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Governor Snyder signs a law to ban Tesla direct sales in Michigan

sbenario 12y ago
Another example of regulation being used to protect older, more established businesses from newer entrants that would supplant them. Sigh.
- ende 12y ago
  Reglation, corruption, lobbying... Its all the same thing.
mandeepj 12y ago
What is his problem? I think they are all trying every-possible-trick-under-their-belly to slow down the storm called TESLA. The day TESLA becomes mainstream the mafia of car dealers, oil rigs will go down the drain. NO MORE OIL.
- _acme 12y ago
  You do understand that electricity is still needed to charge these cars, right, and that a lot of that energy comes from oil (or worse, coal).
  - MCRed 12y ago
    When I was a kid, I saw the movie Logans Run (1970s). They made it to washington DC and found a car. They didn't know what it was, but they shined a light on it, and it started to activate and so they conclduded "maybe this thing is powered by the sun"... and it was. Well, it's been 40 years since that movie was made. Alas, a solar powered car may still be many years off... but the elegance of it is certainly extremely appealing. One problem: I love the Tesla's expansive sunroof. Would want solar collectors that are at least semi-transparent to light.
    - mikeash 12y ago
      There just isn't enough surface area. A Model S has a roof area of around 9m^2. The sun provides about 1000W/m^2 on a clear day at high noon when directly overhead, so with 100% efficient solar cells on a perfect day, you'd get around 9kW of electricity. A Model S goes about 4 miles per kWh when it's doing well, so in this ideal situation you'd top out at around 36MPH. In the real world, the sun isn't directly overhead, and real solar cells have more like 20% efficiency, so cut that number down by a factor of ten or more. The best way to build a solar-powered car would be to have a battery-powered car that gets recharged from solar energy. Basically, a Model S and a home solar generating system.
      - baddox 12y ago
        That illustrates the advantage of electric cars, even if the electricity is currently generated by fossil fuels.
      - ctdonath 12y ago
        I recently ballparked the cost of a home solar charger for my Leaf EV. Came out around half the price of the car ... not cheap, but feasible for someone serious about it. I do have a propane-powered electrical generator for emergency/backup home power. Some day I'll try charging the Leaf with it.
        mikeash 12y ago
        Have you ever worked out your approximate cost per kWh for the generator? I imagine it's painful compared to what you get from the power company, but I'd be curious to know just how painful.
        ctdonath 12y ago
        About $1.23/kWh. Ad verbiage for the allegedly 3250 running watts generator states "engine run time of 10 hours at 50% on a common 20Lb (gas grill type) cylinder". So that's under $2 for 1.625kWh, which is roughly the power draw for recharging the Nissan Leaf in question, which takes 20 hours - costing upwards of $40. More to your point, that's about $1.23/kWh. Not cheap, but a 10x markup is appropriate and acceptable for emergency needs.
  - beastman82 12y ago
    or better, nuclear
    - manicdee 12y ago
      Nuclear's only an option if we have breeder reactors that can reprocess all the waste into non-radioactive outputs. In the meantime you still have all that radioactive plumbing being replaced that needs to be handled, and I really don't want that being buried in my watershed, food bowl, or anywhere that might end up being a watershed or food bowl for people elsewhere in space and time. So find a way to build a nuclear reactor with non-radioactive outputs, built with materials that do not corrode due to the radiation, and we have a deal! Oh, and the final result needs to have a higher EROEI than current state-of-the-art solar panels.
  - mandeepj 12y ago
    We can call it (Tesla) incremental departure from oil. Down the line, we might be able to charge tesla under lot lesser time than what it takes today. May be we will have solar tesla or self charging tesla. At least, these constant rip-offs of every n month this fluid change will go away.
  - scott_karana 12y ago
