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North Carolina Wants To Make It Illegal For Tesla To E-Mail Customers

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Tesla owners & supporters gather in Statehouse in Austin to support company [photo: John Griswell]

Tesla owners & supporters gather in Statehouse in Austin to support company [photo: John Griswell]

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How far will state car-dealer associations go to prevent Tesla Motors from opening its electric-car showrooms and selling cars over the Internet?

A long, long way.

In North Carolina, a new law passed by the state Senate would apparently make it illegal for Tesla to e-mail its customers.

In other words, if you're a North Carolina resident who has a question about Tesla, the new law may prohibit Tesla Motors [NSDQ:TSLA] from responding to your question via e-mail.

The specific wording of the law bars automakers from "using a computer or other communications facilities, hardware, or equipment" to sell or lease a car to anyone in North Carolina.

Even telephones?

This seemed rather remarkable to us, so we asked Tesla communications manager Shanna Hendriks if we were understanding the law correctly.

"That is not an unreasonable interpretation of the law," she said.

"Any communications device--including a telephone--could be captured as conducting sales activity, and [its use] prohibited except by franchise dealers."

Hendriks concluded: "As you can see, they are trying to tie our hands as much as possible to ‘protect the customer'."

Tesla: "unfair competition"?

Diarmuid O'Connell, vice president of business development for Tesla, told ABC News the bill was a "fundamentally protectionist effort to lock down the market and force us to sell through the middle man."

The bill must be sent to the state's House of Representatives by today, and would have to be passed by that body and signed into law by governor Pat McCrory to take effect.

The law is an effort to prevent what the North Carolina Automobile Dealers' Association terms "unfair competition" by Tesla, which so far has sold about 10,000 cars globally since 2008.

The bill would modify a law passed in the mid-1970s to protect existing franchised dealerships against competition from dealers owned by car companies, which could be given preferential treatment by the makers.

No franchisees to be protected

Tesla, however, has no franchised dealers. It currently displays its electric cars at company-owned showrooms, and completes sales online directly with buyers.

Tesla Store - Portland OR

Tesla Store - Portland OR

Enlarge Photo

The NC dealer group wants to force Tesla to sell only through franchised dealers, who Tesla believes cannot adequately advocate for electric cars because they now derive all their profits from selling and servicing gasoline cars--a technology Tesla competes against.

The case that such laws are in the car buyer's own best interests--and the best way to protect customers--can be seen in comments by Tim Jackson of the Colorado Automobile Dealers Association.

Some supporters

Tesla and its products are not without supporters in the Tar Heel State. There are 49 Tesla cars registered in North Carolina, and the company operates a service center in Raleigh, but it currently has no stores.

Citizens dismayed at the law had actually set up a private website, called Tesla Motors NC, to rally efforts around preventing passage of the law.

So if you're a North Carolina resident with a question about the 2013 Tesla Model S that only its maker can answer, you perhaps should plan to write Tesla a letter.

You know, the old-fashioned kind. Printed out and inserted into an envelope. With a postage stamp.

Unless, of course, the NC dealer association should conclude that the U.S. Postal Service is a "communications facility" too.

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Comments (33)
  1. It almost makes it sound like an illegal drug deal. Shh tonight we're crossing the state border to meet a Tesla representative, word has it he has the goods for all our questions shhh.

    This is becoming a witch hunt, it's sickening.
     
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  2. Since the Supreme Court decided that corporations are people and have the right of free speech, companies will be able to buy elections in North Carolina, but not sell cars. I think I'm beginning to understand how those two things can be linked.
     
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  3. Actually because of the Supreme Court decision, Tesla the corporation has "Free Speech" rights that are being abridged by the state.

    You can't talk to someone on the phone or email them. Uh, speech right?

    The state cannot coerce "people" and prevent them from speaking, whether human or corporate.
     
