Tesla, Michigan, and How To Save The American Car Industry

Keith Crain is simply wrong. Also, sex tape. And Flint.

Alex Roy

I shall now explain how to save the American car industry.

We begin with Keith Crain — Editor-In-Chief of Automotive News and Autoweek — who is simply wrong.

So wrong that I've written 2000+ words in response to his 419.

I don’t normally read The Onion for political commentary, nor do I read anything published by Crain’s for comedy, but it’s an election year. Traditional roles, expectations, acceptable language and even the definitions of words have been wildly subverted, and all of this is on display in the latest op-ed by Crain, whose latest “column” highlights everything that is contemptible about journalism and politics in this country, and why “wisdom” such as his spells doom for the American car industry.

Crain’s latest piece “Elon Musk is Simply Wrong” is so hilariously transparent and inept in its shilling for friends and neighbors who own car dealerships and sit in state government, it is actually unworthy of The Onion. Crain is writing at a Mad Magazine level here. Lower, in fact, for his ultra-protectionist, fill-in-the-blanks “column” more closely resembles Mad Libs: The Car Dealer Association Party Edition.

Crain’s bias is so obvious, and his arguments so lazy, that the FTC should probably check whether it should be labeled “sponsored content.” That’s just my opinion, of course. Don‘t take my word for it. I’m going to let him speak for himself, with line-by-line commentary.

Let me add that I've never worked for Tesla. I work for Time, Inc., who sell advertising like every media company and yet somehow manage to tackle the truth by publishing pieces that tell both sides of a story.

As for Tesla, I don’t own one, I’ve never owned their stock, and I’ve never met Elon Musk.

I am, however, a proud American, which means I believe in free speech, the separation of church and state, competition, truth, justice and transparency. It also means I am against crony capitalism, collusion and protectionism.

Show me a stacked deck, and I’ll reach for the nearest lighter. And some accelerant.

Our country’s not perfect, but we shouldn’t be afraid to slaughter a few sacred cows on the road to the future. Courage dictates we start with the big ones. Big ones like traditional car dealers, mouthpieces like Crain’s, and industry figures that would rather fight newcomers in the realm of politics rather than products.

Let the consumer decide, I say.

Without further ado, let’s get started. Here's the original piece:

Alex Roy

And now my breakdown.

Elon Musk is simply wrong
By Keith Crain

I don't like blackmail in business.

I don’t like blackmail either, and not only in business. Politics, the bedroom, anywhere. Actually, I’m okay with the bedroom. What I’m not okay with is the blatant use of a straw man argument. Who likes blackmail? No one. And yet Crain spends his first six words trying to set us up to agree with the next sentence, where the redefinition of “blackmail” begins with an Orwellian avalanche of Newspeak.

Tesla CEO Elon Musk is attempting to blackmail our governor and Michigan into making an exception just for him.

Really? Here’s the Merriam-Webster definition of blackmail: “the crime of threatening to tell secret information about someone unless the person being threatened gives you money or does what you want.”

Does Crain know something we don’t? Does Musk know something about Michigan’s governor we don’t? Is there a sex tape? What did the governor know about the Flint water crisis? And when did he know it?

I think maybe Crain is confusing blackmail with extortion, which is defined as: “the crime of getting money from someone by the use of force or threats.”

Has Musk tried to extort Michigan? Let’s find out.

But wait. That exception Musk is allegedly asking for? It isn’t just for him. It’s also for trike manufacturers like Utah’s Vanderhall, and anyone else who may want to launch a vehicle and sell it factory-direct. What's Faraday's business model? I guarantee they're watching. Musk is merely the biggest, best-funded player to get this far, and yet Tesla, relatively tiny by auto industry standards, gets the full brunt of the industry’s attack by proxy, with every weapon in the semantic arsenal unleashed by men who would hit publish less than 12 hours after finishing a dinner likely bought and paid for.

Tesla doesn’t advertise or play the game of junkets, press cars and gifts. Maybe Elon should have invited Crain to a Space X launch. Better include a room, 1st class airfare and a Model X, though. You never know what Bentley might be offering that week.

Two years ago, Michigan's Legislature passed a regulation that bans direct sales of vehicles to consumers; if you want to sell automobiles in Michigan, you have to use franchised dealers. There are hundreds of car dealers selling and servicing vehicles for customers in this state.

Want to guess why Michigan banned direct sales? Because of Tesla, at the behest of the franchised car dealers, who are terrified of factory-direct sales by anyone. Sound like a free market? Not in Michigan. And not just Michigan.

