Tesla Motors (NASDAQ: TSLA) is now aggressively campaigning against the auto sale regulations in Texas so that it can sell its popular electric cars to the state residents through direct sales channels. As of now, Tesla faces sales problems in several states due to the auto sales notion and local laws that prohibit direct sales of cars to consumers, as Tesla doesn’t use outside sales channels or franchised dealers for its luxury electric vehicles.
The current rule in Texas and other states only allow the car manufacturers to sell their vehicles through traditional auto dealerships only, which is directly opposite to the current business model of Tesla. Tesla Motors tried to get the permit to for a direct sales channel in Texas during the state’s 2013 legislative session and failed. Now, once again, the company is pushing itself hard to campaign against the current rule so that it can push the issue in January 2015’s legislative session in Texas.
Tesla believes that there is too much allegiance to traditional fuel powered vehicles as well as the old brands that manufactures these vehicles, hence it doesn’t want to sell through dealerships. Recently, Tesla CEO Elon Musk said that the company doesn’t want to completely eliminate the dealer model of selling vehicles, it just wants to have an option of direct sales channels.
Earlier, there were rumors about Tesla’s Gigafactory battery plant to be opened in Texas, but later, the company decided to open the Gigafactory in Nevada. It’s not clear why the company moved from Texas to Nevada, and its connection with this direct sales channel issues.
Robert Brazie, a lobbyist for the Texas Automobile Dealers Association (TADA), said that the new direct automobile sales bills will be filed in Texas before the end of the 2015 legislative Assembly session. As of now, there is a very little support for the bills that promotes direct sales of cars in Texas.
Tesla Motors’ Vice President of Business Development, Diarmuid O’Connell says that the company has to fight hard in this battle of changing the current law, and if Texas is interested in the offer of building some battery and car factories in the state in the future, the company would seek that way to get the things changed according to their needs. He further added that Tesla Motors will not invest in billions in a state where the laws prohibit the company to sell their vehicles through direct sales channels.
In the United States, some states have shown interest in changing the local law that prohibits the companies like Tesla to sell automobile directly or through the Internet. But, the states like Michigan, Maryland, Arizona, New Jersey and Texas have outright banned the direct sales model. Tesla’s Indianapolis showroom sells the vehicles directly to the consumers, while its showrooms in three major cities in Texas (Austin, Dallas and Houston) can’t sell the vehicles due to the local law. People can only visit the showroom, ask questions and get answers, that’s it. If you want to buy a latest Tesla Model S or test drive one in a Texas showroom, you should have to wait for some time, maybe never.