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Virginia call to action - DMV denies Tesla license

Folks,

Elon just tweeted a few hours ago that Virginia DMV denied Tesla a dealer license! This is really bad for the people of virginia. Let's get organized and write to the DMV Commissioner, Governor and CC your Congressman and Senators. Other ideas? please post widely on FB/Twitter as well.

https://twitter.com/elonmusk/status/326828343100076034

Contact info for Virginia DMV Commissioner:

Richard D. Holcomb
Commissioner EMAIL ADDRESS
richard.holcomb@dmv.virginia.gov
TELEPHONE - EXT
(804) 367-6606 FAX
(804) 367-2296

This issue needs to be dealt at the Federal level. It constitutes restraint of trade.Anyway, the Obama administration supports Tesla. so it is just matter of time before this issue is addressed.

Regardless, the consumer can still order the car via internet. Tesla could even outsource test drives.

A nice and polite request to Mr. Holcomb has been sent, requesting him to look into the matter again.
In support of US and Virginia in particular, MS "brothers and sisters" ;-)

Overruled!

"Elon Musk ‏@elonmusk 10h

VA DMV Commissioner Donley overrules own Hearing Officer stating Tesla store in public interest.. pic.twitter.com/iByWfYYyMY"

@GeirT Wow, your note must have been really powerful! That was quick. :-)

@GeirT Way to go! :-D

Donley should be sent a Tesla

I think you guys have it backwards. The hearing officer was pro direct sales but was subsequently overruled by the DMV commissioner

You ALL need to read the article!!! Tesla has been shot down even after the hearing officer said they should be approved. As I read it, Mr. Donley DENIED their license...

Ah..:-/

Elon's Tweet was easy to misunderstand. (In our defence)

"VA DMV Commissioner Donley overrules own Hearing Officer stating Tesla store in public interest.. "

I read it as,
"VA DMV Commissioner Donley overrules own Hearing Officer, stating Tesla store in public interest.. "

That's why grammar is important!

Drove from Seattle to San Francisco last week. Right after the California border in the middle of nowhere there is a huge liquor store. Apparently, the tax rate is such that it's worth driving from the southern cities in Oregon to stock up (liquor is cheaper in CA). Gun dealers do the same thing just over the Indianapolis border from Chicago.

So, worst case, Tesla sets up service centers and show rooms just over the border. Virginia is not all that large, and I suspect the vast majority of Tesla's market live within 100 miles of the nearest state border. Many may just take the 15 mile drive to Maryland.

So someone should point out to Commissioner Donley that the big loser on this decision is the State of Virginia, and its citizens.

Of course, he already knows that, and he doesn't care. Because the Auto Dealers and Big Oil lobbyists are feathering his nest, and paying for his campaign and extra "staff," that is who he truly "represents."

Commissioner Donley, like many others in government today, is just making sure that the public interest does not get in the way of his cronies' private profits. This is not a "free-market." This is not about liberty and justice, its about crony capitalism and public manipulation for private profit. Utterly corrupt. Beyond disgusting!

@ elguapo

Magic. What else you need help to? ;-)

Ooops... failed magic!

And here is the response to my polite request:

"Thank you for your interest in this matter.

After carefully reviewing the information and evidence provided at the administrative hearing, it was found that the statutory requirements in Section 46.2-1572 of the Code of Virginia had not been met.

However, Tesla is not prohibited from gathering additional evidence and presenting it to DMV as a new request at a future date. Please let me know if you would like a copy of the decision to more fully understand the law and rationale for the decision in this case.

Brock H. Cole
Senior Legal Services Analyst
Virginia Department of Motor Vehicles
Legal and Regulatory Affairs"

http://leg1.state.va.us/000/cod/46.2-1572.HTM
§ 46.2-1572. Operation of dealership by manufacturer.