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  4. tell north carolina to forth with unknown carnal knowledge OFF
     
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  5. This is clearly a Constitutional issue. Article 1, Section 8 of the Constitution states CLEARLY (in part), "To regulate Commerce with foreign Nations, and among the several States, and with the Indian Tribes;". Now lets move on to the 10 Amendment, "The powers not delegated to the United States by the Constitution, nor prohibited by it to the States, are reserved to the States respectively, or to the people."

    Clearly, since the Constitution requires interstate regulation of business, then the states cannot use the 10th to support their claim to regulate, since the business is clearly interstate in nature and the vehicles regulated under Federal law.
     
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  6. I agree with the spirit of your comment, but your interpretation of the interstate commerce clause is inaccurate. States are permitted to regulate commerce within their state, even if it impacts interstate commerce. However, if the federal government decided to regulate, their law would preempt the state law to the extent they overlap.
     
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  7. North Carolina auto dealers and lawmakers need to get out of the dark ages. No government or group will ever keep me from using the internet as I choose!
     
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  8. another UNENFORCABLE law?!?!?
     
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  9. This is very silly.

    I'm ok with advocacy groups advocating for their constituents, even when, as here, the advocacy is ridiculous.

    My problem is that this ridiculous advocacy was effective and agree with comments that interpret this as a systemic issue.

    If our system produces representatives that are persuaded by advocates of the ridiculous, our system is flawed.
     
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  10. Wow, limiting internet communication. it's the sort of thing one would expect in China or Russia. Must be a hallmark of crony capitalism.
     
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  11. hello Oil & Gas Industry!
     
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  12. That was my thoughts exactly when reading this article. Ten thousand cars isn't really that much but obviously it's bothersome to the NC dealer group.
     
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  13. How absurd!
     
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  14. I hope all automakers oppose this legislation. I receive emails from Ford and Nissan that would violate this proposed law.
     
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  15. North Carolina...
     
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  16. I misread the caption and thought for sure it said North Korea.
     
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  17. Hilarious...
     
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  18. "Any communications device--including a telephone--could be captured as conducting sales activity, and [its use] prohibited except by franchise dealers."

    So when Tesla makes headline news, will NC news anchors be banned from communicating the story? CNN Breaking… geo-location ban? If TSLA stock moves 50%, can Fox News report the failed/success story, or interview Elon?

    When NC legislative publishes case outcome on NC state website; will it black-out non-dealer OEMs' names, or would NC be breaking its own laws?

    NC ban on:
    - @ElonMusk tweets be filtered for NC geo-locations? All #tesla tweets?
    - Facebook photos of new Tesla owners, or of Model S'es by NC landmarks?
    - Google searches for [ motortrend car of year ] unless filtered?

    LOL…
     
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  19. Just like the reaction of several states to tack a tax onto electric cars to make up for them not paying taxes through gasoline purchases, this is last century thinking. We need the government to understand that a new age, one with MAJOR benefits to mankind, is beginning. They have to think in new ways. More alternatively powered vehicles are coming. The existing tax structure and dealer networks are not suited to handle them. As the article mentions, most dealers would have split allegiances, if not truly opposed to the new vehicles as they threaten the income generated by their service departments. Heck, even the some of the dealers I visited tried to talk me out of the EVs THEY SELL!
    This is too important for the government to screw up.
     
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  20. "If you live in North Carolina and you've been debating whether to buy a new Tesla, you'd better do it soon. The state's Senate Commerce Committee unanimously approved a bill that would prevent auto manufacturers such as Tesla from selling their cars directly to consumers — rather than through dealerships — in the state. Republican Senator Tom Apodaca who sponsored the bill says it's to "prevent unfair competition" between manufacturers and dealers. (And that has nothing to do with the campaign contributions he receives from the North Carolina Automobile Dealers Association)."
    Glad I do not live in a Red state. What's with the Republican's trying to ban stuff with laws? I do not like it one bit. Remember Corporations are people too. Geez
     
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  21. Maybe Tesla should come out and say that gasoline cars are not in the public's interest and should be outlawed. Emissions from gasoline cars kill people as do cigarettes. Gasoline cars make people sick. Gasoline cars use fuel that we have to buy from people who hate us and try to kill us. The source for the fuel for gasoline cars has to be protected by our military at great cost the all Americans. Even the one that don't drive.

