the service center and Superchargers are unaffected).

Pretty Hard To Sell Cars You Can't See

Pretty Hard To Sell Cars You Can’t See

Basically to sell cars, Tesla need to be a dealer, but it can’t get the dealer licence to do so.

Now it seems there is a new legislative idea that would enable Tesla EV sales in Utah with on-line ordering – but without having physical car inventories.

A stipulation Tesla is not happy with, and as such, is now suing Utah to make the conditions more favorable for the automaker:

“A Utah lawmaker is again proposing a way to let Tesla Motors sell its electric cars at a sleek Salt Lake City showroom, but the company says the plan puts unfair restrictions on their business and they’re taking the fight to court instead.

A Tesla representative said Monday the proposal bars them from keeping any inventory in the state and they can’t do business that way. Regulatory affairs vice president Jim Chen says Tesla is instead suing the state for refusing to give them a license.”

“The bill would let people come to the $3 million showroom and buy cars, but it would force Tesla to ship each order to Utah rather than keeping an in-state car inventory, said Jim Chen, the company’s vice president for regulatory affairs.”

source: The Salt Lake Tribune, Manufacturing.net

Video from April 2015:

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39 responses to "Tesla To Sue Utah Over Restrictive Sales Guidelines"

  1. Nelson says:

    Just goes to show how incompetent Utah legislators are. They’re turning away the opportunity to collect State Income tax from the workers that would run that Tesla Store. A business is a business when it comes to State Tax revenue. I wonder if the Utah Judges are as dense as its elected officials.

    NPNS! SBF!
    Volt#671

    1. kubel says:

      They aren’t incompetent. They are corrupt.

      1. Nelson says:

        Perfect sting setting for an FBI case.

        NPNS! SBF!
        Volt#671

  2. bro1999 says:

    Let’s blame GM!

    1. Anon says:

      Please… We like actual challenges on this blog.

      Give us something harder. 😉

  3. Alex says:

    GM dealers wants to sell Tesla, oh no mean Silverados :-).

    1. John says:

      Someone needs to put an AWD Tesla 90DL drivetrain in a new Silverado. Just to piss everyone off 🙂

      1. Rick Danger says:

        Hah! And drive it right up Bob Lutz’s a.. er, driveway.

        1. Anon says:

          Oh man, that would be spectacular…

        2. dRanger says:

          You know, I think I would pay real money to see that.

      2. TomArt says:

        If I knew how, I would!

  4. G2 says:

    I thought Americans would love an all American car maker and support American jobs.
    Things are very strange my friends.

    1. TomArt says:

      It’s called “Free markets for everyone! (unless I don’t like you)”

  5. TNT says:

    I love how Republicans complain endlessly about how red tape & over regulations are killing businesses and yet they are the ones trying to over-regulate Tesla out of business. Biggest hypocrites in the world.

    1. Anon says:

      Yup. It’s a tactic used not just for cars; but for basic human rights– like a woman’s ability to choose having a legal abortion or not.

      When money speaks louder than the voices of its citizens, Democracy dies a little more each time…

      1. TomArt says:

        Yep, it’s more like, ‘free markets for my campaign contributors’

      2. Mark C says:

        Anon, obviously when you mentioned basic human rights, you were not talking about the child to be aborted. And you’ve never seen a sonogram of an unborn “human” child moving in the womb. But it is a grand depiction of a judicial system gone bad.

        Your opinion may vary, as we are for the moment, still a free country.

        1. Anon says:

          Until the tissue growing within its mother is detached; it has no rights– any more than a tumor (like a teratoma) does.

          High Sentience is not just human-shaped tissue, but culture, experience and reason. This is precisely why we don’t allow people to vote until they reach a certain age…

          Seen plenty of ultrasounds of many things moving around in humans; including various stages of embryos to fetuses. So, not sure why you had made such an assumption? But, OK. *shrugs*

        2. Nick says:

          Yep, body autonomy vs rights of foetuses.

          I’m sure we’ll settle this to everyone’s satisfaction in the comment section of inside EVs. 😀

          Let’s start with Tesla direct sales and work or way up. Sounds easier.

  6. sven says:

    The Tesla VP said that Tesla wants to keep an in-state inventory of cars in Utah to sell to customers instead of having to ship each order to Utah.

    “The bill would let people come to the $3 million showroom and buy cars, but it would force Tesla to ship each order to Utah rather than keeping an in-state car inventory, said Jim Chen, the company’s vice president for regulatory affairs.”