It shall be unlawful for any motor vehicle manufacturer, factory branch, distributor, distributor branch, or subsidiary thereof, to own, operate, or control any motor vehicle dealership in the Commonwealth. However, this section shall not prohibit:

1. The operation by a manufacturer, factory branch, distributor, distributor branch, or subsidiary thereof, of a dealership for a temporary period, not to exceed one year, during the transition from one owner or operator to another;

2. The ownership or control of a dealership by a manufacturer, factory branch, distributor, distributor branch, or subsidiary thereof, while the dealership is being sold under a bona fide contract or purchase option to the operator of the dealership;

3. The ownership, operation, or control of a dealership by a manufacturer, factory branch, distributor, distributor branch, or subsidiary thereof, if the manufacturer, factory branch, distributor, distributor branch, or subsidiary has been engaged in the retail sale of motor vehicles through the dealership for a continuous period of three years prior to July 1, 1972, and if the Commissioner determines, after a hearing on the matter at the request of any party, that there is no dealer independent of the manufacturer or distributor, factory branch or distributor branch, or subsidiary thereof available in the community to own and operate the franchise in a manner consistent with the public interest;

4. The ownership, operation, or control of a dealership by a manufacturer, factory branch, distributor, distributor branch, or subsidiary thereof if the Commissioner determines, after a hearing at the request of any party, that there is no dealer independent of the manufacturer or distributor, factory branch or distributor branch, or subsidiary thereof available in the community or trade area to own and operate the franchise in a manner consistent with the public interest;

5. The ownership, operation, or control of a dealership dealing exclusively with school buses by a school bus manufacturer or school bus parts manufacturer or a person who assembles school buses; or

6. The ownership, operation, or control of a dealership dealing exclusively with refined fuels truck tanks by a manufacturer of refined fuels truck tanks or by a person who assembles refined fuels truck tanks. Notwithstanding any contrary provision of this chapter, any manufacturer of fire-fighting equipment who, on or before December 31, 2004, had requested a hearing before the Department or the Commissioner in accordance with subdivision 4 for licensure as a dealer in fire-fighting equipment and/or ambulances may be licensed as a dealer in fire-fighting equipment and/or ambulances.

It seems like section 4 would apply here. There is no independent dealer available in the area to own and operate the franchise - for two reasons: 1) Tesla did not exist before; and 2) there is no franchise.

The Conclusion:

"After careful review and consideration of the entire record, I am unable determine that no dealer independent of Tesla is available in the community or trade area to own and operate a dealership franchise in a manner consistent with the public interest. [it would be very interesting to know what is hidden inside Public Interest]

Tesla has shown that its business model for dealerships is unique and outside the traditional model of motor vehicle dealerships in Virginia. In light of that fact, I need more comprehensive information than has been provided to make a reasonable determination. I cannot determine that there is no dealer independent of Tesla available in the community to own and operate the franchise in a manner consistent with the public interest [here we go again the Public Interest, what does that mean?] without further evidence of an effort to identify or solicit candidates in the relevant market that could operate a Tesla dealership in a manner consistent with the public interest [woops - one more time].

Therefore, I am unable at this time to authorize Tesla to operate a dealership in Virginia. This decision does not preclude Testa from requesting a new hearing based on additional evidence pursuant to Va. Code § 46.2-1572."

An interesting byline:

"It should be noted that obtaining approval under Va. Code § 46.2-1572 from DMV is only the first step in the process of a manufacturer operating a motor vehicle dealership. Once approval has been obtained from DMV under Va . § 46.2-1572(4), the manufacturer must still apply for a license from the Motor Vehicle Dealer Board and must meet all the statutory prerequisites for such a license. This decision does not express any opinion regarding whether Tesla is entitled to such a license since the issuance of such a license is in the sole discretion of the Motor Vehicleous Dealer Board."

I received the same response that GeirT did. It sounds like we need to be contacting our VA State representatives to get the law stricken. That law seems like it can be weaseled to mean whatever the enforcer wishes to see in it and the enforcers probably don't want to go against the powerful auto dealer lobby.

