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Tesla Loses Fight With Dealers to Sell in Texas


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Lone Star State lawmakers have reined in Tesla's hopes of selling to Texans. Two bills allowing the Palo Alto-based electric carmaker to open Tesla Store's have died in the state legislature, in the face of dealership opposition.

 

Tesla's direct-sales approach has raised the ire of dealership associations nationwide, who worry this jeopardizes their decades-old sales model based on franchise laws.

 

Similar laws are on the books in states such as Michigan, Arizona, West Virginia, and until recently, New Jersey. Tesla founder and CEO Elon Musk reportedly hired up to 20 lobbyists in Texas and made $150,000 in campaign contributions.

 

Despite support from former governor Rick Perry, the bills were unable to overcome Texas' powerful dealership lobby, whose support of franchise laws in a state priding itself as a bastion of free-maket economics and limited red tape was deemed "very un-Texan" by Musk in a 2014 interview.

 

The Texas Auto Dealers Association has spent over $278,000 lobbying against Tesla, with some individual dealership owners and groups contributing hundreds of thousands more.

 

Texas is home to the country's second largest high-tech workforce and is the U.S.' largest technology manufacturing exporter. Tesla's absence among the likes of industry pioneers such as Dell and Texas Instruments is notable. The state competed for the brand's 'Gigafactory' but lost to Nevada.

 

The state's legislature holds bi-yearly sessions, meaning Tesla will need to wait until 2017 for similar bills to be introduced, just in time for the Model 3's debut.

 

Source: The Verge

 

View attachment: Model_S_Press_WEB.jpg


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This stuff just continues to confound me.  Tesla operating direct-to-consumer isn't going to be the death of dealerships.  People still need factory mechanics for warranty work, someplace that will take their trade, help in navigating the details of financing and legal paperwork, etc., and that is what those dealerships provide.  You aren't going to suddenly see GM start selling direct to consumer like this because they would face huge losses in lawsuits from their former dealer networks on top of the massive cost to replicate their already existing network so that they can maintain their sales volume.  It would be a nightmare undertaking for the existing manufacturers to try and emulate Tesla.  In the end what Tesla wants to do hurts nobody, but the fight against them definitely is damaging their images a bit in the minds of a lot of people.  Already most people had a negative view of dealerships as greedy and untrustworthy, and this just reinforces that belief, it's really counterproductive.  On top of that, people who maybe weren't considering a Tesla before will now be intrigued by the "forbidden fruit" aspect of it.

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