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States banning Tesla sales stand to lose millions in tax revenue each year

Photo credit: Delanman via Twitter

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Tesla’s unique business model allows them to sell vehicles directly to consumers through both retail locations and Tesla’s online design studio. Direct-to-consumer sales of its vehicles have led to some turbulence with existing car dealerships in many states, including Utah, Louisiana, Connecticut, Texas and Michigan. New Jersey allowed Tesla to open direct sales in the state in 2015, but with conditions. New Jersey’s legislation limited the number of direct-to-consumer dealerships per manufacturer to four stores and required at least one service center in the state. Tesla CEO Elon Musk once compared local car dealers to a mafia protection racket, stating in a Tesla blog post, “The rationale given for the regulation change that requires auto companies to sell through dealers is that it ensures ‘consumer protection’…Unless they are referring to the mafia version of ‘protection’, this is obviously untrue.”

Tesla recently launched a lawsuit to overturn a sales ban put into effect in Michigan in 2014 that prevents the Elon Musk-led electric carmaker from selling directly to consumers within the state. The greatest opposition against Tesla’s plea for direct sales in Michigan comes from both auto dealers and manufacturers, who argue that Tesla disrupts the traditional franchise dealership model.

Courtesy of Teslanomics.co

Ironically, Michigan and Texas which bans Tesla’s direct sales model have public pensions that are significant investors in the Silicon Valley company. However, that isn’t the only financial interest states have in Tesla. All states in the US rely heavily on sales tax to generate revenue. States without stores are forcing owners to purchase and service their vehicles out-of-state, missing out on sales tax in the process, a major revenue loss. 

Source: Bloomberg, September 2016

Bill Wolters, of the Texas Automobile Dealers Association, is claiming that the introduction of Tesla into the Texas car market would “reduce competition”, and will incur costs for Texas. However, this argument assumes that dealers are creating added value for their consumers, and if that argument holds, then dealers should be able to keep customers in the market after Tesla enters. Additionally, Tesla is competing against other manufacturers and not franchises.  

Racecar driver and environmental activist Leilani Munter protest’s North Carolina’s ban on Tesla’s direct sales model (Photo: Medium/Leilani Munter)

Out of a presumed 400,000 reservations for the Tesla Model 3, it is estimated that roughly half originate from the United States, according to the distribution of early Model 3 reservation data from Model3Tracker.info. Using a loosely estimated assumption of Tesla Model 3 reservations originating from banned states via Model3.ocasual.com, we get the following numbers: 1,250 in Louisiana, 2,980 in Connecticut, 3,076 in Utah, 15,670 in Texas, and 4,230 in Michigan.

The sales tax for Michigan is 6%, Louisiana is 9%, Connecticut is 6.35%, Utah is 4.7%, and Texas is 6.25%

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This equates to a loss of $8,883,000 for Michigan, $3,937,500 for Louisiana, $34,278,125 for Texas, $6,623,050 for Connecticut, and $5,060,020 for Utah. That’s a total of $59,791,695 in loss revenue, which does not factor in current sales of Model S and Model X. 

States with Tesla Ban Sales Tax Estimated Tesla Model 3 Reservations Projected state revenue loss (in dollars)
Louisiana 9% 1250 $3,937,500
Texas 6.25% 15670 $34,278,125
Michigan 6% 4230 $8,883,000
Connecticut 6.35% 2980 $6,623,050
Utah 4.70% 3076 $5,060,020

 

Navigant Research believes that sales electric vehicles, including hybrid/plug-in hybrid, are set to comprise 9 percent of total vehicle sale by 2025. Currently, EVs make up 3% of total vehicle sales, but the number in 2016 saw a 36 percent increase in sales in the US alone. In 2016, 4,500 EVs were sold in Texas, 2,470 in Michigan, 270 in Louisiana, 1,452 in Connecticut, 1,132 in Utah, and 70 in West Virginia. Texas, Connecticut, and Michigan ranked among states with some of the highest EV sales. Of electric vehicles sold total in 2016, the Tesla Model S was the leading electric vehicle with ringing in at 29,156 vehicles. The Tesla Model S also outsold its entire class of vehicles, combined. Tesla is expecting high demand for Model 3, which will start at roughly half the cost of the Model S.

Source: Topspeed.com

There are currently 223,319 estimated Model 3 reservations in the United States, far greater than the sales of comparable vehicles. The BMW 3 and 4 series which sold around 106,000 vehicles in 2016 and the Mercedes C-Class sold around 77,000 vehicles in 2016. Tesla CEO Elon Musk is expecting to produce 500,000 vehicles in 2018 and tens of thousands this year (Tesla hasn’t released Model 3 production guidance for 2017). Musk’s expectations could make the Model 3 the highest selling vehicle in its class in both 2017 and 2018. The states that ban Tesla dealerships not only miss out on sales tax revenue from Tesla vehicles but in turn create an inconvenience for residents. By instating a direct sales ban on Tesla before the launch of Tesla Model 3, states will not only lose millions of dollars in sales revenue per year but also interfere with and disrupt free market competition and consumer activities.

Feature image courtesy of Delanman via Twitter.

