Tesla Testifies In Texas, Takes On State's Auto Dealers Over Stores Page 2

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Elon Musk

Elon Musk

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He has urged his Twitter followers to support Tesla's fight in Texas, and in a memo to employees leaked to Forbes last week, he wrote:

It is crazy that Texas, which prides itself on individual freedom, has the most restrictive laws in the country protecting the big auto dealer groups from competition.

If the people of Texas knew how bad this was, they would be up in arms, because they are getting ripped off by the auto dealers as a result (not saying they are all bad – there a few good ones, but many are extremely heinous).

"For everyone in Texas that ever got screwed by an auto dealer," Musk concludes, "this is your opportunity for payback."

For the record, Musk was rather more measured in his words in a follow-up interview with Forbes.

The general counsel for TADA, Karen Phillips, called Musk's leaked e-mail "inappropriate" in an article in trade journal Automotive News.

The legislators of her state should be able to "see beyond the number of people at a hearing," she said, and simply focus on the existing law and its merits.

The e-mail, she sniffed, "shows the type of person we're dealing with."

Texas Tesla plant?

Musk also dangled the possibility that Tesla would consider the state for a second manufacturing plant, at whatever point it decided it needed such a facility.

The company's current facility in Fremont, California, is largely empty outside of the single Model S assembly line.

When the Fremont plant was jointly operated by General Motors and Toyota, it produced several hundred thousand vehicles a year; Tesla is targeting 20,000 to 25,000 cars this year.

In other words, any second Tesla plant seems likely to be many years in the future.

Musk suggested, however, that such a plant might be a suitable home for his vision of a future all-electric pickup truck with the "performance of a sports car" but higher cargo capacity and towing ability than a similar truck powered by a gasoline or diesel engine.

Skeptical legislators

Tesla owners & supporters gather in Statehouse in Austin to support company [photo: John Griswell]

Tesla owners & supporters gather in Statehouse in Austin to support company [photo: John Griswell]

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Meanwhile, the act requires a vote of two-thirds of the members of each house to become law.

While more than 40 people testified for the bill, in support of Tesla, committee members questioned whether there might be ways to further restrict the bill.

Among suggestions was the idea that Tesla would have to convert over to franchised dealers once it reached a certain level of sales.

After the hearing, Musk seemed to acknowledge that the bill might not succeed, telling the Texas Tribune that if it didn't, the company would return next session.

[Sincere thanks to Tesla owner and photographer John Griswell, who allowed us to use his photos from the hearings.]


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Comments (10)
  1. Tesla is actually arguing in favor of a monopolistic market - controlled by the auto manufacturer, which makes price fixing very easy to do. Years ago golf club manufacturers imposed price fixing and restricted distribution of their products to pro shops and other outlets designed to extract the highest prices. That business was outlawed under anti-trust statutes. Of course, it's unlikely that friendly Pres Obama and his lapdog Justice Dept would ever enforce anti-trust laws against their friends. It's obvious that the Justice Dept, Energy Dept and all the others need to be be made independent of political control by the White House or Congress. This is one very stupid country.

  2. Well, I'm afraid I must disagree with everything in your post except the last sentence. I agree with 49% of that one.

  3. whoops --checked thumb down but meant thumbs up!

  4. I know nothing about golf clubs (spawn of the Devil) but it seems to me that if your state did not have this law and you felt you were were being manipulated by the manufacturer of your car that you wouldn't buy one of the same make again. Last time I looked there were plenty of alternatives in the car market. There is even already a few choices in the EV market. So why do car owners need this special protection? It seems to me as an outsider that this bill is a real test of just how much the politicians of Texas are in the pocket of the auto makers... As for Ms Phillips' comments about Mr Musk, I'd trust him over a car dealer any day.

  5. Haven't heard much about all electric vehicles and towing. The idea of an all electric pickup with decent towing ability is pretty interesting. I wonder what the practical towing limit for a Model X would be? (with AWD)...that's the one that is of most interest to me.

  6. There shouldn't be an exception to this law - it should be scrapped entirely. Any law that restricts liberty needs to be examined and most likely tossed. This law protects franchise owners at the expense of consumers and car companies. If franchise dealers don't want competition from their car company, they can negotiate a contract with that company and leave the state out of it.

  7. Shame on you Texas! Stamping out entrepreneurial new businesses. You are better than that.

  8. The real problem here is that the salesmen working at dealerships can't be relied upon to sell electric cars, which because of their "new to most consumers" technology require more knowledge, skill and time to sell. They'd rather just sell ICE cars.

  9. There's also the issue of post-sale service as the primary revenue stream for the dealerships. Their "servicing" is one of the reasons I'm driving an electric car.

  10. I understand why Tesla wants to by-pass the dealers. Dealers tend to be the biggest problem for manufacturers and buyers. Most complaints about any particular brand are actually complaints about the dealerships. The dealerships are unethical and unscrupulous and most manufacturers would rather to just be rid of the headaches caused by them. These dealers also add great expense to the price of purchasing a car.

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