Maybe because it’s 65 years later?
How many people here could write a substantial one-page essay about Tesla and their cars without ever having seen one, or caught more than a glimpse of one? Far more than could do so about a Beetle in 1950, I’d wager.
Regardless of whether the amount of sales tax generated by Tesla sales is substantial, the argument is stupid.
Sales taxes are paid regardless of who is doing the selling. A car sold by a dealership generates sales tax, as does one sold by the manufacturer, as does one sold by a private citizen.
Presumably that has to do with jobs and requiring independent franchisees to act as a intermediary to consumers for a variety of reasons.
I never said it would put everyone out of work, just (IMHO) a good majority, with the remaining people making far less. The dealership infrastructure is monstrously inefficient in terms of labor. If a manufacturer could sell directly to consumers, they would fire A LOT of people for obvious reasons.
This isn’t really about Tesla. This has been tried by other makers and they have hit the same roadblocks.
Tax revenue is not just sales tax. Even so, I don’t think you can tax manufacturers as easily as you can local consumers.
If you are going to do all that, then why not just require them to have an independent dealership?
Why? I agree it’s a pretty stupid system, but you could make a pretty good argument that upsetting now is NOT going to lower prices or be easier for consumers in the long run. This is part of why there is no price flexibility on many in demand car models. This would only be worse if there wasn’t a middleman who has to compete with other middlemen, and is largely incentivized to sell a greater number of cars.
I doubt they will win. Again, Tesla is not the first company to try this.
That, and also note that the claims that such measures would lower gas prices did not really materialize in places that have switched to self-service.
First, SALES TAX revenue is not the sum total of TAX revenue. I used that number from the study to quantify one part of how integral auto dealerships are to local coffers.
Second, no state that I am aware of taxes cars previously registered in another state to the same person. This “loophole” is what allows many people to register cars in Oregon for 90 days in order to avoid CA car sales tax. What some people do is rent a garage with an address in a no tax state like Oregon or Delaware, register the car, move the car after a few months to the higher tax state w/o having to pay taxes.
There is also that loopholes that would make an out of state purchase only subject to use tax (which is almost always sales tax). The issue is the use tax usually takes into account taxes paid in another state on that purchase. So if Tesla registers the cars in State A who has given them a kickback for every 100 cars they register, they can “charge” the purchaser x% in tax and subtract the kickback amount, then the purchaser is only on the hook for the delta between their home state and the kickback state. Home state obviously would lose in that scenario.
Either way, I pretty much guarantee that some accountant would be really to figure out how to take advantage of the situation with the help of some bottom feeding state like Delaware.
Correct. Otherwise states would be banning going to another state to buy a car, a common practice in areas close to state borders or with a high cost of living. For example, people in DC, MD, and VA often buy vehicles from out of state (or district) for a number of reasons. They are often close to other states, those in the DC suburbs can find better prices in the exurbs or other states like PA, or they even just prefer a dealer that happens to be across a state line. They still pay the sales tax to their state of residence when registering the vehicle.
I think some politicians can’t stomach the idea of an electric vehicle becoming popular and succeeding. It’s like a slap in the face to anti-environmentalists, climate change deniers, big oil supporters, and others, particularly with one of their big complaints being that Tesla took a “green energy” federal loan from the Department of Energy. Never mind the fact that other automakers have gotten huge assistance from the federal government and that Tesla has already repaid the $465 million loan even though it wasn’t supposed to be paid off until 2022.
States will lose lots of jobs. They will have to field tons of complaints from ABC motor owners whose batteries catch fire, and can’t sue because ABC is located several states away or registered as a shell company in the Isle of Man. They will see far more people mitigate the amount of taxes they have to pay. Etc. etc.
This is isn’t just about Tesla. Ford tried to do this too. I am sure others have tried as well. I doubt Tesla will ever be a huge player in the industry in terms of volume. They are not the threat. The laws that would allow Tesla to exist in the way they wish to are because they would allow every other manufacturer to cut out middlemen.