Are there hundreds of car dealers selling and servicing vehicles in Michigan? Yup. All of them deeply invested in the profits derived from selling and servicing internal combustion cars, with lowest-column denominator sales staff uninterested in new technologies like electrification and autonomy. There’s a reason car dealers are consistently rated so low in honesty and ethics, and people flock to third-party mechanics the instant their warranties run out.

Have you been to an Apple store? Consistently rated among the best consumer experiences in any sector. Have you tried to buy a Mac outside an Apple store? My experiences vary from okay to s**t. When you’re selling a high-ticket item, it makes sense that you want to control the sale to the greatest extent possible. When you’re buying one, the slightest hiccup will send you to a competitor.

Franchised dealers are just another layer waiting to be disrupted, and you don’t need to be Nostradamus to know they’ll do anything to stop it. Clearly, they already have.

Tesla applied to sell anyway, and that was denied by the secretary of state last month. Now Tesla has filed suit in federal court and is also threatening to withhold building a future plant in Michigan.

A suit in federal court? Oh no! God forbid the state of Michigan and its governor — the very man who allegedly lied about Flint— have to face off against Tesla outside the fabled halls of Michigan’s court system, where I’m sure Musk’s team would have gotten a fair hearing...

A company executive said last week that states that have made it difficult to sell cars are poor candidates for plant consideration.

...which brings us to the so-called “blackmail” Crain refers to, but which actually falls under the propagandist’s definition of “extortion”, if you call rational decision making by a CEO “extortion.” Is there a CEO on the planet who would open a plant in the same state, region (let alone country) where their products can’t be sold?

That would be like opening a synagogue in 1942 Berlin.

That’s business school 101. It makes no sense. Unless you represent entrenched interests. And you’re trying to sell advertising. And stay on the junket list.

Musk probably will also want a special tax incentive to buy one of his cars like they have done in California. Sorry folks, but Tesla has to learn to play by the rules sooner or later. The Michigan franchise law should not be amended.

Wait, so Crain is against incentives? Or is he just against incentives for Tesla? Because just a few weeks ago Crain was FOR incentives, right here, in an August 28th op-ed entitled “Maybe We Need Incentives.”

Nope. No bias here. Nothing to see. Move along.

Right now, Tesla seems to be surviving with a huge amount of debt and lots of government subsidies to keep the company afloat.

That debt? That’s how startups in tech requiring serious infrastructure get started. Again, business school 101. Musk is trying to pay it back by selling cars. In Michigan. Preventing Tesla from doing so is called protectionism. It’s anti-competitive, and it’s un-American.

As for those government loans, Tesla paid back their $465 million federal loan in 2013.

Here’s Tesla’s history of revenue, investment and government support:

Tesla

Subsidies? Thanks to the work of lobbyists, virtually every big business in America is subsidized in some form or another. The banking sector through changes to the tax code. The petroleum and traditional car industries through a foreign policy that has led us into countless trade agreements and foreign wars, good and bad.

Crain is all for incentives, subsidies and corporate welfare, as long as it benefits his friends and business partners. Actually, it appears Crain doesn’t know what he really believes, or can’t remember what he’s said. To quote Crain himself on August 28th, “...it does make some sense to offer a new business that is interested in building a plant where none existed some sort of incentive to entice it to be in Detroit. New plants usually mean new jobs. That should always be the end game. With incentives, Detroit doesn't lose revenue from someone who never existed.

Based on his August 28th op-ed, Crain should be totally FOR Tesla sales in Michigan, starting with the jobs new stores would bring, and the potential for a future plant that would benefit all.

I almost forgot. EV subsides don’t just benefit Tesla, but any EV manufacturer, including the ones Crain is trying to protect. If only they had EVs to sell, and wanted to, and had charging infrastructure, and trained staff, and weren’t trying to protect sales of higher-profit margin ICE vehicles and associated service.

If only.

Very shortly, Tesla will have more competition, starting with the Chevy Bolt, which you can buy without a deposit and can be serviced at dealerships across the nation.

The Chevy Bolt appears to be a terrific car, but it is also unavailable, for now. It is also not a direct competitor to the current Tesla Model S or X — available throughout the two-year old direct sales ban Crain supported — nor is it clear that the Bolt overlaps with the upcoming Model 3. Crain is living in the old world, comparing apples to oranges, again at the apparent behest of monied interests with whom he spends too much time.

Teslas can also be serviced at stores across the nation. Tesla stores. In states where anti-competitive and un-American regulations aren’t on full display. Also, Tesla has its own network of charging stations, which are both free (for now) and much faster than competing networks, none of which are owned by manufacturers.

I just tried to place a deposit on a Chevy Bolt. The cars aren’t available until later this year, pricing hasn’t been determined, and delivery dates remain unknown.