    It might be a minor improvement, but it's still an improvement. Oil burned in a plant is higher efficiency than when burned in individual, smaller-scale engines. Stated as a corollary: imagine how dirty having per-car coal furnaces would be...
  - the_ancient 12y ago
    Name one "oil" fired power plant? Coal yes, nat gas sure, hyrdo (which is where alot of MI power comes from) you bet yea but I have not seen a oil powered electric plant. further even is such a thing does exist, generating electricity has a much high efficiency then the IC engine which is by for one of the least efficient systems there is
    - ctdonath 12y ago
      If customer demand for electricity grows high enough, there's no reason oil-fired electrical plants won't arise on a large scale. Efficiency issues can be addressed much better when implemented on a scale much larger than a car engine.
    - qbrass 12y ago
      https://en.wikipedia.org/wiki/List_of_power_stations_in_Michigan#Oil_power_stations https://en.wikipedia.org/wiki/List_of_power_stations_in_Mich... Also, while Michigan has a lot of hydroelectric stations, they don't account for more than a few percent of the state's electricity.
MCRed 12y ago
I believe that this law is in direct violation of the commerce clause[1]. The commerce clause was designed to prevent tarrifs from being placed on products from one state being sold in another state. They wanted to prevent inter-state trade wars. Being forced to go thru a dealer network that (theoretically) adds no value while extracting a cut of sales is a form of a tarrif (or at least, I think it is arguably one). Therefore, I think it might be time for Tesla to take this up as a federal matter. I believe Tesla's constitutional rights are being violated in the states that do not allow them to operate their own stores.[2] [1] "Congress shall have the power to regulate commerce ... among the several states ..." At the time the constitution was written, the definition of regulate was something like "to keep free of obstruction, to allow to occur without hinderance". [2] This is completely separate from regulations that require car stores to operate safely, e.g.: if the state required that service departments have barriers around pits to keep people from falling in, that would be fine, and Tesla could comply when they open a service department. But forcing a business model on people is quite different from protecting public safety.
- baddox 12y ago
  This wouldn't be a violation of the commerce clause per se. The commerce clause just says that the federal government has the authority to regulate interstate commerce. In other words, the US legislature could pass a law prohibiting these restrictions on Tesla sales, and that law would be constitutional.
  - abcabc321321123 12y ago
    > The commerce clause just says that the federal government has the authority to regulate interstate commerce. This is not completely correct. Let me expand a little bit even though it is not applicable here. There is something called the "dormant" commerce clause (also referred to as the "negative" commerce clause) doctrine. This doctrine basically prohibits states from favoring in state commercial actors at the expense of out of state actors. Think protectionist legislation. Therefore, there is a lot more to the commerce clause than simply allowing the federal government to regulate interstate commerce.
duaneb 12y ago
How are these people justifying these changes to their constituents? It's pretty hard to justify mucking with the free markets except to protected vested interests. Most of the time, these vested interests have very little to do with the voters.
- pavel_lishin 12y ago
  I'd wager that in Michigan, a large part of the constituency works for non-Tesla car manufacturers. They might be just fine with it.
  - duaneb 12y ago
    I still think they would be more convincing attempting to get Tesla to sell to dealerships (lol) or to attempt to get Tesla to move some of the manufacturing to Detroit. I can't see this being positive for the taxpayers of Michigan for more than a few years.
- baddox 12y ago
  I think you underestimate the brazenness with which politicians can approach these issues. George W. Bush practically boasted that he had deliberately abandoned free market principles. You might be overestimating how much love people have for the free market as they understand it.
