How Dealerships Forced Tesla Motors’ Business Model Out Of Texas
Want to buy a Model S from the dealer? If you're in Texas, you're out of luck. Here's why.
Tesla Motors is the car company behind the electric Model S, of which we are fans. But along with cars, the company is also trying to innovative on the business-side, skirting the traditional third-party dealerships that act as middlemen between car companies and consumers. Instead of buying a Model S from a dealership, you can get it directly from Tesla. Unless you’re in Texas, that is. If you’re in Texas, you’re hosed.
Texas residents can still get a car from Tesla–they’ll just have to order it from out of state, and in the meantime deal with hog-tied Tesla showrooms that will show cars but can’t even give potential owners a test drive. Why’s that? In short, because dealerships have a lot of cash and a vested interest in the status quo, according to a new report from non-profit group Texans For Public Justice. Acting as the go-between for companies and consumers is how dealerships make their money, and if legislators repeal or loosen laws, the dealerships cede some ground. Tesla is the only car manufacturer using this business model. Plus, compared to other electric cars, and even compared to dinosaur-fossil guzzlers in its class, the Model S is selling well, making it all the more of a threat.
Elon Musk, Tesla Motors founder and seemingly very busy billionaire, had enough sway with legislators in Austin to push other bills through, including two that would allow another of his companies, SpaceX, a place to put a rocket-launch site. But a relatively innocuous bill that would allow Tesla to sell its cars directly from the company was killed. As the report notes, “Employees in Tesla car galleries in Austin and Houston are legally prohibited from offering visitors a test drive, quoting them a price or even directing them to Tesla’s website.” (Emphasis on that completely bonkers last clause mine.)
This battle is being waged in other states, too, like New York and North Carolina, but Texas has some of the most dealership-friendly laws in the country, and in 2012, dealership lobbyists spent more than $2.5 million in Texas elections, and another $750,000 on lobbying. Musk, meanwhile, spent $7,500 on campaign contributions (which were more likely for the SpaceX legislation), then another estimated $255,000 to $565,000 on lobbyists. As the report notes, 60 percent of current lawmakers are getting checks cut by dealership interests. If you’re a lawmaker not so concerned with consumer interests, you can do the math.
You can read the full PDF report here.