Tesla Motors Inc Asks Texas To Relax Auto Sales Rule

Tesla Motors Inc Asks Texas To Relax Auto Sales Rule
Blomst / Pixabay

Tesla Motors Inc (NASDAQ:TSLA) is not happy with automobile regulations in Texas and wants to sell its electric cars directly to consumers instead of channeling through dealerships. Even though Tesla did not choose Texas for its gigafactory, the automaker hopes using future investment projects as an incentive could help it sell cars in the state.

Tesla offers future investments as incentive

During the 2013 legislative session, the proposal to give the green light to Tesla’s car sales in Texas was postponed, but the company seems determined to ramp up its efforts and urge lawmakers to open up for its direct sales model.

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Diarmuid O’Connell, Tesla Motors’ vice president for business development, said, “We are looking for a narrow and reasonable window to be able to promote this new technology ourselves.”

O’Connell added that Tesla does not aim to scrap the franchise dealer system. He also acknowledges that changing the law won’t be easy, and the fact that Tesla did not choose Texas as the site for its gigafactory did complicate things. However, O’Connell said that in the coming years, Tesla will need many more big battery factories and new vehicle factories as well.

Will the strategy work?

In March, former Gov. Rick Perry said state laws are “antiquated” and now is the right time for Texas to openly discuss automobile laws. Perry acknowledged that Texas was in the fight to get the gigafactory, however, Tesla decided to set up the factory in Nevada. Perry has a reputation for luring job creators to Texas, and during his tenure in the state, he even drove the Model S around Sacramento.

Robert Brazie, a Texas Automobile Dealers Association lobbyist, expects the bill in favor of direct car sales to be filed before the end of the 2015 legislative session, but he is expecting hardly any support for the bill. Brazie believes the offer of future Tesla investments will not help much as “when they had a chance to come to Texas, they didn’t.”

According to Brazie, sales will surge to more than 1.5 million new cars this year, totaling to approximately 10% of total sales across the nation. California is the only market in America that is larger than Texas. At present, the Palo Alto-based company is running galleries in Dallas, Austin and Houston but is restricted to sell cars directly or even offer test drives or pricing information.

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