Politicians, Car Dealers Trying To Make It Illegal To Buy A Tesla In North Carolina

from the hating-on-disruptive-innovation dept

Mon, May 13th 2013 9:48am — Mike Masnick

Last fall, we wrote about how auto dealers were bitching about the fact that electric car company Tesla sells their cars directly. It has "stores" but you can't buy your cars from those stores, due to antiquated and ridiculous regulations about car sales. Most states have laws that basically say that car companies can't sell directly. These laws serve no purpose other than to protect (often politically powerful) independent car dealers from being disintermediated.

In North Carolina, however, they're taking it up a notch. They're basically trying to make it illegal to sell a Tesla in North Carolina at all. About 80 North Carolina residents have already bought one, but they may be the last:

A legislative proposal, backed by the N.C. Automobile Dealers Association, would make it illegal for Tesla, or any other car maker, to bypass dealerships and sell directly in the state. The proposal cuts at the heart of Tesla’s business model: selling luxury cars over the phone or Internet and then delivering them to the front door of high-net-worth customers.

The North Carolina State Commerce Committee approved the proposal unanimously.

This is the same thing we see over and over again in other contexts. Companies in an entrenched legacy position trying to use regulations to block disruptive upstarts. There is no good reason for this law other than to block Tesla and to prop up dealerships. It's somewhat disgusting to see politicians actively seek to stamp out innovation.

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Filed Under: dealers, north carolina, regulations, tesla
Companies: tesla

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rw (profile), 13 May 2013 @ 8:09am

Disgusting, but not surprising. It's what politicians do best.
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Ninja (profile), 13 May 2013 @ 9:09am

Welcome to Corporate States of America. Telcos monopoly? Check. Copyright monopoly? Check. Patent monopoly? Check. Regulatory capture? Check.

America falling absurdly behind the rest of the world in all fields? Check. But the money is flowing to the usual pockets as always ;)
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out_of_the_blue, 13 May 2013 @ 9:59am

OMG, "disintermediated"!!! Sounds BAD!
Okay, congrats for using a word pretty sure I've never run across.

BUT HA! For using it wrongly, EVEN by "economist" usage:

http://www.thefreedictionary.com/Disintermediate

disintermediation
(Economics, Accounting & Finance / Banking & Finance) Finance the elimination of such financial intermediaries as banks and brokers in transactions between principals, often as a result of deregulation and the use of computers

SO I can only guess that Mangler Mike meant "not in on the deal".
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Anonymous Coward, 13 May 2013 @ 10:00am

This is the same thing we see over and over again in other...

Mike Masnick posts? Why yes, it is. Bad analogies: It's the Pirate way.
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Anonymous Coward, 13 May 2013 @ 10:03am

Re: OMG, "disintermediated"!!! Sounds BAD!
Are you serious? Is this a parody or is this the real blue?
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Anonymous Coward, 13 May 2013 @ 10:05am

Re:
Please don't confuse the word 'analogies' with 'examples'. Mike is just merely pointing out that there are other examples of this such as the taxi cab monopolies that governments impose. That's not an analogy it's an example.
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Anonymous Coward, 13 May 2013 @ 10:06am

Re: OMG, "disintermediated"!!! Sounds BAD!
In economics, disintermediation is the removal of intermediaries in a supply chain, or "cutting out the middleman". Instead of going through traditional distribution channels, which had some type of intermediate (such as a distributor, wholesaler, broker, or agent), companies may now deal with every customer directly, for example via the Internet.[1] One important factor is a drop in the cost of servicing customers directly.

http://en.wikipedia.org/wiki/Disintermediation
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kitsune361, 13 May 2013 @ 10:11am

Honestly...
Every car dealer I have ever known has screwed someone I know. Between the dealerships and their incestuous relationships with car loan lenders you'd be lucky to walk out not paying twice what the damn thing is worth by the end of it.
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Anonymous Coward, 13 May 2013 @ 10:11am

Hmm, what a surprise.

