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Thursday, September 29, 2016

North Carolina GOP Takes On Tesla By Trampling Free Market

Elon Musk

After North Carolina introduced legislation that would make it illegal to predict rising sea levels on its coast, the state’s Republicans are now moving to make in-state business difficult for an electric-car manufacturer. Tesla Motors currently sells its vehicles to North Carolina residents over the phone and Internet, but the state legislature takes issue with this and plans to make such purchases illegal.

Republican state senator Tom Apodaca has introduced a bill that would require that car manufacturers sell their cars through third-party dealerships in the state, claiming any other business model is unfair to dealers. Senate Bill 327  made it through the Senate Commerce Committee with a unanimous vote.

It is worth noting that Senator Apodaca received $8,000 in campaign contributions from the North Carolina Automobile Dealers Association (NCADA), which receives subsidies from dealership sales and clearly has a vested interest in ensuring cars are sold through dealerships instead of directly through manufacturers.

NCADA president Robert Glaser told CNBC on Wednesday, “We believe that if you’re selling cars in North Carolina, then you should be licensed to sell cars in North Carolina. And we believe in the franchise-retail system that has been in place for a hundred years. It works to protect consumers, it works to protect the customers, it works to protect our employees and our families.”

Tesla’s vice president for corporate and business development, Diarmuid O’Connell, responded to Glaser during the same interview. “I also think it’s interesting that Mr. Glaser asserts that his mission is to protect consumers. I think in this national forum it would probably be interesting for a lot of consumers to understand that that’s what the dealer model protects.” O’Connell added, “What’s happening in North Carolina is that the Dealers Association is changing the rules of the game, they’re moving the goalposts and they’re fundamentally disenfranchising North Carolina consumers from having the ability to order a car in the privacy of their own homes—they are changing the rules of the game.”

Slate reports, “In its current form, North Carolina’s bill would be the harshest of a handful of anti-Tesla regulations around the country. In Texas, the company is fighting a law under which the employees of its ‘showroom’ in Austin are not allowed to sell any vehicles, offer test drives, or even tell customers how much the car costs. But at least Texas still lets people buy the car online, which North Carolina’s law would prohibit.”

You’d think NCADA would instead move to require Tesla to participate in the franchise-retail system and reap the benefits in revenue, considering that in this year’s first-quarter sales, Tesla’s Model S vehicle was the top seller — outselling Mercedes-Benz, BMW, and Audi.

For a hybrid and electric vehicle manufacturer, Tesla has been quite successful thus far. The company received $465 million from the Obama administration’s Department of Energy for research and development.

In April, former Alaska governor and vice-presidential hopeful Sarah Palin criticized Tesla in a Facebook post, stating, “This losing tax-subsidized venture joins other past losers like the Obama-subsidized Volt that gets 40 miles per battery charge, or like the Obama-subsidized Tesla that turns into a ‘brick’ when the battery completely discharges and then costs $40,000 to repair.” Palin may be surprised to learn that Consumer Reports rated Tesla’s Model S car a 99 out of 100, writing, “So is the Tesla Model S the best car ever? We wrestled with that question long and hard. It comes close.” Tesla has been doing so well, in fact, that it is expected to pay back the loan five years earlier than initially promised.

Senate Bill 327 will be brought to a vote in North Carolina in the coming months, yet the constitutionality of the law is already being questioned. The Dormant Interstate Commerce Clause asserts that “states could not pass laws that created taxes on or restrictions to residents of other states or create benefits not available to residents of other states,” which could very well present an obstacle to state Republicans and the Dealers Association alike.

AP Photo/Paul Sakuma

  • Lynda Groom

    This would be a real hoot if not dangerous. Fear and distrust of ‘markets’ when that is something that the right continues to preach about is truly astounding. Why are they so afraid of innovation and progress? It beats the heck out of me.

    • wesley rasmussen

      Because innovation and progress are signs of Intelligence – something that is anathema to Tea Party and all other Republicans. Remember, it was their God, Karl Rove, who said that Republicans who get what they want from government are happy Republicans. Those that get education vote Democrat.

