New York Cuts Deal To Allow Existing Tesla Stores To Continue Direct Selling

MAR 30 2014 BY JAY COLE 20

Averting a head-on collision between the state dealers associations and Tesla, New York Governor Andrew Cuomo announced that both Tesla Motors and the NY dealers have reached an agreement to allow direct-to-consumer sales by the Californian EV maker.

Tesla Rejected Earlier Deal That Would Have Seen Them Able To Operate Directly In NY For 8 Years

Tesla Rejected Earlier Deal That Would Have Seen Them Able To Operate Directly In NY For 8 Years

Effectively the agreement actually bans the direct-sales model in New York, but grandfathers any existing outlets present in the state.

Meaning it will be business as usual for the 5 existing Tesla stores already operating.

“Today’s agreement reaffirms New York’s long-standing commitment to the dealer franchise system, while making sure New York remains a leader in spurring innovative businesses and encouraging zero emissions vehicle sales” – Gov. Cuomo

The agreement (which will still need to be approved by the state legislature), was reported by the Post as the result of “last-minute haggling that kicked off last week when a bill to ban Tesla’s direct-sales model met with near unanimous approval by a second committee in the state Assembly.”

The defeat apparently convinced Tesla to negotiate an alternative to this bill very quickly, and that’s when Gov. Cuomo’s office got involved to mediate the discussion.

The dealer groups, fearing that the direct sales model could be adopted by other (much larger) automakers in the future, reportedly had offered to let Tesla operate their existing stores for a period of 8 years before switching to a traditional franchise system.  However Tesla quickly declined,  as has been their MO, any deal that requires any kind of dealer model be put in place.

Eventually, the decision to grandfather the existing units was facilitated by Cuomo’s top aide, Howard Glaser.

Currently operational five Tesla boutiques that will be grandfathered:

Tesla has yet to comment on the agreement, but  Neale Kuperman, chairman of the Greater New York Automobile Dealers Association seems pleased with the outcome,  “We are happy that the franchise system, which is good for the consumer, is being reinforced.”

New York Post hat tip to Sven!

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20 Comments on "New York Cuts Deal To Allow Existing Tesla Stores To Continue Direct Selling"

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The NY boutique is rather like a dealership anyway, in that that particular ‘store-dealership’ makes promises they don’t keep, but I suspect that’s more the NY City mindset than anything Tesla is doing.

After taking an S for a test drive I got home to find out I had “agreed” to buy the car. I had to call california several times to get this ‘agreement’ cancelled (its technically not an agreement since I didn’t agree to anything), but rather to purge this order from the system.

Seeing as this ‘quasi-dealership’ will be grandfathered along with the other 4, I doubt there could be any issue for the NADA to worry about.

Did you give them a credit card? If yes, then bad on you. If no, then nothing whatsoever happened.

“Today’s agreement reaffirms New York’s long-standing commitment to the dealer franchise system, while making sure New York remains a leader in spurring innovative businesses and encouraging zero emissions vehicle sales” – Gov. Cuomo

Something only a politician could say with a straight face.

“We are happy that the franchise system, which is good for the consumer, is being reinforced.”

Ok, this is just more BS than I can take at one time.

We need Tesla to survive.
So if it is somewhat hypocritical then so be it.

+1 George

Tesla’s survival is not really in question here, so that’s a pretty weak straw-man. IMO, you created said straw-man to justify your support of this crony-capitalism. Yet you aggressively vilify such crony-capitalism when you think it favors a product you don’t like. For example, when you thought Christie was favoring dealerships, you said “Stick it to the pig!”

My ideals are not that flexible. That’s why I think New York should fix their stupid system, making the same rules apply to everyone, not carve out special deals for Tesla, etc. This what Christie proposed in New Jersey.

It’s not a “special deal” for Tesla.

The franchise laws were intended to protect dealers (and their investments in the dealerships) from being undercut by THEIR OWN manufacturer, not protect ANY dealer from being undercut by ANY party wishing to sell cars made by some OTHER manufacturer. The laws were intended to specifically protect, for example, Ford dealers from being competed with unfairly BY FORD.

