The Texas State Legislature failed to vote on two separate bills, which would have allowed Tesla Motors Inc. to sell its $100,000 electric cars in Texas. The company has been denied of its proposal of direct sales for the second time in two years.
Tesla had sponsored two bills in the legislature that would have permitted it to sidestep auto dealers and sell its electric cars directly in the second-leading U.S. car market. Both bills did not make it either to Senate floors or the House of Representatives for a vote. With the legislature closing on June 1, its proposal is finished and will have to wait two more years when the state legislature will resume its next regular session
The bills were created to bypass a dealer-supported ruling enacted decades ago on the books that forbids car manufacturers from direct sales. Such laws exist and Tesla is trying to get prohibitions lifted from states, such as Arizona, Connecticut, Michigan, and West Virginia. The Connecticut legislature is still consulting to lift its ban.
This year, Elon Musk, Tesla's CEO, has successfully lobbied to have the same kind of legislation overturned in New Jersey, Georgia, and Maryland, and he was making the same efforts to pull off the feat in Texas.
Tesla employed about 20 lobbyists and exhausted more than $150,000 on campaign handouts from October to December 2014, based on state records. Tesla lobbyists had met with the office staff of Republican Governor Greg Abbott and Lieutenant Governor Dan Patrick, said Diarmuid O'Connell, Tesla's vice president of business development.
Dealership lobby groups, who were very firm on its stand to protect family-owned businesses and consumers from automobile manufacturers, have defended their business model.
Automobile dealers sell $81.4 billion worth of vehicles in Texas, next to California, based on statistical figures of the National Automobile Dealers Association from Virginia. Being a powerful lobby in Austin, they did not want to give Tesla an opening. As in other places, auto dealers fund Girl Scout troops and Little League teams, host victory celebrations for government officials, and distribute advertising revenue to newspapers.
Tesla states it is an unfair monopoly. More than 2,500 Model S cars are traveling on Texas roads, out of nearly 70,000 globally, according to Tesla.
Though the change in law could be favorable for the environment as well as business competition, the end of dealership models may cause some drastic changes in the economy, according to some experts.
