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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

Conflict of interest would seem to apply here. The case can easily be made that no dealer exists that will take a new product on if that new product would create conflict in their sales staff for their existing product.

Bah, Elon says it better, but no way is an ICE dealer can sell a BEV without having to bad mouth his existing stock in the process.

Guaranteeing that only ICE vehicle dealers can sell EVs is kind of comparable to mandating that only photo processing centers could sell cameras. Do you really think that we'd have digital cameras today if that were the case.
I respectfully disagree with those who think these laws were placed there for good reason. While there are a lot of laws on the books that were placed there with good intentions (and often very bad unintended consequences) to prevent other abuses, I don't believe that this one is. It is simply a protectionist measure to protect local political supporters from out-of-state manufacturers. It probably is within the rights of a state to do, however, it may not be good for them in the long run.
I've notified my state representatives of my displeasure with these laws and hopefully, they will look at reforming them - but I doubt it. The Brown's and Checkered Flag auto empires probably support VA campaigns more than I can.

Last weekend I went to a winery here in MO that is owned by one of the Bommaritos. For those that don't know they own several franchise dealers here in St. Louis for many different car makers.

When the owner of the winery saw my car he was ecstatic, something he had never seen. I showed it to him and he asked all the right questions. I could tell he knew cars. He was even feeling the paint job and commented it was aluminum which he figured out just from touch. He definitely wanted to know who the manufacturer was so he could call them and request to setup a franchise. He appeared to believe that the car is the thing of the future.

I sometimes wonder if it wouldn't be better for Tesla to work with these types of people to setup up galleries, or factory dealers with the promise or contract guaranty that once the GenIIIs come out or sales reach XXk number that person can have exclusive franchise rights for Y number of years in a certain area. I am fairly confident when Tesla starts selling around 100K cars they are going to need franchises.

According to the Virgina franchise law the Bommarito's are a perfect example of the type of people that would be willing to setup a franchise of Tesla only stores (no ICE at all) so in this case, I hate to say it, the ruling is correct according to the law. The law should probably be changed but I don't know if that is going to happen.

Sadly these laws are also prohibiting Tesla from having the best of both worlds. I think there are thousands of people that would be just as happy to go to a franchise dealer and buy it from them (instant on the lot gratification) rather than go online, pay tens of thousands and wait weeks/months to get the car. I think both models could work at least in the short term.

I think getting through the red tape in these states would go a long way if they had the right allies.

As I read through these comments, there are those who suggest Tesla should use dealers. Would you suggest that Amazon use book stores? I think that business model is going away. We need to make some adjustments in the retail space just as we have in the media space.

Should airlines be forced to go back to selling tickets only through Travel Agents? Should a middle man be a legal requirement to sell any consumer product?

PD; I think you're talking without data again. What data do you have wrt what margin Tesla would have via a dealer model vs. a direct model? And their stated 25% GM has nothing to do with the issue at hand - as many would argue that they could have a higher gross margin with an efficient dealership infrastructure in place.

You state whatever saving go straight to Tesla and not us - I would argue that all the carping we all do that their delivery, licensing, etc for each state that currently is so subpar is costing them $'s not adding. Yeah right - they are doing this as a start-up auto manuf for the GM $'s. Get real. If they could hook into an existing infrastructure in the short run they'd be far ahead than going alone.

I won't argue the reason why the laws exist, all well and good. But Tesla will be far behind the curve for several years at best and to imply that they are GM points to the good with this process is off the mark.

Having a debate over the franchise model is actually quite sad. It should be up to the producer to chose his route to market and what interface he prefers with his customers. That state or government should even bother to care is appalling. What is the difference besides the obvious, between an Apple product in an Apple Store and a MS in a TM store?
It amazes me that that this is even a topic - and in the US of all nations.

I fail to see why you can't have both, you have ATT stores that are ATT owned, and you have Franchises. You have MCDonalds, that are McDonalds owned, and some that are Franchises. Why is this (TM), (Now) in the 21'st century different ?

Just like finding the absence of a viable dealers in a district is a falsehood, and difficult to prove. Proving that Franchised Dealers are to the "Public Good" is also difficult to prove. Some may be, others not.

