The ‘perfect battle’ between Elon Musk and Lone Star State’s auto dealers and the lawmakers who protect them
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Frank Rogers went to Tesla’s service center near the Dominion in 2018 and shot in an all-electric Model 3 for the first time.
“What attracted me first was technology, and when I got behind the wheel, it was the thrill of the ride,” said Rogers, CEO of a small service company. “It’s like being on a roller coaster, but you can control how fast you go.”
A self-proclaimed “geek”, Rogers rushed home to purchase one from the electric car maker’s website, carefully selecting the color, type of wheels, interior design, and battery options.
Three months later, Rogers received his blue Model 3 with the 30-day temporary license plates at his home. A Tesla agent in the Dallas area helped him secure his registration and license plates.
“We signed the documents that were sent to us and it was pretty convenient,” he said. “But it took about three months to get the records.”
He had to return to Tesla’s service center on the far North Side three times to pick up new temporary license tags.
Earlier this year, his wife went online to buy a Tesla Model Y. But without a broker, Rogers said it was “a fiasco” as she drove to several driver’s license offices to get license plates. “It just wasn’t knowing where to go.”
Rogers suspects that if the automaker could sell its vehicles directly to consumers, Tesla buyers in Texas would not face such problems. But it can’t. Texas law requires automakers to sell their cars, trucks, and SUVs through franchise dealers.
Texas customers must purchase Tesla vehicles from the company’s website and complete the paperwork via email.
Tesla continues to limit itself to the operation of showrooms and service centers such as the Dominion location. Staff offer test drives in these sleek, Apple Store-inspired windows, but cannot speak to potential car buyers about prices or help with most dealership services such as car sales. B. License plates and registration.
“If Tesla could have helped us – figure out where to go – it would have been easier, just like it did with the dealers,” Rogers said. “But since Tesla couldn’t sell in Texas, that was up to us.”
Selling direct to buyers over the internet is at the heart of Tesla’s sales model, and Co-Founder and CEO Elon Musk doesn’t seem to be moving on that front.
And a partnership with third-party dealers is apparently out of the question; In fact, Tesla has tried to get rid of franchise dealer laws across the country.
Although Tesla managed to overturn such laws in other states, including New Jersey and Massachusetts, it has failed repeatedly in Texas.
But Tesla could play a stronger hand than ever in Texas. The company is building a $ 1.1 billion cybertruck facility in Austin, and Musk announced on October 7 that it is moving its headquarters from Palo Alto, California to the state capital.
Given the size of Tesla’s investments here – in addition to the Texan operations of SpaceX, Musk’s other large corporations – will Governor Greg Abbott and state lawmakers finally consider changing the Dealers Act?
“The perfect fight”
Tech entrepreneurs Martin Eberhard and Marc Tarpenning got Tesla rolling in 2003, with Musk largely funding the company with a portion of the $ 180 million he earned from selling PayPal – which he co-founded – to Ebay in 2002. The idea was to start with an all-electric luxury roadster, perfect its automotive engineering skills, and eventually sell less expensive electric vehicles to the masses.
It succeeds. In the third quarter, Tesla sold a record-breaking 241,000 electric vehicles despite its supply chain entanglements.
Yet traditional retailers across the country – and the lawmakers protecting them – are resisting Tesla’s direct-to-consumer push. Texas is one of nearly 25 states that either prohibit automakers from removing dealerships or restrict the manufacturers’ sales directly to their customers.
“What we’re asking of the Texan legislature is really simple,” Musk said in 2013 when Tesla first attempted to overturn the franchise law. “Let’s sell our cars directly to the people of Texas like we can in most of the country.”
The Texas Automobile Dealers Association fought the law this year, battling successor legislation for the last four sessions. The organization represents more than 1,200 merchants across the state, many of whom are wealthy and politically connected in their communities.
“This really is the perfect match as these two interests collide,” said Raji Srinivasan, assistant dean of the McCombs School of Business at the University of Texas at Austin.
To bring zero-emission vehicles into the mainstream, Musk “introduced disruptive technology into the traditional car model,” she said. And its internet-based sales system is just as challenging for traditional dealers as its coveted electric vehicles are for large automobile manufacturers.
April Ancira, chairwoman of the Texas and San Antonio Auto Dealer Associations, testified against Tesla-backed bills in the last term.