1) A car marketed as friendly to the environment and good for fighting global warming.

2) An industry (car dealers) that leans heavily republican, especially with who they donate campaign cash to (a 7 to 1 advantage for republicans).

3) A state that now has a republican governor and republican controlled legislature. And a state not well known for environmentalists being strong politically.
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fogbugzd (profile), 13 May 2013 @ 10:13am

Regulations that only serve to protect existing businesses always come back to haunt the industry they were intended to protect. Part of the motivating force behind Telsa's business model was a desire to stay out of the dealership quagmire that exists in most states. It will be interesting to see if Telsa teams up with other players at the national level to get federal action to overturn the antiquated state laws en masse. The same laws that kept dealerships protected have in many cases limited them from growing into the internet market. They could be in a lot of trouble if they suddenly have to compete.
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out_of_the_blue, 13 May 2013 @ 10:14am

Re: Re: OMG, "disintermediated"!!! Sounds BAD!
Yeah, I read that one TOO. The KEY point that sways me here is that a car DEALER is not mere financial transactions (the def above says "banks and brokers"), but supplies services to cars, besides showroom, and so on. So it's MANGLED. -- Also unnecessary! Mike is just flaunting a buzz-word.
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Lord Binky, 13 May 2013 @ 10:17am

Next on the list
Inspired by car dealerships, food market stores push for laws to illegalize the purchase of food products directly from farmers and requires all food market stores to be registered and located in a permanent building (i.e. no wooden stands). The collective insists this is for public safety.
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out_of_the_blue, 13 May 2013 @ 10:17am

Re: Re: Re: OMG, "disintermediated"!!! Sounds BAD!
2nd addition: IF Tesla set up their own dealers in NC, then none of the existing would be "disintermediated" any more than if a Hyundai dealer starts up, so it's just not apt.
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Anonymous Coward, 13 May 2013 @ 10:18am

Re: Re: Re: OMG, "disintermediated"!!! Sounds BAD!
Read the next paragraph

"This can also happen in other industries where distributors or resellers operate and the manufacturer wants to increase profit margins, therefore missing out intermediaries to increase their margins."
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Lord Binky, 13 May 2013 @ 10:22am

Re:
I agree, this wouldn't be a surpise if it the word republican was replaced with democrat.

I read on the internet democrats are immune from all human shortcomings at birth. Why people don't allow the infallible democrats to just run the world just baffles me.
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Anonymous Coward, 13 May 2013 @ 10:22am

not been from the US, I not sure, but is there rule/laws that stop 1 state from interfering in sales happing in another state. with Tesler been in California surely it is the laws for US Federal Gov and California apply.
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Anonymous Coward, 13 May 2013 @ 10:24am

the politicians only back this type of action because, obviously, it is financially beneficial to them! if it were to become illegal to 'reward' politicians for this type of behaviour, just think how many more inventions would come to the market? think how much better off mankind could be? what politicians seem to forget is just because they dont back a particular legacy industry that refuses to do anything to advance itself doesn't mean there would be no rewards if a new comer were backed!
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Anonymous Coward, 13 May 2013 @ 10:25am

Legality
Isn't this illegal under the Commerce Clause of the US Constitution?
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Anonymous Coward, 13 May 2013 @ 10:33am

Re:
http://en.wikipedia.org/wiki/Dormant_commerce_clause
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Anonymous Coward, 13 May 2013 @ 10:36am

And the sales tax goes to...

