Tesla

July 20, 2016|Frederic Bastiat, Henry Ford, innovation, Markets, NHTSA, Tesla, the unseen

Regulators, Hands Off the Autopilot!

Tesla provides an autopilot that allows its cars to drive themselves in certain circumstances. Recently, while on autopilot, a Tesla car crashed and killed the driver. The autopilot apparently did not distinguish between a white tractor-trailer and a brightly lit sky in the background of the trailer. The driver is rumored to have been looking at a movie, against the express mandate that a driver using the autopilot keep his hands on the steering wheel.

The National Highway Traffic Safety Administration (NHTSA) is investigating the crash, and the government is now considering how to regulate autopilots. I fear that if regulators aren’t careful, they may kill more people than they save. The basic problem is that first recognized by the great French economist Frederic Bastiat. People too often consider effects that can be seen, but not those that are invisible. Here the focus is likely to be on lives lost by the autopilot, often in fiery crashes that get attention. But lives may be saved as well by its introduction and these lives will receive almost no attention. Statically, the current autopilot itself may save some lives. Dynamically, permitting autopilots may lead to faster improvement in self-driving cars that may save more lives in the future. There are a lot of such lives to be saved. More than 30,000 people die each year in car crashes in the United States, and most such crashes are caused by driver error.

This problem is compounded by the prism though which government bureaucrats view regulation.

April 27, 2016|deals, distribution, dormant Commerce Clause, economic protectionism, rational basis test, Tesla

Let Tesla Sell Directly to Its Customers

by John O. McGinnis|

There is a debate about how innovative are Tesla’s new cars, but the company is indeed trying to do something new in the way it sells them. Tesla wants to sell directly to consumers without the use of dealers. Unfortunately, however, many states are trying to prevent direct sales. These laws are outrageous exercises in economic protectionism in favor of special interests.

When it comes to keeping down the costs of distribution, a manufacturer is the consumer’s BFF. Both the manufacturer’s and the consumer’s interest is the same—having the most efficient and cost-effective form of distribution. An efficient distribution allows the manufacturer to sell more cars, because the total cost of the product is lower. It also benefits the consumer, because the distribution is incidental to the enjoyment he or she gets from the product.

Some legislators argue that dealers are necessary because they can provide important services to consumers. But the manufacturer takes the level of service into account when deciding whether to sell directly. Optimal service helps the manufacturer’s bottom line as well, because it gains a reputation for cars that are well serviced and thus last a long time.

June 21, 2015|Elon Musk, hyperloop, Peter Thiel, Secular Stagnation, Space X, Tesla

Is Elon Musk the Henry Ford of Our Time?

by John O. McGinnis|

A new biography, Elon Musk: Tesla, Space X, and the Quest for a Fantastic Future, provides more evidence that America does not face secular stagnation—a state of slow growth and little innovation. I have always been skeptical of this claim, because many of the statistical measures on which it relies are those of our centralized government that miss out on improvements in health and enormous benefits of new technology, particularly the internet.

But some intelligent observers, notably Peter Thiel, have argued that recent gains are narrowly focused on information technology. As Thiel provocatively puts it: “We were promised flying cars, and instead what we got was 140 characters.” Musk, however, has become a billionaire by building actual products that do gesture to a fantastic future where such items as flying cars are imaginable.

One is an electric car, Tesla, that has attracted attention not only for its battery engine, but for its aesthetics. It combines Silicon Valley know-how with Hollywood dazzle.

March 23, 2014|Car Dealer Privileges, Tesla

More on Tesla and Government Privileges for Auto Dealers

by Mike Rappaport|

Last week I wrote about the efforts of New Jersey and other states to prevent Tesla from selling cars directly to the public without using dealers as an intermediary. Now, Alex Tabarrok has great post on the dealers laws and their effects on competition and consumer welfare. It is not a happy story. Here is an excerpt: So there you have it, [according to the New York Times] limits on direct sales ensure competition and protect car dealers from being undercut by the automakers. Sorry, but you can’t have it both ways. Franchising arose early on in the history of the auto…

March 17, 2014|Car Dealers, Chris Christie, Tesla, Vertical Integration

Tesla, Christie, and Competition

by Mike Rappaport|

A New Jersey regulatory commission, with Chris Christie’s appointees on it, has announced that Tesla may not sell its cars in New Jersey because the company does not use licensed automobile dealers. Tesla argues that the policies underlying the regulation are not applicable to it and plans to fight the ruling.

The notion that automobile companies should be forced to use dealers to sell cars is absurd. Telsa claims, perhaps as a strategic argument, that the law made sense back in the old days. Tesla says that in the past the car companies had attempted to offer bad deals to the dealers, based on the car companies’ leverage (because the dealers had no where else to go). Hence, the state laws that protected car dealers were necessary. But Tesla argues that nothing like this is applies to it, since it has never used dealers.

I am skeptical of this argument. In the middle of the century, vertical arrangements were often misunderstood (as were markets generally). If the car companies sought to treat their dealers unfairly, that would harm their reputation and make it more difficult for them to have future arrangements with dealers. Moreover, if a car company offered too little, then the dealer could attempt to become the dealer of another company. Further, even if the deals were unfair, there were ways in the future to protect the dealerships, such as using long term contracts and other mechanisms to protect dealers from exploitation by car companies. It would not make sense to establish a law that would harm the public in the future by interfering with competition.

July 31, 2013|Mancur Olson, Tesla, The Rise and Decline of Nations

Interest Groups and the Rise, or Decline, of the American Nation

by Greg Weiner|

Future historians seeking clues to explain either the resurgence or decline of the United States may find a significant one in the outcome of a series of legislative and court battles pitting Tesla Motors against car dealers around the nation. The latter are trying to—and have, to varying degrees, succeeded in— gaming state legislatures to prevent the electric-auto maker from selling directly to consumers. The fate of the republic does not hinge on this battle. But Mancur Olson teaches it does depend on something else: the nation’s ability to adapt and, therefore, to resist the accretion of interest groups who organize to protect gains by inhibiting change.

A Mirror of the 20th-Century Congress

by Joseph Postell

Wright undermined the very basis of his local popularity—the decentralized nature of the House—by supporting reforms that gave power to the party leaders.

The Graces of Flannery O'Connor

by Henry T. Edmondson III

O'Connor's correspondence is a goldmine of piercing insight and startling reflections on everything from literature to philosophy to raising peacocks.

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