Shoot us a Text.
Episode #1026: California dealers are taking legal action against Scout Motors over its direct-sales model. Elon Musk plans to scale back his government role amid Tesla’s slumping sales. And new code reveals OpenAI may soon integrate Shopify directly into ChatGPT, turning the AI into a full retail assistant.
- The California New Car Dealers Association is going to court over Scout Motors’ retail strategy, saying the VW-owned startup is sidestepping franchise laws and undercutting the state's dealer network.
- Dealers claim Scout violates California Vehicle Code Section 11713.3, which bars automakers from bypassing franchised dealers if the brand is affiliated with an existing franchise network.
- A 2024 amendment clarifies that new EV brands under a legacy OEM must sell through franchised dealers if they share ownership.
- CNCDA argues that VW can’t legally claim Scout is “independent” when it's wholly owned by Volkswagen AG.
- The association says VW dealers are being unfairly excluded from selling Scout’s high-demand electric SUVs and pickups, and the lawsuit seeks over $35M in fines, plus a full sales halt and deposit freeze in California.
- “Illegal competition will harm not only dealers but also the communities and car buyers that they serve,” said CNCDA President Brian Maas.
- Elon Musk says he’ll scale back his government work next month and refocus on Tesla, where sales are dropping, margins are thinning, and investors are restless.
- Musk says the “slog” of setting up the Department of Government Efficiency (DOGE) is mostly done, but still plans to spend 40% of his time on it.
- Tesla stock jumped 5.5% after Musk’s remarks on an earnings call; shares are still down nearly 50% from their December peak.
- Tesla’s Q1 revenue missed estimates at $19.34B, with auto revenue down 20% and net profit down 71%.
- Musk reiterated support for lower tariffs but acknowledged Tesla isn't immune to "macro demand for cars," noting that economic uncertainty leads consumers to "pause on doing a major capital purchase like a car."
- Tesla is on track for a mid-2025 launch of an affordable EV and a June debut of its Austin-based robotaxi fleet.
- OpenAI is setting the stage for ChatGPT to become a full-fledged shopping assistant, as new code hints at a direct integration with Shopify that could streamline the entire purchase journey—from query to checkout.
- Code found in ChatGPT’s public web assets includes tags like “buy_now” and “shopify_checkout_url,” suggesting native shopping support.
- If confirmed, this would allow users to move from query to checkout in seconds—no affiliate links, just direct Shopify-powered transactions.
- OpenAI’s move mirrors Microsoft’s April launch of the Copilot Merchant Program, which embeds shopping directly into the AI experience.
Join Paul J Daly and Kyle Mountsier every morning for the Automotive State of the Union podcast as they connect the dots across car dealerships, retail trends, emerging tech like AI, and cultural shifts—bringing clarity, speed, and people-first insight to automotive leaders navigating a rapidly changing industry.
Get the Daily Push Back email at https://www.asotu.com/
JOIN the conversation on LinkedIn at:
about dealer suing scout. Elongoing back to Tesla and AI
digging deeper. People reallywent into retail. Folks, Kyle's
got some anecdotal stories on
Kyle Mountsier (00:18):
that. One, the
applications are insane, fam.
Paul J Daly (00:21):
Yeah, and they're
just getting more insane. We'll
talk about it later, becauseanother one. I got another pop
up this morning that I sent ascreenshot of, which is going to
be a total game changer.
Kyle Mountsier (00:29):
I connected some
stuff last night on that, by the
way, really, yeah, I did. I did.
I was like, You know what? We'regoing to do it. We're going to
do it. I know. All right,listen,
Paul J Daly (00:38):
Yes. Agenda for
ASOTU CON, large and in charge.
Go to ASOTU CON com. Look at theagenda. Detailed agenda by stage
is the best place to seeeverything going on. Pull the
list of topics up. These arebroad topics, but we have
specific sessions on drillingdown into each of these. AI,
compliance culture, fixed stops,global industry, leadership,
(00:58):
marketing, multi rooftop group.
I'm appreciating thealphabetical order, Nathan,
technology and much more sales.
F and I go to the agenda,because you're going to realize
these topics and the peoplespeaking on the panel, the
dealers, the industry, partners,the takeaways are actionable
right now. We're not dreamingabout what it could be. We're
(01:20):
saying, Hey, this is what'shappening right now. These are
the things you can take back toyour stores to help you solve
the problems that you're facingthe dealer. Tickets actually
have been really picking up.
