Texas

Texas Bill Would Prevent Tesla From Fixing Their Own Cars

The Lone Star State continues its attacks on Elon Musk's electric car company.

|

Tesla has hit another roadblock when it comes to selling their cars in Texas. The state has some of the most restrictive laws in the country which prohibit the direct sales of automobiles to consumers. Now a new bill would prevent the electric car company from servicing their own vehicles.

State Senator Kelly Hancock (R-North Richland Hills) introduced SB 1415 in the Texas legislature last week. The bill would change the state's transportation code to limit the ability of vehicle manufacturers to repair the vehicles they produce.

The bill is the latest attempt from the legislature to impede Tesla's ability to operate in the state. Since 2013, lawmakers have refused to consider four bills that would allow Tesla to sell cars directly to consumers. The company, which prides itself on being a disruptor in the auto industry by eliminating dealership middlemen, runs about 13 showrooms in the state. But employees are prohibited from giving customers pricing information or directing consumers to the company's website.

As Quartz notes, in 2018 the state also "blocked Tesla buyers from receiving the state's $2,500 alternative-fueled-vehicle incentive since the cars are not sold in dealerships."

In 2017, Reason TV reported on Tesla's issues in Texas and why the state continues to enact laws which protect car dealers and limit competition. Watch the full video below.

Editor's Note: We invite comments and request that they be civil and on-topic. We do not moderate or assume any responsibility for comments, which are owned by the readers who post them. Comments do not represent the views of Reason.com or Reason Foundation. We reserve the right to delete any comment for any reason at any time. Report abuses.

45 responses to “Texas Bill Would Prevent Tesla From Fixing Their Own Cars

  1. and yet somehow they’re still all over Dallas. Red Barchetta.

    1. Texas did help prevent buyers from getting one of the tax credits. So that’s a good thing.

      1. That tax credit box-out was incidental.

        Texas also has a law on the books that prevents customers buying directly from car manufacturers- which is not in consumer’s interests. It literally forces customers to pay more for a vehicle with delivery costs set plus markups for dealerships.

        1. Oh I understand all that. I’m just pointing out the silver lining. Albeit an unintentional one. Especially as I despise the idea that taxpayers are subsidizing these types of cars.

          1. Luckily few people buy electric cars compared to gasoline vehicles.

            It really is time to revisit all subsidies for energy, solar, and electric car companies and get rid of them all. Just let all these industries compete on their own merits.

            1. Same for oil & gas subsidies. Let them ALL compete on the same playing field.

              1. Of what oil and gas subsidies do you speak of? Gasoline is heavily taxed.

              2. Of what oil and gas subsidies do you speak of? Gasoline is heavily taxed.

    1. Why . . . why would you *not* want a high fence between you and your neighbors?

    2. My mannequins are always dressed appropriately for outdoor activities.

  2. What was even the original logic behind banning direct sale of vehicles? I don’t see how that’s not purely a boon for car salesman. It doesn’t seem to help the producer or the consumer.

    1. That was the explicit reason.

      1. Do you know how old these laws are?

        1. Interestingly, it looks like the feds are against these type of laws. This is a good example of where state laws are more oppressive than the federal government. This is why I am skeptical of the idea that jurisdictionally smaller governments are always better for liberty.

          1. This is why I am skeptical of the idea that jurisdictionally smaller governments are always better for liberty.

            In the narrow case where your Tesla doesn’t have the range to drive you out of Texas for repairs I tentatively agree.

          2. The good thing about small jurisdictions is not that they are always better for liberty but that they are easy to leave when they are not.

            1. Yup. Better for economics and informed decision-making: one huge market or a market of markets?

              I tend to think the latter and, in a somewhat emergent libertarian fashion, the arrangement doesn’t necessarily/automatically/intrinsically preclude the former the way the opposite arrangement does. As indicated, in the narrow case where the smaller regional government makes access to other markets excessively burdensome or even impossible, then the relative or effective size is immaterial, but you can’t (e.g.) just go shutting down local jails because it inconveniences felons seeking to access the federal court system.

        2. very old. You need to realize Texas still had blue laws until the early 1990s. When I worked in a grocery store in HS, on Saturday night we had to block off entire aisles because those items could not be sold on Sundays. The items were seen as encouraging work and the law was from the 1800s and intended to keep the Sabbath as a day of rest. Hell it was illegal to walk around with a pair of wire cutters in your pocket until 2001 because they were used to cut fences in the 1800s. Our arcane knife laws were just repealed in 2017. Before then you could not carry any knife with a blade longer than 5 1/2 inches, even when hunting. The reason was a law passed in the 1870s to stop fights using bowie knives across the state.