...the neighbouring states.
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Riccardo Cabeza, 13 May 2013 @ 10:39am

Republican obstructionism denies inovative products to its citizens
Once those red state rubes get a taste of west cost automotive engineering and finally get to see a doctor once in a while with out being bankrupt, the republican party goes away. Along with their childish obstructionist games.
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AzureSky (profile), 13 May 2013 @ 10:47am

Re:
Actually its The Incorporated States of Fascist America.
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art guerrilla (profile), 13 May 2013 @ 10:48am

Re: Honestly...
having bought a new truck a couple years ago (USED ones a year or two older were selling for MORE than NEW ONES! wtf?) and getting the usual salesdroid bullshit, obfuscation, etc, i was already sick of that subhuman cohort of our population...
then, just recently when getting a new car for SWMBO, i purposefully -even though i am a fan of that brand- do NOT go to the same dealer, because we did *NOT* want to deal with that bullshit...

so, different dealer, same bullshit...

fuckers tried to stiff us on an option we had added on, told us lies about when it could be done, didn't follow up, didn't get the parts, didn't set the appointment, FINALLY had to threaten to return the car just within the 30 days, before the useless bastards got the parts and had a THIRD PARTY install it... (again, NOT what was represented to us when we bought it...)

fuckers, i'll say it again:
car salesdroids are only a method to keep con men, liars and sociopaths off the streets... the only thing they are good for, is stuffing sinkholes...

art guerrilla
aka ann archy
eof
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Chuck Norris' Enemy (deceased) (profile), 13 May 2013 @ 10:50am

Re:
And how many democrats stepped out and shouted to the world to oppose this? Bueller? Bueller?
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Anonymous Coward, 13 May 2013 @ 10:52am

Well, if they do make it illegal to sell Teslas in NC, those car dealers should throw an expensive lavish party to 'thank' those legislators. They should probably also return the favor by offering high-paying thumb-tiddle jobs to them if ever that 'government' thing doesn't work out.
You know, just to be neighbourly.
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Chuck Norris' Enemy (deceased) (profile), 13 May 2013 @ 10:55am

Re: Republican obstructionism denies inovative products to its citizens
Anybody else want to put on the partisan blinders and take a shot? I didn't know that the blue states in west let you see a doctor without bankrupting you...I was told it was a national problem...darn media.
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Anonymous Coward, 13 May 2013 @ 11:02am

Re: Re: Re: OMG, "disintermediated"!!! Sounds BAD!
omg Mike is using words! GET IM!
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LJW (profile), 13 May 2013 @ 11:07am

really?
Is this the biggest problem we have here in NC? I'm so glad we've solved all of our other problems. Exactly how many people will be buying Tesla's anyway? Not many. Who cares?
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Haywood (profile), 13 May 2013 @ 11:21am

Re: Next on the list
http://www.realrawmilkfacts.com/raw-milk-regulations
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out_of_the_blue, 13 May 2013 @ 11:27am

Re: Re: Re: Re: OMG, "disintermediated"!!! Sounds BAD!
3rd addition: Glad to stir controversy over a word! -- Actually, I should KNOW better by now.

But I left this out because seemed obvious: dealers can't be DIS-intermediated as they're NOT currently "intermediated". That clinches Mike's usage as mangling.

Mike JUST wanted to show off, so trotted out a fancy word. I still say it's wrongly used.
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Jared Hopkins, 13 May 2013 @ 11:34am

Auto dealerships
you should check out a Planet Money episode called: Why buying a car is so Awful,

http://www.npr.org/blogs/money/2013/02/12/171814201/episode-435-why-buying-a-car-is-so-awf ul

It goes into some depth as to why there are dealerships, why states protect auto dealerships..and the like. The blame goes all the way back to the depression. Enjoy.
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Anonymous Coward, 13 May 2013 @ 11:36am

Wouldn't this be a violation of the constitutional amendment dealing with equal protection under the law? Interstate commerce is the jurisdiction of the federal government as well. I see a major constitutional challenge coming in the near future should these ridiculous laws pass. Elon Musk can afford an attorney or two.
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Anonymous Coward, 13 May 2013 @ 11:36am

