Tesla Could Start Direct Sales to Consumers in Texas if New Bill Passes

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Laws in Texas, USA require car manufacturers to sell their vehicles only through third-party franchised dealerships. But Tesla, as a manufacturer that only sells through direct sales, may soon be given the green light to sell its cars directly to buyers in the Lone Star State.

The proposed state law provides special treatment for certain electric vehicle manufacturers, allowing them to circumvent Texas's stringent regulations, reports Austin American-Statesman. The passage of this law will make Tesla's activities in the state more meaningful. The manufacturer is building a new factory near Austin that will, among other models, produce an electric pickup truck that is expected to be highly popular with consumers in Texas. Unless the existing regulations are changed, Tesla will face the prospect of selling cars built at Giga Texas outside of the state.

Tesla has been fighting to change the rules for several years. "It would be a huge (public relations) black-eye for Texas" if Tesla isn't allowed to sell directly to buyers in the state when cars start rolling off the floor of the new factory, said Wedbush Securities analyst Daniel Ives, who follows the company.

"There's a massive, decade-long-plus opportunity in (electric vehicles) that Tesla now has brought to Austin," he said. “The (electric-vehicle) food chain follows Tesla wherever it goes.” If Texas plays its cards right, they will reap significantly more benefits in the long run.

Defenders of the Texas law, which prohibits automakers from also having dealerships—along with the Texas Automobile Dealers Association—argue that the rules protect consumers by preventing manufacturers from establishing monopolies. But critics call them protectionist measures that cement dealership owners as third-party intermediaries. In essence, this law is aimed at protecting the owners of dealerships, rather than protecting consumers.

A new proposed House Bill 4379, authored by state Rep. Cody Harris, R-Palestin, will allow manufacturers of vehicles that are powered entirely by electricity or batteries to act as dealers in accordance with government regulations and thus sell directly to consumers.

“There's a 'green' tidal wave on the horizon, and this is the tip of the iceberg" for Texas, Ives said. "I will be shocked if (state lawmakers) don't change the rules" to accommodate Tesla's business model.

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