Why Did Texas Put the Brakes on Tesla Motors?

Tesla CEO Elon Musk wants to reinvent not only the way we make cars, but he also wants to reinvent the way we buy cars.

Getty Images.

“He plans on opening 50 new Tesla stores in the next year,” ABC News Nightline reports. “And taking a page from the Apple playbook, Musk is selling his product directly to consumers. No hard sell. No commission for employees. And uniform prices at every store.”

The auto CEO explains the strategy: “We actually train people to educate. We always wanted to be a really low-key kind of friendly environment, where we're not constantly trying to close deals.”

In short, Musk wants to cut out car dealers and selling directly to consumers.

“It takes them at least twice as much effort to sell someone an electric car and to educate them as to why an electric car is good,” said Musk. “And so if we were to go through the traditional dealer path, the result would be a disaster.”

But this is where things become complicated for the upstart car company: Texas isn’t on board with the idea of Tesla selling its much-touted Tesla Model S, the first EV to win Motor Trend’s “Car of the Year” as well as a 99 out of 100 rating from Consumer Reports, directly to motorists.

It appears legislators in the Lone Star State are sticklers when it comes to the state’s franchise laws.

“This happens all the time,” said Bill Wolters, the president of the Texas Automobile Dealers Association. “Someone wants an exception to the franchise laws. If we made an exception for everybody that showed up in the legislature, before long the integrity of the entire franchise system is in peril.”

But many believe Texas’ decision to block Tesla has less to do with the sanctity of franchise laws and more to do with the fact that the state's auto dealers make handsome political donations.

And this setup is not exclusive to Texas. Indeed, many states boast of cozy auto dealer/lawmaker relationships.

Now think about it: if something (or someone) comes along and threatens the supply of auto dealer campaign cash, what do you suppose happens next?

All we can tell you is this: Texas won’t allow Tesla to sell directly to consumers and now North Carolina, Colorado, and Virginia are considering passing similar measures.

The future of the company is uncertain. But Musk says he is not about to quit. We'll see where it goes from here.

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Featured image Getty Images. This post has been updated.

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