If a group of state representatives and senators get their way, Texans may soon be able to buy Tesla vehicles and other new vehicles directly from manufacturers.
Representatives Eddie Rodriguez, Charles Anderson, Jodie Laubenberg, Tan Parker and Ron Simmons as well as Senator Kelly Hancock filed House Bill 1653 and Senate Bill 639, respectively, on Feb. 19.
Under the proposed legislation, vehicle manufacturers that have never participated in the states existing franchise dealership system would be granted licenses to sell their vehicles directly to consumers. The legislation would allow for 12 such licenses to be granted.
Under Texas current law, new vehicles can only be sold through a franchised dealership.
"Free market principles are the foundation of our strong Texas economy," Hancock said in a news release. "SB 639 helps sustain a competitive marketplace and gives consumers more choices."
Currently, Texas consumers who wish to buy a Tesla vehicle must have it shipped from the company's headquarters in Palo Alto, California.
"Our current franchise dealership laws were created to prevent vehicle manufacturers from unfairly competing with their existing franchised dealerships, not to restrict competition," Rodriguez said in a news release. "HB 1653 ensures Texans have access to breakthrough automotive technology."
According to a news release about the legislation, most states have laws allowing some form of direct sales of new vehicles.
Rodriguez filed a bill similar to HB 1653 and SB 639 during the last legislative session. That bill made it through the House Committee on Business & Industry, but failed to come to a vote on the House floor.
A 2009 study by the U.S. Department of Justice found that direct sales from manufacturers could decrease inventory levels necessary for auto producers to keep on hand. That could result in a savings of about $2,225 for an average-priced vehicle, the study found.
The Texas Automobile Dealers Association, a trade association representing more than 1,200 franchised automobile dealerships in the state, is opposed to the legislation, TADA spokesman Bill Walters said.
"It's an exception to our law that eliminates their competition and allows them to sell for a non-negotiable list price and take all the profits of the sale outside of the state," Walters said. "It doesn't do anything for Texas."
Walters also contested the Department of Justice study arguing that cost savings due to lower inventories would not necessarily have to be passed on to consumers. If a dealer has limited competition as would be the case with retail outlets owned by the same person or company there is no incentive to offer a competitive price, Walters said.
Instead, Walters said Tesla should consider entering the Texas market through the existing franchise dealership system.
"[Tesla CEO Elon Musk] could open 20 dealerships tomorrow because there are investors who would invest in a dealership for the Tesla brand," Walter said. "But under that scenario there would be competition."