A Little Movement On Changing Dealership Laws

[Ekh]

A number of states (including Ohio) prohibit manufacturers from selling motor vehicles directly to the public, requiring a dealer system instead. In Ohio, at least, motorcycles are defined as motor vehicles under the law, so there is no loophole there.

However, there is some stirring of action on this issue at the regulatory level in Washington. Here's a link:

http://www.autoblog.com/2016/01/20/ftc-hinting-change-us-auto-dealership-laws/

 

[Jeff Porter]

Interesting article, thanks Eric. Overall, I think it will be REALLY DIFFICULT to change the dealer system. Also difficult to imagine the FTC listening to Tesla and Elio Motors reps. BUT, who knows, stranger things have happened.

 

[BiloxiGeek]

In the NYIAS speech Paul Elio said the Elio is considered a motorcycle so the dealership rules that automotive manufacturers/dealers have to abide by don't apply. I have no idea what all the rules are and how they compare to motorcycle manufacturers/dealers but my impression when I heard that part of the speech was that much of the hassle Tesla has had to deal with won't apply to Elio.

Is that impression correct/part true/way the F off base?

 

[Ekh]

In the NYIAS speech Paul Elio said the Elio is considered a motorcycle so the dealership rules that automotive manufacturers/dealers have to abide by don't apply. I have no idea what all the rules are and how they compare to motorcycle manufacturers/dealers but my impression when I heard that part of the speech was that much of the hassle Tesla has had to deal with won't apply to Elio.

Is that impression correct/part true/way the F off base?

I heard that too. Unfortunately, in Ohio, the law is specific. I have read it. All of it. There is no Elio loophole in Ohio. I can't speak for other states.

The Autoblog story mentions California, Michigan, and Texas as states where Tesla is fighting this battle at the state level. I'm sure Elio is right in there with them.

The Ohio battle was won by Tesla in June 2014. Unfortunately, the Ohio legislature wrote the law so that while Tesla got three outlets, after a very brief period -- a couple of weeks after the law was signed, as I recall -- no other manufacturers would be permitted to operate sales outlets in the state. Sneaky. So Tesla is in, all others are out. That's why this interest by the FTC in unwinding the dealership system is really important to Elio Motors. It might put "paid" to a system many view as protectionist, anti-competition, and expensive.

 

[Jeff Porter]

In the NYIAS speech Paul Elio said the Elio is considered a motorcycle so the dealership rules that automotive manufacturers/dealers have to abide by don't apply. I have no idea what all the rules are and how they compare to motorcycle manufacturers/dealers but my impression when I heard that part of the speech was that much of the hassle Tesla has had to deal with won't apply to Elio.

Is that impression correct/part true/way the F off base?

Good question. There's a lot going on w.r.t. the Elio being a motorcycle vs. an autocycle vs. a "motor vehicle". There are federal laws and state laws that differ.

Federally, the Elio right now is a motorcycle. Could that change in the future? If the Feds want to increase their tax revenue and they can do it by creating an autocycle category, it'll happen. There are several states now that have an autocycle designation for vehicles like the Elio. But it's under the federal motorcycle category.

If a state doesn't have a law specific to restricting motorcycles to be sold thru a dealer, then the current plan by Elio will be fine.

Also, their current plan for stores doesn't have a store in every state. States in the north-central part of the country won't have an Elio store, at the beginning anyway. According to the map showing the planned stores, states to be left out would be ID, WY, KS, NE, SD, ND, MT, IA, AK.

Ah, looking closer at the map, states to be left out also: SC, VT, NH, ME, NJ, DE, RI, WV, AR, MS.

Interesting! If state laws come into play about the dealerships, the approximate count is 31 states.

 

[Rickb]

The NADA has a well financed and strong political lobby on both State and Federal levels of government. They will politically influence legislation in their favor. I wouldn't have a problem with an Elio Dealership network for Sales, Parts, and Service all under one roof. Matter of fact I prefer to have products serviced where I buy them. I think Tesla's original direct to consumer sales model was created and required because of the Tesla's limited market based on high MSRP and the low maintenance EV factors that couldn't justify a dealership network. My understanding is the very limited service and routine maintenance required beyond TBAs for EV's cancel out the need for dealership service and parts departments required for ICE vehicles.

Even motorcycle brands have dealership networks because of the maintenance and servicing requirements. Again, perhaps electric motorcycles are an exception to the dealership rule.

 

[Marshall]

In the NYIAS speech Paul Elio said the Elio is considered a motorcycle so the dealership rules that automotive manufacturers/dealers have to abide by don't apply. I have no idea what all the rules are and how they compare to motorcycle manufacturers/dealers but my impression when I heard that part of the speech was that much of the hassle Tesla has had to deal with won't apply to Elio.

Is that impression correct/part true/way the F off base?

One problem is that every state has it's own law. Most will allow direct motorcycle sales but a few like Ohio do not currently permit any motorized vehicle to be sold directly by the manufacturer. So no broad statements can be made that covers everyone across the country.

 

[Ekh]

Good question. There's a lot going on w.r.t. the Elio being a motorcycle vs. an autocycle vs. a "motor vehicle". There are federal laws and state laws that differ.

Federally, the Elio right now is a motorcycle. Could that change in the future? If the Feds want to increase their tax revenue and they can do it by creating an autocycle category, it'll happen. There are several states now that have an autocycle designation for vehicles like the Elio. But it's under the federal motorcycle category.

If a state doesn't have a law specific to restricting motorcycles to be sold thru a dealer, then the current plan by Elio will be fine.

Also, their current plan for stores doesn't have a store in every state. States in the north-central part of the country won't have an Elio store, at the beginning anyway. According to the map showing the planned stores, states to be left out would be ID, WY, KS, NE, SD, ND, MT, IA, AK.

Ah, looking closer at the map, states to be left out also: SC, VT, NH, ME, NJ, DE, RI, WV, AR, MS.

Interesting! If state laws come into play about the dealerships, the approximate count is 31 states.

Ohio is booked for 3 outlets, none of which can be created under current Ohio law.

 

[Jambe]

Tesla is suing Utah for the right to have company dealerships.

 

[Jeff Porter]

Tesla is suing Utah for the right to have company dealerships.

Here's the latest news that I could find, this is similar but I'm not sure if it's related to the lawsuit. Anyway...

Sheesh, it gets complicated quickly: state rep creates a bill and Tesla doesn't like it. Then Tesla says the bill would not allow customers to finance the vehicle at the store, and the bill creator says the bill doesn't keep that from happening. One item not in dispute that Tesla doesn't like: they can't have any cars to buy at the store. Works for them now, but would not work for them in the future.

http://www.sltrib.com/home/3603797-155/tesla-now-trying-to-kill-utah

For Elio, and this we may take for granted, I'm betting that Joel Sheltrown would be working with the bill creator to at least start with something that Elio likes. On the other hand, from personal experience in helping to create a bill for KS, there are times that the bill gets morphed and changed in committee. I suppose that could've happened here, but you'd think Sheltrown would be all over the committees to get something that works.