Not really. Private sales are often not reported honestly. Have you ever heard of a close family members selling a cars to each other at blue book value? Additionally, while sales tax is almost always paid on dealer sales, it doesn’t always go where it should in the amounts it should. The issue is similar to the internet (Amazon) sales tax issue. Consumers were always supposed to report the things they buy online, and to pay sales tax on them. Few did obviously, which is why Amazon and others were basically forced to collect it. Car purchases are obviously harder to hide, but it happens, and would get a lot worse if I you could sell cars online, or without direct state and local oversight.
I really think this treads on tinfoil hat territory. A politician who came out even to his inner circle and in 2014 said, “Wow, EVs really suck. I’m going to do everything I can to block them” would get some strange looks and little public support. Not that s/he wouldn’t do things to protect existing business, friends, donors etc. but the motivation would be quite different. It wouldn’t take much political savvy to realize that supporting EVs, in the right crowds, will become a political asset - regardless of personal feelings.
Will they?
What’s the difference, in jobs and state/local revenue, between a nominally third-party dealership, and one owned and run directly by Tesla?
Other than an extra owner or partners in the middle skimming the cream on personal income tax, I don’t see any difference. Manager, sales force, clerks, parts and repair shop… who cares who “owns” it?
It’s not just about cost, it’s about time. I would guess people spend as much time waiting for a service guy to hook them up and unhook them as they do actually getting the gas pumped, which would imply that changing to self-service would cut the amount of time sitting in gas stations by 50%. Point of which is that interest groups advocating for more local jobs and the like have considerable influence in NJ.
You gave numbers for sales tax. You have other figures, whip them out.
I don’t see what any of this has to do with dealerships. All these strategies sound exactly as feasible for dealerships - or people buying from them - as they do for national companies.
When I lived in New Jersey I bought three cars, two of them in Pennsylvania dealerships. As Fotheringay-Phipps said, the sales tax was paid to NJ.
So tax has nothing to do with it.
Since NJ is a small state, what will happen is that Tesla can establish dealerships right over the border, in PA and NY, which are not that far from almost any place in the state. That will lose jobs and related tax revenue. Politics for sure.
In any case how odd that these three states with Republican governors who prattle on about minimal government intervention have laws restricting free enterprise.
Missed the edit…
It doesn’t matter. Most states don’t accept registered value below low book, or some large fraction thereof. They long ago got wise to people selling the car for one price and giving the buyer a BOS for some much lower figure to “stick it to the man,” so they’ll use the paperwork for valuation as long as it’s not lower than book, or in the case of argument, actual appraised value.
Around 1995, I bought a Volvo 240D in nice condition from a co-worker in a hurry to leave town. I jokingly offered him $500 and he took it. (I later sold it, with tranny problems and another 10k miles, for $3,600 to a turnaround specialist.) When I went to register it, the CA DMV lady took one look at the BOS and said, “You aren’t going to claim this is value, are you?” and I settled for low book valuation for sales tax and registration value. I’ve had a number of used car transactions since, including one very exotic beast, and both CA and CT DMVs were insistent on a realistic value no matter what sales records showed.
So I doubt many people get by selling cars to family members for token amounts. Such transactions are often exempt from sales tax, anyway.
I also looked into buying a vehicle from neighboring RI. The deal was that I had to pay sales tax there to conclude the purchase, but here in CT I could deduct that amount from the sales tax owed to CT. (RI’s is lower than CT’s. Other way around, I would owe CT nothing but be out the extra to the other state.) Many states have such agreements, especially up here where borders are close and tight.
Maybe you’re misunderstanding or I was unclear, I think probably the latter. I meant to refer to politicians that are being lobbied by those types of people I mentioned. Auto dealers are likely responsible for a huge portion of the anti-direct sale lobbying, but big oil and anti-environmental regulation groups surely also let it be known when they write their checks that they don’t want anyone supporting Tesla’s business model because it hurts the good ol’ boys.
Regardless, you’re not up on American politics if you think a politician, particularly a conservative politician, who said such a thing would get little public support.