This is how it works. That's howit works the auto industry. You
get within 30 days. Now we'rewithin three weeks. No, it's
like, it's
Kyle Mountsier (01:35):
like, five
tickets a day, seven tickets a
day, 10 tickets a day yesterday,28 tickets, right? It's like,
alright, everybody's coming.
Just friends, five, don't messaround.
Paul J Daly (01:45):
Five dealers. Five
dealer tickets came in this this
morning. Yeah, okay, so here'sthe deal. Three weeks from
today, 925, we will be in thefirst main stage sessions right
now. Come on now. Yeah, Claudesilver is hanging out with
Claude silver. She's gonna be onstage right now, Chief Heart
Officer, VaynerMedia, talk aboutsomeone who has has really been
(02:06):
across the world working withmajor brands, major executives,
major business initiatives, andtying them back, how to make
sure the people in yourorganization are thriving in a
way that can accomplish thesebig goals. She's gonna be a
great way to start it off as adear friend and will be three
weeks from now, on the stage ata soda con. So you should be in
the room Soto con com. Go ahead.
Go to have some fun. You know
Kyle Mountsier (02:29):
what? Like, we
don't hold any punches for the
end of shows, right? Like wewe're swinging right to the end
one of the very last sessionsthat I'm super excited about on
Thursday afternoon, meaning,don't get your early flights
out. No, this is not yourstandard conference. It's like,
just, there's plenty of flightsout all around Baltimore. Fly
(02:50):
out after five. You're gonna befine, okay? But one of the very
last sessions before our endingkeynote is we've got like half
of the entire roarman team. Oh,it's a month talking about how
social media has completelytransformed their business over
the last year, from recruitingto to new inbound leads across
service and sales and like,they've taken it on as an
(03:13):
organization. It's not just oneperson that's that's growing so
that's going to be, that isthat's going to be a
Paul J Daly (03:18):
panel, yeah. I
mean, talk about an
organization, literally, thissession was actually their idea.
Yep, they were like, we're sopassionate about this. It's
working so well. We want to helpthe other dealers execute like
this as well. I want to be thereand so, like, I mean that in and
of itself, means I think it'sgoing to be the most fire
session. And what a way to endthe session. It's a shame that
(03:39):
people get trained, or havegotten trained over the years,
to leave early. That's the endof the conference. Is the least
valuable. That's why we keep ittight to two days, like, two
full days of content. Because wewere like, there are no
throwaways. And even for ourindustry partners asking for
placement, we're like, no, no.
You don't understand. Last yearday two at higher traffic than
day one. Yep, right. Becausethat's and we have the Maryland
auto dealer Association doingtheir thing on day two. It's,
(04:01):
it's a real thing. It's a realwe
Kyle Mountsier (04:05):
got a thing
coming with Steve Greenfield on
day two that you're gonna wanna,like, just keep your eyes out
for it. Just, you know whatpeople get tickets will tell you
about
Paul J Daly (04:14):
going to bed early
now, just so I don't have to
sleep when I'm in the soda. Allright, let's talk about our
friends at the California NewCar Dealer association is going
to court over Scout motorsretail strategy, saying that VW,
owns startup, is sidesteppingfranchise laws and undercutting
the state's dealer network.
Dealers are claiming Scoutviolates California's franchise
laws, in which a 2024 amendmentclarifies that new EV brands
(04:37):
under a legacy OEM must sellthrough the franchise dealer if
they want to share ownership.
Whoa, the cncda argues VW can'tlegally claim scout is
independent when it is whollyowned by Volkswagen, when it's
shared leadership, when it'sshared financial resources. I'll
just go on. The association saysVW dealers are being unfair.
(05:00):
Excluded from selling scoutshigh demand electric SUVs and
pickups, and the lawsuit seeksover $35 million in fines, plus
a full sales halt and depositfreeze in California. Scout
motors, General Counsel nearCitron, said in a January,
January 17 letter that the VWbrand dealers have no right to
scout branded vehicles, nor doany other franchise dealers.
(05:21):
Scott Kyle, Scout, CEO, wellloved by the VW dealers for a
long, long time, right? Said inFebruary. What's on the table is
a lot of press articles with,let's say, threats and things
like that. I think it's superclear we have a brand in Scout
that does not have a dealernetwork and did not have a
dealer network. 100% startupallows you to make decisions
that startups can make. Ourfriend, Brian Moz uh, president
(05:43):
of cncda, says illegalcompetition will harm not only
dealers, but also thecommunities and car buyers that
they serve.
