Tesla Will Have to Ship Its Texas-Built Cars Out of State to Sell Back to Residents

[Klaralven]

Texas, the state that was once a country, has some unique features in its governance. One is that its state legislature meets only every other year for a maximum of 140 days, starting from “noon on the second Tuesday in January.” This year, the Legislature convened Jan. 12 and will wrap up its work on May 31 before breaking until 2023. And it will do so without making a widely expected change to Texas’ auto dealer franchise laws that would finally allow Tesla to sell its cars—many of which will be built at its new Austin factory next year—directly to the public in the nation’s second-largest state.

Teslas haven’t been completely unavailable to Texans this whole time; instead, buyers have had to use various inconvenient loopholes to take home their new electric cars. Now, Tesla is on the verge of having to jump through the most ridiculous one yet: having to ship its Texas-built vehicles out of the state before it can sell (and ship) them back to Lone Star buyers.

This is not some weird hypothetical. There’s not enough time left in the current legislative section to advance the bill that was supposed to avert that Kafkaesque outcome. This is going to happen unless Texas Governor Greg Abbott calls a special session specifically to debate this topic—extremely unlikely—or some arcane regulatory exemption can be crafted for Tesla in the months ahead. So how did we end up here?

Under Texas franchise laws, which are similar to those in most other states, automakers like Toyota and General Motors cannot sell you a car. They must sell their cars to independently owned third-party businesses that in turn sell them to Texans—you know, new-car dealerships.

As it stands, Tesla’s company-owned outlets cannot legally sell a car in Texas, nor can the company “deliver” a car within the state even if bought by a Texan. Owners had regularly rallied against this soft ban as early as 2013. There are workarounds, some detailed on forums within Tesla’s own website. The company has more than a dozen Texas “galleries,” where cars can be viewed and described—though staffers may not discuss prices.

https://www.thedrive.com/tech/40779/tesla-will-have-to-ship-its-texas-built-cars-out-of-state-to-sell-back-to-residents?

[PortTack]

1. Used to think I would like to own one, but with their ratings in safety and reliability slipping

Not so much

Is tesla a reliable car?
Tesla reliability issues drag down its scores in 2 major car-brand rankings. Two major rankings of the best car brands came out on Thursday. In Consumer Reports' 2021 ranking, Tesla slid five spots to No. 16 due to reliability issues.Feb 22, 2021

https://www.businessinsider.com/tesla-best-car-brands-ranking-consumer-reports-jd-power-2021-2

[Johonny]

14. It was the lack of actual dealerships that sold me against them

I went with a Prius instead. I could test drive it, pick out the color, and know where to bring it not just locally but around the country if it has problems.

The Tesla? You don't buy a car in a mall. Their lack of dealerships and inability to build the car infrastructure of other car companies seems insane. I don't want to deal with it.

[beaglelover]

17. I bought my Tesla online. Picked the color and other options.

6 weeks later got a text to click a link to set up a delivery time on a specific day at the service center in Burbank, CA. Got an email telling me to watch the various short videos online to familiarize myself with the car prior to pick up day. On pick up day, an hour before my appointed time, logged into my Tesla account in the phone app and my car was now linked to my account. Drove to the service center, used the phone app to honk my car's horn so I could locate it, got in, signed one piece of paper which I dropped off into a mail drop at the service center, got in the car and drove home. It was the easiest most amazing car buying experience I had ever had in my 56 years on this earth and I believe there were only 2 interactions during that order and delivery process with an actual human being. It was GREAT!!

Been extremely happy with my Tesla. No issues whatsoever....knock on wood. They have service centers all over the country if you run into an issue and they even will send service techs to your home to do the service depending on what you need done.

[MagickMuffin]

2. Question: Does this mean Texans will have to pay double on transportation costs?

That's always part of the bill when buying a new car, or so it has been that way for me.

[Klaralven]

4. Probably. Too bad they didn't build the plant in Beaumont, Texarkana, or El Paso....

[area51]

11. +1 n/t

[MichMan]

10. It's a fixed cost averaged over every state

If a car is built in Michigan, you get charged the same fee whether you live in Oregon, or just five miles from the assembly plant. Not sure what Tesla normally does

[genxlib]

3. It's a good thing they are in Texas

Where they can avoid all that cumbersome regulation.

[keithbvadu2]

5. OUCH!

[TheBlackAdder]

6. Because the car dealer industry bribes state legislators to limit competition and maximize profit.

.

I'm in NJ, and they are one of the most powerful lobbying groups that own the legislature.

.

[Klaralven]

8. It's really the small and medium sized enterprises that run state and local politics

Many are privately owned.

There are thousands of mini-Kochs.

[MichMan]

7. Or Tesla could just follow the existing laws and open a dealership

[MineralMan]

9. Aha!

Yes, they could do that, couldn't they? It's not their business model, though. Still, that's what I'd do if I were Tesla. Path of least resistance.

[fescuerescue]

13. Path of least resistance for now in the short term.

But it creates a permanent path of resistance.

Once you go down the franchise route, it's impossible to turn back. Franchise law is very protective of franchise owners.

And I'm sure they see it as giving up control. Once they start franchising dealers, they have a new permanent and powerful partner in how they do business.

Opening up dealerships is a permanent solution to what they may see as a temporary problem.

[fescuerescue]

12. Well they are still following the law

No one is saying that Tesla is breaking the law here. No one is being prosecuted or investigated.

They are just following a different statute that law makers didn't want followed.

[Klaralven]

16. It would add thousands to the price of each car

[MichMan]

18. Why?

Tesla is charging MSRP now, dealers typically don't

[Klaralven]

19. MSRP is padded enough to include a substantial cut for the dealer, even if they cut a little

Plus, there are holdbacks, dealer incentives, and other costs.

I don't see any dealers going broke. They are making bank.

[MichMan]

20. Maybe Tesla is already keeping the extra profit for themselves and

Tesla buyers are paying full MSRP

[Klaralven]

21. Tesla is only making it due to selling e-vehicle credits to other manufacturers and

the reduction in effective vehicle prices that their customers go from various government entities.

If they had to up their MSRP to include a slice for the dealer network, they'd be out of business.

Besides, the MSRP is only loosely related to the manufacturer's cost of producing the vehicle. It is more based on what the market will bear. The manufactures profit margin on various models varies widely.

[MichMan]

22. I agree that MSRP is based on what the market will bear

I was following you, but now not sure what exactly you are trying to say.

Either having dealers means Tesla would raise the MSRP, or it wouldn't, because the market wouldn't bear it.

"It would add thousands to the price of each car"


"If they had to up their MSRP to include a slice for the dealer network, they'd be out of business."


"Besides, the MSRP is only loosely related to the manufacturer's cost of producing the vehicle. It is more based on what the market will bear. The manufactures profit margin on various models varies widely."

"Tesla is only making it due to selling e-vehicle credits to other manufacturers"

[LiberatedUSA]

15. If you have ever wondered..

...”Why are there no Walmarts for vehicles?”, that is because they designed car sales to be like that; so the dealerships can be in complete control.