Tesla may have a new ally in wresting control of car sales from Texas dealerships

Texas is keen to build electric vehicles, but will it work with emerging manufacturers who don’t want to sell through the state’s long-standing dealer industry?

Electric vehicle startup Rivian Automotive urged lawmakers to make it its own dealer before it was revealed the manufacturer was considering building a $ 5 billion plant in Dallas-Fort Worth.

During the first six months of this year, Rivian spent up to $ 300,000 to hire four lobbyists for this year’s legislature, according to lobbyist registration information filed with the Texas Ethics Commission.

In May, the company supported a bill by 37-year-old Republican Cody Harris. The bill, House Bill 4379, would have allowed consumers to buy battery-powered or electric vehicles directly from a manufacturer that never had franchise dealers in the state. The bill would have taken into account the preferred sales methods used by Rivian and other electric vehicle manufacturers like Tesla.

Harris sold the bill as a door opener to economic development and job creation in Texas for the electric vehicle industry. Tesla’s sprawling $ 1.1 billion facility near Austin is nearing completion and will produce the company’s electric SUVs.

But the bill failed without a vote in one of the chambers. The committee members resisted the idea of ​​outsourcing electric vehicle companies and defended the state’s long-established dealer model.

Current Texas state law makes it illegal for manufacturers to sell cars directly to consumers, and state lawmakers won’t meet again until 2023 to consider new laws.

Existing state laws “prevent monopolies and ensure competition, resulting in savings and convenience for consumers,” said Texas Automobile Dealers Association spokeswoman Jennifer Stevens.

Fort Worth became known this week as a finalist for Amazon-backed Rivian’s next large manufacturing facility, which would create at least 7,500 jobs. If the electric vehicle maker ultimately chooses Fort Worth, it would be one of the largest economic development projects in Texas history, according to the city.

The prospect reiterated the question of whether EV companies like Rivian will continue to look to Texas as a location for doing business if existing laws preclude companies’ preferred sales model. Most states have laws protecting dealers’ rights to sell vehicles, but at least 10 states have laws introduced this year trying to change that.

Rivian declined a request for comment on Friday.

The auto dealership industry is as old as the assembly line technology that enables the mass production of automobiles. But new electric vehicle vendors, led by Tesla and Elon Musk, are looking to turn the traditional vehicle sales and maintenance architecture enshrined in many state laws on its head, and instead vie for full control over all aspects of sales as allowed in other industries. Tesla also backed the failed bill that session in Texas.

EV startup Canoo, which recently left Texas for Oklahoma in search of its next production site, is even planning to develop an app-based ecosystem in which the company will make it easier to resell its vehicles.

Like Tesla, Rivian plans to sell its electric trucks, SUVs and commercial vehicles direct to consumers.

“This is an unnecessary barrier to entry for new businesses like us and prevents additional investment and job creation in the state,” said Dan West, Rivian’s director of public policy, in May. “It also puts an unnecessary burden on consumers who now have to conduct an out-of-state transaction to buy or even test drive vehicles like ours.”

Under current law, Tesla customers in Texas can buy a car or SUV directly from the manufacturer and have it delivered to a nearby service center for collection. His cars can be legally shipped from nearby states of Arizona, California, Colorado, Nevada, and Utah.

The process is one that Tesla owners have lamented for years. And it’s a topic Musk picked up in person on Twitter when Tesla’s mega-factory outside Austin is nearing completion.

Rick Bollar of Southlake, owner of two Teslas, stepped on tires on electric cars at traditional dealerships before going through the online ordering process to buy his first Tesla in 2012.

“I tried to buy one [Nissan] Scroll through a dealer and it was just a pain, ”said Bollar, who is a member of the Tesla Owners Club of North Texas. “They didn’t know much about the technology and tried to convince me to do something else.”

Because electric car technology is so different from its fossil fuel counterparts, Bollar says consumers need real expertise to buy an electric car – a know-how that is yet to be matched by dealerships selling a wide variety of models .

Bollar also likes the idea of ​​going to a dealer and knowing the price of a car from the manufacturer rather than negotiating equipment options and the price.

If aspiring EV companies so chose, they could sell their vehicles through existing dealerships or through dealer networks they set up, said April Ancira, a member of the Texas Automobile Dealers Association and vice president of the Ancira Auto Group.

“Everyone thinks it’s dealers versus electric vehicles,” said Ancira. “No, we sell electric vehicles.”

But would retailers for brands like Tesla and Rivian generate a boost in sales? Bollar is not entirely sure. He bought his Tesla through the company’s website and had it shipped to a local Tesla service center.

According to the US Department of Energy’s alternative fuel data center, Texas has the third most electric vehicle of any state in the country, at 52,190 as of June.

But California, which allows direct sales, has almost eight times more electric cars than Texas. California accounts for approximately 42% of all electric car registrations in the United States

“It’s not that Tesla has had a problem getting customers in Texas yet,” Bollar said.

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