      Need I say more?

    • RobertCHastings

      Simply, my dear, because it is NORTH CAROLINA.

  • Sand_Cat

    Isn’t this trampling on Congress’s right to regulate “interstate commerce”? But I guess the Constitution means as little to North Carolina Republicans as honesty and patriotism.

    • RobertCHastings

      Sand Cat, you have no idea. The state Constitution STRICTLY prohibits the carrying of a concealed weapon on school property (any school). Just recently the Iredell county commissioners passed local legislation to supercede that. I have a feeling it SHOULDN’T get very far through the state courts, but with Republicans in solid control of the state, I could be mistaken.

      • CPAinNewYork

        Another redneck state embarasses itself.

        • RobertCHastings

          It’s hard to believe they went for Obama in 2008.

    • CPAinNewYork

      This will run its course, wind up in the United States Supreme Court and be slapped down.

  • Mark Forsyth

    It will be interesting in the days to come to see whether or not the residents can make Democracy stick in the Old Tar Heel State.I wish them well.

  • idamag

    Just when you think they can’t get any crazier…

    • RobertCHastings

      Why didn’t this one show up on “The Week in Crazy”?

  • Allan Richardson

    State-sanctioned “free” enterprise is nothing new. Floridians have been trying for years to buy gourmet wines and beers by mail and internet, and the state refuses to allow any brand of alcohol to be sold unless a LICENSED wholesaler in Florida distributes it. But the few large outfits that are LICENSED are in bed with the big vineyards (such as Mondavi) and brewers (surely Busch, probably others), so they refuse to import these “exotic” brands, who cannot afford to set up an in-state infrastructure to sell the small quantities the public demands.

    So NC is doing the same thing but with more damage to the “free” market, the public, and the environment.

  • mah101

    Whatever happened to “government shouldn’t be picking winners and losers”? Or getting government regulations out of the way of free markets? Scared of some competition, are we?

    Just what is it that Republicans stand for? Why do we still have a Republican party, they have no core values, they have no vision, they obstruct any and all progress, and they don’t give a damn about anyone that doesn’t have a ton of money to support their campaigns.

    • RobertCHastings

      If the current national legislation in favor of taxing internet sales goes through, the state of NC stands to make MUCH more money through internet sales than through local sales. Current state law limits sales tax on motor vehicles at less than $500, regardless of value.

    • Our winners are different than their losers! In other words, the car dealers donated cash, Tesla didn’t.

  • RobertCHastings

    Since the Republicans took over in 2010, and elected a Republican governor in 2012, they have indeed gone stark, raving wild. This one, however, is simply amazing! Where are all the free market champions on this one. Milton Friedman must be sh—-ng all over himself, and I know Ronald Reagan is rolling over in his grave. This one certainly borders on bribery; there is certainly a quid pro quo here.

    • CPAinNewYork

      Bribery in North Carolina’s legislature? Heavens no! It’s just lobbying at its worst.

      • RobertCHastings

        If it looks like chicken —-, and it smells like chicken—-, and tastes like chicken —-, there is a better than 50-50 chance that it is chicken —-.

  • exdemo55

    They have had enough of liberalism and are doing what they can to block it. They are tired of government telling them what they have to do. They want freedom.

    • DennisRL

      That’s funny. You’re a funny guy! “tired of government telling them what to do”.
      Isn’t that what the NC state government is doing by telling people they can’t buy a Tesla over the internet? When I read blogs on the internet, I never come across anyone on the right who makes a bit of sense or has any intelligence what so ever. You prove that point.

  • howa4x

    this is the dichotomy republicans face. On one hand they support the free market with out government interference , and on the other because of their corruption they want to restrict free market practices to benefit contributors. this is the republican way. Lie to the tea party about freedom of everything and behind closed doors restrict it.
    Shows what dupes the tea party members really are.

  • “Senator Apodaca received $8,000 in campaign contributions from the North Carolina Automobile Dealers Association”

    The senator sells his soul cheap.