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Summary:

Tesla is battling Texas over selling its electric cars directly to customers. CEO Elon Musk spoke at the Texas Capital Wednesday morning calling for support of a new bill.

Tesla Model S

Tesla’s CEO Elon Musk called for support of a Texas bill that would make it legal for Tesla to sell its electric cars directly to the public from its own stores, speaking in Austin at the Texas Capitol on Wednesday morning. Texas (like some other states) has franchise laws that forbid automakers from operating their own dealerships.

Tesla wrote in a statement:

Electric vehicles simply cannot be sold side by side with gas vehicles because they will always be a minority item in terms of sales and service volume. Existing franchise dealers have an inherent conflict of interest between selling gasoline cars, which constitute the vast majority of their business, and selling the new technology of electric cars.

Tesla’s resistance to the Texas Automobile Dealers Association reminds me of some of the newer transportation companies like Uber, Relay Rides, SideCar and Lyft are facing policy and legal opposition in some cities and states. Per usual, technology and business innovation is moving faster than policy can keep up with it.

Tesla Model S

Tesla already has two “stores” in Texas where they can show off the cars, but can’t talk about pricing and can’t actually sell anything directly to customers. And in true Tesla and Elon Musk competitive style, the new bill is pretty narrowly specific for a company like Tesla. House Bill 3351/Senate Bill 1659, which was filed by Senator Craig Estes (R-Wichita Falls) and Representative Eddie Rodriguez (D-Austin), permits U.S.-based companies that make 100 percent electric cars (so no hybrids) to sell directly to customers. Tesla says it’s narrow so it affects the dealers as little as possible.

Tesla has been innovating around its stores since it launched the first one years ago. The company hired George Blankenship to lead the store experience, and Blankenship previously helped design Apple’s store experience. Here’s my interview with Blankenship at our RoadMap event November 2012 (RoadMap 2013 info is here).

  1. I’m shocked that a state as business-friendly as Texas would prevent companies from selling what they want. What brand of libertarianism are they smoking down there?

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  2. Better Place had the same problem in Israel… It was one of the reasons they failed to get significant market penetration. Hopefully, Tesla is smarter at dealing with dealerships

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  3. Welcome to the real world, where things aren’t always done because it’s the logical or right thing to do. These dealer associations are powerful. TADA probably thinks “if we give our okay for this one exception, all of a sudden the floodgates are open and every manufacturer will want to sell directly to the public!” Purposeful inefficiency rules the day, my friends.

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  4. You have to listen to this NPR’s podcast to understand some silly laws in place around car dealerships.

    http://www.npr.org/blogs/money/2013/02/12/171814201/episode-435-why-buying-a-car-is-so-awful

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