- BHSPitMonkey 12y ago
  They "justify" it by claiming that direct sales would threaten the jobs of the dealer industry, not that it actually justifies anything. By that reasoning, we should not have allowed manufacturing to become mechanized, because "think of the factory workers!".
- dkrich 12y ago
  No justification is required because it's pretty much baked into the mentality of the Midwest. The auto industry is what drives the Michigan economy (at least its most populous areas). Therefore most constituents not only don't mind, but likely fervently support such laws. The same could be said for the United Auto Workers. Pretty much the opposite of the free market, yet most people in Michigan support it because either they or somebody they know relies on the benefits created by the union. Further, few people in Michigan can afford a new Ford, let alone a $60,000 electric car. If Tesla wants to lobby for free market economics, Michigan is probably the very last state they should be trying to convince.
piyush_soni 12y ago
In the country I come from, corruption is rampant, and it makes governments create anti-public, pro-corporations laws and regulations. But there it's still called "corruption". Here, in US, it is called "Lobbying", and is official.
- MCRed 12y ago
  I call it corruption as well. Any time the government violates its own laws, or violates human rights, that's corrupt. I think americans believe their government is less corrupt in part because corruption is not identified as such. Illegal domestic spying is corrupt, and a crime... yet no charges have been filed (for instance). This matter here, is possibly in an area where the law isn't as settled, so corruption is an opinion, rather than a fact, but an opinion I would agree with.
yock 12y ago
Snyder gets a lot of money from Ford, GM, et. al. The United Auto Workers gave the DGA about $1 million, according to MCFN. The union was the largest donor from Michigan, followed by the Service Employees International Union, the Michigan Regional Council of Carpenters, Ford Motor Company and Caidan Management. http://www.mlive.com/lansing-news/index.ssf/2014/10/michigan_governors_race_2014_w.html http://www.mlive.com/lansing-news/index.ssf/2014/10/michigan...
- deleted 12y ago
  [deleted]
mark-r 12y ago
Does this really surprise anybody? Remember which state Detroit is in?
- numo16 12y ago
  This also blocks GM/Ford/Chrysler from selling directly to the consumer. This isn't specifically Tesla focused, but is favoring the auto dealer network which wants to remain relevant and get their cut.
  - TaylorAlexander 12y ago
    Since only Tesla actually wants to sell direct (and in fact needs to due to the unique nature of their product), this does in effect only target Tesla. It just doesn't look so targeted to the layperson, which is likely why they can get away with this.
    - deleted 12y ago
      [deleted]
  - mark-r 12y ago
    GM/Ford/Chrysler have a symbiotic relationship with their dealers - they both need each other to survive. Neither wants to see a new upstart that might someday eat their lunch. Presumably if the makers had a do-over, they might try direct to the consumer themselves, but the present conditions make that impossible.
    - Igglyboo 12y ago
      Uh no they don't. The dealers need the manufacturers to survive, the manufacturers could easily open their own dealerships and sell their cars cheaper while running the old dealers out of business. The dealerships do not benefit the manufacturer.
Falkon1313 12y ago
Can craftsmen and other non-auto manufacturers sell directly in Michigan, or are they also forced to hire distributors and retailers? What crime is that law supposed to prevent?
padobson 12y ago
Anybody want to start a Tesla dealership in Dearborn?
rabbyte 12y ago
Couldn't somebody open a dealership that offers Tesla vehicles where dealers are replaced with touch screens that walk you through all the available options, scheduling test drives, and settling on payment? Staff would be there to make sure questions are answered, machines are operating properly, and verifying paperwork. I know nothing about this industry so I could be totally off base but that seems like a decent way to jab back at an aging system.
- jinushaun 12y ago
  That's how Tesla stores currently work. But those stores are illegal too.