“It’s not that Tesla is that scary itself,” she said. “We’d just hate it if one thing caused the downfall of America’s backbone: midsize family businesses that get involved in their communities and are great for their consumers when they are competitively priced.”
As vice president of the Ancira Auto Group in San Antonio, Ancira said she supports Tesla’s plan to move its headquarters to Texas. But she said she was stunned by the company’s decision to forego the franchise model, where automakers can use dealerships to “have a point of mass distribution without having to raise all the capital and risk”.
She wonders if Musk would ever change his mind and work with dealers.
“I don’t know any dealer out there who wouldn’t raise his hand,” said Ancira. “If he said let’s do the dealership thing, I would say, ‘Where should I build?'”
Roadblock in Austin
State Senator José Menéndez said he was “always consistently against my opposition to the law change for a manufacturer.” Over the past legislatures, the San Antonio Democrat has worked all the political path to prevent the big three automakers, and now Tesla, from doing that kill state traders act.
“I don’t think Mr. Musk decided to move his headquarters to Texas because it would buy it for favor with lawmakers,” Menéndez said. “Because if he thought like that, he’s wrong.”
Neither Abbott nor Musk responded to requests for comment on this story. Tesla also didn’t respond to questions at the time of going to press.
Tesla has employed “a multitude of lobbyists” for nearly a decade to sway lawmakers, but they fell short because the franchise dealer model “isn’t broken,” Menéndez said.
He mentioned the economic advantages of local traders. The 78 dealerships in San Antonio, he said, employ 8,700 workers with an average annual salary of $ 69,000 on total wages of $ 600 million.
“With all due respect, Mr. Musk, the state of Texas has been going well for over 150 years without having to meet you,” he said. “I’m sure we will be fine if you choose not to play by the rules.”
Menéndez said he was “a huge fan of Tesla products” and offered some sort of olive branch.
“The day Mr. Musk decides to play by the rules we have in Texas is the day I think about buying a Model S, but never before,” he said.
Buyers weigh in
Back at his San Antonio store, Frank Rogers said he expected lawmakers to keep icing on Tesla.
“It’s the big three that are preventing these other manufacturers from selling directly to consumers,” he said. “It’s a union thing. It’s a matter of politics. It’s not about how good the cars are and how much people like the cars. “
Rogers said he couldn’t imagine Musk working with a franchise dealer because “his whole philosophy is to move the world towards sustainable energy and I don’t think he would park his car next to a gasoline car” .
Michael Danberry, president of the Tesla Owners Club of San Antonio, said the company-sanctioned group has gained 246 members since it was founded last year. Other Tesla owner groups exist in Austin, Houston, and North Texas.
After retiring from the army, Danberry tested his first Tesla in Kansas City, Missouri in 2017.
“The test drive will inspire you,” he said. “It’s easy. No sound. No shifting. It’s just a gentle step. “
Danberry placed an online order for a Model S in the Tesla showroom. Two years later, he and his family had moved to Dripping Springs near Austin when his wife Carla – who also retired from the Army – bought a Model X on the Internet. She had the same difficulties that Frank Rogers and his wife experienced.
“In Texas, they can show you a car and deliver it, but they can’t sell you the car,” Danberry said.
The club president said he supported Tesla’s mission to “create an entire sustainable energy ecosystem,” adding, “Tesla is more than an automaker – they are a technology company.”
Teslas have become a common sight on the streets of Texas, especially in metropolitan areas – which means the state’s dealer law hasn’t stopped shoppers like Danberry. However, he fears that the law and similar laws in other states could hinder start-up electric vehicle manufacturers like Rivian and Lucid, both based in California.
“These new automakers don’t want to follow the dealer model,” he said. “You shouldn’t have to follow the dealer model.”
Srinivasan, the UT professor, said lawmakers in several states, including Texas and Connecticut, have partnered with franchisees, which she described as “traditional interests.”
Still, she believes Texans will one day be able to legally buy Tesla’s directly from the company, and says, “It’s a matter of when.”
Ancira said she was “99 percent certain” that the law will not change in the next legislative period. But she worries about the legislative sessions farther out as more merchant-friendly lawmakers like State Representative Lyle Larson, R-San Antonio, retire.
“You get to the point where you need to retell your story to make sure there are no interruptions from one session to another and to continually build those relationships as these players start to change,” she said. “We worry. But we try to keep an overview as well as possible. “
eric.killelea@express-news.net
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