How Did Tesla Motors Inc (TSLA) Lose In Texas?

At first glance, those that don’t live in Texas would give the simple answer, “It’s Texas.” And there is something to that. Texas acts different; they want to be different, and they are. Even Austin is very different, albeit, in very different ways than the rest of the state, that has both drive through ammo and liquor stores and has never shied away from executing a prisoner, even if mentally retarded.

How Did Tesla Motors Inc (TSLA) Lose In Texas?

Tesla’s inability to break into Texas

While Texas is different, Tesla Motors Inc (NASDAQ:TSLA)’s inability to break into Texas doesn’t have so much to do with a state proud of its oil history, but rather the work of one man: Gene Fondren.

Fondren, the late legislator, lobbyist and long-time head of the Texas Automobile Dealers Association made it impossible for factory-owned dealerships in the Lone Star State. When Musk failed to win an exception, despite the obvious difference in the business Tesla had hoped to do, he called the (dead) man “one tough dude”.

Referring to the statute that effectively keeps Tesla Motors Inc (NASDAQ:TSLA) out of Texas, Musk somewhat tongue-in-cheek said, “He worded it six ways to Sunday. Like Green Eggs and Ham, you know,” Musk told Automotive News this year. “If you’re a manufacturer, you cannot sell it any which way, no matter what. You can’t sell it in a house, can’t sell it in a mouse, can’t sell it in a grouse. It’s like, OK, wow. You can’t sell it.”

Fondren stepped out from TADA

This Dr. Seuss reference hasn’t lost its teeth despite Mr. Fondren stepping down from Texas Automobile Dealers Association in 2003 at the age of 76. Don’t let his age fool you—he got more steadfast in his beliefs later in life, as exhibited in Tesla’s quest for an exception.

Fondren’s influence extended beyond Texas, according to Don Hall, president of the Virginia Automobile Dealers Association.

“We’d look at what Texas was doing and then we’d tweak it this way or that way,” Hall said. “But it was Fondren who got us the basic language and concept and understanding.”

Expectations for Tesla

While TADA is losing influence, experts don’t expect Tesla Motors Inc (NASDAQ:TSLA) will have a walk in the park when it looks to fight the statutory regulation again in 2015.

According to Paul Burka, who has covered Texas politics for Texas Monthly for more than 30 years, Tesla Motors Inc (NASDAQ:TSLA) will need to spend time and money in Austin. “If they’re going to survive, they’re going to have to play the game.”