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Published on June 11th, 2013 | by Zachary Shahan

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Tesla Sales Model Rejected In Texas Despite Citizen Support

June 11th, 2013 by  


Covering the Tesla–Texas Auto Dealership saga for awhile, I was hopeful it was going to all turn out for the best. Apparently, that wasn’t the case.

As we noted back in April, 80% of polled Texans thought that Tesla should be allowed to directly sell its vehicles to consumers.

Image Credit: Poll via Austin Business Journal

Image Credit: Poll via Austin Business Journal

Even a former Texas car dealer, Sterling McCall, wrote an op-ed in the Houston Chronicle on why he thought Tesla should be able to. As part of that, Sterling wrote:

As a 40-year franchise automobile dealer in Texas, I think it’s time we updated our laws to better embrace competition and reflect the realities of today’s marketplace.

That’s why I support legislation now being considered at the state Capitol that would allow U.S.-based manufacturers of 100 percent electric vehicles who have never been granted a franchise dealership to sell directly to Texas consumers.

It’s a change that’s needed because manufacturers like Tesla don’t fit the traditional model for a volume retail dealership, not having or needing the full and extensive range of service, parts, new and used vehicle departments.



Sterling also noted the overwhelming support for updating the model:

“It’s something the public wants. Ninety-nine percent of respondents to a Los Angeles Times online poll said that Tesla ought to be allowed to conduct direct sales of its cars. Right here in Texas, 87 percent of respondents in an Austin Business Journal online poll agree, too.”

In a similar manner to the above extended quote, Tesla itself wrote:

The Tesla sales and service model is based on direct customer relationships, without an intermediary licensed dealership. This is fundamentally different from the traditional dealership model just as an electric vehicle is fundamentally different from a gas powered car. Electric vehicles simply cannot be sold side by side with gas vehicles because they will always be a minority item in terms of sales and service volume. Existing franchise dealers have an inherent conflict of interest between selling gasoline cars, which constitute the vast majority of their business, and selling the new technology of electric cars. It is impossible for them to explain the advantages of going electric without simultaneously undermining their traditional business. Simple math shows no traditional dealer is incented to sell an electric vehicle with the same enthusiasm as the rest of their inventory.

Unfortunately, approval for the new model all had to go through the Texas legislature, which was heavily lobbied by the Texas Automobile Dealers Association to reject the proposal.

Michael Graham Richard of TreeHugger aptly notes: “That’s very sad, especially in a state that pretends to be more about free enterprise than most. Either a dealership structure adds value to the process of selling cars, in which case a company like Tesla will be disadvantaged without it and the dealerships don’t need special protection. Or they don’t add value to the process, in which case they don’t deserve special treatment…”

And, the nail in the coffin (unless Tesla makes this a national effort), is that the bill “failed to make it to the floor of the Texas House or Senate for voting before the regular session came to a close on May 27,” which won’t open again until 2015.

In other words, thanks to the Texas legislature, it’s much harder for a Texan to buy a Tesla vehicle than it could be. Why? Apparently because a number of businessmen and politicians are scared of have a more free market system in the state. Ironic. 
 
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About the Author

is tryin' to help society help itself one word at a time. He spends most of his time here on CleanTechnica as its director and chief editor. He's also the CEO of Important Media. Zach is recognized globally as an electric vehicle, solar energy, and energy storage expert. He has presented about cleantech at conferences in India, the UAE, Ukraine, Poland, Germany, the Netherlands, the USA, Canada, and Curaçao. Zach has long-term investments in Tesla [TSLA] — after years of covering solar and EVs, he simply has a lot of faith in this company and feels like it is a good cleantech company to invest in. But he offers no investment advice and does not recommend investing in Tesla or any other company.



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