    Just the other day, Pushmi-Pullyu was jumping up and down arguing that Tesla absolutely does not sell cars from inventory even though I pointed out to him that in the 4th quarter Tesla sold 3,450 more cars than it produced, and the only logical conclusion was that these cars were sold from inventory.

    http://insideevs.com/tesla-reports-q4-2015-and-full-year-earnings/#comment-791952

    1. vdiv says:

      CPO cars have to be from inventory. Demo cars too, how would you offer test drives otherwise?

      1. Pushmi-Pullyu says:

        Used cars, aka CPO cars, are not the same inventory. That’s not the “inventory” under discussion here.

        No auto maker counts used cars as new car inventory or sales.

        1. vdiv says:

          Talking about selling cars in Utah, new or used, without being able to have them in Utah. See Tech01x comment below.

    2. Pushmi-Pullyu says:

      *sigh* Here we go again, with the confusion over the word “inventory”.

      When Tesla says “inventory” cars, it means only those cars used for showroom floors, test drives, and service center loaners. Tesla does not use the word “inventory” as other auto makers use it.

      Get it? Got it? Good.

      It appears to me that what Tesla is complaining about is that the State of Utah won’t even let them keep cars around to use for test drives and showroom floor models.

      1. sven says:

        No, Tesla clearly and explicitly states in in its latest Form 10K Annual Report filled with the SEC that “Finished goods inventory includes . . . new vehicles available for immediate sale at our retail and service center locations . . .” From this inventory, Tesla takes vehicles to serve as demo cars and loaners, which eventually will be sold to customers. But as stated above, you can also buy a new car from this inventory that hasn’t been used as a demo or loaner car, or pre-ordered.

        The link below is to Tesla’s 2015 Annual Report Form 10K, Notes to Financial Statements. Scroll down to the bottom of page 60, and look at Note 4 – Inventory.

        “Note 4 – Inventory”
        . . .
        “Finished goods inventory includes vehicles in transit to fulfill customer orders, new vehicles available for immediate sale at our retail and service center locations, and pre-owned Tesla vehicles. The increase in finished goods inventory was primarily due to customer orders that were in transit for delivery at year end.”

        http://ir.teslamotors.com/secfiling.cfm?filingID=1564590-16-13195&CIK=1318605#TSLA-10K_20151231_HTM_NOTES_TO_CONSOLIDATED_FINANCIAL_STATEMEN

    3. Pushmi-Pullyu says:

      sven said:

      “Just the other day, Pushmi-Pullyu was jumping up and down arguing that Tesla absolutely does not sell cars from inventory even though I pointed out to him that in the 4th quarter Tesla sold 3,450 more cars than it produced, and the only logical conclusion was that these cars were sold from inventory.”

      sven, some of your posts are starting to read like you’ve become a hard-core Tesla basher, ignoring actual facts in favor of TSLA short-seller conspiracy theories. There is an ongoing Tesla basher conspiracy theory, often repeated on Seeking Alpha, which claims Tesla is secretly hiding production of “inventory” cars that it’s selling in some mysterious gray market somewhere… altho for some odd reason nobody has ever been able to find any of those, or point to a VIN number.

      In other words, the Tesla bashers want us to believe Tesla is faking its sales numbers, to believe that Tesla does not actually have an order for every car it builds (other than the relative handful of cars it uses for demos and loaners.)

      Now, is that what you really believe? Yes or no, please.

      If “No”, then please accept the fact — fact, not opinion — that the only cars Tesla sells from “inventory” are its demos and loaners, which are sold as new at a slight discount, generally after just a few months of use.

      (For purposes of full disclosure, I should add that what Tesla counts as “inventory”, for accounting purposes, also includes cars in transit to the buyer. That is, cars which have been built but not yet paid for. But in the context of this article, that only adds to the confusion over the term “inventory”. That’s not what Tesla is complaining about here.)

      1. staff says:

        There seems to be an epic rivalry between PP and sven happening. And it seems unlikely to end with one conceding defeat.

        Perhaps it is best for you guys to just avoid each other, or attempt to “reset” your relationship to more cordial/professional for the good of others in the discussion who are being entangled with it.

        We are considering moderating comments now that contain words like “fanboy”, “troll” or “fudster” that don’t have anything constructive to say (to eliminate the language that will “engage” threads from spiralling out of control) – if only for the good of the wider community.

        1. Pushmi-Pullyu says:

          Is it okay if I call myself a “Tesla fanboy” or “fanboi”? 🙂

          Seriously, I don’t regard sven as a troll, and I don’t think he’s posting for the purpose of promoting an investor or political agenda. He often makes useful contributions to the discussion.

          My apologies if my comments here have been “over the line”.