Re: Republican obstructionism denies inovative products to its citizens
LOL West Coast Engineering? Really...
Tesla loses money on each car it sells, except for the GOVERNMENT grants for Carbon offsets... if you want to call that good business and Engineering, go right ahead but as a long time Automotive Engineer I will still call it bullshit.
And really Tesla's design is such a load of crap from a techincal stand point...
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Anonymous Coward, 13 May 2013 @ 11:46am

Re: Re: Re: Re: Re: OMG, "disintermediated"!!! Sounds BAD!
Not Over A Word, Over Your Lack Of Comprehension. Full Stop.
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Anonymous Coward, 13 May 2013 @ 11:49am

"... would make it illegal for Tesla, or any other car maker, to bypass dealerships and sell directly in the state" is not equal to "...Trying To Make It Illegal To Buy A Tesla In North Carolina".

If you're going to crib headlines from Reddit, try to remember that there's a good chance that the OP is a fag.
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Anonymous Coward, 13 May 2013 @ 11:50am

I didn't know that Tesla sold cars direct - that's actually quite brilliant. I would love to NOT have to deal with a dealership when buying a new car. I've definitely prolonged buying because I just don't want to go through the pain of buying a new car.
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Anonymous Coward, 13 May 2013 @ 11:51am

Re: Re: Republican obstructionism denies inovative products to its citizens
Crap? How Technical. Care To Elucidate Us?
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Zakida Paul (profile), 13 May 2013 @ 11:52am

Gotta be big oil's influence. Electric cars affect their bottom line.
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Akari Mizunashi (profile), 13 May 2013 @ 11:55am

I'm curious as to know how this is legal. Doesn't this law trample a few federal laws regarding free trade?

I'm sure Tesla's lawyers are about to be paid well.
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Anonymous Coward, 13 May 2013 @ 11:56am

Re: Re: Re: OMG, "disintermediated"!!! Sounds BAD!
funny that none of what you mentions makes the word any less apt.

how very inept of you.
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Michael Long (profile), 13 May 2013 @ 11:59am

Re: Re: Re: Re: Re: OMG, "disintermediated"!!! Sounds BAD!
Do you deal with Ford directly, or do you deal with a dealership not owned by Ford, but who's simply entered into a contract to sell their cars?

Since it's that later, the dealer is in fact an intermediary between Ford, the manufacturer and you, the buyer.
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Rob, 13 May 2013 @ 12:04pm

Re: Re:
I kinda assume that all the Democrats in North Carolina could fit in my kitchen.
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John Fenderson (profile), 13 May 2013 @ 12:14pm

Re: Honestly...
Indeed. Anything that lets me avoid doing business with dealerships (new or used, doesn't matter) is a good thing. The reason I have never purchased a new car is because I can't do that without having to go through a dealer.

Although Tesla is a bit out of my price range, theoretically this way of selling would allow me to purchase a new car -- otherwise, I am simply a lost sale to them all.
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John Fenderson (profile), 13 May 2013 @ 12:16pm

Re:
If I remember correctly, these laws came around because of a prior abuse by car manufacturers: they used to own all the dealerships themselves. This gave them a monopoly position that they then abused. Part of the legal sanctions around that was that they couldn't own dealerships anymore.
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AC Unknown, 13 May 2013 @ 12:29pm

Re:
I don't think that Mike is a bundle of sticks or a cigarette, idiot.
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PopeRatzo (profile), 13 May 2013 @ 12:34pm

Half-right
It's also what corporations do best: kill competition.

Welcome to cancer-stage capitalism, where corporations hate free markets.

Make no mistake, these anti-competitive laws are not coming from "politicians". They're not smart enough for that. These laws are coming from the people who pull politicians' strings.
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Anonymous Coward, 13 May 2013 @ 1:02pm

Re: Re:
Is that why? Well, I see some problems with that.

First, when that law was made, there was probably only Ford, Chrysler, and GM that people could pick from. Today, you have a lot more imports that can give competition.

Second, even if you make a bunch of dealerships, the companies STILL have a monopoly on their product. They can charge whatever they like to the dealerships, who pass the costs on to the consumer. Having a middleman or not doesn't change that.