Another example of regulation being used to protect older, more established businesses from newer entrants that would supplant them. Sigh.

ende 12y ago
Reglation, corruption, lobbying... Its all the same thing.

mandeepj 12y ago

What is his problem? I think they are all trying every-possible-trick-under-their-belly to slow down the storm called TESLA. The day TESLA becomes mainstream the mafia of car dealers, oil rigs will go down the drain. NO MORE OIL.

_acme 12y ago
You do understand that electricity is still needed to charge these cars, right, and that a lot of that energy comes from oil (or worse, coal).
- MCRed 12y ago
  When I was a kid, I saw the movie Logans Run (1970s). They made it to washington DC and found a car. They didn't know what it was, but they shined a light on it, and it started to activate and so they conclduded "maybe this thing is powered by the sun"... and it was. Well, it's been 40 years since that movie was made. Alas, a solar powered car may still be many years off... but the elegance of it is certainly extremely appealing. One problem: I love the Tesla's expansive sunroof. Would want solar collectors that are at least semi-transparent to light.
  - mikeash 12y ago
    There just isn't enough surface area. A Model S has a roof area of around 9m^2. The sun provides about 1000W/m^2 on a clear day at high noon when directly overhead, so with 100% efficient solar cells on a perfect day, you'd get around 9kW of electricity. A Model S goes about 4 miles per kWh when it's doing well, so in this ideal situation you'd top out at around 36MPH. In the real world, the sun isn't directly overhead, and real solar cells have more like 20% efficiency, so cut that number down by a factor of ten or more. The best way to build a solar-powered car would be to have a battery-powered car that gets recharged from solar energy. Basically, a Model S and a home solar generating system.
    - baddox 12y ago
      That illustrates the advantage of electric cars, even if the electricity is currently generated by fossil fuels.
    - ctdonath 12y ago
      I recently ballparked the cost of a home solar charger for my Leaf EV. Came out around half the price of the car ... not cheap, but feasible for someone serious about it. I do have a propane-powered electrical generator for emergency/backup home power. Some day I'll try charging the Leaf with it.
      - mikeash 12y ago
        Have you ever worked out your approximate cost per kWh for the generator? I imagine it's painful compared to what you get from the power company, but I'd be curious to know just how painful.
        ctdonath 12y ago
        About $1.23/kWh. Ad verbiage for the allegedly 3250 running watts generator states "engine run time of 10 hours at 50% on a common 20Lb (gas grill type) cylinder". So that's under $2 for 1.625kWh, which is roughly the power draw for recharging the Nissan Leaf in question, which takes 20 hours - costing upwards of $40. More to your point, that's about $1.23/kWh. Not cheap, but a 10x markup is appropriate and acceptable for emergency needs.
- beastman82 12y ago
  or better, nuclear
  - manicdee 12y ago
    Nuclear's only an option if we have breeder reactors that can reprocess all the waste into non-radioactive outputs. In the meantime you still have all that radioactive plumbing being replaced that needs to be handled, and I really don't want that being buried in my watershed, food bowl, or anywhere that might end up being a watershed or food bowl for people elsewhere in space and time. So find a way to build a nuclear reactor with non-radioactive outputs, built with materials that do not corrode due to the radiation, and we have a deal! Oh, and the final result needs to have a higher EROEI than current state-of-the-art solar panels.
- mandeepj 12y ago
  We can call it (Tesla) incremental departure from oil. Down the line, we might be able to charge tesla under lot lesser time than what it takes today. May be we will have solar tesla or self charging tesla. At least, these constant rip-offs of every n month this fluid change will go away.
- scott_karana 12y ago
  It might be a minor improvement, but it's still an improvement. Oil burned in a plant is higher efficiency than when burned in individual, smaller-scale engines. Stated as a corollary: imagine how dirty having per-car coal furnaces would be...
- the_ancient 12y ago
  Name one "oil" fired power plant? Coal yes, nat gas sure, hyrdo (which is where alot of MI power comes from) you bet yea but I have not seen a oil powered electric plant. further even is such a thing does exist, generating electricity has a much high efficiency then the IC engine which is by for one of the least efficient systems there is
  - ctdonath 12y ago
    If customer demand for electricity grows high enough, there's no reason oil-fired electrical plants won't arise on a large scale. Efficiency issues can be addressed much better when implemented on a scale much larger than a car engine.
  - qbrass 12y ago
    https://en.wikipedia.org/wiki/List_of_power_stations_in_Michigan#Oil_power_stations https://en.wikipedia.org/wiki/List_of_power_stations_in_Mich... Also, while Michigan has a lot of hydroelectric stations, they don't account for more than a few percent of the state's electricity.

MCRed 12y ago

I believe that this law is in direct violation of the commerce clause[1]. The commerce clause was designed to prevent tarrifs from being placed on products from one state being sold in another state. They wanted to prevent inter-state trade wars. Being forced to go thru a dealer network that (theoretically) adds no value while extracting a cut of sales is a form of a tarrif (or at least, I think it is arguably one). Therefore, I think it might be time for Tesla to take this up as a federal matter. I believe Tesla's constitutional rights are being violated in the states that do not allow them to operate their own stores.[2] [1] "Congress shall have the power to regulate commerce ... among the several states ..." At the time the constitution was written, the definition of regulate was something like "to keep free of obstruction, to allow to occur without hinderance". [2] This is completely separate from regulations that require car stores to operate safely, e.g.: if the state required that service departments have barriers around pits to keep people from falling in, that would be fine, and Tesla could comply when they open a service department. But forcing a business model on people is quite different from protecting public safety.

baddox 12y ago
This wouldn't be a violation of the commerce clause per se. The commerce clause just says that the federal government has the authority to regulate interstate commerce. In other words, the US legislature could pass a law prohibiting these restrictions on Tesla sales, and that law would be constitutional.
- abcabc321321123 12y ago
  > The commerce clause just says that the federal government has the authority to regulate interstate commerce. This is not completely correct. Let me expand a little bit even though it is not applicable here. There is something called the "dormant" commerce clause (also referred to as the "negative" commerce clause) doctrine. This doctrine basically prohibits states from favoring in state commercial actors at the expense of out of state actors. Think protectionist legislation. Therefore, there is a lot more to the commerce clause than simply allowing the federal government to regulate interstate commerce.

duaneb 12y ago

How are these people justifying these changes to their constituents? It's pretty hard to justify mucking with the free markets except to protected vested interests. Most of the time, these vested interests have very little to do with the voters.