Kyle Mountsier (05:51):
I mean, not
backing down. What's so silly is
like these dealers want to helpyou sell the cars
Paul J Daly (05:58):
and deliver a
better customer experience, and
deliver a
Kyle Mountsier (06:02):
better and be
more connected to the customer.
And look, I would, if I'm justgonna go out there on a limb and
say that if you're a VW dealer,you mean it, right? That's,
Paul J Daly (06:13):
that's a great
point. You know what I mean?
Like, you know what youunderstand? You're never heard
of
Kyle Mountsier (06:18):
a VW dealer.
That's just life in, yeah, halfin, yeah. It's a very loyal
brand. It's a very like, youknow, it's probably a high
retention brand. The stores aregorgeous. They've done a great
job at the retail experience,and every VW dealer that I know
is like, a bit more savvy. Sowhy wouldn't you lean in to that
(06:39):
reputation as Scout, it just isconfounding me. I do think the
move that Scout's gonna have tomake, because there's too much
legal boundary out there forthem, is they're gonna have to
decide whether or not to spin upa whole new entity and get it
completely removed fromVolkswagen, AG, and I don't know
(07:01):
how they would do it from alegal standpoint, but, like, I
think it's crazy.
Paul J Daly (07:09):
Yeah, I'm trying to
think of ways around that. I
mean, they have to spin into anentity that is, like, publicly
owned, right, like, right,there's, it's, that's a tough
thing. I mean, in California,obviously, they made that
amendment specifically. I mean,it says, it's a general
statement, but it's specificallytargeted towards Scout, because,
for sure, this is the instancethat we're dealing with right
now. I think the allure ofhaving, like, a sexy independent
(07:30):
brand like rivian or Tesla, thatit has no constraints like this,
it's such a complicated issue,right? Like, don't get us wrong,
we're free market capitalists.
However, in this specificinstance, the money that was
that was used was the money thatthe dealers made, the
leadership, it's like that wasused was the leadership that
(07:50):
worked VW, not to mention,there's a lot of there's a lot
of hurt feelings in heartburn,because dealers, for years, VW
dealers for years, have beenasking yes for a pickup option
for the and they don't have apickup option. There is no
pickup option, but there willbe, but you can't sell it, and
we're calling it somethingdifferent. So it'll be
Kyle Mountsier (08:13):
interesting to
see. If anyone knows Scott Kyle,
we are willing to enter into aconversation. It'll be a really
great conversation, like we areopen minded type people
introduce us. Yeah, for
Paul J Daly (08:24):
sure. Yeah. It
would be great to hear from him,
because, again, super wellrespected by dealers for a long,
long, long time, long time. Andif anyone knows how to make the
case and present it in the waythat they're seeing it, it's
him, I don't know, speaking ofsomeone who's trying to make a
case stop. Segue Elon Musk sayshe will scale back his
(08:47):
government work next month andrefocus on Tesla and his other
companies where sales aredropping, margins are thinning,
and investors are getting quiterestless. Must Musk says the
quote slog of setting up theDepartment of government
efficiency, aka Doge, is mostlydone, but he still plans to
spend now 40% of his time on it.
It's probably been like 100% ofhis time. Tesla stock jumped
(09:09):
5.5% after Musk's remarks on anearnings call. Shares are still
down nearly 50% from where theywere just last December. Tesla's
q1 revenue missed estimates at19.3 4 billion, with auto
revenue down 20% net profit down71% okay, here's, here's an
interesting, controversialslide. Musk reiterated support
(09:31):
for lower tariffs, butacknowledge Tesla isn't immune
to macro demand for cars, notingthat economic uncertainty leads
consumers to quote pause ondoing a major capital purchase,
like a car. We said none of ourdealer friends, none of our
dealer friends, as far as what'sbeing reflected in their demand.
So I think this is, you know,this is one of the things where
(09:54):
just being a little out of touchor spinning it a little way,
because, you know, Tesla. Seeingdecreased demand for a lot of
other reasons, but all of ourdealer friends and industry
partners are saying volumelegitimately
Kyle Mountsier (10:07):
this morning.
Paul, a lot. Paul, just so youknow, I went into a Google Ads
account that I have access to.
And I don't know if you've everbeen in a Google Ads account,
but up in the upper right handcorner, they have this little
notification bar sometimes hasto do with the Euro account, but
they like to drop in macrotrends. And in the macro trends,
one of its it just said, trendis up for searches for new and
(10:32):
used vehicles. Ah, okay, likeGoogle is saying, the trend in
the search behavior of consumersbroadly, generally, it's just
up, like more people aresearching for cars. Yeah.
