Tesla century city

In its second attempt in two years, Tesla failed to persuade Texan lawmakers to grant it permission to directly sell its $100,000 electric cars there. Unlike other US car manufacturers, Tesla sells cars directly to its customers and not through car dealers. The CEO of Tesla, Elon Musk, had hired 20 lobbyists and invested $150,000 to support the bid to overturn existing auto sales laws in Texas.

Texas has a law in place that protects the interest of dealers and bans car manufacturing firms from direct sales. Similar legislation exists in some more states such as Arizona, West Virginia, Connecticut and more. Musk had met with success in reversing a similar law in New Jersey. He was hoping to emulate the same feat in Texas.

The two bills would have let Tesla bypass the auto dealers in the state and sell its automobiles directly to consumers. Both bills could not make it to the Texan House of Representatives or Senate for a vote. On June 1, 2015 the legislature session ends. So Tesla will have to wait for two more years for voting to take place. Hence, the firm will not be able to sell cars directly to the customers in Texas till 2017.

As per Engadget, the dealership is crucial because it produces employment as well as sponsorship. However, the elimination of the dealership model is likely to trigger severe economic changes. Hence, the rejection was not a surprise. In most US states the auto dealership lobby is very strong.

As per statistics from the Virginia based National Automobile Dealers Association, auto dealers in Texas gross $81.4 billion in terms of automobile sales surpassed only by California. Tesla has 70,000 Model S vehicles on the roads globally of which over 2,500 are in Texas. If Tesla was exempted from the above mentioned law it would have access to a potentially very lucrative car market.

Sources: Theverge, Bloomberg, Autonews

1 COMMENT

  1. Why can’t the state just let the market decide? Oh yeah, that would be because the corrupt politicians are beholden to the money given to them by the auto dealers. Disgraceful.

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