          1. The reason was a law passed in the 1870s to stop fights using bowie knives across the state.

            Like all them tussles down in Fort Spunky.

          2. At the ATL airport on a Sunday many years back. Got my ticket, checked the bags, and asked “where can I get a beer?”.
            Answer: “Son, you’re in Baptist country!”
            I got it on the plane.

    2. I don’t see how that’s not purely a boon for car salesman. It doesn’t seem to help the producer or the consumer.

      Any more than having a Wal-Mart helps the producers or the consumers. Admittedly, the internet has diminished the need some, but our within 5 mi. of where I live there are 5 dealerships stocked with cars from over 2 dozen makers from Kia and Nissan to Bentley and Rolls Royce. In easily less than a day, you could test drive dozens of cars from dozens of manufacturers. If you’re an auto buyer who’s into that sort of thing.

      1. But Walmart is not mandated by law. I’m not saying salesman should be banned in this way, maybe it is better, but the way now effectively bans the ability to try different things. And that does seem questionable.

        1. But Walmart is not mandated by law.

          I’m not agreeing that dealerships should be mandated by law. Just that the dealership does off some benefits to consumers and that any law enshrining the dealership defends or enshrines those benefits.

          Like I indicated, our local community has a number of dealerships. 3 are relatively massive and the community is relatively affluent and the tax burden kept low because of the sales and property taxes imposed on the dealerships.

          Again, I’m not saying that dealerships are *the* model that should be enshrined everywhere. Just that the EV market as it currently stands isn’t exactly lots more decentralized and unregulated.

          Our local community is actually relatively affluent without property taxes (in the village) and trivial village fines and fees specifically because of sales and property taxes on the local dealerships. It’s easy to avoid paying your local taxes in this regard by driving down the road and buying a different car from a different dealer. For EV’s this isn’t exactly the case and there’s no indication that if I did pay the taxes, they wouldn’t be funding Musk and California’s pet causes rather than any regional cause.

        2. The dealership model helps out most car manufacturers in one very important way: car manufacturing is an incredibly capital-intensive business, consuming vast amounts of investment cash.

          Dealerships take the pressure off the manufacturer’s very debt-laden capital structure, by taking retail demand and short-term inventory fluctuations out of the equation. The manufacturer only has to manage demand at the dealer level, which can be planned and executed more smoothly, over a longer time horizon.

          Not a justification, just an explanation of why most manufacturers are fully on board with the dealership model.

          1. Car manufacturers could stop acting like Americans want every new year vehicle to have a bunch of modifications and completely new styles. This and dealerships increase the cost of vehicles.

            Ever wonder why cars and trucks get massively more expensive at time progresses and technology gets better? Most products get cheaper and better over time. Computer components are a great example of that.

            I have even bought a few cars below invoice because car dealerships get some incentive cash from the car manufacturer, so its sometimes worth it to not lose a sale on Dec 31.

            1. Car manufacturers could stop acting like Americans want every new year vehicle to have a bunch of modifications and completely new styles.

              They could do that. But why would they when that’s what Americans want. It might not be what *you* want, but enough people want it that manufacturers do it. Or do you think these people are wasting money through ignorance? And if so, why are you not raking in the dough making the cars people really want?

              Most products get cheaper and better over time. Computer components are a great example of that.

              When was the last time you bought a computer component? Because while a given SKU might become cheaper over time, the *component* actually stays at roughly the same price over time – but the capabilities you’re getting with that component increase.

              Its the same with cars. Every cycle they’re a little bit better – while the price stays the same. If you want a lower quality/performance car for less money (in any given market segment), well that’s what the used market is for.

      2. No one is telling you that Walmart is the only form of store allowed.

        Texas is telling people that selling cars through a dealer is the only legal way to do it in the state – and that if you’re not a dealer, you can’t repair your own company’s cars.

        1. Texas is telling people that selling cars through a dealer is the only legal way to do it in the state – and that if you’re not a dealer, you can’t repair your own company’s cars.

          I don’t think this is entirely accurate. You aren’t allowed to produce, sell direct, and (in the case of Tesla require exclusive) service.

          Tesla being based in CA this pretty clearly boils down to either Texas gets to do what it wants or you think Congress should flex it’s Commerce Clause muscles. Not being a Texan (or a Californian) I’m leaning towards the former because, as an American, I’ve had enough of the latter.

