Tesla Motors Inc Fails To Get Direct Sales Bill Passed In Texas

Tesla Motors Inc Fails To Get Direct Sales Bill Passed In Texas
<a href="https://pixabay.com/users/Blomst/">Blomst</a> / Pixabay

Tesla lost a fight in Texas after the state legislature failed to vote on two bills that would have given a green light to its direct sales model, says a report from Bloomberg. The Elon Musk-led company known best for its innovative Model S is fighting a tough battle across the U.S. to get its direct sales model accepted.

Auto dealers hold more power

Both bills in the state legislature were framed to override an older dealer-backed law that blocked manufacturers from implementing direct sales of cars. States such as West Virginia, Arizona, Connecticut and Michigan are also running by the same law. In New Jersey, however, Musk got it revoked and wants to achieve a similar status in Texas as well.

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Bloomberg reported that Musk hired as many as 20 lobbyists in Texas and spent over $150,000 in campaign contributions in support of the effort. However, auto dealers have enormous political support, which is why the bill was not passed. Now the bill will only be considered again in two years when the legislature holds its next session.

Red McCombs, the 87-year-old billionaire founder of his namesake auto dealership in San Antonio, said, “It’s kind of a joke to think that somebody’s going to come in here and ride in on a horse that doesn’t use gasoline and change the world.” McCombs added that they will have to adhere with the rules, and this is how competition works.

Tesla to reconsider investing in Texas?

Last year, Tesla’s CEO said he is keen at making an investment in Texas. Just two years ago, Musk planned the idea of manufacturing an electric pickup there.

Diarmuid O’Connell, vice president of business development for Tesla, said that when the company manufactures a pickup, it will have to do it in Texas. However, Tesla will also consider why it would make an investment in a state where it is not possible for it to do business. O’Connell said that next time, the Palo Alto-based company will have to do a better job in gathering the support for its sales model.

Texas stands second to California with auto dealers selling $81.4 billion worth of automobiles, according to statistics from the Virginia-based National Automobile Dealers Association. In Texas, Tesla sold around 2,500 Model S vehicles of the 70,000 sold worldwide.

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