Who gains from Snyder’s signature

The big winners are car dealers, of course. And the big loser is the purchasing public.

Check out this article from Vox, written by Timothy B Lee.


The main supporters of these laws are auto dealerships themselves. According to the Wall Street Journal, “dealers say laws passed over the decades to prevent car makers from selling directly to consumers are justified because without them auto makers could use their economic clout to sell vehicles for less than their independent franchisees.” This argument doesn’t make much sense. Lower prices might be bad news for independent franchisees, but they’re a good thing from the consumer’s perspective.

But despite their weak policy arguments, auto dealerships have a lot of clout with state legislators. People who own auto dealerships tend to be pretty affluent, so they can afford to make generous campaign contributions. And dealerships are spread out around a state, allowing dealers’ groups to organize a potent state-wide lobbying campaign. The result: the Michigan legislature overwhelmingly approved the protectionist legislation.

As economists at the Federal Trade Commission have written, the ban on direct auto sales is “an anomaly in the broader economy, where most manufacturers compete to respond to consumer needs by choosing from among direct sales to consumers, reliance on independent dealers, or some combination of the two.” But auto dealerships are using their clout to force consumers in Michigan and other states to pay inflated prices to get cars through them.

Decision day for Rick Snyder: Snyder signs bill banning Tesla sales in Michigan

Here is Snyder’s statement regarding the bill:





Interesting quote from Rick Snyder, as quoted in the Detroit News:

Snyder sidestepped a question about whether it should be illegal for Tesla to sell its cars directly to Michigan buyers without dealerships.

“That’s a separate legislative question,” Snyder said. “That’s something that should be a different discussion that could be a legislative priority either in (the) lame duck (legislative session following next month’s election) or after that.”


GM admits electric Cadillac is no competition to Tesla Model S:







Tesla quote of the day 2

The forces aligned against disruptive ways of satisfying consumer demand have gotten, in the space of a couple days, an amendment into a bill that passed both houses and is sitting on the governor’s desk. The amendment prohibits Tesla — in the largest state in which company doesn’t yet have a sales office — from selling directly to its prospective customers. The company has said it had been discussing an approach to sales in Michigan with political leaders in the legislature and appropriate government agencies, until the amendment was adopted and voted on with great alacrity by the General Assembly.

There was never any public debate, and news reports suggest that most members of the legislature were unaware of the impact until the auto dealers started thanking them for their votes. That is, for voting to protect Michigan customers from having more choices about what to drive.

We’ve seen a lot of this lately. It’s just plain bad faith by lawmaking bodies to not at least host some discussion on a law that puts a death sentence on what appears to be a perfectly reasonable business model. If signed by Gov. Rick Snyder, sales of a shiny new consumer product will be impossible in Michigan unless the company decides to sell through traditional dealerships. It is difficult not to notice that these middlemen are third parties that are very active politically, in what was supposed to be a pretty close election for governor this time.

Alan Smith at R Street.

Sampling of reactions on Twitter to anti-Tesla law in Michigan (updated)

As a side note, when reviewing all the tweets posted about the question, I have seen only 3 in favor of the legislature’s bill.

@elonmusk Rick Snyder @onetoughnerd is smart guy and (I think) will veto this nonesense
10/20/14, 4:35 PM


Michigan Gov. Rick Snyder poised to BAN sale of Tesla tomorrow. How is this even legal?? via /r/news http://t.co/Xoc8LLnQfx #news
10/20/14, 4:07 PM


@onetoughnerd Mich Gov. Snyder: Please know advantages of EVs over internal combustion. http://t.co/487MOTNOnD #ev #Tesla Help your voters.
10/20/14, 2:27 PM


@onetoughnerd Hey Governor Snyder, ya want to know what a real nerd would do now? They would probably allow Tesla to see directly.
10/20/14, 2:54 PM


Seriously Michigan Gov Synder? @onetoughnerd An anti-competitive prohibition on @Tesla? No more Detroit cars for me http://t.co/ejIwNNc8k9
10/20/14, 10:29 AM


. @DetNewsOpinion @onetoughnerd competition is a good thing, no? I mean if public schools need to battle it out with charters…
10/20/14, 10:16 AM


Instead of blocking direct sales (pandering to dealers, as the US has) Norway encourages Tesla massively. http://t.co/8CmohwUaKI
10/20/14, 10:01 AM


“Column: Gov. Snyder should veto anti-Tesla bill” @freep http://t.co/uhtJjZcg3z
10/20/14, 9:42 AM


Rent-Seeking Smackdown: Tesla vs. the Michigan Automobile Dealers Association http://t.co/MCEcsw1DFQ
10/20/14, 9:23 AM


#Tesla is a U.S. car, built in the U.S. by Americans. Why are we making it difficult to buy/sell it. http://t.co/XMtMIMtISj #Stuckinthepast
10/20/14, 10:55 AM


Gov Snyder Mulls Ban On Tesla’s Electric Cars In #Michigan http://t.co/MemxLZg2GM Rs believe in “free market” ONLY when suits their donors!
10/20/14, 8:30 AM


@onetoughnerd #tesla #electriccars Hey, Gov! What the frack!? Don’t stand in the way of Cool, Clean, Green energies. They might locate w/U.
10/20/14, 10:52 AM

Tesla quote of the day

I don’t have a problem with auto dealers, which is why I don’t mind buying cars from them. But if I did have a problem with them — or if you did — it wouldn’t be right for the law to force either one of us to patronize them, given an alternative.