This is more of a grander view of mine, but when you have laws like this:
California: No vehicle without a driver may exceed 60 miles per hour. or Animals are banned from mating publicly within 1,500 feet of a tavern, school, or place of worship.

And you go "That makes sense ! Sort of why 60 MPH" but now with Google Autonomous cars.. Or sure they don't want the dogs / cats just humping each-other, but whom are you going to throw in jail ?

All laws should expire, all of them ! And if the people find that the laws are right/just, they should vote to renew them. Maybe turnouts at the polls would be higher, if your favorite program was about to expire.

This is a conversation I have been having with my State Representative and Senator:

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I appreciate you looking into this. To be transparent, I WAS a Tesla stock holder, I was stupid and sold the stock over a year ago.. That said I have no interest in them now, other than the fact, I am personally interested in buying a Tesla, and techie at heart, and would like to see them succeed for the reasons mentioned in my first email. I also hate to see hypocrisy cause stalemate and put up roadblocks in front of businesses for no reason.

Right now it would really boil down to the fact it would seem the DMV and specifically DMV Commissioner Richard Holcomb, is in bed with the Dealers Association. It couldn't be more obvious in the fact as noted in the below articles, the commissioner rejected their application even though "despite a recommendation by their own hearing officer that opening the Tysons Corner, VA dealership would be in the public interest. "

You see clearly the law states, if no Dealer is available they should be able to get a license. Since Telsa does not have a dealer network there is no conflict of interest with a dealer in Virginia.

I feel it simply boils down to the Dealers afraid of what this could open up for other manufacturers. But if you look at the law, allowing Tesla a license would not really affect anything, as they are not looking for new laws to be made. Just for the DMV to abide by the laws as they are written. Not as their special interest group wants them to be applied.

I have attached recent articles and the law he used as an excuse to deny their application for you and I appreciate you looking into it.

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News reports - April 23rd 2013

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The Virginia Department of Motor Vehicles has rejected Tesla Motors Inc.'s bid for a dealership license.

In a ruling issued Monday, Virginia DMV Commissioner Richard Holcomb turned down Tesla's request, which dates back to March 16, 2012. A spokeswoman for Tesla, which wants to open a company-owned dealership in Tysons Corner, Va., said in a Tuesday e-mail that the company is "still figuring out next steps."

The Virginia Automobile Dealers Association had vigorously opposed the Tesla store license. Don Hall, president of the dealers association, told Automotive News in a Tuesday e-mail that he is "very pleased" by the ruling.

"We welcome Tesla to Virginia, but they too must abide by the laws like all other manufacturers and Virginia new car and truck dealers," Hall wrote.

The dealers association argued that issuing such a license would violate Virginia franchise law, which generally prohibits manufacturer-owned stores.

There is an exception in the law that states a factory-owned store is permissible if no independent dealer is available to operate the franchise in a manner consistent with the public interest. In his ruling, Holcomb said he was not presented clear evidence to determine that there is no such independent dealer.

Holcomb said his ruling does not preclude Tesla from requesting a new hearing based on additional evidence. To appeal the ruling, Tesla must file a notice of appeal with the department within 33 days of the decision.

In addition to the appeals process, Tesla could "even go to court," Hall said Tuesday in an e-mail. "This process would set them back 'many' more months or even years depending on what option they exercise."

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McLEAN, Va. (AP) -- Virginia officials have rejected a request from electric car maker Tesla Motors (TSLA) to operate its own dealership at a Tysons Corner mall.

State law requires manufacturers to sell cars through a dealer, unless the manufacturer can show that no dealer is available.

Palo Alto-based Tesla sought an exception, saying its unique model for selling cars would not be attractive to a traditional dealer. The showroom would be more of a "design studio" where customers would use touch screens to customize options. No inventory would be on hand, and customers would wait up to six months to receive their vehicle. There would not be a service department.

The Virginia Automobile Dealers Association objected to Tesla's request.

In a ruling Monday, Department of Motor Vehicles Commissioner Richard Holcomb said he was unable to say definitively that no dealer could meet Tesla's needs.