Paul J Daly (10:47):
I mean, yeah. So
I'm, I don't know, stock is up
5% it's been a bit of a rollercoaster. But I think this is one
of those situations, again,where franchise retail dealers
understand what's actually goingon in the market, and if you're
detached from it, you're kind ofjust guessing, or you're
spinning it in a way that youthink is beneficial. And so I
don't know, well, Tesla's gotWell,
Kyle Mountsier (11:08):
I mean, I think
the one thing that you can take
from this, if you're a franchisedealer, is, like, you know,
Tesla is still on the move. IfMusk gets re involved, there
will probably be a change in theused car side of the business as
well, because, like, where hisattention goes. You know, Tesla
doesn't have a marketing arm.
They have Elon Musk, and themarketing arm has been
(11:30):
sideswiped by his attention onDoge, his tweets toward that,
all of that type of stuff.
Imagine the tweets going backtoward what he may or may not be
planning at the Tesla level, allof a sudden, the marketing arm
is spun back up and new and usedTeslas take their bait from that
and so and
Paul J Daly (11:50):
without too I think
another element of him just
being around when you know, youread the biography, and you
listen and you observe how heworks. His team is high
efficiency. They get a lot done,but he is a formidable force on
the manufacturing floors in themeetings. When he's there,
things move faster. You have areally brilliant mind on solving
(12:10):
problems. And so when he's backin the mix, I think the
shareholders are right to get animmediate boost in confidence,
because he is definitely aplaymaker when it comes to that
company in general, for sure,speaking of playmakers, segway,
Kyle Mountsier (12:28):
playmaker at the
top of almost every news article
open AI is setting the stage forchatgpt to become a fully
fledged shopping assistant, asnew code hints at a direct
integration with Shopify thatcould streamline the entire
purchase journey from query allthe way to checkout. Code found
in GPT public web assetsincludes tags like buy now and
(12:49):
Shopify checkout. URL subjectsuggesting native shopping
support. It confirmed that thiswould allow users to move from
query to checkout in seconds. Noaffiliate links, just direct
Shopify powered transactions inthe native UI. Obviously, the
copilot merchant program withMicrosoft in April is something
(13:10):
that they're going to look to goright up against copilot already
in the Microsoft ecosystemfeatures things like price
alerts or incidentrecommendations so this is like,
this is a next step in catpowered agency and buying
(13:30):
behavior. So
Paul J Daly (13:31):
does that mean that
in the near future, since the
more than car store is onShopify, that you'd be like,
hey, buy me one of those. Lovepeople more than you love cars T
shirts. And it's gonna be like,this one, and you're gonna be
like, Yep, and it's, don'tworry, we'll be hot on it as
soon as the integration isthere. Because I can tell you
what, we've got a Shopify store,and you should buy it. I need to
buy where you can. I need to buythese. Love people more you love
(13:53):
cars T shirts for my entiredealership, and I want it
branded with my logo. Can youhelp me with that? Yes, I can.
Come on. Do you have I'll letyou know your volume discounts,
shipping estimates, and you cansubmit your graphic. Yeah,
Kyle Mountsier (14:04):
hey, other other
chat GBT things you and I were
talking about this morning thatthey've now integrated Google
Drive. So I would say, like,check with your IT team if you
are on a pro plan to make surethat, like, if you're on Google
and Google Admin, that you'vegot all of the right permission
sets and all of that dialed into make sure you you are keeping
(14:25):
things in the right place. Butthe unlock there is kind of
insane.
Paul J Daly (14:29):
Oh, you mean, like
I can upload all my sales data,
I can connect it to a GoogleDrive with my sales reports in
them, and I can ask it realworld questions, get real world
answers and strategies movingforward and how I might be able
to make my business better justwith plain language right from
my phone I drive into work inthe morning.
Kyle Mountsier (14:45):
Crazy Is
Paul J Daly (14:46):
that what you're
saying, it could be, look, I
think one thing is very clear,if you're not paying attention
to this technology and how it'saffecting business, you are
falling behind. Great place tokeep up. Be on the bleeding edge
of this is that ASOTU CON. Whereyou can talk to people who are
doing it and kind of theorizewhat you can do when you get
back to make it a part of yourbusiness. We'll see you
tomorrow.
Unknown (15:21):
You.