Print 46 comment(s) - last by Morlarl.. on Apr 15 at 7:41 PM

Gov. Rick Perry  (Source: Bloomberg)
He said the pros of allowing this would outweigh the cons

Not long ago, Texas told Tesla Motors to take a hike when the automaker wanted to sell its electric vehicles (EV) directly to customers without the use of auto dealers. But it seems that the Lone Star state is changing its tune now that Tesla's giant Gigafactory is on the line. 
According to Dallas News, Gov. Rick Perry (R-TX) indicated that Texas needs to take a second look at its state rules -- which he referred to as "antiquated" -- that prevent Tesla from selling its EVs directly to customers. 
"Tesla’s a big project,” said Perry. “The cachet of being able to say we put that manufacturing facility in your state is hard to pass up.
“I think it’s time for Texans to have an open conversation about this, the pros and the cons. I’m gonna think the pros of allowing this to happen outweigh the cons.”
Perry wants Tesla's Gigafactory, which the automaker plans to build in a Southwest state in the U.S. The factory aims to supply batteries for up to 500,000 EVs by the year 2020. The gigafactory would cost $5 billion USD, span as much as 1,000 acres, and employ about 6,500 people. It would also largely be powered by renewable energy. 
Four states -- Texas, Arizona, New Mexico and Nevada -- are pushing to become the site for the Gigafactory. Whichever state Tesla chooses will see great economic benefits from the large-scale plant; hence Texas' new view on direct sales.
The state realizes that Tesla likely won't choose it if Texas doesn’t allow the automaker to sell its vehicles without the help of auto dealers. 
It's possible that Tesla CEO Elon Musk is using the Gigafactory as leverage to get the direct sales laws changed in certain U.S. states, and it looks to be working as Arizona recently passed a bill to allow Tesla to do just that.
Texas Rep. Jason Villalba (R, Dallas) recently wrote Musk a letter in an attempt to patch things up with the automaker. He said he's a proponent of the Tesla-backed House Bill 3351, and that Texas is the perfect state for the Gigafactory due to its warm climate (for the solar-ran factory) and large labor pool to fill factory positions.  
Earlier this month, New Jersey Gov. Chris Christie’s administration proposed a new rule that requires a person to have a franchise agreement with an auto manufacturer in order to be granted a license to sell. Tesla already had two stores in the state at the time. 
Shortly after, the New Jersey Motor Vehicle Commission voted in favor of the ban of direct auto sales. This means that the two stores must be turned into showrooms and nothing more after April 1, 2014. 
New Jersey is now the third state to ban Tesla's direct sales model. 

Source: Dallas News

Comments     Threshold

This article is over a month old, voting and posting comments is disabled

Arizona's law was not because of Tesla
By Adul on 3/24/2014 7:46:56 PM , Rating: 2
The law in Arizona against direct sales has been on the books since 2000. There was no booting of Tesla. I am hopping to see the law repealed though, would be nice to test drive one. ;)

RE: Arizona's law was not because of Tesla
By m51 on 3/24/2014 11:20:05 PM , Rating: 2
You'll love it, it's an absolute blast to drive. Awesome car. A friend who is an inveterate performance car nut got one a year ago and has declared it his dream car. He drives it hard and just loves the thing. After driving it a few times myself I'm also very impressed. I'd get one if it was a tad less expensive.

By wordsworm on 3/25/2014 2:03:37 AM , Rating: 2
It is the most exciting car company I've ever seen. I will be thrilled when this thing gets partnered up with Google for a fully autonomous electric car for less than 30k...

RE: Arizona's law was not because of Tesla
By Reclaimer77 on 3/25/2014 9:12:44 PM , Rating: 2
You'll love it, it's an absolute blast to drive.

Pretty much anything for that price is. Just saying.

RE: Arizona's law was not because of Tesla
By Mint on 3/26/2014 2:50:28 PM , Rating: 2
No car that is similarly roomy or pricey has the throttle response and near-zero body roll of the Model S.

Just try to find sub-$100k competitors that do 45-65 mph in 1.7s. MotorTrend puts every car it can through that test.

Cars with AWD and/or launch control can best it from standstill, and a Panamera is the handling benchmark on twisty roads (under $100k it isn't as quick), but otherwise the Model S is unparalleled off the track.

RE: Arizona's law was not because of Tesla
By JohnThacker on 3/25/2014 12:20:29 PM , Rating: 2
Yes, that's true of most states. Most states have various "dealer franchise protection laws," that are supposed to help dealers (who tend to be local businessmen) from being abused by out of state car makers. Of course it ends up being protectionism. But many of those regulatory laws don't really envision a direct sales model, simply assuming that everything will be with franchise dealers, and that they need to regulate the relationship.

(NB: The Petroleum Marketing Practices Act is a similar federal law that prevents gas companies from closing gas stations or failing to renew franchise agreements in most cases.)

In most states, Tesla's franchising model was arguable illegal, though like many new economy experiments, whether ridesharing like Uber, Lyft, and Sidecar, or things like Aereo, Tesla could also argue that it was legal, especially depending on the exact wording of states. In some states there have been lawsuits, in other states rulings by appointed regulatory bodies. Generally the incumbent car dealers have a good relationship with their regulatory bodies (aka regulatory capture.) So in many states, but not all, they've gotten existing law interpreted as they desired.

In other states there have been efforts to clarify existing law, generally with NADA (North American Dealers Association) pushing anti-direct sales.

Other manufacturers, not just Tesla, have been interested in direct sales before, and NADA has always been against it. What makes Tesla different is that they have no dealers at all.

By 1prophet on 3/26/2014 8:44:54 AM , Rating: 2
Other manufacturers, not just Tesla, have been interested in direct sales before, and NADA has always been against it. What makes Tesla different is that they have no dealers at all.

Others have tried, all have failed, the last thing the big manufacturers want is owning dealerships with all the liabilities and expenses that go along with them,

the present model insulates them from most of that while allowing them to have almost total control.

By Jeffk464 on 3/25/2014 5:42:48 PM , Rating: 2
If you really want one and can afford it, just go buy it in another state.

“So far we have not seen a single Android device that does not infringe on our patents." -- Microsoft General Counsel Brad Smith

Most Popular Articles5 Cases for iPhone 7 and 7 iPhone Plus
September 18, 2016, 10:08 AM
Laptop or Tablet - Which Do You Prefer?
September 20, 2016, 6:32 AM
Update: Samsung Exchange Program Now in Progress
September 20, 2016, 5:30 AM
Smartphone Screen Protectors – What To Look For
September 21, 2016, 9:33 AM
Walmart may get "Robot Shopping Carts?"
September 17, 2016, 6:01 AM

Copyright 2016 DailyTech LLC. - RSS Feed | Advertise | About Us | Ethics | FAQ | Terms, Conditions & Privacy Information | Kristopher Kubicki