Will Tesla Renew Fight To Sell in Texas?

Dec 08, 2014 10:54 AM EST | Jordan Ecarma

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Tesla still has its eye trained on Texas as the carmaker looks to bring its direct-sales model to more states, and the issue could be brought up in legislation when lawmakers resume work in January.

The Palo Alto, Calif.-headquartered company is known for its unusual sales model, which works through Tesla's own stores rather than franchised dealerships and has been met with opposition in some states.

Tesla has "galleries" in Dallas, Austin and Houston, but employees at the Tesla locations can't sell vehicles, let consumers test-drive cars or even disclose pricing information. The Lone Star State is an especially appealing market for Tesla and other carmakers as it is expected to surpass 1.5 million new-vehicle deliveries this year.

Dealer advocates have said that allowing Tesla to sell direct to customers will undermine the entire dealership system, while Tesla has urged the promotion of its electric Model S as a step to bringing zero-emission technology to everyday consumers.

"We're not asking to blow up the franchise dealer system," Diarmuid O'Connell, Tesla's vice president for business development, told the Associated Press. "We are looking for a narrow and reasonable window to be able to promote this new technology ourselves."

O'Connell went on to suggest to the AP that Tesla may withhold major investments from Texas if the state remains resistant to Tesla's direct-sales model. 

"If we're banned in Texas, why are we investing billions of dollars here?" he asked. 

Headed by CEO Elon Musk, Tesla has proven to be a tough bargainer when it comes to investments. The company is building a lithium-ion battery "gigafactory" in Nevada after considering several sites and looking at high-wager offers from Arizona, New Mexico, Texas and California as well as the Silver State.

While attempting to woo Tesla to his state, outgoing Gov. Rick Perry said the law blockading Tesla's direct sales was "antiquated" and Texas needed "to have an open conversation about this."

Michigan is the latest state to contest Tesla, passing legislation in October that essentially bans Tesla's direct-sales model. Texas, New Jersey, Arizona and Maryland have similar laws. Additionally, Iowa stopped Tesla test-drives that were taking place in September, with the state Department of Transportation saying that even test runs were illegal under state law.

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