If a large number of individuals or businesses are heavily invested in the-way-things-are, is it ever dangerous to rapidly change the market rules that we've built up- usually for the purposes of consumer protection or fostering businesses that benefit the larger community?

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[0] http://www.peachpundit.com/2014/09/05/tesla-uber-internet-sa...

I would expect that the standing issue would be different if dealer for G could show harm by the actions of maker T.

This article gives more info about the decision: http://www.reuters.com/article/2014/09/15/us-tesla-motors-ma...

Drastic and radical changes that happen quickly are probably quite a shock to a lot of business/industries/people. However, we must take care in what "regulation" or "consumer protection" as you call it, we add lest we actually make the subsequent change more drastic and actually harmful(more so than the harm we're trying to prevent by putting the regulation in place).

We're only in this situation because of regulation designed to protect already-invested businesses. At the time it was probably argued that having them fail would be a "dangerous and rapid change", or something to that effect. And the regulation sort of propped up or let the businesses get even more heavily invested into their ideas with no fear of alternative markets etc.

We could argue that if those regulations never got in place, those relatively smallish businesses would have failed at the time. The then owners would have adjusted, started over, or re-tooled their business to fit in.

In the article, he points out that Tesla's been given a lot of taxpayer money plus a lot of incentives for buyers to make their product more attractive. And now they now get to skirt around the market rules that other companies have been stuck with and had to build infrastructure and procedures to deal with more effectively.

Maybe Tesla's handouts should be pared back as they grow and are allowed to bypass the old rules.

Also, their vehicles receive the same incentives as other EVs produced by other manufactures. Perhaps other manufacturers should make more EVs (or EVs people will buy) if they would like to capture the benefit of those government incentives.

Yes, it is a gift. The loan was priced way below market, considering the level of risk and other conditions attached. The difference between the interest rate Tesla paid, and the market interest rate for the same amount of money, is a subsidy (or 'gift', if you prefer) from the taxpayer to Tesla.

http://www.slate.com/articles/business/moneybox/2013/05/tesl...

If you have any thought that the US is an efficient pure free market, I am sorry to inform you that is not the case.

'can you point out taxpayer money they were "given"'

My point is that the subsidised interest rate _is_ taxpayer money they were given. They were given the difference between the market interest and the interest they actually paid.

I'm _not_ arguing either that (i) 'the US is an efficient pure market' or (ii) that this specific subsidy was a good or bad thing.

One could argue that by not taxing the externality of their business (CO2 emissions), auto manufacturer's that make traditional gas guzzlers have been given far more government assistance than Tesla. The incentives that you speak of are intended to produce a positive benefit to society (less pollution) rather than as a handout to help Tesla.

If the law is producing bad outcomes, the legislature should face pressure to change the law. We shouldn't rely on the Court to stretch as far as it can to get the "right" result.

But JackC's summary of the opinion makes a reasonable case that the standing issue was properly decided.

I really hate buying cars. I don't like the games that are played during the process.

I've walked away from several car deals, and felt kinda sh*tty about 3 that i didn't walk away from.

That is (as much as any other reason) why many people will support a change to the status quo.

They say that's the hallmark of a fair deal; both parties walk away feeling mildly dissatisfied.

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Edit: having read the decision, I thought it might be fun to explain what the Court did here. Reading statutes is a lot like reading code. Reading cases is like ... not running the code, because we can't do that, but more like having it explained by a particularly skillful coder with decades of experience. It's fascinating if you're into that stuff.

So to start with, we have this statute in Massachusetts that says it is unlawful for a car manufacturer "to own or operate, either directly or indirectly through any subsidiary, parent company or firm, a motor vehicle dealership located in the commonwealth of the same line make as any of the vehicles manufactured ... by the manufacturer[.]"

Sounds pretty clear cut, right? Tesla can't run a dealership in Massachusetts that sells Teslas -- there's no helpful exception left out of that quote. But the Court didn't come out that way.

If you really want the reading-unfamiliar-code experience, go read the surrounding parts of the statute[1] and see how you think the Court understood that section. It's under subsection (10).

...

