Texas says no to Tesla direct sales

Texas just ran out the clock on Tesla.

Facing pressure from state car dealerships, this week the Texas legislature declined to take up several bills that would have allowed Tesla to sell cars directly to consumers.

Under current state law, automakers must sell cars through a third-party dealership, which Tesla has refused to do.

Altering dealership laws has proved to be a long, challenging process for the electric carmaker. Many states have laws that mandate automakers to adhere to the dealer model.

Complicating matters, local car dealers are often large sources of tax revenue for state and local governments, creating a disincentive for lawmakers to change laws that protect the third party dealers.

In several states including Texas, Tesla maintains showrooms, but is barred from selling cars directly, allowing test drives — or even directing customers to the Tesla website.

As Ars Technica points out, the lone star state hasn’t been particularly hospitable to Tesla. In 2013, the state assembly refused to take up a similar bill.

Tesla CEO Elon Musk made another push, bumping up his financial support for several Texas state politicians in 2014. But he was unable to outspend local dealers. According to the Texas Tribune, Texas car dealerships outspent Musk 40 to 1 in the 2014 election.

Tesla has recently had some success with its direct-sales approach. In March, New Jersey finally allowed Tesla to open four outlets after a protracted debate with state dealerships. New York, Maryland, Ohio, and Pennsylvania have all also changed laws in recent years to allow the electric automaker to sell directly to consumers.

For its part, the federal government has been supportive of Tesla’s efforts to circumvent dealerships. This week, the Federal Trade Commission urged Michigan lawmakers to repeal the state’s third party dealership mandate, claiming that Michigan’s auto practices are anti-competitive.

“In our view, current provisions operate as a special protection for dealers — a protection that is likely harming both competition and consumers,” the FTC said.

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