Tesla edges closer to right to sell in Texas
Tesla Motors’ Lone Star ambitions won the blessing of the Texas GOP at the party convention in Dallas this month, paving the path towards a possible end to the three years of drama over the electric car manufacturer’s right to sell in Texas.
It’s a dramatic incremental victory for Tesla in Texas, the nation’s second-largest auto market, coming less than a year after the state’s top Republican, Gov. Greg Abbott, told Bloomberg that Texas wasn’t interested in the California car company’s direct sales.
The debate, which surfaced officially in the last two legislative sessions, saw the full fury of Texas car dealers unleashed, and pit principles of conservative economics against each other.
When leaders herald a competitive marketplace with slim state control, what do they do when retailers ask for state control to maintain competition?
Since 2013, Tesla sought an exemption from state regulations that require its luxury automobiles be sold at franchised dealerships.
The Texas Franchise Law outlawed that, so Tesla in Texas ran “galleries,” not stores, where employees could show the cars but not discuss their prices, or even give the web address where customers could order a Tesla from a California factory.
Tesla founder Elon Musk took his qualms to Texas lawmakers in 2013. Advocates for Texas car dealers argued that Tesla’s request amounted to an unfair exemption for a single player.
Indeed, the bill filed by Rep. Eddie Rodrigues, D-Austin, carved out an exception for “a manufacturer of only all electricpowered or all batterypowered motor vehicles” which already operated dealerships elsewhere in the U.S. and never used a franchised retailer. That pretty narrowly singled out Tesla without mentioning the name.
That bill passed committee but never made it to vote. A 2013 report from the watchdog group Texans for Public Justice credited the failure to high dollar contributions from auto dealers to state lawmakers.
When the 2015 session came around, the issue re-emerged and both sides upped their game. Tesla increased its spending on lobbying efforts from about $350,000 in 2013 to $1.5 million in 2015.
Car dealers upped their spending even more, according to a 2015 report by Texans for Public Justice, doling out $6 million in campaign contributions during the 2014 cycle.
The legislation, this time with bipartisan backing, stalled in committee.
The coming 2017 session seems poised to provide a breakthrough for Tesla, now that the company has courted the sentiments of Texas Republicans.