I'd suggest contacting the media as well. Shine that spot light.

Geir, when refering to "the public interest" they are just referring to § 46.2-1572 (4) as listed above.

It would be interesting to see if there was any case law or prior VA DMV decisions which could help define "the public interest." However that exception is so limited that it may never have been used prior to this attempt.

In addition, it appears that the VA DMV is asking Tesla to prove that there is no independant dealership in the area. It is very difficult to prove a negative. Additionally, I could see dealerships that sell luxury cars standing up stating "sure I'd love to sell Tesla's" That way either they get the opportunity to make some money, or, more likly they don't have the competition from Tesla.

Thanks for posting the law, Alex K,

I believe that if you simplify the wording, #4 basically says "No manufacturer can own a dealership unless there is no dealership in the state willing to sell that manufacturer's vehicles". With this in mind, Tesla owning a dealership there (and not trying to involve an existing dealership) violates the spirit of this law.

So the place to write is to the legislature to change the law. I don't think this comes as a surprise to anyone at Tesla.

Thanks guys for jumping on this. I got the same reply from the DMV legal which seems to be just beating about the bush. The judgment seems to be accepting that there can be no independent dealer who can own an operate a Tesla dealership but then just simply denies the request. This is not what our country is supposed to be! What else can we do here? I like EArl and Nagin's idea of contacting VA state reps -- they get our votes after all no? Can anyone put up info where we can find whom or reps are?

I also tweeted to Governor Bob McDonnell though do not have an email for him. Suggest contacting him/his office via the website as well.

To find your VA representative go to:
http://virginiageneralassembly.gov/membersAndSession.php?secid=1&activesec=0#!hb=1&mainContentTabs=0
Click on "Click for Bill Tracking, Meetings, Who's My Legislator? tab at the top, center of page.
A section will enable you to enter your address and zip code and it will tell you who your legislators are. There's a link for "more about ..." at the bottom from which you can get an email address.
I'm sure they will listen to a flood of emails although I doubt that my Norfolk reps will really get too many besides mine.

The law, the ruling and the response is nothing but Kafkaesque. I find it curious that this can exist at this day and age. An expression of crony capitalism at its worst, where special interests and business are cozy in bed.
I agree fully with the ones above, to stand a chance to make any change at all this has to be done through the political way. The DMV Tsar rules in his fiefdom as he is set to do, protecting his friends which of course we all know who are.

DMV is only the first step...the manufacturer must still apply for a license from the Motor Vehicle Dealer Board <== and guess who sits on that board = the dealers. Mr. Holcomb is just shielding his buddies to be exposed to deny a license. A cozy nest they created for themselves.

Ridiculous - zero state oversight... the dealers decide who can be a dealer.

I live in VA, have a Model S & love it. I do not like the dealership auto sales model. However, lets not get all indignant about this. The reason that TM has this business model is NOT about saving the consumer anything. To the contrary, they are SPECIFICALLY using this strategy to increase gross margins to TM. They pass nothing through to the consumer. One of the company's stated goals for this year is to acheive 25% gross margins. No other auto manufacturer acheives even half that - the best, like Ford, get around 11% margins because the dealer is an added cost to them.

Whatever savings there are in TM's distribution model go back to Tesla, not us. And whatever added costs there are in the dealership distribution model that serve to drive up ICE car costs only serve to give TM more competitive margin.

Let's also remember that the reason these laws were initially put in place was seriously abusive trade practices on the part of auto manufacturers in the early days of automotive history. The laws presume a franchisee business model because that's how all auto manufacturers worked - very few could afford to set up dealerships, given the long intial acceptance period, so they worked with local service stations and business people to represent them. And then, after becoming successful, they tried to run the dealers out of business and set up direct consumer sales channels. Tesla is victimized here by history, not some nefarious attempt to protect local car dealers or stop the EV trend.


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