Tesla Fights For Direct Sales In Texas

Tesla CA Showroom model s

Tesla may be able to open up to 12 stores in Texas, if a group of five Texas state legislators gets its way.

The automaker opened its first Dallas “gallery” last year, but it can’t actually sell cars because the company isn’t allowed to have franchised dealers in the Lone Star State. But two bills, recently filed by State Reps. Eddie Rodriguez, Charles Anderson, Jodie Laubenberg, Tan Parker and Rod Simmons and Sen. Kelly Hancock, would allow Tesla to sell directly to customers. Under current state law, customers can purchase new vehicles only through a franchised dealership. The bills would allow customers to purchase vehicles directly from the manufacturer.

The Texas bills, House Bill 1653/Senate Bill 639, propose that a manufacturer or distributor may be considered a dealer if the manufacturer or distributor does not own or operate more than 12 dealers or dealership locations in Texas and if the manufacturer’s product has never been sold in this state through an independent franchised new-vehicle dealership.

Dealers oppose the bills, said Bill Wolters, president of the Texas Automobile Dealers Association. “They think it’s a very bad idea. It is a bad idea for our state,” he said.

Texas has 1,257 franchised new-vehicle dealerships, and many dealers are contacting members of the Texas House and Senate to voice their concerns, Wolters said.

“When you buy a product from a retail outlet owned by a California corporation, 100 percent of proceeds from the sale go to California. Nothing goes to Texas. There’s no real benefit for our state,” Wolters said. He also says dealers have a greater push to take care of local customers, because they are “a part of the community. They focus on customers, employees and their town because they want to be there for generations,” he said.

Manufacturers, such as Tesla, won’t have competition if the bills pass. There will be no reason to negotiate prices without that competition, and their focus will be to make as much money as possible to satisfy the stockholder, rather than the customer, Wolters said.

The group of legislators disagrees. Sen. Kelly Hancock, who represents the bill, said in a statement: “Free market principles are the foundation of our strong Texas economy. The bill helps sustain a competitive marketplace and gives consumers more choices.”

The bill applies only to manufacturers that have not previously been a part of the dealer or franchise system. Texas legislators filed similar bills in 2013 that would have exempted Tesla from the state’s franchised laws, but the bills didn’t move forward.

Tesla is waging battles in several states as it seeks to expand its retail footprint around the country.

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