Did the governors make those laws? My understanding is that they have been on the books, and the governors are just enforcing them. Is that not correct?
I’d still disagree that there’s any connection between being pro-oil, pro-climate change and pro-goodolboys and attacking Tesla’s “business model” because any of these groups or pols think there’s actually something wrong with the model itself. As a bullshit obstruction tactic, sure.
To his inner circle and the choir and no further, and with nothing but the most evident intent of protecting oil and donor interests. Not to the general public outside of oil-field counties. I don’t think being pro oil and anti climate change leads to general negative feelings about EVs. Especially not Tesla, which has become something of a media and popular darling.
I know we did a thread about this subject recently (within the last year), and I can’t for the life of me find it. Anyone else? IIRC, it had a lot of good info in it about the history of these laws.
I think we can take as given that there was a time when permitting national corporations to sell major goods directly undercut competition and undermined local economies.
That time, however, was 1950. With our transparent and essentially fused national economy, such laws are nonsense, as 47/50ths of the states agree.
A lot. Tesla dealerships often exist in malls run by a couple guys. A third party wouldn’t likely have to sell multiple brands to make ends meet. But I think the assumption should be that their would be fewer jobs and lower costs to Tesla, otherwise, they would just have a franchisee sell their cars.
The ownership thing is to nominally to create another layer of competition that would in theory lower prices. Whether that happens is up for debate. The larger issue is that a full transition from cars being BOUGHT by consumers rather than being SOLD by car dealerships is not something that would be good for a state’s bottom line in the current climate.
True, but that time doesn’t just come from one side. How much longer will you have to work to account for the costs accrued because now some guy who previously had a job pumping gas is now committing crimes or on some kind of assistance?
Either way, the whole I could save x seconds not doing something, so it cumulatively costs society $y dollars is not particularly compelling.
Having grown up in NJ, my anecdotal experience suggests that you are very wrong about that. The time added is usually minimal.
Do you honestly doubt this scenario would be bad for state revenues? Why? Let’s look at what happened in Brazil when GM was allowed to sell one model direct to consumers:
Is it a better system? Of course. The bolded parts are what is problematic. Using few suppliers and parts, and passing on government subsidies is not good for the government’s bottom line. Those things either mean less taxes or fewer jobs. The state is not collecting property taxes, payroll taxes, ss taxes, etc. I completely agree that they a shift away from the current is system would be ideal, but I think there will be larger costs to transition given that the savings are not distributed in a even fashion, nor are there opportunities being created as fast as they are destroyed.
Because the State of NJ can crack down on or audit Brad Benson auto located in-state far easier than ABC auto located in Wisconsin.
See above.
I think this issue will be resolved one way of another without having a patch work where companies like Tesla can exploit those sorts of loopholes.
Not really. These guys care about jobs, revenue, and campaign contributions.
First, you are allowed to gift items, which is how many family sales are conducted. Second, people are just not honest, and it is hard to catch people. I would be surprised if the tax compliance on private sales were anywhere near what it is on dealer sales.
Right. So this is what would happen. Bottom feeder state puts their sales tax at X% knowing that most states have about X%. The state tells Ford and Toyota that they should set up their national internet sales office in their state, and they will allow them to pay no corporate taxes for 10 years so long as they temporarily register all of their cars in their state, paying the applicable X% sales tax. Ford in turn give 50% of the savings to the consumer on the cost of the car, and the consumer on plays the difference in sales tax in their home state. The home state loses, Ford/Toyota wins, and the bottom feeder state makes more than they otherwise would have.
I would bet this is what you will see happen. States already try to poach companies from one another using tax incentives. States give money to fucking video game companies for Christ sake. Do you really think such a large about of tax revenue wouldn’t attract certain states who want to take it from higher tax states?
I agree. But it seems like some people in this thread think that governors are to blame for this, but I think these laws go back quite some time, and it’s not like governors can just erase them from the books.
And I thought the Bitcoin arguments were murky. 
