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Elon Musk & Tesla Motors: New York Political Corruption and Special Interests on Display for ALL to SEE

Those who speak of free markets, must be government employees, dictators, and the terminally insane …

For those of you who are wondering why car manufacturers do not sell direct to their customer base, the deal is simple. They are in a parasitic relationship with their dealers who sell and service their vehicles; and who occasionally act as unwitting bankers as manufacturers load them with vehicles and parts on a take or go out of business. Both sides profit from the relationship and lobby states to preserve the franchise relationship at all costs.

Now comes Elon Musk – an entrepreneur who heads Tesla Motors, Space-X, and other ventures. He wants to sell his fancy, over-priced electric vehicles direct to his liberal customer base without interference.

But, the special interests and the politicians have another idea …

Pending law would block Tesla sales in New York -- Tesla's battle with dealership owners is coming to a head in New York, where legislators are considering a bill that would block the electric-car maker from directly selling vehicles in the state.

Tesla said in a statement Friday that if the bill passes, it will be "put out of business in New York," with all employees in the state losing their jobs. "The bottom line for New York consumers and New York suppliers is that if this bill passes, special interests in Albany will once again have gotten their way while robbing New Yorkers of choices in the marketplace," Tesla (TSLA) said.

The New York State Automobile Dealers Association did not respond to a request for comment, though the association is also urging supporters to contact their representatives, saying the pending bill is "designed to maintain the health and vitality of New York's retail automobile industry."

Tesla has tangled with dealership associations in a number of states in its effort to sell its Model S electric sedan directly to consumers rather than using franchised car dealers.

General Motors (GM, Fortune 500), Ford (F, Fortune 500), Toyota (TM) and others don't sell cars to customers. They sell to independently owned and operated dealers or distributors who, in turn, sell them to the public, usually after some negotiation over the final price.

Tesla's showrooms, by contrast, are owned and operated by the company. Most are in shopping malls, with only enough cars on hand for display and test drives. Every Tesla car sells at full sticker price, and service on the cars is performed at separate garages owned by Tesla.

Auto sales are mostly regulated at the state level. In some states, Tesla has had little or no problem opening its stores. In others, auto dealers and their allies in government have resisted Tesla's plans, fearing they could ultimately undermine the system of franchised dealers.

Earlier this month, legislators in Texas failed to vote on a bill backed by Tesla that would have loosened the state's restriction on dealerships owned by automakers. Virginia rejected the electric-car maker's dealership application earlier this year.

Dealers argue that the traditional franchise system is best for car buyers because it preserves competition between dealerships selling the same products.

But Tesla worries that traditional franchised dealers, who also have gasoline cars to sell, won't represent its products properly or aggressively enough. Dealers pressed to make quick sales will likely be tempted to steer customers to gasoline cars rather than explain the benefits of the Model S, Diarmuid O'Connell, Tesla's vice president for business development, told CNNMoney last month.

"From the beginning, Tesla's goal has been to catalyze the market for electric vehicles, and selling through intermediaries at this stage of the company will not work," Tesla said Friday.

Source: Pending law would block Tesla sales in New York - Jun. 21, 2013

Bottom line …

For all those “free market” advocates, republicans, and libertarians, this is a prime example of why there are no truly free markets that are independent of government and their special interest masters. One need only look at the government’s interference in the car markets using the TARP stimulus funds meant to deal with the government’s interference in the housing markets that sparked the near collapse of the U.S. economy.

As for the dealership assertion that having dealers sparks competition between dealers, this is crap. There are so many side-deals that the vehicle’s sticker price is pure bullshit when it comes to computing a dealer’s profit. In fact, the dealer’s control over spare price of parts is another example of faux competition. Pretty much why all of the internet “genuine parts” sites are connected to dealers.

The last thing manufacturers and dealers want to see is Elon Musk market his vehicles directly to consumers for a single price. So they lobby mightily and the politicians fall in line. If you want to see the raw power of this lobbying effort, consider why the consumer protection agencies attack predatory lending in the mortgage marketplace, but say virtually nothing about controlling the far more egregious practices in the auto finance industry. Ask yourself, why doesn’t the newly-formed Consumer Financial Protection Bureau is not creating finance disclosure forms for the automotive finance industry – showing all of the terms and conditions for the various financing options.

In the final analysis, as long as we see corrupt politicians and government interference in the marketplace, the consumers and taxpayers will be paying full freight: for cars, mortgages, student loans, and cars.

If Elon Musk cannot sell his cars in every state, perhaps we need to throw out all of the corrupt congressional idiots in 2014.

-- steve 


“Nullius in verba.”-- take nobody's word for it!

“Beware of false knowledge; it is more dangerous than ignorance.”-- George Bernard Shaw

“Progressive, liberal, Socialist, Marxist, Democratic Socialist -- they are all COMMUNISTS.”

“The key to fighting the craziness of the progressives is to hold them responsible for their actions, not their intentions.” – OCS

"The object in life is not to be on the side of the majority, but to escape finding oneself in the ranks of the insane." -- Marcus Aurelius

“A people that elect corrupt politicians, imposters, thieves, and traitors are not victims... but accomplices” -- George Orwell

“Fere libenter homines id quod volunt credunt." (The people gladly believe what they wish to.) ~Julius Caesar

“Describing the problem is quite different from knowing the solution. Except in politics." ~ OCS

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