Tesla Loses Their “No Dealership” Selling Plans In Texas, 2nd State To Be Defeated In

4 years ago by Jay Cole 17

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

After starting with a near flawless record of getting their “direct sales” model past many legal hurdles in various states across the country (as in Massachusetts,. New York and Minnesota),  Tesla has since run into some roadblocks; most recently with a loss in Virginia, and a North Carolina battle that seems destined to also fail.

Most recently in Texas, Tesla has lost a legal battle against the Texas Automotive Dealer Association (who had a much stronger legal position to defend their sales model from),  to sell their Model S direct in the Lone Star State.

Tesla had sponsored several bills to create a loop-hole in state legislation that would have allowed a smaller, electric car-producing automaker to own and operate their own stores.  However, as Automotive News reported this weekend, none of thosebills made it to the Texas House or Senate for a reading.

Tesla Owners Line Up Their Model S Sedans At The Texas Capitol In Support Of Hearing For HB 3351

Tesla Owners Line Up Their Model S Sedans At The Texas Capitol In Support Of Hearing For HB 3351

The next general session where Tesla could be heard does not come until 2015, meaning that Tesla’s two “boutique” shops, one in Houston and one in Texas, with have to continue to only show the car.  Tesla and its employees are prohibited from selling, or promoting the Model S as for sale in Texas.

Naturally, Karen Phillips, who was the Texas Dealer’s general counsel, was pleased, “The Legislature did the right thing…”

Tesla did not immediately issue a response to Auto News, but CEO Elon Musk had earlier testified in Texas saying:

“For us this is life or death.  If we can’t go direct we will not be able to sell cars.”

The Tesla boss had also teased Texas with a second, larger Tesla assembly facility in the state, that could build an electric truck if the company was permitted to sell direct.

A Federal Battle Would Mean Opposition Direct From NADA...The "Voice of the Dealer"

A Federal Battle Would Mean Opposition Direct From NADA…The “Voice of the Dealer”

With a North Carolina legal result also expected to end in failure, that would also see Tesla lose the ability to sell and solicit over the Internet, Tesla may be forced to take its battle to the national level.

“Obviously, we don’t want to bother Congress at the federal level unless it seems like something that’s a common issue across a large number of states.”

It seems like that battle is an inevitability now.

Automotive News (sub req)

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17 responses to "Tesla Loses Their “No Dealership” Selling Plans In Texas, 2nd State To Be Defeated In"

  1. Fishhawk says:

    According to Tesla’s web site, they have stores in Dallas, Houston, and Austin. The Dallas store doesn;t show up on the map, but is in the list of stores.

  2. Fishhawk says:

    My bad, Dallas only has a service center. The store is in Houston.

  3. David Murray says:

    I just really don’t understand this. Why is it I can walk through the mall and see a setup in the walkway with a Cadillac on display with big signs and full disclosure of MSRP, etc. Sure, there are no “employees” walking around the car, but I don’t see how that is any different.

  4. Brian says:

    “Tesla and its employees are prohibited from selling, or promoting the Model S as for sale in Texas.”

    What do these conversations with “customers” (can I legally call them that?) sound like after all the technical questions are answered?

    “Well, it’s a beautiful car. Where is your closest dealer?”
    “We don’t have dealers”
    “Then how do I buy one?”
    “I’m not at liberty to say”

    1. Nelson says:

      “Then how do I buy one?”
      “Well as ridiculous as this will sound, your elected State Officials have banned Tesla from selling the Model S directly to customer. Call your State Representative and let them know you want to be able to buy a Tesla Model S directly from Tesla in Texas.”

      NPNS!
      Volt#671

      1. Steven says:

        +1

  5. GeorgeS says:

    “With North Carolina, that would also see Tesla lose the ability to sell and solicit over the Internet, ”

    Jay,
    I can’t possibly imagine how they could keep someone in NC from sitting down at a computer and order an S. That would be unconstitutional.

    1. MTN Ranger says:

      NC could possibly take it all the way and deny registration of Teslas at the DMV. It sounds crazy, but our Republican legislature is hell bent on sending the state back decades. It may come to a constitutional lawsuit for interstate trade at that point.

      http://www.forbes.com/sites/toddganos/2013/05/15/north-carolinas-threat-to-tesla-likely-unconstitutional/

  6. Darius says:

    Now in case legislator forbids Tesla selling it’s products it should oblige someone doing that othervise things could get crazy.
    For me that is just funy. Back to USSR.

    1. GeorgeS says:

      Yeh I think it was a McCartney song.

  7. Darius says:

    Precisely. Thank you.

  8. Aaron says:

    This nearly guarantees this will go to a Federal level. I hope Tesla hands the auto dealerships their a$$, allowing car manufacturers to sell cars directly and stop with all the bull$hit you get working with middle-men (dealerships).

  9. evnow says:

    I think the best course of action for Tesla is to sue the states in a federal court. I’m fairly sure the courts will rule in Tesla’s favor and Supremes won’t even take up the appeal.

  10. pjs says:

    When it does go Federal, and is won, the dealers will have much more than Tesla to worry about. Can you imagine Ford setting up a direct buying dealership? Can’t wait!

  11. James says:

    People like car buying about as much as trips to a dentist, so if this makes it to the national stage I believe Tesla can win.

  12. GSP says:

    Ford actually did set up factory owned dealerships in the Midwest several years ago. 1980’s or 90’s I think. They gave up after a short time and sold them.

    GSP

  13. Martin T says:

    Good on Tesla to crack the dealer mold, keep at it don’t give up!

    As for Ford … No surprise there and no sympathy from Australia where they have been stuffing up big time for us – from the US HQ for years and are now in the process of winding up manufacturing in Australia in the next few years – so status same.