Tesla loses to Texas dealers over direct customer sales

01 Jun 2015


Bills in the Texas state legislature that would have allowed Tesla to sell its cars directly to customers will not come up for a vote before the state's legislative session wraps up on 1st June.

This would see the electric vehicle maker left high and dry until the next session kicked off in 2017.

This means customers will not be able to simply buy the car directly from Tesla.

The setback was not surprising given how fiercely dealership lobby groups fought to protect their business model, though, Texas posed a number of additional challenges.

A lot of the state's political clout rested in rural areas, where dealerships were more vital to local communities in terms of jobs and sponsorships of local events.

House Representatives would more readily support local businesses than a California company trying to up-end the dealership model, even if it helped competition and the environment.

Tesla's uniqueness does not rest with making unique cars, it had a unique way of selling them too.

The company handled sales directly, meaning there were no dealerships, and naturally, powerful auto dealers across the US would hardly be supportive of the business model.

According to Bloomberg, Musk had hired as many as 20 lobbyists in Texas, and had made over $150,000 in campaign contributions just in support of the effort.

However, auto dealers wielded a great amount of political power, and the measures failed to even come up to a vote, Bloomberg reported.

What this meant was- the next time the electric car maker would have a chance, it would possibly be two years from now in 2017, when the state legislature held its next regular session.


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