pavel_lishin 12y ago
I'd wager that in Michigan, a large part of the constituency works for non-Tesla car manufacturers. They might be just fine with it.
- duaneb 12y ago
  I still think they would be more convincing attempting to get Tesla to sell to dealerships (lol) or to attempt to get Tesla to move some of the manufacturing to Detroit. I can't see this being positive for the taxpayers of Michigan for more than a few years.
baddox 12y ago
I think you underestimate the brazenness with which politicians can approach these issues. George W. Bush practically boasted that he had deliberately abandoned free market principles. You might be overestimating how much love people have for the free market as they understand it.
BHSPitMonkey 12y ago
They "justify" it by claiming that direct sales would threaten the jobs of the dealer industry, not that it actually justifies anything. By that reasoning, we should not have allowed manufacturing to become mechanized, because "think of the factory workers!".
dkrich 12y ago
No justification is required because it's pretty much baked into the mentality of the Midwest. The auto industry is what drives the Michigan economy (at least its most populous areas). Therefore most constituents not only don't mind, but likely fervently support such laws. The same could be said for the United Auto Workers. Pretty much the opposite of the free market, yet most people in Michigan support it because either they or somebody they know relies on the benefits created by the union. Further, few people in Michigan can afford a new Ford, let alone a $60,000 electric car. If Tesla wants to lobby for free market economics, Michigan is probably the very last state they should be trying to convince.

piyush_soni 12y ago

In the country I come from, corruption is rampant, and it makes governments create anti-public, pro-corporations laws and regulations. But there it's still called "corruption". Here, in US, it is called "Lobbying", and is official.

MCRed 12y ago
I call it corruption as well. Any time the government violates its own laws, or violates human rights, that's corrupt. I think americans believe their government is less corrupt in part because corruption is not identified as such. Illegal domestic spying is corrupt, and a crime... yet no charges have been filed (for instance). This matter here, is possibly in an area where the law isn't as settled, so corruption is an opinion, rather than a fact, but an opinion I would agree with.

yock 12y ago

Snyder gets a lot of money from Ford, GM, et. al. The United Auto Workers gave the DGA about $1 million, according to MCFN. The union was the largest donor from Michigan, followed by the Service Employees International Union, the Michigan Regional Council of Carpenters, Ford Motor Company and Caidan Management. http://www.mlive.com/lansing-news/index.ssf/2014/10/michigan_governors_race_2014_w.html http://www.mlive.com/lansing-news/index.ssf/2014/10/michigan...

deleted 12y ago
[deleted]

mark-r 12y ago

Does this really surprise anybody? Remember which state Detroit is in?

numo16 12y ago
This also blocks GM/Ford/Chrysler from selling directly to the consumer. This isn't specifically Tesla focused, but is favoring the auto dealer network which wants to remain relevant and get their cut.
- TaylorAlexander 12y ago
  Since only Tesla actually wants to sell direct (and in fact needs to due to the unique nature of their product), this does in effect only target Tesla. It just doesn't look so targeted to the layperson, which is likely why they can get away with this.
  - deleted 12y ago
    [deleted]
- mark-r 12y ago
  GM/Ford/Chrysler have a symbiotic relationship with their dealers - they both need each other to survive. Neither wants to see a new upstart that might someday eat their lunch. Presumably if the makers had a do-over, they might try direct to the consumer themselves, but the present conditions make that impossible.
  - Igglyboo 12y ago
    Uh no they don't. The dealers need the manufacturers to survive, the manufacturers could easily open their own dealerships and sell their cars cheaper while running the old dealers out of business. The dealerships do not benefit the manufacturer.

Falkon1313 12y ago

Can craftsmen and other non-auto manufacturers sell directly in Michigan, or are they also forced to hire distributors and retailers? What crime is that law supposed to prevent?

padobson 12y ago

Anybody want to start a Tesla dealership in Dearborn?

rabbyte 12y ago

Couldn't somebody open a dealership that offers Tesla vehicles where dealers are replaced with touch screens that walk you through all the available options, scheduling test drives, and settling on payment? Staff would be there to make sure questions are answered, machines are operating properly, and verifying paperwork. I know nothing about this industry so I could be totally off base but that seems like a decent way to jab back at an aging system.

jinushaun 12y ago
That's how Tesla stores currently work. But those stores are illegal too.