Applying the franchise laws to Tesla is a PERVERSION of the laws’ original purpose. The dealer lobby is plainly and obviously attempting to protect the present-day sales monopoly enjoyed by traditional car dealerships, who now sit as privileged middlemen, doing little more than INCREASING the ultimate sales price of new vehicles and unethically extracting profit generated by the planned-for maintenance required by the products they sell (worse, they often fabricate maintenance “need” and foist it upon unsuspecting consumers).

Tesla, as a manufacturer, has no existing Tesla dealerships to undercut. They should be exempt from any dealership franchise law. The law simply does not apply to a manufacturer that has no dealerships to compete unfairly with. How can it?

Electric-Car-Insider.com

+10

If the franchise system is so good, why would they restrict or worry about the inferior direct sales approach?

MrEnergyCzar

They know they are thieves.

Yes, let the two approaches compete on their own merits. Oh wait, “competition” is what they are trying to protect. How silly of me.

I wounder what would happen if someone invented a totally new personal transport system that wasn’t a car at all or didn’t look like one. Such as say someone invented a pogo stick that could teleport the rider anywhere they wanted with in 80 miles of were they were at. Such as it would be funny to see how the politicians and car dealers scream murder at Walmart and K-Mart selling them for $50 dollars a piece. I would also like to think how fast the politicians would quickly pass Monkey Rules on the pogo sticks in the form of having to pay registration taxes on them and having to go though pogo stick dealerships. And let’s not forget all the oil men and oil producing counties who would be cut out of all of this as the public bonces away from them with this idea.

I still think we need a revision of the franchise laws so that GM, Ford, etc. can sell their plugins without the discrimination they have to ensure at dealerships.

This is still good though, a step in the right direction, but it’s still very limiting (for Tesla as well).

the only trouble with Tesla is they make a great car. Remember when Wagoner and the boys promised congress that if they got more money, they would build better cars? Elon built a car everyone wants. How about we stand by this American innovator, n`est ce pas?

Typical of the New York politicians, it is as if upstate New York didn’t exist at all. Of course to them it doesn’t.

I smell organized crime behind the Dealer Association. Possible job for the FBI.

NPNS! SBF!
Volt#671

Tesla can’t afford to agree to any settlement that will force it to use the franchise system eventually. EV economics just don’t work that way, they simply don’t generate the sort of maintenance income to keep the expensive and inefficient franchise dealership system funded.

A lean factory operated system that doesn’t add too much extra retail cost on top of already high EV production cost and that’s more focussed on informing the public about a relatively unknown product (mall locations…) and less on maintenance is needed.

A fundamentally different product takes a fundamentally different retail approach that suits its specific needs. Without that electric vehicles simply have no future in the US.

I think Tesla is picking it’s way through a minefield of regulation and potential legal setbacks. Though it will take every victory it gets no matter how small. I think anything short of a complete ban is a victory, albeit possibly a minor one.
I think a cartoon with a toothy grinned car salesman counting hundreds into the palm of a pinned-stripped cigar smoking politician, and saying, amid a show floor full of gleaming ice’s: “Now we don’t want to ruin this beautiful view, we could not afford to pay for it, if not for you.” Could be in order.

At a federal level, if they just were to pass an interstate commerce law that says that a state cannot charge sales tax for automobiles that were purchased in a different state, this problem with dealers would go away asap. The states that prohibit direct sales would lose a TON of tax revenue.

“We are happy that the franchise system, which is good for the consumer, is being reinforced.”

Will someone please explain how the current franchise system has ANY beneficial effect on consumers? All I know is that people HATE car shopping at a dealership. I hear horror stories all the time.

Even years ago when I ordered my PT Cruiser, the salesperson said it would be $500 over invoice. When the car arrived, they said it would be $2000 over invoice. The salesperson didn’t work there anymore and they “couldn’t find” my paperwork.

How the hell does that benefit me as a consumer?