Jim Hackett, president and chief executive officer of Ford Motor JEFF KOWALSKY/AFP/Getty Images Few U.S. companies have been hit harder by the Trump administration’s ongoing trade war with China (and the rest of the world) than Ford. The Dearborn, Mich.-based carmaker, the only one among the American “Big Three” automakers that survived the 2008 Financial… Continue reading Ford CEO Jim Hackett: Trade War Could Wipe Out Most Tax Cut Benefits for Americans
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Absurd Tesla Obstructionism In Numerous US States
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Published on November 8th, 2018 |
by Matt Pressman
Absurd Tesla Obstructionism In Numerous US States
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November 8th, 2018 by Matt Pressman
Originally published on EVANNEX.
Tesla has many challenges to overcome. According to David Pogue (via Yahoo Finance), “It’s amazing that Tesla even exists. Before Tesla, the most recent successful American auto startup was Chrysler, over 90 years ago. Tesla has survived the first hard part: designing beautiful, fast, high-tech electric cars that a lot of people want and love. Now come all the other hard parts … [including] getting permission to sell them.”
A look at Tesla’s store in Walnut Creek, California (Image: Tesla)
“That’s right. In some states, Tesla is not allowed to open dealerships. I live in one of them: Connecticut. Two years ago, I added myself to the waiting list for the Tesla Model 3. This summer, I finally picked it up — in New York. As I drove it back home over the state border, I wondered why Connecticut would want to hand over all the sales tax I just paid to a rival state,” writes Pogue.
Furthermore, “in a capitalist system, it might seem counterintuitive for a state to prevent a popular company from opening a store. Aren’t new businesses good? Don’t they generate property taxes and sales tax? Don’t they mean more local jobs? Wouldn’t welcoming a big player in electric cars help these states with their environmental goals? (Connecticut’s government, for example, aims to lower emissions to 45% of 2001 levels by 2030.) Don’t we want to support American manufacturing?”
It turns out that these protectionist laws are rooted in a bit of ancient history. Pogue notes, “Back in the 1930s, the car companies established this system so that they could worry about making cars, and the franchises could worry about selling and repairing them. Early on, though, the franchisees lobbied their state governments for protection.” State governments, in turn, passed laws.
Along with Connecticut, Tesla still can’t sell cars direct-to-consumer in other states including Texas (Youtube: ReasonTV)
Fast forward to the present — are laws in certain states still banning Tesla from selling cars? Yes. Through extensive, expensive (and often successful) lobbying efforts, dealer groups are waging war on the electric carmaker. One reason could be that “the vast majority of [dealer] income comes from service … [and dealers] see the electric car as an existential threat to their service business. It’s revenue that these car dealers don’t want to give up,” says Bruce Becker, president of the Electric Vehicle Club of Connecticut.
To that end, “an electric car has no engine and no transmission. It has no spark plugs, fan belts, air filters, timing belts, or cylinder heads. It never needs oil changes, tuneups, or emissions checks. Your brake pads go years without needing replacement, too, since just lifting your foot from the accelerator slows the car down (by recharging the batteries).” It’s no wonder dealers want to boot Tesla from their state. A National Automobile Dealers Association spokesman said dealers make triple the profit from service as they do from selling new cars.
Yet for state officials, banning Tesla “is not a good long-term strategy. It’s not stopping people from buying Teslas — it’s just sending them out of state to do it.” Tesla’s general counsel, Todd Maron notes, “In all the other states in the country, in all the other countries where we operate, we’ve always been able to operate alongside dealers selling other cars. It’s just competition, and it’s completely normal. … We’re not going to give up on this issue, ever. It’s so fundamental to who we are.”
If you live in one of the blue states, you don’t have to cross state lines to buy a Tesla (Graphic credit: David Foster / Yahoo Finance)
After all, “Existing franchise dealers have a fundamental conflict of interest between selling gasoline cars, which constitute the vast majority of their business, and selling the new technology of electric cars,” CEO Elon Musk writes on Tesla’s site. “It is impossible for them to explain the advantages of going electric without simultaneously undermining their traditional [gasoline car] business.”
