Currently, as per the laws of Texas, a new car is allowed to be sold only through franchised dealerships. The bill, backed by the California billionaire, if passed would allow the electric-vehicle manufacturers to sell cars directly to customers in Texas.
“What we’re asking for from the Texas Legislature is really simple. Let us sell our cars directly to the people of Texas like we’re able to do in most of the country,” Musk said in a news conference today.
Yesterday, Musk visited the House Business and Industry Committee to testify for the bill.
Tesla Motors Inc (NASDAQ:TSLA) follows a strategy of selling directly to potential drivers through the network of its high-tech retail stores, much like the traditional automakers who franchise their brands to independent owners. Tesla has operations in Houston, but the Texas law does not allow a company’s employee to discuss prices, offering test drives or even directing customers to the company’s website.
“It sounds like something out of a Monty Python story,” Musk said.
Tesla Motors Inc (NASDAQ:TSLA) is facing stiff opposition from the dealer franchise associations over its retail sales model throughout the country and the bill is being strongly opposed by the Texas Automobile Dealer’s Association. Even Musk realizes that the opposition faced will be difficult to overcome.
“Everyone warned us and said hey if you are going to do this, you’re going to get your ass kicked,” Musk said. “I guess there’s a good chance we’ll get our ass kicked. But we’ll try.”
Good news for the CEO is the support for the the bill is gaining momentum elsewhere in the U.S. Earlier, the company won a lawsuit in the state senate to ban Tesla stores in Minnesota. In Massachusetts, a judge threw out a lawsuit filed by dealers accusing Tesla Motors Inc (NASDAQ:TSLA) of violating franchise laws similar to those found in Texas.
Texas is an important location from the point of view of sales for Tesla Motors Inc (NASDAQ:TSLA). It is expected that Texas could account for 15 percent to 20 percent of Tesla’s total sales in the US.
Presently, if a Texas citizen wants to buy a Tesla vehicle, they need to contact the company representative in another state to arrange for the purchase along with the shipping of the vehicle.