Third, you're punishing companies that had nothing to do with those abuses, since they did not even exist at the time. If companies are abusing a monopoly, then antitrust laws should kick in, but only for those companies.
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Anonymous Coward, 13 May 2013 @ 1:18pm

Re:
Propping up legacy industries is a "bipartisan issue"...

The thing is that the jobs retained in those industries will stay in that geographic region, the inventive jobs are not necessarily. Since the states interests are heavily based on keeping unemployment down and thereby taxation up, the lack of geographic specificity of internet jobs is a potential threat to their economy!

It is just too easy for lobbyists to put all the blame there.
Since USA cannot in any way compete with South Korea, Singapore and Japan on wages and technological availability, the internet is likely cursed to Hades by any local politician!
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Anonymous Coward, 13 May 2013 @ 1:50pm

Re: Re:
Ah, so the only thing you got out of the fact that it's a misleading headline is that Mike, is not, in fact, a bundle of sticks. Queer.

And by queer, I mean odd.
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ChrisB (profile), 13 May 2013 @ 1:51pm

Re:
None of those things you mention is directly the fault of corporations. Monopolies only exist when governments grant them, in most cases. And there is only regulatory capture when the regulators are powerful enough to crush competition.

You meant to say the Crony States of America. The solution is less monopolies, less patents, less copyright, less regulation in general.
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GrrlGeek1972, 13 May 2013 @ 1:52pm

North Carolina vs. Tesla
You are overlooking the double dip on this one: right wingers hate anything to do with 'green' technology. North Carolina outlawed using real science to forecast sea level rise, remember? Although the green-eye-shade actuaries at the insurance companies writing homeowners' insurance won't be as stupid as the politicos...
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madasahatter (profile), 13 May 2013 @ 2:00pm

Re: Re: Re: Republican obstructionism denies inovative products to its citizens
All electric cars (not hybrids) suffer from the same technical problem of recharging time vs range. The recharging time of the battery limits the usefulness of electric cars to short distance trips with the lengthy recharging in between. Recharging times are often several hours. Tesla has managed to increase the range by having larger batteries installed.

This technical problem has existed since the Brass Era (1890 - 1920) and is caused by the nature of rechargeable batteries.

Steam (some Brass Era cars where steamers) and internal combustion engines can use liquid fuels. The refueling time, thus, is only a few minutes. The effective range of the vehicle is determined by the physical limits of the driver.

For example, some Tesla models have a range of about 250 miles with a recharging time of several hours. Your typical IC powered vehicle has a range of about 350 miles but more importantly a refueling time of about 10 minutes. The IC powered vehicle has effective range of 2 - 3 times that of a Tesla.

Also, it is debatable if electric vehicles are overall better for the environment. They are not emissionless, just the emissions occur at a different location and in the production of the battery.
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Anonymous, 13 May 2013 @ 2:32pm

"...selling luxury cars over the phone or internet and then delivering them to the front door of...customers". So as long as they sell their cars from outside North Carolina, they can deliver them to customers in North Carolina with no problem.
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Anonymous Coward, 13 May 2013 @ 5:10pm

Re: Re:
Expecting mike's attackers to understand what words mean is so unfair!

Mike already knows them so he has an unfair advantage!
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horse with no name, 13 May 2013 @ 10:14pm

Dirtect Sales Legal Issues
While it's nice to spew the misleading headline, perhaps you should spend a little time looking into things to understand why this is such a problem.

First off, many companies who do direct sales do so from another state. Why? Simply, they avoid state sales tax by not being present in the state. Further, the avoid all the public liability, consume safety, and consumer protection rules for that state, and often for the state they are selling from as well.

Have a problem with your new car? Where do you take it?

