As Session Nears End, Tesla Faces Uphill Battle to Win Texas Dealerships

Photo by Olivia Gordon/StateImpact Texas

The Tesla S at the company's showroom in Austin.

It’s been a good month or two for the luxury electric car manufacturer Tesla: the company just posted its first profitable quarter; it’s stock is soaring and Consumer Reports just rated the Tesla S the best car it’s ever tested. But one item on the company’s wishlist increasingly looks like it won’t be coming true: owning and operating its own dealerships in Texas.

In Texas, as in many other states, cars can only be sold through the franchise dealership system: manufacturers are not allowed to own their own dealerships. In Texas, Tesla can’t legally have dealerships, only “stores” where you can’t take a test drive, can’t find out the price of the car, and can’t purchase a Tesla. It’s a system that’s been on the books for decades, but Tesla argued before state lawmakers this session that they’re different and should be exempted from the existing rules. Because they would only sell a small number of cars, they argued, and because they don’t have the service operations of a typical dealership (tiny motor with many fewer parts = less maintenance), Tesla argued before the state legislature that state law should be changed in their favor. (Meanwhile, North Carolina’s legislature is considering banning Tesla sales — even online — entirely.)

But that appears difficult at this point in the session. With just thirteen days to go, several deadlines have come and gone without a victory for Tesla.

A bill in the state House, 3351 by state Rep. Eddie Rodriguez, D-Austin, that would have amended the state’s franchise laws passed out of committee in late April, but it never made it to the House floor for a vote. Last week, the window closed on bills to make it out of the House, effectively killing that bill.

While a companion bill is still alive in the Senate, SB 1659 by state Sen. Craig Estes, R-Wichita Falls, it hasn’t moved since early April, when it was left pending in committee. And Rodriguez’s office isn’t optimistic that the Senate bill will move forward. But it’s too early to write an obituary for the Tesla bill yet, as there’s still time for it to get out of committee and onto the Senate floor, just very little of it.

In the meantime, Texans hoping to buy a Tesla will still have the option of flying out to California for a test.