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Tesla CEO takes dealer fight to Texas, says he can sell more cars

April 10, 2013|By Ronald D. White
  • The Tesla Model S is introduced at the 2013 North American International Auto Show in Detroit in January. In the latest chapter of an ongoing battle against traditional dealer networks, Tesla Chief Executive Elon Musk has taken his fight to Texas, telling lawmakers his company could sell as many as 2,000 cars there next year if allowed to open its own stores.
The Tesla Model S is introduced at the 2013 North American International… (Stan Honda / AFP/Getty Images )

In the latest chapter of an ongoing battle against traditional dealer networks, Tesla Motors Inc. Chief Executive Elon Musk has taken his fight to Texas, telling lawmakers his company could sell as many as 2,000 cars next year if allowed to open its own stores.

Musk testified Monday before a committee of the Texas Legislature in support of HB 3351 and SB 1659, bills  that would allow U.S.-based manufacturers of 100% electric- or battery-powered vehicles to sell directly to Texas consumers.

Musk reiterated his contention at a news conference Wednesday. “The ability to sell cars through Tesla-owned stores is important for sustainable transportation and is the best chance a new electric car company has of succeeding," he said.

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Under current Texas law, Tesla can't sell vehicles directly to the public because it has no franchised dealer relationships there.

Tesla currently has galleries in Austin and Houston, where its employees are not allowed to discuss financing, leasing, or purchasing options. The galleries also can't offer test drives.

The push to allow Tesla the right to sell directly to consumers in Texas will rankle dealerships there as much as it has everywhere the automaker has tried the approach.

The nation's roughly 18,000 new-car dealers got a cut of every one of the 12.8 million new cars and trucks sold in the U.S. last year. It's an exclusive arrangement that has made many of them very rich -- and one that they're not about to cede without a big fight.

Tesla wants to sell directly to consumers to keep the profit that dealers would normally make on new-car sales. It's also the only way an electric car will get a fair shake, Musk says.

Musk also believes existing dealers will have difficulty selling customers on the advantages of going electric without simultaneously undermining their traditional business of selling gasoline-powered cars.

Some individual auto dealers and regional associations have already filed lawsuits attempting to block Tesla, which now operates 16 stores in 12 states.

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