A Tesla “dealership” can’t be two guys in a mall unless it relies on a supporting sales, service and maintenance structure elsewhere. This is the only thin thread I can hang a working argument against a no-dealership model on: that buyers might be screwed by having to take their car three states over for repair or something. However, I doubt Tesla is hiding any such fact, making it a matter of consumer transparency and not necessarily needing legislation to ban the option. If someone buys an $80k car without a good service and support plan, it’s not much different from buying, say, a Lamborghini that has to be shipped back to Modena for service. Their call, as long as it’s informed. I still don’t see where the state or general community loses a thing.
By the time Tesla sales reach any appreciable fraction of the market, there will be full-fledged dealerships identical to those for any other make - the market will force them to do it that way. I can’t see how Tesla owning those dealerships changes the game at all.
What “other layer of competition” does a third-party dealership create for a limited model like Tesla? There are many products sold by a tightly controlling maker who will not let dealers undercut MSRP; having multiple Tesla dealerships in no way means there would be competitive pricing, or that Tesla would permit it, or that dealer pricing would allow any significant variance.
I don’t follow a word of this, and it’s centered on the bullseye of my professional interests. Maybe you could explain the difference in more detail?
ETA: I can’t make any sense out of your subsequent arguments, either, and you’ve mixed up Voyager and me in the quote attributions. Just one example: it makes no difference if “people are honest” about private vehicle sales or not - DMVs don’t take their word for values below book. It’s reasonable, book, or by appraisal, not what some schmo scribbled on a BOS with a smirk.
To summarize, who stands to benefit if Tesla can’t sell their cars in New Jersey without going through dealerships?
We have talked about dealers - owners of dealerships are usually somewhat influential local business people.
Then there are the oil companies - they would probably be OK if electric cars didn’t sell at all.
And what about the big auto manufacturers? They would probably be OK too if Tesla didn’t sell.
So, is it possible that lobbyists from these 3 industry groups were paid to chat up New Jersey legislators? Possibly, possibly.
Here is one that I have personally been to. I don’t know how many people are there at any given moment, but having visited that mall several times, I can tell you there are usually not more than a handful of staff, and there doesn’t need to be. The one is DC isn’t very well staffed either. Although I guess they technically would call them showrooms.
This isn’t only about Tesla. How many times must this be said and linked to? It’s also funny how Tesla only wants the law amended to include companies like them.
Why would Tesla or any other manufacturer need full service dealerships if they can sell directly to customers? Sure, they may need a small area with a few cars to take people on test drives and the like, but there would be no need to have the number of employees they do, or the amount of inventory they have.
For Tesla, probably not much at the moment. The issue is about what other mainstream manufacturers would do.
You have a cite for that law or statute?
I never said it would lower prices for Tesla. I said that that is the theory for other mainstream brands.
Traditional dealerships will typically claim their value-added is that they SELL cars that would otherwise not be sold. They stimulate interest and create demand. Most other consumer products are not sold by pitchmen directly, but instead they rely largely on advertising for consumer interest and demand. The issue is that cars needed to be sold that way because there was such an information asymmetry in the past. Now, I can pretty much find out everything about a car include the dealer invoice price. Most people I know pretty much know what car they are going to buy before the leave the house to visit a dealership. The balance of power has changed now that consumers buy cars instead of being sold cars. This has lowered prices and obviated the need for a qualified middleman. That trend alone has been bad for local government revenue because the margins are thinner now, and fewer people are employed. So while I think cars will eventually be sold directly to consumers in some form, let’s not pretend that won’t have costs.
Do you honestly think private auto sales are reported with fidelity? Really? Yes, you can’t expect to have the DMV sign off on a Benz for $50, but a good percentage of people will not report the actual price paid.
The state, other dealers, and maybe consumers.
They didn’t need to really. There are laws like this in almost every state, and in multiple different industries. Major drug companies usually can’t sell you OTC drugs directly. Liquor companies often can’t sell alcohol directly. Movie studios usually can’t own and run movie theaters. This is not a new law just to piss off Tesla. I agree that is not an ideal setup, but I think it’s fairly apparent that direct sales would cost the state in a variety of ways.