Failed “Ford Retail Network” 15 Years Ago Stopped Tesla Today From Selling Direct In Texas

4 years ago by Jay Cole 38

No Love For Tesla (Or At Least Their Direct Sales Model) In Texas

No Love For Tesla (Or At Least Their Direct Sales Model) In Texas

Tesla and the Texas Automotive Dealer Association recently had a protracted battle over whether not the California maker of the Model S could sell direct in the Lone Star State.

This Man - Gene Fondren (1927-2010), Is The Reason Why You Can't Buy A Tesla Model S In Texas

This Man – Gene Fondren (1927-2010), Is The Reason Why You Can’t Buy A Tesla Model S In Texas

And while Tesla won the right to sell direct in many states…Tesla lost in Texas.  And the failed Ford Retail Network from the late 90s is the reason why.

Selling direct is not a new concept, and it is certainly one the major automakers would like to re-visit, especially considering the proliferation of the internet.

Even back in 1998, Ford tried to bring its own lineup of factory owned stores to Texas.  However, the then head of the Texas Dealer Association Gene Fondren  (now deceased), who was also a noted legislator and lobbyist was right there to fight them.

In a report filed by Amy Wilson of the Automotive News, apparently Fondren did such a good job re-writing the legislative code that he stopped Tesla 15 years later.  In speaking with the publication, Elon Musk called Mr. Fondren “a tough dude.”

“He worded it six ways to Sunday. Like Green Eggs and Ham, you know. If you’re a manufacturer, you cannot sell it any  which way, no matter what. You can’t sell it in a house, can’t sell it in a  mouse, can’t sell it in a grouse. It’s like, OK, wow. You can’t sell it.”

The Ford Retail Network continued to exist in some form or other until April of 2002 when the company sold off the last nine stores in the greater Oklahoma City area to 10 existing dealers…including a couple of the largest dealers in Texas.   But the air-tight legislative language to stop them, and future would-be direct sellers remains today.

Whose A Happy Guy?  Texas Dealer Association President Bill Wolters Is A Happy Guy!

Who’s A Happy Guy? Texas Dealer Association President Bill Wolters Is A Happy Guy! (pic via ABCNews)

Shortly after the FRN closed shop Mr. Fondren also stepped down as head of the association, but left behind his hand-picked team of lawyers who drafted the state rules to thwart direct selling in the state to fight on.

“We get a lot of calls from other (association’s) people saying, ‘Send me  the language for this part of your statute,” said Bill Wolters, who succeeded Fondren as president in 2004.

The Virginia Dealers Association was one of those who patterned their language on direct OEM selling practises after Texas defeated a challenge from Ford to change Texas state franchise laws.  Tesla’s other most recent setback unsurprisingly came in Virginia.

Texas dealer association President Wolters credits two people specifically for what the group has been able to accomplish in framing the Texas’ franchise statue  – Tom Blanton, who is COO of legislative affairs, and Karen Phillips, who is executive VP and general counsel.  The two combine for over 60 years with the association.

“They did a tremendous amount of work in the background, and then Gene would go  get the bill passed,” said Wolters in praising of the two.

Tesla probably thinks of them, and the late Mr. Fondren another way.

Automotive News (sub)

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38 responses to "Failed “Ford Retail Network” 15 Years Ago Stopped Tesla Today From Selling Direct In Texas"

  1. GeorgeS says:

    Interesting Jay. I didn’t know Ford once had a factory dealership network.

    1. Jay Cole says:

      Yeah…didn’t work out so well, (=

  2. Bennyd says:

    When the Tesla charging stations are complete, Texas will only be a pit stop in history. Good thing the Texas bill didn’t conceive of charging stations.

  3. Loboc says:

    So, how are the people driving Teslas with Texas tags getting it done? I’ve seen at least 4 different ones. And one Fisker.

    1. Jay Cole says:

      Like this:

      “One Of The First Tesla Model S Sedans Is Delivered In Texas By A Third Party Outfit. Of Note: Tesla Is Not Allowed To Deliver These Cars Themselves On Any Vehicle With Company Markings, Nor Are They Permitted To Unwrap Or Touch The Car While In The Act Of Selling Or Delivering The Vehicle”

      Currently, Tesla has boutiques in both Houston and Austin. However, the company is legally prohibited from discussing the price, servicing or acquistion on the Model S.