But a bill on Gov. Rick Snyder’s desk would force that very thing.

Slipped in as a last-minute amendment to a bill dealing with other issues concerning automotive sales, it would prohibit manufacturers from selling direct to consumers — mandating that all sales of vehicles in Michigan be conducted by franchised dealers. Snyder has until Tuesday to sign or veto the bill.

He needs to veto it.

The Michigan Automobile Dealers Association quite openly tells The Detroit News it had a hand in crafting the amendment, and it’s all designed to stop the soon-arriving Tesla Motors from bringing its established direct-sales method to Michigan.

Tesla, which manufactures high-end electric cars for a limited market, believes it is in a better position as the manufacturer to sell the cars directly.

There are only 50 Teslas on the road in Michigan right now, and it’s unlikely Tesla will ever sell in sufficient volume to threaten the viability of dealers franchised by larger auto manufacturers.

But that’s beside the point. Even if Tesla was planning to sell 100,000 cars a year in Michigan, there is no reason consumers should be forced to pay a mark-up to a middleman if they don’t want to.

* * *

I’m all for jobs, but not if they exist solely because the law forces people to patronize a service they would not choose to patronize on their own. I happen to think auto dealers provide some good value-added services that would make a lot of people prefer buying from them even if there was alternative. But it’s up to them, those dealers, to be sure they provide that value. That MADA felt the need to insert this amendment into the bill suggests they are indeed insecure about the competition Tesla’s unconventional model might present — and their first instinct is a Detroit auto culture classic: Seek protection from politicians.

– Dan Calabrese, writing in The Detroit News. The whole piece is worth a read.

Tesla’s take on auto dealer association’s purchase of Michigan legislators

On October 1, the Michigan Automobile Dealers Association succeeded in passing a bill that is harmful to consumers. The bill, HB5606, was originally a single amendment to existing law designed to ensure that the car dealers can tack additional fees on to the purchase price for all vehicles (from any manufacturer) sold in Michigan. Such fees have a controversial history, are generally regarded with skepticism and have been the subject of consumer concern in other states.

Not content with enshrining their ability to charge consumers dubious fees, on the last day of the legislative session, the dealers managed to make a last-minute change to the bill in an attempt to cement their broader retail monopoly. Using a procedure that prevented legislators and the public at large from knowing what was happening or allowing debate, Senator Joe Hune added new language in an attempt to lock Tesla out of the State. Unsurprisingly, Senator Hune counts the Michigan Automobile Dealers Association as one of his top financial contributors, and his wife’s firm lobbies for the dealers.

By striking a single, but critical, word from MCLA 445.1574(14)(1)(i), the law governing franchise relations in Michigan, the dealers seek to force Tesla, a company that has never had a franchise dealership, into a body of law solely intended to govern the relationship between a manufacturer and its associated dealers. In so doing, they create an effective prohibition against Tesla opening a store in Michigan.

This amendment goes even further. It also seeks to prevent Tesla from operating a gallery in Michigan that simply provides information without conducting sales. We could even be barred from telling people about our car.

This anti-competitive behavior mirrors similar tactics in New Jersey and Missouri, where dealers have resorted to backroom political maneuvers to shore up their monopolies. The dark-of-night tactics highlight the dealers’ concerns that their arguments don’t stand up well to public scrutiny.

Indeed, no consumer unaffiliated with dealers would ever want this. Officials at the Federal Trade Commission have spoken out about the potentially harmful consequences of the dealers’ anti-competitive behavior, saying “competition ultimately provides the best protections for consumers.” Leading economists have also weighed in, saying dealer monopolies come “at the expense of consumers and innovative technologies.” And in September, in considering a similar body of law, the Massachusetts Supreme Court handed down a ruling that made it clear that such laws were not intended to exclude a manufacturer without franchise dealerships from selling to consumers directly.

While the car dealers’ anti-consumer bill has made it through the legislature, it has yet to be signed into law. The bill is now on Governor Rick Snyder’s desk. We are calling on concerned consumers to contact the Governor and urge him to veto this legislation and return the issue to the legislature for a full and open debate in 2015.

Please make your voice heard.

Other ways to contact Gov. Snyder:

  • Phone: 517-373-3400
  • Mail: P.O. Box 30013, Lansing, MI 48909
  • Twitter: @onetoughnerd

[Note: I added additional links not in the original Tesla post.]