    Maybe Tesla needs to point out the gasoline cars and their agents who sell them do not operate in the public's interest.

    They should defend themselves!
     
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  22. Well, seen from a European perspective, this sounds indeed like pure protectionism (if not to say pure socialism... :-) - something one would expect to happen in Europe, but as far as I remember, over here the problem with car dealers is more a question if carmakers are allowed to restrict sale of their cars to dealers of their choice. Currently the official car dealers are (if I remember correctly) working under a special (limted) permit issued by the EU that allows them to sell their cars only to their dealership network. Reason: Car maintenance.
    But this of course has nothing to do with the fact that a NEW carmaker is allowed to sell through channels of his choice. I have heard of NO Tesla store in Europe has these problems.Any comments?
     
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  23. That's actually a very true and relevant point. As "people' corporations enjoy 1st amendment protection, which this would clearly infringe upon.
     
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  24. Oops, that was supposed to go up top to Samo.
     
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  25. As someone who lives in NC, you'd be surprised by what all is going on in Raleigh. The Republican party holds boths houses and the governor. They can pass any law they want and are doing so...they're legalizing pollution because it interferes with businesses profits, they're raising taxes on the poor while cutting them for the wealthy and corporations, a woman who shows her breasts will go to prison but carrying a gun into a bar is legal, raising the sales tax on food etc. They waited 100 years to get absolute power and they're absolutely enjoying it now. Tesla should set up just over the state line and let Virginia, South Carolina, and Tennessee get the sales taxes.
     
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  26. John, perhaps it's my poor comprehension of legalese, but the section in question only applies if you engage in any of these activities (a) "at any location in this state," which I take to mean as opposed to across state lines, and (b) use electronic communications for the purpose of transmitting applications, contracts, or orders for motor vehicles.

    Maybe I'm misreading it, but it sounds like the dealer needs to be in-state for the law to require him to be considered a dealer. Otherwise, surely it's interstate commerce in the truest sense.

    More decisively, the section on electronic communication specifically relates to transmitting applications, contracts or orders. Don't do that on the call/e-mail and you're golden.
     
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  27. Two clarifications: on (a) I may be giving the lawmakers too much credit, but I thought this was to pre-empt appeals based on the Interstate Commerce clause by focusing on intra-state transactions.

    On (b), The term "communications facility" does not seem to be universally or specifically defined. For example, in the context of "wireless communications facility" it would not be taken to mean a newspaper. However, in terms of privacy or conducting business, it might be open to the degree that FedEx might be considered one, banning Tesla from sending a customer a contract that way.
     
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  28. "First they ignore you. Then they ridicule you. And then they attack you (...)"

    So EVs are entering 'stage 3' then? Interesting times ahead!
     
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  29. Those darn liberals and they job killing regulations! (Now, just in case anyone is missing it, this is sarcasm)
     
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  30. I would like to hear from the people who are responsible for voting in such legislators.
     
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  31. If only the big auto makers would pay their engineers as much as they pay their lobbyists. Then they wouldn't have to make the competition illegal.
     
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  32. North Carolina should adopt the alias, Tar and Feather State. Maybe Despot State wouldn't be bad, either. I'm not surprised NC would pass a law that quashes new technology. It goes along with all its anti social legislation. And they want CAR DEALERS to have a lock on Tesla and prohibit sales direct from car manufacturers. Well, buddy boy, auto dealerships have a reputation somewhere below ambulance chasing lawyers, hucksters of patent medicine remedies and used car salesman. They are a joke. Have you ever heard anyone say, "Well, I best get down to the dealer. I hear some wicked clunking sounds in the rear end?" No one goes to a dealer unless they are under warranty. Then the dealer always finds things wrong to bill the manufacturer.
     
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  33. Why does this sound so like interfering with Interstate commerce? If you want to go to a dealer you should be able to. But if you want to buy direct from the factory, that should be your personal right also.
     
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