Musk Defends Bills In Texas To Allow Tesla To Operate Without Franchise

Tesla Motors and its supporters in Texas await the outcome of Elon Musk’s having spoken yesterday before a House committee on business and industry defending Tesla’s intent to sell and service its cars outside of the traditional dealership franchise model.

The CEO and co-founder of the electric car maker from Fremont, Calif. spoke at a press conference today at the Texas Capitol in Austin, advocating passage of House Bill 3351/Senate Bill 1659.

Under the current provisions of Texas Occupations Code (TEX OC. CODE ANN. § 2301.476), as previously reported, Tesla is barred from selling or servicing its vehicles direct to the public in Texas.

Tesla has won various victories in courts in other states but Musk’s appearing before a state legislature to see a law changed represented another facet of Tesla’s determined effort to win in this protracted fight against the establishment.

The latest stage in the drama saw Tesla’s chief making points in support of Tesla’s maverick retail stores that are based loosely on how Apple runs its stores.

The dealer association in Texas, and those at the national level and in other states besides, have objected to Tesla’s upsetting the apple cart, as some might see it.

Tesla has said it wishes to cut out the middleman and deal direct, and under a free market as it sees it, this should not be forbidden.

But forbidden, it is, as it is in other states besides, and Musk defended his position of bypassing the need for state licensed dealerships today.

“Our goal is to bring electric vehicles to the mass market by telling our story, educating the public about electric vehicles, and delivering the best car in the world,” said Elon Musk, Tesla Motors co-founder and CEO. “The ability to sell cars through Tesla-owned stores is important for sustainable transportation and is the best chance a new electric car company has of succeeding. Our sales model allows for innovative technology to be more affordable to the broader population in an unconflicted way, without changing the dealer model for gasoline-powered cars.”

Tesla_Store

At stake in the minds of those opposing Tesla are profits and a way of doing business long-since preserved. They are concerned with the precedents being set by the upstart company, and on principle oppose Tesla having any exemption to rules other makers abide by.

Tesla has argued that selling its electric cars is fundamentally different than selling a conventional 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,” said Tesla Motors today in a statement. “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.”

Tesla further contended it’s impossible to explain advantages of selling EVs without undermining their main bread and butter business.

“Simple math shows no traditional dealer is incented to sell an electric vehicle with the same enthusiasm as the rest of their inventory,” Tesla’s statement says.

In going at the multifaceted problem with this focused line of attack, Musk and company have hopes that their contentions will be considered and approved by lawmakers in Texas.

House Bill 3351/Senate Bill 1659 – the bills in question – filed by Sen. Craig Estes (R-Wichita Falls) and Rep. Eddie Rodriguez (D-Austin) are intended to as benignly as possible open the way for Tesla to sell and service its cars as it sees fit.

It would allow U.S.-based manufacturers – not imports – of 100-perecent electric vehicles to sell directly to consumers in Texas.

“It’s a very limited classification of exception to current laws and does not harm any existing dealer franchise,” says Tesla.

For further info, Tesla lays out its case on its Web site on this page and explains its distribution and service approach on this page.