So, it turns out the Court looked to the legislative history, which is the closest we have to comments -- statements of legislators and the Governor explaining why they were voting for (or not vetoing) the statute. (As a side note, Massachusetts has terrible legislative history, because not much was recorded of the debates, many decisions are made behind closed doors by the Democratic super-majority, and unlike Congress, we rarely explain why a statute is being passed in the text itself -- but there seems to be some history in this case.) The Court concluded that the statute is intended to protect dealers from their own manufacturers. The Court finds: "the purpose of c.93B historically was to protect motor vehicle dealers from a host of unfair acts and practices historically directed at them by their own brand manufacturers and distributors." Or, quoting an earlier case, it's about "preserving a sound competitive market free of the domination of oligopolists[.]"

That matters because intent matters -- the Court isn't a computer, and if at all possible it tries to do what the Legislature actually wanted.

So then the Court looks back at the statute, and lo and behold, subsection 10 is only one of 12 subsections! (We knew there had to be at least 10.) And every single one of them (besides #10) is obviously designed to regulate relationships between dealers and their own manufacturers. So the Court says, "It would be anomalous to find, within this detailed list of rights and protections that are conferred on dealers vis-à-vis their manufacturers and distributors, a lone provision giving dealers protection against competition from an unaffiliated manufacturer." Instead, they conclude that the Legislature -- which was trying to promote competition -- must have intended subsection 10, like the others, to be a right of dealers against their own manufacturers.

And that's why this is ultimately dismissed on the basis of "standing." Cases (almost always) have to be filed by someone with a legally protected interest at stake. If the statute is designed to protect Tesla dealers (if any), then only Tesla dealers can file a case. That means, for now, no one can.

(It's an interesting side effect that this essentially means there can be no third-party Tesla dealers in Massachusetts as long as Tesla is selling directly. It's an open question whether that's a good thing.)

[1] https://malegislature.gov/Laws/GeneralLaws/PartI/TitleXV/Cha...

"Motor vehicle dealership" is a term defined in c. 93B as: "any person who, in the ordinary course of its business, is engaged in the business of selling new motor vehicles to consumers or other end users pursuant to a franchise agreement and who has obtained a class 1 license pursuant to the provisions of [G. L. c. 140, §§ 58 & 59]"

Because neither Tesla nor Tesla MA is engaged in the business of selling new Tesla motor vehicles in Massachusetts "pursuant to a franchise agreement," there appears to be a question whether Tesla's business model involves the operation of a "motor vehicle dealership" ... and therefore whether, by its literal terms, the proscription of § 4 (c) (10) applies to the defendants at all.

I suppose that if Ford set up "showrooms" in the Natick Mall and tried to claim they weren't "franchises", the Court would consider reading the definition more broadly, but I'd rather any Court read statutes as being as minimally intrusive as possible: No franchise agreement? No problem.

Can Ford not put vehicles in public areas with associated literature (paper marketing, iPad kiosks, etc), and take orders from that mobile device or via a customer's phone?

The order takes place where the servers are (the same as when you buy a Model S on teslamotors.com), and you would be prohibiting the corporation's freedom of speech (finally! a use for Citizens United that sucks less) by preventing them from putting a vehicle out in public (if they have approval of whomever owns/controls the underlying space).

Citizen United was about political speech, not selling cars. There's a long history of the court taking differing approaches to commercial speech vs political speech. Ford most likely could open up stores to distribute political literature. They could even likely make a Ford movie. What they can't do is sell cars.

The court generally errs on the side of the people when it comes to political speech and on the side of the state when it comes to commercial speech. I don't see Ford having much of a case opening up dealerships under Citizens United.

The other model that some legacy manufacturers are working on is to let customers go through the whole purchase process on their corporate web site and then just take delivery through the local dealer. The dealers are happy with this arrangement since they still get to profit on the sale and don't have to do any sales work.

Thanks for the explanation though, perfectly clear and very interesting.

>It's an interesting side effect that this essentially means there can be no third-party Tesla dealers in Massachusetts as long as Tesla is selling directly.

The first thing I thought was "well, they've got a problem if someone else starts to sell Tesla's" but of course they've got full control over this.

The state AG/etc could still do it.

This is because the legal conclusion (under the heading "Conclusion") is limited to the dealers and their private right of action, and thus, only the reasoning that applied to that is considered stare decisis.