There is a whole lot more at play here. I guess you know that, but damn, it's a great (dishonest) headline!
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Anonymous Coward, 13 May 2013 @ 10:37pm

The solution to this is obvious.
Tesla creates a new company (only $125 in NC, cheaper elsewhere), independent from the main car manufacturing company, but with the same owners and a contract saying that they mark up the cars almost nothing and that they're the exclusive reseller of Tesla cars. Then they sell the cars through the shell company.

It's amazing what shell companies can do really.
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Anonymous Coward, 14 May 2013 @ 4:58am

Re: Re:
This isn't regulating INTERstate commerce, though. No one is saying you can't drive a Tesla or buy one in Virginia and then own it in North Carolina. It's just saying that Tesla has to play by the same rules as everyone else. This is regulating an intrastate activity, with perhaps an incidental effect on ISC.

It's a stupid law - don't get me wrong. And as a North Carolinian, I'm getting exceedingly tired of our boneheaded state legislature. But I don't think this is unconstitutional.
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Anonymous Coward, 14 May 2013 @ 5:37am

Re: Re: Re: Re: Republican obstructionism denies inovative products to its citizens
If they are recharged using energy from a renewable source such as hydroelectric, then their only emission is water with a lowered potential energy.
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Anonymous Howard (profile), 14 May 2013 @ 6:36am

Re: Re:
Not _directly_ the fault of corporations, that's true. Indirectly however.. through bribery and lobby, yes, they're responsible.
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btrussell (profile), 14 May 2013 @ 6:40am

Re: Re: Honestly...
"otherwise, I am simply a lost sale to them all."

Must have been a Monday.

"If I can sell this old heap for a couple of grand, I shall buy a new car!"
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Anonymous Coward, 14 May 2013 @ 5:54pm

just when I thought NC was actually starting to become a forward thinking state. This is the dumbest thing I have seen... if someone in NC wants a Tesla, guess what, they are still going to get one. They will just drive to another state to get it and give them the sales tax.
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Wut?, 15 May 2013 @ 12:03am

Re: Dirtect Sales Legal Issues
Sales taxes in NC are paid upon getting a title for the car, so that's never avoided.

People buy cars in other states all the time. It's fine.

This is an unnecessary law.
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btr1701 (profile), 15 May 2013 @ 1:38pm

Re: Re: Dirtect Sales Legal Issues
> Sales taxes in NC are paid upon getting a
> title for the car, so that's never avoided.

Not only is not avoided, sometimes it's double-dipped.

I bought a new 4Runner in Texas. Five years later, I moved to Virginia. When I took it to get registered at the Virginia DMV, they wanted me to pay sales tax on the car as if I'd bought it in Virginia. I told them I already paid sales tax on it when I bought it in Texas. They told me that didn't matter, that if I wanted to register it in Virginia, I had to pay the sales tax again to them. I threw a fit because this was a significant amount of money, and once the supervisor came out of the back, and it was obvious to her I was both an attorney and not willing to be screwed, the tax was suddenly 'waived'. I have a feeling they know they have a good scam going and don't want someone who knows the law to ruin it for them, so they waive it for anyone who looks like they might be trouble.
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Jim Van Damme (profile), 15 May 2013 @ 3:04pm

Can't buy them on the internet?
Like we do everything else??
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Geary@Subaru cars, 15 May 2013 @ 6:12pm

I might have not read everything about the real issue of Tesla. But I guess, it is more important for other car dealers to think how they can be more competent to get along with Tesla's success.
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Auto Verkopen (profile), 18 Aug 2014 @ 1:38pm

You can never stop progress
It is the same as when the first trains arrived. The guys with the horses didn't want that to happen. But you can't stop progress. You can slow it down a bit, but eventually you will loose.
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Bernard Armstrong, 26 Nov 2014 @ 2:23pm

RE: RE:RE
OMG, politicians will never change..

Start advertising/publishing your products or iterms freely online at: CynMart.com: Free classified ads in Ghana and beyond . attract more costumers to your company or products.
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