Tesla won’t be able to directly sell the cars it builds in Texas to Texans

While it works to open a Texas factory, Tesla still can’t sell cars directly to customers in Texas—and won’t be able to for some time. The Texas legislature has run out of time to make the necessary changes to state franchise laws in its current session, and it won’t reconvene again until 2023, The Drive […]

While it works to open a Texas factory, Tesla still can’t sell cars directly to customers in Texas—and won’t be able to for some time. The Texas legislature has run out of time to make the necessary changes to state franchise laws in its current session, and it won’t reconvene again until 2023, The Drive reported Thursday.

With a factory near the state capital of Austin scheduled to open next year, Tesla will likely end up having to ship cars out of Texas to sell them back to customers in the state where they were made. It’s probably not what CEO Elon Musk expected when he threatened last year to move Tesla’s headquarters and all manufacturing out of California, due to what he felt were onerous regulations in that state.

Musk agreed, in a tweet later Thursday, that a change in the law would be most welcomed.

At present, Tesla uses company-owned showrooms and service centers instead of traditional franchised dealerships, a business model that’s rankled owners of franchised dealerships, leading to efforts by dealer groups in certain states to block Tesla direct sales.

In some states, these efforts are helped by existing franchise laws requiring automakers to sell through third-party dealerships. Texas is one of those states. It’s possible to buy a Tesla in Texas, and the company even has some showrooms in the state. But all purchases must be handled as out-of-state transactions, routed through Tesla stores in other states.

Tesla Cybertruck prototype - Nov. 2019

Tesla Cybertruck prototype – Nov. 2019

Tesla began lobbying for changes to the franchise law shortly after opening its first Texas showroom in 2013, but those efforts hit a brick wall. When the Texas legislature reconvened earlier this year, there was an expectation that things might be different, in part because of the factory plans.

In July 2020, Tesla announced Austin as its site for Cybertruck and Semi production, as well as Model 3 and Model Y for the eastern half of North America. The site is also expected to host a battery plant, supplying cells in the new 4680 format Tesla claims will dramatically cut cell cost.

Following the announcement, a bill—HB 4379—was introduced that would have allowed Tesla to sell cars directly to customers in Texas, but it stalled. A new bill will have to be introduced in the next legislative session, but because the Texas legislature only meets every two years, that means waiting until 2023.

So if the Austin factory opens on schedule (never guaranteed with Tesla, granted), cars built there will have to be shipped out of the state in order to be sold to Texans. That will add to the carbon footprint of each vehicle and, considering the size of the Texas new-car market, can’t be trivial.