          1. Jay Cole says:

            I should probably weigh in on this directly, as ultimately the direction of the site/guidelines fall to myself.

            No you are fine, sven is fine, no one is really “over the line” or “in the fire”…as you know we don’t moderate anything/ban hardly anyone around here.

            We are just looking to be a bit more proactive to keep the discussions on topic, so less “poking the bear” between opposing viewpoints if you will, lol.

            So we are considering “light moderation” of those comments without much substance, but a lot of “bear-poking”

            ie) a comment like this “Hey Troll, you are full of bs and your mother was a hamster and your father smelt of elderberries!” will magically change to, “Hey commenter, I disagree” (with a little note saying it was edited)

            Truth be told, if we/I ever get the new comment system bug free on the shadow site (up vote/down vote/collapse comments) I think it should help regulate itself, where too much “troll/fanboy” calling will illicit comment collapse. But you never know, that could get abused too, it is the Internet, (=

        2. Phr3d says:

          a
          MASS
          predisposition Reset is Long overdue:
          To all regular readers that I have intentionally or inadvertently offended:

          I Humbly Apologize.

          We are unwitting ambassadors for the constant influx of people Newly interested in all things EV.
          MANY will be fanbois (likely the reason that they visit).
          MANY will be contrarians (likely the reason that they visit, with luck because the want to see Informed response to the myriad, ahem, claims-as-fact that has been their prior web-sperience).

          I hafta’ remind myself whenever the new flood rolls in, or whenever an experienced reader has -obviously- found urea in their cornflakes today, and cannot get that they are kinda’ crabby -at the moment-.
          welcome to the ‘net.

          and Thank You, each and every one of you, that has educated me on all things EV – you wonderfully knowledgeable lot don’t get near enough credit.. the commentary history of this place could be a webinar if someone was able and wanted to boil down the good stuff from the chaff.

    4. Tech01x says:

      In Tesla’s use of the word “inventory cars” means the demos and service loaners. These cars were never registered by another owner. You can see these on EV-cpo.com which tracks inventory and CPO cars. Over time, these cars will gain mileage and use. People that just cannot wait for an order can buy an inventory car, but this is immaterial to their business model. We are talking likely 100-300 inventory car sales a quarter in the U.S. They likely sell 6,000-8,000 build to order cars. Most of them really used cars after a bunch of demo rides. Rarely, an inventory car might be sold without any prior use, but there then there is no discount.

      1. Pushmi-Pullyu says:

        Tech01x said:

        “Most of them really used cars after a bunch of demo rides.”

        Yes, and it really amazed me when I found out that demo cars can legally be sold as “new”, at least in the USA. Well, I guess every auto maker does that, so no good reason for Tesla not to.

    5. JakeY says:

      Other than loaners and demo vehicles (which Tesla does sell as a “new” car just with some discount based on mileage), there are also abandoned vehicles (ones that were customer ordered but cancelled in last minute) that Tesla have available for sale.

      If you are lucky, you can find an example with low miles (before enough customers have loaned it out or test drive it), but then you also will get little discount.

      I think the pushback on your characterization is that you make it seem like they are keeping actual new car inventory in the traditional sense (large amounts that sit on a lot and are not intended to accumulate many miles). Right now they only have enough to keep a loaner and test drive fleet. Loaner and demo cars are categorized under a different category in dealership lingo.

  7. Anon says:

    I am a FUDster. Yes.

    Firm, Unwavering, Determined… 😉

  8. Bob Nickson says:

    In the mean time, while the lawyers do their thing, Tesla should troll Utah by:

    Filling the SLC showroom and parking lot with lots of not-for-sale Teslas for ‘decorative’ purposes.

    Establish or contract with a SLC rental car company to provide rental Teslas that can be rented ‘by the minute’ for test drives.

    Keep their standing inventory of cars parked in Evanston WY, just 80 minutes away.

    Have an internet kiosk in the Service Center customer lounge where a potential buyer, after having experienced a full service but slightly quirky but legal ‘sales’ experience can order their car online and have it delivered to the curb outside from Wyoming by the time the paperwork is wrapped up.

  9. LGHTCYCL says:

    I am a resident of the state of Utah. yesterday I was running and a sleek new Type S drove past me. What a beautiful car! It makes no sense that a state that professes to be a free market one restrains an American company, one of our own, from selling their cars unrestricted in the state. Tesla has diligently been working with my states government on getting a license. Their frustration is only logical.

    I have decided to actively petition the state to look at letting Tesla sell their vehicles the way Tesla wants to.

    1. Bob Nickson says:

      I’m surprised you could see the car through the smog.

      If only there were a viable path forward to clean air on the Wasatch Front.