Where Tesla can sell cars. Map via TMC Staff
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About the Author
Matt Pressman is all about Tesla. He’s a TSLA investor, pre-ordered the Model 3, and loves driving the family's Model S and Model X company cars. As co-founder of EVANNEX, a family business specializing in aftermarket Tesla accessories, he’s served as a contributor/editor of Electric Vehicle University (EVU) and the Owning Model S and Getting Ready for Model 3 books. He writes daily about Tesla and you can follow his work on the EVANNEX blog.
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Tesla Plans To Spend Up To $3 Billion A Year On Gigafactories Over Next 24 Months
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Published on November 8th, 2018 |
by Steve Hanley
Tesla Plans To Spend Up To $3 Billion A Year On Gigafactories Over Next 24 Months
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November 8th, 2018 by Steve Hanley
In its latest 10-Q filing with the SEC, Tesla says it is planning to spend big on upgrading Gigafactories 1, 2, and 3 — up to $3 billion a year over the next two years, in fact. It also says it expects to pay for most of that from current earnings. Here’s the relevant paragraph:
“Considering the pipeline of new products planned at this point, and consistent with our current strategy of using a partner to manufacture cells, as well as considering all other infrastructure growth and expansion of Gigafactories 1, 2 and 3, we currently estimate that capital expenditures will be between $2.5 to $3.0 billion annually for the next two fiscal years. Moreover, we expect that the cash we generate from our core operations will generally be sufficient to cover our future capital expenditures and to pay down our near-term debt obligations, although we may choose to seek alternative financing sources. For example, we expect that much of our investment in Gigafactory 3 will be funded through indebtedness arranged through local financial institutions in China. As always, we continually evaluate our capital expenditure needs and may decide it is best to raise additional capital to fund the rapid growth of our business.”
That part about Gigafactory 2 is interesting. GF2 is the factory near Buffalo, New York, where Tesla intends to produce its Solar Roof tiles. We haven’t heard much about that initiative in a while. Perhaps the company is finally ready to get serious about ramping up Solar Roof production? In the recent Tesla conference call, Elon Musk highlighted that it simply takes a long time to do appropriate testing for a roof product.
In addition to increased spending on its factories, Tesla also announced recently it intends to significantly expand its service network, particularly in places outside of major urban areas. That will take even more money. According to Electrive, the company says it is leveraging what it has learned about manufacturing to date to allow it to manage its money more wisely and efficiently. Here’s more from the 10-Q filing itself:
“In 2019, we expect to continue to increase the Model 3 production rate in our Fremont factory while needing only limited additional capital expenditures. As we continue to expand our existing manufacturing capacity, introduce new products, expand our retail stores, service centers, mobile repair services and Supercharging network, we will continue to utilize our increasing experience and learnings from past and current product ramps to do so at a level of capital efficiency per dollar of spend that we expect to be significantly greater than historical levels.”
Tesla is not resting on its Q3 laurels. Moving forward, the company is looking for ways to make every dollar available to it work as efficiently as possible to support its overall mission — driving the electric car revolution forward at the fastest possible pace. Tesla has a lot on its plate and still has plenty of detractors who think it is continuing to bite off more than it can chew.
New ideas always unsettle the status quo and invite negativity from those who wish things would just continue going along they way they always have. It’s human nature. One minute you’re Kodak or Polaroid or Xerox with a hammer lock on the market, the next minute you’re out in the cold looking in. It’s painful to fall from grace. But creative destruction is one of the bedrock principles of modern capitalism. And creative destruction is what Tesla does best.
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Koben Announces EVOLVE EVSF —Grid-Friendly Modular EV Store & Forward System
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Shift In Navajo Country As Coal Plant That Navajo Community Doesn’t Want Is Dropped
The EV Safety Advantage
Read & share our free report on EV safety, “The EV Safety Advantage.”
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