New York lawmakers are moving to shut down Elon Musk’s Tesla sales across the EV-friendly state
By: Christiaan Hetzner (Fortune via MSN)
Does the Democrats' need for political attention outweigh the harm they cause to workers and consumers? While sales obviously garners the sole attention of politicians (look at all that money!), an auto dealership is much more than a sales floor. There is also a service department that must meet the standards set by the maker for vehicle repairs.
Real people have real jobs to do real work at Tesla sales and service locations. These Democrats' unfamiliarity with real work doesn't excuse their attacks on workers and consumers for political gain.
S E E D E D C O N T E N T
Democratic lawmakers in New York are attempting to eliminate a waiver that allows Tesla to sell cars in the EV-friendly state there in retaliation for CEO Elon Musk’s backing of the Trump administration.
In 2014, the state government in Albany banned automakers from bypassing conventional car dealers to sell directly to customers. Out of the entire car industry, Tesla was granted the sole exemption, which let it grandfather in five stores.
Now state Democrats are questioning that move.
“Why should we give them a monopoly?” state senator Patricia Fahy said, according to a report in the New York Times on Sunday.
Co-sponsor of a bill currently moving through both houses of the state legislature, Fahy called Musk “part of an administration that is killing all the grant funding for electric vehicle infrastructure, killing wind energy, killing anything that might address climate change.”
New York, whose legislature and executive are both controlled by the Democrats, is one of a handful of EV-friendly states across America. The government in Albany has set out a target to hit 100% zero-emission new vehicle sales by 2035 in the state, the country's fourth-largest by population.
Tesla, whose customers would likely be forced to go out of state to accept receipt of a car at one of its other delivery centres, could not be reached by Fortune for comment.
Fahy’s bill is the latest repercussion from the bitter falling-out between the Democratic party and the Tesla CEO during the Biden administration. In the course of the post-pandemic inflation wave, Musk’s wealth and anti-union politics made him a target for a party looking to reconnect with its working-class supporters.
In response, the enraged entrepreneur dropped a quarter-billion of his own fortune to support the president's campaign, despite Trump's long-standing opposition to the EVs and renewable-energy storage that have been the hallmark of Tesla’s business.
Why doesn't Tesla use dealers to sell cars?
For decades vehicles like a Chevrolet Silverado manufactured by General Motors have been distributed wholesale to dealers, who then marked them up in price and sold them for a small profit. These independent retailers maintained the relationship with the customer at all times, leaving carmakers to focus on areas like engineering and branding.
Thanks to the influence of dealers in their local communities, America’s heavily fragmented automotive retail market traditionally has prohibited carmakers from bypassing their distributors to sell directly to consumers. This hadn’t been an issue for most car manufacturers in the past, since going direct to consumers would have hurt their margins when cars were mainly analog.
Tesla took a different approach from the outset, eschewing independent dealers entirely. Musk recognized that cloud computing opened up all new business models only available if a brand owned the relationship with its customers and was free to mine their digital profiles for clues about what owners might need or want.
Its entire full self-driving software, the foundation for its upcoming robotaxi pilot, would not be possible without drivers sharing their data over many years to help it refine its AI model.
What does this mean for Tesla?
Under Lahy's plan, the exemption from franchise laws could be forfeited in favor of brands like Rivian, Lucid, and Volkswagen’s upcoming Scout, which are all relying on a similar direct-to-consumer sales approach.
Now Lahy says she is “making amends” for being wrong about Musk in the past, when she had supported Tesla’s original mission to advance sustainable transportation.
The Empire State is a key market for Tesla. Most EVs tend to be sold in warmer climates like southern California, Texas, and Florida, where temperatures are more forgiving for battery ranges. New York is one of a few northern states to champion EVs—over 172,000 are already on state roads, and half are Teslas.
If Lahy and her colleagues succeed, restricting Tesla’s ability to compete in New York could deliver a sensitive blow at a time when the company is losing ground to archrival BYD.
Last week, Tesla reported first-quarter results that revealed a group operating margin of 2.1%, its worst since the second quarter of 2019. Underlying profitability at its core car business fell to its lowest level since the launch of the Model Y first turned Tesla into a trillion-dollar company on the stock market.
This story was originally featured on Fortune.com
Tags
Who is online
48 visitors
New York Democrats showing their true colors again. Anti-labor, anti-consumer, but, oh, so self righteous.
You feel Tesla should be treated differently from other car manufacturers? "Out of the entire car industry, Tesla was granted the sole exemption"
Is a Tesla a car or a computer on wheels? Is Tesla a traditional car, a robot, or an AI enhanced transportation experience? Why should Tesla be forced to conform to horse-and-buggy definitions of cars when the Tesla breaks the horse-and-buggy model of transportation? Don't claim that self-driving EVs make ICE vehicles obsolete and then force those EVs into the ICE model of sales and service.
Don't make the stupid mistake of demanding change that stays the same. That doublespeak would be a bit too Orwellian.
Yep. If you want to spread the EV gospel, why not cut out the middle man to keep consumer pricing at a mild roar so that many would be able to afford the cars? It seems self-defeating to me. Most car dealers I know take a 15-20% mark up on their ICE vehicles. If pushing EV's is the goal, lower pricing should at least make the playing field a little more palatable.
Agreed, but that should apply to ALL EV manufacturers. Shouldn't it? Why give only Tesla the advantage?
Like which ones? Chevy? Ford? Hyundai? Toyota? Kia?
They all have established dealerships. Perhaps you would rather have them split off the EV vehicles seperate from those dealerships and do as Tesla is doing....................Looks like someone thought ahead.
The New York legislature could have done exactly that. But they didn't. Maybe the NY politicos thought Musk would reward them by excluding the competition.
Even you are suggesting that it would be more appropriate to expand the exemption from sales through dealerships to all EV manufacturers. That is certainly something the NY legislature could do. But the NY legislature still refuses to create a level playing field that would benefit consumers and encourage wider adoption of EVs. Instead the NY legislature has chosen an anti-labor, anti-consumer stance to punish Musk for political points. The NY legislature is more interested in political optics than in actually governing.
It’s a car. Stop with the BS.
Then self-driving EVs are not a disruptive technology and shouldn't receive exemptions or special treatment on roads and highways. They're just cars, like any other car. That's the horse-and-buggy model of transportation that has guided regulation of cars from the beginning.
Giddy up!
They all have partnerships with independent established dealerships. None are owned by Chevy... Ford... Hyundai... Toyota... Kia...
IMO the problem is the rule itself, not the exemption.
We have the same bullshit here in Texas, BTW. The car dealers lobby like madmen, claiming they are "advocates for the consumer" against the manufacturers, pretending they are not the world's least honest industry.
And all because Elon is exposing the corruption and working with the current administration.
He hasn’t exposed shit except the bizarre cult of personality currently in charge of government.
Results say otherwise.
Their blatant hypocrisy should not surprise me. But sometimes they can still reach levels that seem impossible.
So, it's not about the environment after all.
The fucking retards have just shifted all the tax revenue from Tesla sales to neighboring states.
If it causes Musk pain, I’m for it.
And there is the complete lack of empathy and tolerance from the left, if you disagree with me we want you to suffer. i would say unbelievable, but it is far to believable.