    2. Foo says:

      Buying out of state? I don’t think there’s any law that says you can’t register a perfectly legal vehicle in the state of Texas. You just can’t sell one if you’re the manufacturer. Makes perfect sense.

      1. Aaron says:

        What’s even better is that you have to take an emissions test in Texas, even if your car is fully electric.

        1. Bob A says:

          Where do the put the exhaust pipe emissions port probe?

          1. Just_chris says:

            I have a few suggestions, none appropriate

          2. scott moore says:

            I know where we would all like them to put it…..

    3. Dr. Kenneth Noisewater says:

      In another year or so, Tesla buyers should be able to drive home from the nearest sales state or take personal delivery at the factory, via Superchargers.

  4. Nelson says:

    Demand for the future Tesla $35K vehicle with 200+ mile range will change the laws in Texas when Automobile Sales TAX revenue starts to dwindle. They will beg Tesla to sell direct in TEXAS. At that point maybe Elon could charge the State a yearly fee for every store and maintenance shop they open in TEXAS.

    NPNS!
    Volt#671

    1. ItsNotAboutTheMoney says:

      Unless people are paying the sales tax on the oos sale, they’d be paying sales tax on the car anyway as a “use tax”.

      1. Mark says:

        Not every state has a use tax. Some states you just pay sales tax once, then your annual registration fee which is typically under $100 in the non sales tax states I’ve lived in.

    2. Josh says:

      Texas is getting the sales tax revenue when you register the vehicle, but you have to do it yourself. In other states, Tesla will handle this for you.

      It is still better than paying the higher California sales tax on the car.

  5. io says:

    Interesting stuff, but man, I’m left breathless after so many punctuation-challenged sentences… or maybe this:
    “[he] was right their”
    “Mr. Fondren also down”

    1. Jay Cole says:

      Hey you try to write and coordinate 16 plug-in stories in one day and attend the Frankfurt autoshow and see how you do!

      /just kidding…fixed

      1. Eric Loveday says:

        I’m breathless now too…Boy what a day it was…Auto show = exhaustion…Unfortunately, there’s one more day left…ugh

      2. ClarksonCote says:

        “Who’s running this dive?” Laughed out loud when you said that previously, Jay! 😉

    2. Josh says:

      @io

      You are on here enough, you should know it is editing by committee here. 😉

  6. Koz says:

    Ford direct is apples to Tesla’s direct oranges. Tesla has no existing dealer obligations to undermine. Seem like a clear restraint of trade that is detrimental for Texans. This anti free market stance is against Texas coulture and should not last too long while challenged.

  7. Steven says:

    Didn’t Saturn try that ad well? I seem to remember a tv commercial saying you could basically order one over the phone, and they’d deliver it to your location.

  8. MDEV says:

    Texas and Virginia are primitive social states, only rifles can talk in Texas. I am in Virginia and I can say we are third word countries comparable with states than brace progress and technology. Just take a look of the Governors of Texas and Virginia a perfect reflection of the 1800’s people. Buy the cars in a progressive state I did that, we Virginians can buy Teslas in DC and Maryland.

  9. Zero Retail Centers in TX, but 3 Tesla Service Centers in Texas. Can’t sell, but can buy! If Tesla made normal vehicles this might be a problem, however…

    So no customer is going to worry about lack of service, nor lack of SuperCharged highways. PS: Texas has lots of highways and wind turbines.

    1. Josh says:

      There are two Tesla “Galleries” in Texas (Houston and Austin). The “Gallery” is the term Tesla likes to use for their Store that have been neutered the ability to actually make sales.

      They just inform people intending to buy jeans, purses and iGadgets of what an electric car is all about. Tesla’s hope is that shoppers will pay attention longer than they do for the 30 second TV spot and they will think about Tesla before their next auto purchase.

    2. ItsNotAboutTheMoney says:

      Tesla’s model breaks up the normal dealership bundle into separate parts and modifies it:
      – Inquiry: online or at a no-pressure information center (store) in a shopping mall.
      – Purchase: online or by phone
      – Delivery: at a service center, or at home if there’s no nearby service center; at the factory if you’re willing to pay CA sales tax.
      – Service: at a service center, or at home as a paid option.

      By separating the parts of the process, Tesla can lower costs the board.

      In Texas, there is some inconvenience because they can’t control the Purchase and Delivery steps as they’d like, but I’m sure potential buyers know where to go and they’re still going to get the car. Scaling it up, you’d end up with a Texas delivery company doing some good business. Still won’t need dealerships.

