If the idea of Tucson landing a huge Tesla Motors battery plant seems too much to hope for, I’m sorry to say it may well be.
The Star’s Gabriela Rico reported Sunday on a bid by Tucson-area officials to persuade Tesla to put its so-called gigafactory here, along with a projected 6,500 new jobs. Tesla, which makes electric cars, has said it’s looking to locate the plant in Texas, New Mexico, Nevada or Arizona.
However, Arizona is one of many states where auto dealers have been able to enshrine their business model in statute: State law prohibits auto manufacturers from selling cars directly to consumers rather than going through dealers.
Since Tesla’s business model is to sell direct to buyers, either through company-owned dealerships or over the Internet, it cannot sell cars in the state. Tesla has a showroom in Scottsdale where prospective customers can look at its models but can’t drive the cars or even discuss the price. (That’s probably OK for most people, since the cheapest model starts at about $70,000.)
Not surprisingly, auto dealers say the law, last changed in 2000, is not meant to protect their own businesses.
“It was for the consumer, so we could take care of them, take care of recall and warranty work,” said Bobbi Sparrow, president of the Arizona Automobile Dealers Association.
She also noted that most people live in areas where there is more than one dealer of each manufacturer’s vehicles, so that creates competition among dealers that wouldn’t occur if manufacturers were the only sellers.
Those are certainly arguments.
I asked Robert Lusch, a professor of marketing at the University of Arizona’s Eller College of Management, about the dealership system, and he said it evolved out of the early years of auto sales a century ago, when it took manufacturers a long time to ship their vehicles around the country in response to orders.
Now that transportation problem doesn’t really exist, he noted, but the dealership system that grew out of the problem persists, in part because auto dealers have become such integral figures in their communities. They sponsor teams and activities and make donations to community needs. Their standing and money also translate into political power (not that we have anybody who fits that description in Tucson).
“They lobby to get those laws passed,” he said. “In my opinion, it’s anti-competitive, but the government has the power to pass laws.”
This year, state Rep. John Kavanagh introduced a bill that would have allowed manufacturers to sell cars in Arizona as long as they are not within 60 miles of a dealer who sells the same autos. The bill, HB 2059, never got a hearing.
Kavanagh explained Thursday: “The dealerships brought up some legitimate issues concerning protecting the very large financial investments that dealerships make and the need to have protection from factory sales outlets, and issues with parts availability. There were enough questions raised that the bill was not heard this year.”
Sparrow, of the auto dealers association, says such laws have nothing to do with whether Tesla puts its plant here.
“They’re two very different issues,” Sparrow said. “The plant is wonderful. I think it’s fabulous.”
But that’s not what Diarmuid O’Connell, Tesla’s vice president of business development, said in an interview with Bloomberg News this month regarding the gigafactory and Texas laws that prohibit direct sales.
“The issue of where we do business is in some ways inextricably linked to where we sell our cars,” O’Connell told Bloomberg. “If Texas wants to reconsider its position on Tesla selling directly in Texas, it certainly couldn’t hurt.”
So there’s a challenge for Arizona’s auto dealers. The rest of us would of course welcome the economic boost a Tesla plant would bring to Tucson and Arizona. If you do, too, maybe it’s time for you to re-examine your position on direct sales.
Convention of States
Most Arizonans probably did not hear about the great leap toward fiscal restraint and limited government that occurred in the state Legislature Tuesday.
But it happened. The House passed a concurrent resolution applying for a Convention of States intended to bring amendments to the U.S. Constitution.
The vote in Arizona’s Legislature is part of a movement, mostly among conservatives and libertarians, to call a convention for the purposes of amending the Constitution. Article V of the Constitution allows for such a convention if two-thirds of the states’ legislatures call for it. Nowadays, that’s 33 legislatures.
State Rep. Adam Kwasman, a Tucson-area Republican, was excited about the passage: “We’re doing it in order to pass a balanced-budget amendment to the U.S. Constitution. I love it as a federalist, ground-up effort.”
Arizona’s Senate still must ratify the resolution before this state can be counted as applying for the convention. Only one state, Georgia, has done that so far.
The truth is, the results are likely to be a long, long ways away if they ever materialize, as this has been tried before.
In 1994, Gov. Fife Symington called for such a convention, laying out these aims: “One would be a balanced-budget amendment, which would curtail the growth of federal spending. The second would be amendment language disallowing unfunded mandates. And the third would be to take the 10th Amendment language in the Constitution itself (the section that reserves certain rights to the states) and strengthen and protect it from the kind of incursions we’ve seen.”
Martial law for Pima?
The Pima County Board of Supervisors passed a resolution Tuesday giving unconditional support to Davis-Monthan Air Force Base and whatever the Defense Department wants to do with it.
This is a way of saying “We’re OK with the F-35” without having to explain it to jet-noise-averse constituents.
At the end of the discussion, the board voted unanimously for the resolution and Chair Sharon Bronson recommended that the city of Tucson and other local jurisdictions be sent a copy so that they can do the same.
How quickly memories fade!
It was just a year ago when the City Council passed a similar resolution that led to nationwide outrage among conspiracy theorists who read the language and believed that Tucson was now under martial law.
That hasn’t materialized yet. But now we know that when the tanks roll up Campbell Avenue, they won’t be stopping at the Rillito.