          1. And if Texans don’t like the law, they should vote out their representatives.

          2. You aren’t allowed to produce *and sell direct [no comma here] or service* – it has to be done through a dealer.

            If you’re a producer the only legal way to get your cars into consumer’s hands in Texas is to set up a dealer network or partner with an existing one.

            As for what I think – I think its bullshit *and* I don’t think Congress needs to get involved.

            1. – it has to be done through a dealer.

              If you’re a producer the only legal way to get your cars into consumer’s hands in Texas is to set up a dealer network or partner with an existing one.

              I guess I’m thinking that the distinction between a dealer network and a P2P network is effectively moot. I mean the number of ‘Si Habla Espanol’ used car lots in the suburbs of any major city makes me think it’s not exceedingly difficult for a top shelf auto manufacturer to get a dealer network off the ground and/or that they were effectively going to set up distribution in the state anyway if only it didn’t identify as a dealership to ‘buck the trend’.

              1. It could be incredibly easy. It could, literally, simply be filing a form.

                The point is that *its legally mandated* that you have a separate dealership network. And that shouldn’t be a requirement.

    3. There was huge war between car manufacturers and other interests back then.

      The Big 3 pushed to have trams removed in cities, so more people would have to drive.
      General Motors streetcar conspiracy

      Not that trams were the transportation answer but car companies like GM spent money to manipulate local government transportation.

      Of course, a few years ago we had to bail out some of those companies with taxpayer money. Taxpayers also spend billions to put light rail system where the old trams used to run.

  3. Couldn’t we all use a little morekuakuaqun around here?

    Especially after Tulpa shows up to corpse-fuck a thread?

  4. Now a new bill would prevent the electric car company from servicing their own vehicles.

    Is this really a problem? My local Ford dealership performs services on behalf of Ford and will, upon request, use direct-from-the-factory Ford parts but otherwise services any one of several dozen makes of vehicles that roll into their garage with parts they have on hand or, conditionally, even ones I bring in. My understanding of some of Tesla’s inner workings suggest that they haven’t actually eliminated many of the middlemen and don’t perform the servicing themselves as much as source it to contractors. For a company that’s supposedly saving money by cutting out the middleman, their prices are still pretty high and service and used car sales are pretty shitty.

    As Quartz notes, in 2018 the state also “blocked Tesla buyers from receiving the state’s $2,500 alternative-fueled-vehicle incentive since the cars are not sold in dealerships.”

    Yeah, I’m gonna go with ‘both sides’ on this one.

  5. The law prohibiting a manufacturer from repairing the vehicles they build is an old law and the intent is not clear but this is Texas and we have ALOT of dealerships. A lot of dealerships that sell cars, trucks and SUVs who do not want to compete with Tesla. In addition, the entire industry knows the problem Musk is having so using political clout to hurt him further is not surprising. Musk has brought a lot of this on himself with his arrogant comments and especially his comments about Texas. Attacking the state is not the most effective way to get the legislature on your side. How this plays out, no one knows.

  6. Attacking the state is not the most effective way to get the legislature on your side.

    Yes. At the very least the people bemoaning Texas’ auto sales protectionism should realize that it effectively aligns or biases them with what is effectively California’s electric car mandate. To be clear, all the pickup trucks in Texas (and all the Volkswagens and Audis coming out of Germany) are already regulated to meet California emissions standards whether they ever see a traffic situation more congested than the lot at the dealership or not.

    1. He’s the one who went through the terribly *insane* six+ month process to buy a used Model X, right? That’s what I was thinking of above when I said “For a company that’s supposedly saving money by cutting out the middleman, their prices are still pretty high and service and used car sales are pretty shitty.”

      They dicked him over terribly on that sale and he even talks with a couple of friends who were dicked over worse (paying taxes on vehicles they own but don’t hold the title of and, therefore, can’t drive) and *still* talks favorably about Tesla. Either he’s making a ton off his Youtube channel and needs to maintain access or the Climate Change mindfuck is exceptionally strong. Or both.

      1. Yes. One of the best car/Tesla channels around.

        And that used Model X was purchased sight unseen as well.

  7. Now if the state will just prevent the other car manufacturers from repairing their own cars.

  8. Must be some Texas politicians bought and paid for by the Big 3 (or 4,5,6…). Politicians authoring and supporting this Bill need investigating.

Please to post comments

Comments are closed.