  10. Roy_H says:

    Hang in there Tesla. Don’t give in to this legal affront to freedom of selling and buying choice.
    Take as long as required. Several years from now citizens in Virginia and Texas will get mighty pissed at their elected representatives representing the Auto Dealers Association instead of them. They will get voted out of office. It will take time, but eventually it will be an election issue.

    1. Doc R says:

      I’m a conservative Tea-Party Republican, and this is just mind-boggling anti-consumerism, anti-capitalist and “ol-boy” protectionism/cronyism.

      Someday the fat-cat lawyers will lose this law when some smarter and wiser heads prevail.

      Otherwise, just register to buy your new car at teslamotors.com. Done bunny!

  11. Martin T says:

    Interestingly Australia is similar to those wacky US states banning direct selling.

    Australian dealers have got together a fighting fund (Every new car sold the dealer must donate $10.00 to the association).

    With this fighting fund they are lobbying Australian politicians on both sides to keep the ancient dealer system alive.

    Doesn’t it just suck, for every new car sold the consumer is supporting the status quo to keep prices high and the old school buddy rip off system intact.

    Australian consumers and some US states are simply “Suckers” when it comes to this.

    Bring on completion / democracy and freedom to the selling and serving of new cars.

    We should wish Tesla all the best to “Stick it up them” for the benefit for all consumers.

    Definitely there has to be choice, for those who need a building – to those that are confident with on line shopping, servicing that come to you or a high tech local service centre for the major service etc. required.

    There has to be a better way for all – other than spending multimillion dollars on flashy show rooms that one visits extremely rarely.

    In Japan the Japanese have interesting selling and servicing practices that blows away the traditional museum automotive client procedures in the West. If your going to pay, you might as we feel “special” yes ?

  12. Robert says:

    If Gen 3 takes off, Dealers will be hurt anyway, since Tesla will be taking a share of their market. All Elon has to do is stick it out.

    More out-of-state direct sales = less turnover for dealer = less jobs = dealers have to suck up changing employment conditions and retrain / do something else.

    Sorry Mr. Dealer but if you can’t win fair, don’t fix the fight, train harder.

  13. Dude says:

    There was a time the US was a capitalist country. Ironic that it falls first in a totally republican controlled state.

    1. David Stone says:

      No country has ever been capitalist.
      But the US is alot less capitalist than it used to be.

      Same with justice.

      This was never a ‘direct vs. indirect selling’ issue.
      It was a ‘protecting existing dealers from UNFAIR competition from their suppliers’ issue.

      The law was openly and blatantly twisted and got passed anyway.

  14. Foo says:

    Everything is bigger in Texas, even the hypocrisy.

  15. Priusmaniac says:

    How can this homo legislatus think be thwarted?
    Can Tesla create a company called Tesla Texas that would be a reseller of used Tesla vehicles (with one mile on the odometer!)?
    Can we create a Mars embassy in Texas that would be extraterritorial ground on which it would be able to sell Tesla’s because US laws would not apply?
    Can Tesla sell from Thackerville Oklahoma and Vinton Louisiana?
    Can Tesla sell 1000 car parts being billed separately and thus not being a true car sale but that happen “by chance” to be delivered in the same “box”?

    1. ItsNotAboutTheMoney says:

      “How can this homo legislatus think be thwarted?”

      Time and delivering on Gen 3. Remember how the tobacco lobby used to be powerful? The combination of people being impacted directly and the inherent unpopularity of the lobby can break the stranglehold. The issue has to matter enough to affect critical votes. Once the issue affect critical votes the power of the lobbyists is weakened because politicians can’t take the position the money requests.

      PS Tesla’s stance also has the advantage of making them potentially useful to other car manufacturers who’d like to go direct. Kill Tesla and you kill the possibility of direct selling.

  16. Mark H says:

    Good things in life takes a long time (Chicago)
    Hang in there Texas

  17. Doc R says:

    I may not be in the market for a Tesla, but I’ll be damned if these protectionistic fat-cat dealers with politicians in their pocket will win this one. Start calling the governor’s office for change!

    I posted this respectfully to the Governor’s Facebook page https://www.facebook.com/TexasGovernor

    “But, why can’t Tesla open sales rooms and sell their cars in your state??? This is anti-consumerism and anti-Republican free-market policies put forth by fat-cat lawyers with politicians in their pocket! Let’s make this right, Governor! 🙂 “