Holcomb ruled against Tesla even though a DMV hearing officer had twice recommended that Virginia grant the company's request -- first in September and again in February after hearing specific complaints from VADA.

Tesla has the opportunity to appeal Holcomb's ruling in state court or re-submit its request with evidence that no dealer is available to operate the franchise in a manner that would benefit the public interest.

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Canned reply to me and a few others from DMV

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"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"

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Lastly, recently a judge recently rejected Tesla's request for an exception to laws that prevent manufacturers from operating dealerships in most cases.

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Here is the law mentioned above:

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.

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So in final.. as noted in section #4..

Do you know any dealers that specialize in luxury electric vehicles and how to maintain them..? Neither do I. I have enough problems getting the dealer to fix simple problems like brakes and tires.

Dealer boutiques where they sell cars on a per order basis, is NOT what traditional dealers do. Also the millions in equipment and training for extremely specialized mechanics, special facilities, etc.. is not something a regular dealer will want to invest in when they are unsure the vehicle will even turn them a profit.

So, It IS in the public interest to allow Tesla to work outside the standard dealer network.

This was even noted above as the opinion of the "DMV hearing officer had twice recommended that Virginia grant the company's request -- first in September and again in February after hearing specific complaints from VADA"

So pressure from those above the DMV Commissioner I think is in order. As Tesla has proved to the DMV review board TWICE that they deserve to own their own facilities within the state. The only thing holding them up is a DMV commissioner going against his own hearing officer, and the interests of the people.

Doing so would also showcase Virginia as being forward thinking and business friendly.

Sincerely,

Charles Goin
www.ez2wire.com
(P) 1-804-503-0249
________________________________
From: Lee Ware
To: Charles Goin
Sent: Tuesday, June 18, 2013 11:21 AM
Subject: RE: Tesla Motors

Dear Charles: I am sorry to learn of your frustration--if you have information as to why the application was denied, do please pass it along. Meantime, I will look further into the matter. Regards, Lee Ware

________________________________

From: Charles Goin
Sent: Tuesday, June 18, 2013 9:21 AM
To: Lee Ware; Sen Watkins
Subject: Tesla Motors

Honorable Representatives,

I write you to express my concern and disappointment in regards to the Virginia DMV denying Tesla Motors a dealership license. They were simply denied, because they don’t have a middle man to be their “Dealer”.

I also realize that although the DMV Licensing in the state is something to be addressed on a state level. A company such as Tesla Motors should not have its entrepreneurial spirit an success dampened by a crazy antiquated patchwork of laws and regulations meant for another era. Nationally that needs to be addressed somehow to help promote more innovative companies like Tesla.

Many don't see what Tesla Motors could mean to this country, and it is simply game changing on an international level. Consider this, when you think which country makes quality performance luxury cars you do NOT immediately think the United States, you think Germany. You think BMW, Audi, Mercedes, Porsche. Here is a country smaller than California, in size and population, with 4 of the top manufacturers in the WORLD of high end luxury & high profit automobiles. Compare that to ALL of America, we have 2 international luxury car brands Cadillac & Lincoln. While Cadillac & Lincoln are improving, the majority of their sales are in the US, and internationally do not garner the same cache as do the German brands. I should also point out, that know that I didn't list Chrysler, as few see it as a true luxury manufacturer. Also, with exception of a few models, few Chryslers are even sold overseas.

In any case, last I checked ALL Virginians were supposed to be for the entrepreneurial spirit, and making Virginia business friendly. This action and the old rules and regulations that are being thrown in front of Tesla are not as much protecting the current dealership network, but killing new innovation. We should, as a state, and as a country, knock down all the barriers in front of them to help them succeed. What we should not do is enforce arcane rules and regulations meant for a different era. By forcing Tesla to have a middleman in the mix, just ads costs to the consumer for no reason, and removes Tesla from the quality control quotient of its unique vehicle. This is not a business friendly, and sure as heck isn't consumer friendly, attitude to take and simply makes no sense. As people that want a Tesla will still be able to buy one, stopping them from selling in Virginia won’t stop that, as they have a boutique in D.C. So by barring them a dealership in Virginia only makes it so Virginia would be losing sales and tax receipts to DC. Also consider that any dealer setup in NOVA would have to compete with the Tesla Motors boutique in D.C. for sales and would lose due to having to add cost to the sale. So it wouldn’t work as a business model and thus Tesla will have a hard time finding a dealer to full fill their needs and Virginias requirements. A lose lose situation for all involved.