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Elon Musk

Tesla CEO Elon Musk’s $1 trillion pay package hits first adversity from proxy firm

ISS said the size of the pay package will enable Musk to have access to “extraordinarily high pay opportunities over the next ten years,” and it will have an impact on future packages because it will “reduce the board’s ability to meaningfully adjust future pay levels.”

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Tesla CEO Elon Musk’s $1 trillion pay package, which was proposed by the company last month, has hit its first bit of adversity from proxy advisory firm Institutional Shareholder Services (ISS).

Musk has called the firm “ISIS,” a play on its name relating it to the terrorist organization, in the past.

The pay package aims to lock in Musk to the CEO role at Tesla for the next decade, as it will only be paid in full if he is able to unlock each tranche based on company growth, which will reward shareholders.

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However, the sum is incredibly large and would give Musk the ability to become the first trillionaire in history, based on his holdings. This is precisely why ISS is advising shareholders to vote against the pay plan.

The group said that Musk’s pay package will lock him in, which is the goal of the Board, and it is especially important to do this because of his “track record and vision.”

However, it also said the size of the pay package will enable Musk to have access to “extraordinarily high pay opportunities over the next ten years,” and it will have an impact on future packages because it will “reduce the board’s ability to meaningfully adjust future pay levels.”

The release from ISS called the size of Musk’s pay package “astronomical” and said its design could continue to pay the CEO massive amounts of money for even partially achieving the goals. This could end up in potential dilution for existing investors.

If Musk were to reach all of the tranches, Tesla’s market cap could reach up to $8.5 trillion, which would make it the most valuable company in the world.

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Tesla has made its own attempts to woo shareholders into voting for the pay package, which it feels is crucial not only for retaining Musk but also for continuing to create value for shareholders.

Tesla launched an ad for Elon Musk’s pay package on Paramount+

Musk has also said he would like to have more ownership control of Tesla, so he would not have as much of an issue with who he calls “activist shareholders.”

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Tesla is adding an interesting feature to its centerscreen in a coming update

In a recent dissection of coding, Tesla hacker green noticed that the company is bringing in screenshare with Software Update 2025.38

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Credit: Tesla

Tesla is adding an interesting feature to its center touchscreen in a coming update, according to a noted hacker.

In a recent dissection of coding, Tesla hacker green noticed that the company is bringing in screenshare with Software Update 2025.38. Details on the use case are slim, but he said the feature would export the car screen so it could be viewed remotely.

It would bring up a notification on the screen, along with a four-digit pin that would link the two together:

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As previously mentioned, the use case is unclear, but there are some ideas. One of which is for remote support, which is something Apple has used to help resolve issues with its products.

Support staff and employees routinely tap into customers’ screens to help resolve issues, so this could be a way Tesla could also use it.

This seems especially relevant with Robotaxi, as the screen might be a crucial part of resolving customer complaints when there is no employee in the car.

Additionally, it seems as if it will not be exclusive to those owners who have newer vehicles that utilize the AMD chip. Intel will get support with the new feature as well, according to what green has noticed in the coding.

Finally, it could also be used with all sorts of content creation, especially as Full Self-Driving videos and what the vehicle sees in Driver Visualization.

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As it is released, Tesla will likely release more information regarding what the screensharing mode will be used for.

For right now, many owners are wondering where it could actually work and what advantages it will offer for owners as well as the company itself.

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Elon Musk

SpaceX posts Starship booster feat that’s so nutty, it doesn’t even look real

The Super Heavy booster’s feat was so impressive that the whole maneuver almost looked like it was AI-generated.

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Credit: SpaceX/X

SpaceX has shared a video of a remarkable feat achieved by Starship’s Super Heavy booster during its 11th flight test.

The Super Heavy booster’s feat was so impressive that the whole maneuver, which was captured on video, almost looked like it was AI-generated.

Super Heavy’s picture perfect hover

As could be seen in the video shared by SpaceX, Starship’s Super Heavy booster, which is nearly 400 feet tall, smoothly returned to Earth and hovered above the Gulf of America for a few seconds before it went for its soft water landing. The booster’s picture-perfect maneuver before splashing down all but capped a near-flawless mission for Starship, which is about to enter its V3 era with Flight 12.

The booster’s balance and stability were so perfect that some users on X joked that the whole thing looked AI-generated. Considering the size of Super Heavy, as well as the fact that the booster was returning from space, the hovering display all but showed that SpaceX is dead serious about keeping its dominant lead in the spaceflight sector.

Starship V2’s curtain call

As noted in a Space.com report, Flight Test 11 achieved every major goal SpaceX had set for the mission, including deploying Starlink mass simulators, relighting Raptor engines in space, and executing a stable reentry for both the Starship Upper Stage and the Super Heavy booster. The feat also marked the second time a Super Heavy booster has been reflown, a milestone in SpaceX’s quest to make the entire Starship system fully reusable.

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Starship’s V2 vehicle will now give way to the upgraded Starship V3, which is designed for faster turnaround and higher payload capacity. The Starship program is expected to pursue even more aggressive targets in the coming months as well, with Elon Musk stating on social media platform X that SpaceX will attempt a tower catch for Starship Upper Stage as early as spring 2026.

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