As for “more” competition, that competition exists BECAUSE of Tesla, and Musk has always welcomed it. Unfortunately for the traditional American manufacturers entering the EV space — the very same companies Crain seeks to protect by supporting uncompetitive practices — the majority of that competition will come from the Germans and Japanese, who know a thing or two about building cars.

Trust me, when affordable, 300+ mile Toyota, Nissan and VW EV’s arrive, Crain and his franchised dealer pals will be begging for the days when their biggest concern was Elon Musk.

Elon Musk is a very bright fellow who has always thought that rules were for the other guy.

The “other guy” being everyone throughout history who laughed at people like Thomas Edison, the Wright Brothers, Da Vinci, etc, etc. Even if Tesla closed doors tomorrow, Musk is already one of the most important figures in automotive history. Rules? Rules, regulations and laws must evolve for changing times. Heard of the Constitution? That’s changed. There used to be a thing called slavery. Women voting? That wasn’t always there.

Crain’s puerile condescension toward Musk is indicative of every old guard’s penultimate gasp, and should be seen for what it is: intellectual laziness, pandering, or worse.

If he wants to compete in Michigan, he needs to have dealers.

No, he doesn’t. Instead, Crain and cronies are forcing citizens who want Teslas to suffer inconvenience to satisfy their demand. File under market friction, and #UnAmerican.

Ironically, I hear some big American manufacturers are shedding dealers. I wonder why.

I don't know anyone who would want to drive hundreds of miles to buy or have a car serviced.

And yet many Michigan residents have. Could it be because they like the product?

I don’t know anyone in Michigan who objects to Tesla opening stores there, except franchised dealers. The enemy of the consumer isn’t Tesla, it’s Keith Crain and the double-talk his column represents.

A Tesla plant in Michigan is highly unlikely in the first place.

Yes, it is unlikely, but only made impossible because of policies supported by Crain.

But the threat is outrageous. Blackmail is a very bad business practice and yet it seems perfectly normal when you're dealing with Musk and Tesla.

Again, blackmailextortionnegotiation ≠ common-sense business practices.

Where do I mail a gift-copy of 1984?

Our Michigan franchise law for automobiles is good for the consumer.

Lies. Old world thinking. Also, many franchise laws impede OTA/wireless updates, which are at the heart of networked/crowdsourced systems like Tesla’s Fleet Learning. Any autonomous vehicle that is to be competitive must offer software updates in the field. How will traditional manufacturers sell cars through dealers that force owners to come in for updates?

There are plenty of dealers and plenty of competition.

Only within the walled confines of limited choice, sclerotic business models and consumer resentment.

But most importantly, the Michigan consumer is served far better than if factories represented themselves.

Nonsense. Ask Apple.

If you look at the electric car market, there will be plenty of choices available to consumers in Michigan. If Tesla chooses not to compete, consumers will have lots of vehicles that will have low prices and longer driving ranges.

That’s like arguing that no one should mourn Porsche’s departure because everyone would be happy with Toyotas. #Communism

The governor should call out Tesla's blackmail attempt for exactly what it is. If it wants to compete for customers, it knows what it has to do. But only if it thinks it will survive.

The American media who believe in transparency should call out Crain’s op-ed for what it is, a bald-faced, un-American screed whose logic belies the same myopia that led to the auto industry's failures of the 70’s.

Innovation and competition are part of what makes America great. If anyone wants to foster growth and prosperity in this country, it starts with unraveling the collusive and frequently insulting relationship between industry, those who would claim to represent the free press, and the toxic policies undermining a healthy economy.

Michigan, of all places can’t afford to stifle business, and yet here we are.

That amazing Chevy Bolt? You can thank Elon Musk for it. Just like you can thank him for every 200+ mile, sub $40k EV that shows up in the next three years.

When a leading industry media figure sarcastically calls out the most important startup in the sector since its inception 100 years ago, mocking it for fighting for its very survival — in a country founded on principles of grit, determination and ingenuity — we should all stand up and cry foul.

I have tons of friends at companies like Ford and GM. Great cars are coming. They are not the problem.

It’s the dealers.

Our biggest sacred cow stands right before us, and Keith Crain is their bullhorn.

(If you still disagree, check out Crain’s comically self-serving bio here at The Automotive Hall of Fame, where he was feted, and I’m now probably banned for life. Also, Crain has some very ill-informed views on driverless cars, among other things.)

Alex Roy is an Editor-at-Large for The Drive, author of The Driver, and set the 2007 Transcontinental “Cannonball Run” Record in 31 hours & 4 minutes. You may follow him on Facebook, Twitter and Instagram.