As a Virginia resident, a car buff, a mechanic and someone that has driven a Tesla. I can tell you this, the Tesla Model S is not only a game changer, this is a whole new breed of vehicle, much less automobile. It is such a new breed that I could not open the hood myself, and would not dare work on a single thing. While the Model S may have four wheels, and look like a automobile to the casual observer, it is much more than that. So much so, that it will require a unique approach to service and sales, and a much more consumer friendly one, to succeed. I am not sure if you have ever had the joy of dealing with a bad car dealership, but with the limited number of dealers Tesla will have one or two bad dealers could ruin their reputation before it begins. They need to be in complete control down to the consumer level.

I mention this because Tesla is a new breed of automobile, Teslas quality standards, build and performance levels are on par with that of BMW, Mercedes, Audi and Porsche. Think about it, in 10 years from now, Tesla could be an international brand name on the level of BMW. They would have established the US as the country that makes luxury EVs, through their brand. By then if someone in France or Spain is in the market for a quality luxury performance EV, they won't think of a German make, they will look at Tesla (Or possibly the GM Volt, or maybe a new upstart that follows in Teslas footsteps) to be that car they want. Because when they think performance luxury EV, it will be ingrained in them to think Tesla, to think an U.S. automotive brand. That is what's at stake here, not just for Virginia but for America.

So in closing, Virginia, and to be fair, many other states North Carolina, and Texas to name a few, have to get out of the way and allow Tesla to experiment with their new concept. This new concept is more than the vehicle itself, it is the way it is sold and serviced as well. By putting road blocks in their path to appease the old standard dealer network business model is to put roadblocks in front of innovation and the future of a new industry.

Sincerely,
Charles Goin

Nice job! Isn't Virginia that has one of the most generous state EV buyer credits/rebates in the nation?

What happened to no-regulation policy touted by all conservatives? It is an American company for god's sake.

Uh, Virginia offers no practical incentives. Zero tax incentive and new EVs can use the HOV lanes ECCLUSIVE of the ones in No VA, the only ones that mattet. And they recently decided to lower the gas tax by ipping the sales tax AND adding an EV registration fee.

If it was possible to practically relocate my business I would be out of VA. I almost cant believe they are so against innobation

Apple can sell its stuff in Apple Stores, which are owned by Apple, but Tesla cannot sell its products in Tesla stores, which are owned by Tesla? My head is spinning and feel that the zombie apocalypse may be upon is.

Apple has lots of pull and pelf; Tesla, not so much. Yet.

Could tesla store cars privately around the state for people to test drive with a quick call? People can do anything else online. There is still no law against DTC ads. You could also still have in state service centers. Who needs those little in mall sales centers!

Meh, it's just an inconvenience. Tesla can still sell cars to Virginians, it doesn't seem like that big of a deal.

Mr Spagheetti,

That inconvinience may just cost Tesla a few % points in lost sales. Elon talks about litigating these guys (in the Reuters interview) and I hope he wins.

New Balance is permitted to open its own stores in Virgina --- and sell their shoes and t-shirts in the SAME malls in which Foot Locker and Finish Line sell the EXACT SAME SHOES AND T-SHIRTS!!!

Tesla, give them hell!

Does Virginia have a citizens initiative process?
That might get the job done.

@RedShift

I doubt it. The difference in the ordering and delivery process between "friendly" and "unfriendly" states is minimal from the purchasers' perspective as I understand it. How many purchasers are so ambivalent about buying their $90k car that they'd cancel because they have to order from their phone or home PC instead of in the Tesla store, for example? Or because the delivery might take a couple extra days since the money has to be received and all paperwork signed before the car leaves CA?

I'm thinking if you back out from that, you were never buying in the first place.


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