Michigan legislature passes bill to stop Tesla from selling cars in Michigan

The Michigan legislature voted last week to endorse legislative changes that would have the effect of stopping sales of automobiles in Michigan that are made directly with the auto manufacturer. The bill, heavily influenced by contributions of the Michigan Auto Dealers Association to Michigan legislators, would ban both direct manufacturer sales, and any advertising or marketing of vehicles unless the manufacturer establishes franchises within the state.

Needless to say, this is simply an outrage. All the legislators, of both parties, save one Republican, voted in favor and the bill currently rests on the desk of Governor Rick Snyder, who has until Tuesday to sign the bill or veto the bill.

The bill does not protect consumers but does protect dealers by imposing a cost on manufacturers who have to create unrelated franchisees in order to comply. Of course, in the United States today only one auto manufacturer does direct sales to consumers: Tesla. The entire country is moving toward online purchase and the effects of disintermediation should not be allowed. For example, for years travel agents books the majority of airline tickets. After the creation of the Internet, airlines created their own sites to sell tickets and the number of travel agents plummeted. The auto dealers are demanding protection from more efficient (and thereby cheaper for consumers) forms of sales.

Here is what I sent to Governor Snyder:

Honorable Rick Snyder:

I am appalled that the Michigan legislature has approved a bill (HB 5606 and specifically Section 14(3) thereof) that would ban auto manufacturers, including Tesla, from making direct sales of its vehicles in the state. I am especially shocked to see the Republican party standing in the way of the free exercise of business sales by a modern company like Tesla, which is producing incredibly good and novel vehicles. This is an automobile state and stopping direct sales is an affront to the history of automotive innovation in Michigan.

It seems to me that the legislature is beholden to the Michigan Automobile Dealers Association and the large amount of contributions made by that group. There is simply no reason to prohibit legitimate automobile sales by any manufacturer.

I will also point out that your administration approved “right to work” legislation in this state. How about supporting a right to sell legitimate products in this state free from governmental interference? Surely, as “one tough nerd” you understand the need for all American businesses to be free to innovate and sell products that meet customer demands.

I highly recommend that you or one of your staffers carefully review this report prepared by the Daniel A. Crane, Associate Dean for Faculty and Research and Frederick Paul Furth, Sr., Professor of Law, University of Michigan regarding the undue influence of the car dealers:


I would be most interested in what you intend to do with regard to this bill. I would particularly like to know your position before election day.

A win for privacy (at least in Florida)

Law enforcement agencies around the country have been collecting mobile phone metadata for several years. They request phone companies to provide the data, and they also have access to a tool called “stingray” devices that masquerade as a cellphone tower to your mobile phone.

The Florida Supreme Court ruled that obtaining cell phone location data to track a person’s location or movement in real time constitutes a Fourth Amendment search and therefore requires a court-ordered warrant.

According to Wired, the ACLU issued a statement that provides, in part:

Following people’s movements by secretly turning their cell phones into tracking devices can reveal extremely sensitive details of our lives, like where we go to the doctor or psychiatrist, where we spend the night, and who our friends are. Police are now on notice that they need to get a warrant from a judge before tracking cell phones, whether using information from the service provider or their own ‘Stingray’ cell phone tracking equipment.


A love letter to Siri

The New York Times has generally adopted a skeptical (if not negative) tone in articles discussing Apple. However, today there is a very sweet article in the Times that focuses not on business realities but rather on a impact that Siri has had on a 13 year old autistic boy. It is very much worth a read.


Just how bad a mother am I? I wondered, as I watched my 13-year-old son deep in conversation with Siri. Gus has autism, and Siri, Apple’s “intelligent personal assistant” on the iPhone, is currently his B.F.F. Obsessed with weather formations, Gus had spent the hour parsing the difference between isolated and scattered thunderstorms — an hour in which, thank God, I didn’t have to discuss them. After a while I heard this:

Gus: “You’re a really nice computer.”

Siri: “It’s nice to be appreciated.”

Gus: “You are always asking if you can help me. Is there anything you want?”

Siri: “Thank you, but I have very few wants.”

Gus: “O.K.! Well, good night!”

Siri: “Ah, it’s 5:06 p.m.”

Gus: “Oh sorry, I mean, goodbye.”

Siri: “See you later!”

That Siri. She doesn’t let my communications-impaired son get away with anything. Indeed, many of us wanted an imaginary friend, and now we have one. Only she’s not entirely imaginary.

This is a love letter to a machine. It’s not quite the love Joaquin Phoenix felt in “Her,” last year’s Spike Jonze film about a lonely man’s romantic relationship with his intelligent operating system (played by the voice of Scarlett Johansson). But it’s close. In a world where the commonly held wisdom is that technology isolates us, it’s worth considering another side of the story.


Your NSA: putting the dumb in freedom