BUt otherwise, you may end up right. Courts tend to be finicky about this stuff, depending on circumstances.

It's only a matter of time before drivers are cut out of the equation as well with riders ordering a cab and getting picked up by a self driving Tesla.

To assert this as obvious strikes me as a bit ridiculous. Let's think through one facet of what happens once services like Uber, Car2Go, Lyft, etc. have self-driving cars. Those living in urban areas would then have a very viable option to avoid ownership, maintenance, storage, parking, etc. for what's commonly cited as the second most costly (and massively depreciating) asset they own after a home. It would allow a practical shift for many people from car ownership to car sharing. The cultural transition won't happen overnight, especially in the US where car ownership is practically a rite of passage. Yet I suspect that the economics will eventually be so favorable that once the business and technology pieces are in place, the transition will happen for a large percentage of the population no matter what.

In this light, Uber is one of several companies positioned for a massive transition of transportation from a product-oriented business to a service-oriented one. We'll see how it all plays out.

Uber is simply an app with supply/demand machine learning, an army of drivers who are becoming more irate by how they're being treated, and community managers. What would it cost to reproduce Uber's app and backend? $500K? $1 million?

What happens if cities simply say, "You're out Uber" and buy their own self-driving cars for their citizens? Is Uber going to build their own roads?

So I well agree that Uber's technology, for which there are already multiple equivalents, isn't important. The contest will be entirely about business models and execution. IMO, that can be a lot harder to predict, at least without considerably more depth than I currently have on the players in this market.

By and large, people seem to love Uber. If they fall out of favor, I think it would be more natural for competitors to put pressure on them to improve (or supplant them), not city governments.

They use the public transit available to them where they move to? Why would self-driving vehicles not be like the postal service, a business but also an essential service?

Just because I left Chicago doesn't mean I get to take the Metra and the CTA with me.

While personal purchase of self-driving cars will be a thing, one big value proposition of self-driving cars is a drives down the relative cost of cars-for-hire compared to personally-owned-vehicles because you no longer need an operator in the vehicle whenever it is available for use (which means that the per-trip fee no longer needs to be enough to pay not only for the maintenance on the car and the operator's time on the trip, but also the operator's down time "on call" to be ready for the next trip.)

Uber might not win the space, but I think its naive to think that self-driving cars don't shift the balance more in favor of for-hire cars.

I completely agree. For-hire self-driving vehicles are the future, I just don't believe Uber and Lyft are going to be the platform.

Off-topic: Whenever I see analysts argue that Tesla isn't making cars fast enough to compete with Big automakers, I chuckle. Elon doesn't have to replace every car, he just has to replace the door to door trips, which he can do with only ~10-15% of the current US vehicle fleet on the road. Self-driving Tesla vehicles for hire would further fund Tesla expansions (which provides additional capital for their Gigafactory to drive down battery storage costs, thereby enabling the wide-spread transition to intermittent renewables such as solar, wind, and tidal).

One reason to take a cab, or uber, or a train to the airport or downtown is the time and expense of parking. But if my car can just park itself at a low cost remote structure, go home, or say earn a few bucks taking a fare, and come back for me, then it's less of a hassle to drive to the city. I don't have to worry as much about being too tired to drive longer distances, I could just snooze or read a book. I'd probably be more likely to let my car drive me to LA overnight, and perhaps take fewer flights and consequently rent fewer cars. I could send my car to pick up food or packages or friends. Overall, it seems like my car is more useful to me, not less, if it can drive itself. If I can hire it out when I'm not using it, it might make it more affordable to own, as well. I doubt most people would rent out their own car with any regularity, unless they had to, any more than they want a bunch of strangers sitting on their furniture and messing with their stuff.

(I just realized I effectively described the car version of a mullet.)

Maybe the FTC should investigate the way current dealer sales operate if they care about protecting consumers.

now the franchisees are understandably lobbying for the opposite to keep manufacturers out. i'm sympathetic to dealers as small business owners but i'm no fan of (most) car salesmen. will be interesting to see if this means dealerships become more competitive (better customer service?) or get pushed out. i've also heard that most dealerships make their money on service, but at least with teslas, that's not a big business (and it's more IT than auto mechanic).