Texas Still Won’t Allow Tesla to Sell EVs Directly to Consumers Could Tesla take it to the feds? Katherine Tweed: June 4, 2013 A two-month effort to pass bills in the Texas legislature that would allow Tesla Motors to sell electric cars directly to consumers has failed after lawmakers failed to vote on the issue before adjourning. The bills would have created an exemption to the current law that prohibits factory-owned dealerships. The two Tesla-backed bills did not even make it to the floor, which mean a long wait before Tesla can try again in the Lone Star State, as the legislature will not convene again until 2015. Currently, Tesla works around the rule in Texas by having retail locations where potential customers can learn about Tesla, even though the staff can’t engage directly in sales activity. Tesla is fighting in other states, as well. It has won court decisions in Massachusetts and New York, according to Automotive News, and has won one round in Minnesota. But Texas isn’t the only place where tides aren’t turning in Tesla’s favor. North Carolina has proposed a bill that would stop Tesla from selling its luxury vehicles in the state, according to the Raleigh News & Observer. The bill doesn’t call out Tesla by name, but it would make it illegal for automakers to bypass dealerships and sell directly in the state. The issue, however, is that Tesla is the only popular carmaker that does not have a dealership. About 80 North Carolinians already have a Tesla, according to the News & Observer, but there will likely be more interested buyers, especially as the Tesla Model S, which starts at around $70,000, was named Motor Trend Car of the Year. There is still a chance that the bill will include an exemption for startups like Tesla, according to the News & Observer. There are about 400 Tesla Model S and Roadsters in Texas. The legislation blockades in various states might appear to be a blow to the burgeoning electric vehicle (EV) industry, but most of the electric cars on the market come from big automakers that have nationwide dealerships, including Nissan, Honda, BMW, Chevy, Ford and Fiat. The rules are a barrier specifically to startups like Tesla that are competing against other carmakers that are introducing electric options into the marketplace. In Virginia, Tesla tried to apply for a dealer license and was denied. Tesla is already welcomed in other states, like California, where it has started its supercharging network. But Tesla has far grander plans, including a nationwide supercharging network by 2015. A nationwide supercharging system, however, will require a nationwide approach to be able to sell its cars. ------------------- Here are some things that employees in electric car-maker Tesla’s Houston and Austin “galleries” cannot do: Discuss purchasing, financing or leasing one of Tesla’s vehicles Tell customers the price of a Tesla vehicle or how they might reserve one Offer test drives Refer customers to an out-of-state store that does any of those things We imagine it’s a pretty unfulfilling job, and pretty unrewarding for anyone in Texas who visits the galleries to buy an all-electric sedan—Automobile magazine’s 2013 car of the year—starting at $62,400. The reason for this weird experience is a Texas state law forbidding car makers to sell their wares directly. All vehicle sales must go through a licensed dealership franchise. Most states around the country have some version of this law. While a franchise system made sense as a way to deal with the capital-intensive nature of storing, marketing, and servicing cars as the industry evolved, it’s also expensive for consumers. Distribution makes up about 30% of a car’s final price. But as the internet and supply-chain innovation made the logistics more manageable, more industries want to go direct, including automakers, as this US Department of Justice report explains: A real-world example of the benefits of a build-to-order, direct manufacturer sales model is GM do Brasil’s experience with production and sale of the Chevrolet Celta economy car at its modern Blue Macaw plant in Gravatai. Since 2000, customers in Brazil can order the Celta over the internet from a site that links them with GM’s assembly plant and 470 dealers nationwide. By 2006, 700,000 Celtas had been produced and the car continues to be one of Brazil’s best sellers. Consumers have 20 “build-combinations” from which to configure a model of their choice, including colors and accessories, and can view each change as it is being made. GM built five distribution centers throughout Brazil to reduce transportation time from its assembly plant and buyers can track location of their car online on its way to delivery at a dealer of their choice. The time from configuration at the factory to delivery is only about a week, in contrast to the several week wait that can be common in ordering a car in the United States. Innovations like that in the US have been forestalled by state laws that protect dealerships from competing with manufacturers directly, since that could destroy their business model. Dealers have strong political voices, as we saw during the government’s rescue of the auto industry in 2009, when they won the passage of a law to protect them from closing in bankruptcy. Tesla, founded in 2003 by tech entrepreneur Elon Musk, hoped to get around such blockages, but in states where the company has opened stores and made sales, like New York and Massachusetts, car dealership associations are suing the company. In Texas, Tesla is pushing for a narrow exception in state law that would allow makers of all-electric cars—i.e. Tesla—to sell their wares directly, in the hopes that dealers more worried about GM or Ford might give the start-up a chance. “Texas is a free-enterprise state that prides itself on being the freest in the nation—I think that’s a good thing,” Musk told the Texas Tribune. “The laws that are in place to protect the big established auto dealer groups are very un-Texas.” New York judge just ruled in favor Tesla, dismissing the legal attack by auto dealers to prevent direct sales! 2:03 PM - 11 Apr 2013
Posted on: Wed, 05 Jun 2013 12:13:27 +0000
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