A similar attempt by Tesla to get permission to sell cars directly to consumers in 2013 failed
Tesla Motors could be able to sell its electric cars directly to consumers in Texas, provided the bill introduced by the Texas Legislature on Thursday is passed. However, it is expected that Tesla will face challenges from the Texas Automobile Dealers Association, which in 2013 fought hard to safeguard franchise dealerships’ interests.
Similar attempt failed in 2013
State Rep. Eddie Rodriguez, D-Austin, and State Sen. Kelly Hancock, R-North Richland Hills, have introduced the bills to allow Tesla to bypass dealers and sell its cars directly to consumers. In 2013, a similar bill was filed Rodriguez, but it was not approved by the committee.
Was Ben Graham's big purchase of GEICO shares actually a value investment? Perhaps it was contrary to what many believe. "In 1948, we made our GEICO investment and from then on, we seemed to be very brilliant people." -- Benjamin Graham, 1976 Both Benjamin Graham and Warren Buffett can attribute a large part of their Read More
Sen. Kelly Hancock told the Texas Tribune, “Free market principles are the foundation of our strong Texas economy,” adding, “SB 639 helps sustain a competitive marketplace and gives consumers more choices.”
The new bills–House Bill 1653 and Senate Bill 639–are based on the deals made by Tesla with other states such as New York, Ohio and Pennsylvania. As per the bill, a manufacturer would be allowed to sell vehicles to consumers through a dealership if the manufacturer or distributor does not have more than twelve dealers or dealerships in the state and the manufacturer’s line or make has never sold through an independent franchised new motor vehicle dealership.
Dealer route not logical for Tesla
For Tesla Motors, the dealership model is unworkable, as it doesn’t mass-produce its cars as of now. It allows customers to place customized orders for cars which are delivered later.
Tesla Motors has long been battling auto dealers in numerous states for approval of its direct sales model. In Texas, franchise dealership laws do not allow cars to be sold directly to consumers but require independent franchise dealerships. Another problem for Tesla could be the fact that Texas has the strongest franchise dealer laws in the country, according to a report from Biz Journals.
Tesla Motors has a gallery in Dallas, but that can only be used to talk about the vehicles, charge the vehicles and explain the features. Employees at the gallery are not allowed to talk about the price or anything related to buying and selling the vehicle. Also they can’t offer test drives. Any customers wishing to inquire about the price and placing an order are referred to Tesla’s website.