Texas auto dealers receive Tesla-sized dent from state GOP
Robert T. Garrett Published: May 20, 2016 6:04 pm
Tesla electric cars were on display during Earth Day Texas 2014 at Fair Park.
AUSTIN — Since 2013, Tesla Motors has pleaded unsuccessfully with lawmakers to allow Texans to buy its electric cars without a middleman dealer.
Last week, though, the carmaker won endorsement by state GOP convention delegates of letting consumers buy cars directly from manufacturers. It was an important victory for Elon Musk, Tesla’s chief executive, and one that showed there may be a weak link in the seemingly impenetrable army of auto dealers that has kept the California company from making major inroads in Texas.
Nearly 90 percent of the more than 8,000 delegates supported the Tesla-backed language in the party platform.
Platform committee members rejected pleas by two prominent figures in the state GOP — U.S. Rep. Roger Williams of Weatherford and former Republican national committeeman Bill Crocker of Austin – that they remove the call for direct car sales. Williams is a car dealer, and Crocker is a lawyer who represents car dealers.
For decades, the dealers’ lobby group and its allies have flecked off unwelcome bills like so much dandruff. There’s at least one dealer, if not more, in every lawmaker’s district, making them a powerful lot.
Last summer, Gov. Greg Abbott told Bloomberg Radio that the state has “a very effective automobile sector that seems like it’s working quite well.”
When cars break down, they need repair, the Republican governor noted. Abbott questioned the ability of Tesla, maker of a niche product, to provide that service. Tesla wants to have regional service centers, saying its cars rarely break down.
Tesla in Texas
In June 2014, then-Gov. Rick Perry drove up to a news conference in a Tesla Motors Type S electric car in Sacramento, Calif. At the time, Texas was hoping to land Tesla’s proposed $5 billion battery factory. (File Photo/The Associated Press)
Dealers contend that they’re the last remaining “Main Street merchants” in small Texas cities and towns and give $50 million in charity a year.
But dealers’ arguments have collided with a younger generation’s embrace of a new economy and Tesla’s unique mix of clean cars, high tech and celebrity. Musk is a PayPal co-founder who also owns rocket ship company Space X, which has a launch site near Brownsville. He’s channeling his hip image, along with the proclivity of tea party and libertarian-style activists to question all government intervention in the marketplace, into what he hopes will be more political success in the future.
David White, Tesla’s Texas spokesman, said he and two others working in the company’s booth at the Dallas convention spoke to thousands of delegates last week. Many were surprised to learn of barriers the Legislature has imposed that limit “open competition” in car sales, he said.
“If Texas is truly ‘wide open’ for business, our elected officials should take the appropriate steps to end these frivolous regulations in 2017,” White said.
The dealers, though, say that granting the wishes of Musk and his company would imperil some of the 1,300 businesses they run in 300 Texas towns, especially in less-populated areas.
San Antonio dealer B.J. “Red” McCombs has said the state’s franchise dealer law is “as sacred as Paul’s letter to the Corinthians.”
Rob Braziel, vice president of the car dealers’ group and its top lobbyist, said it will keep fighting for members’ 100,000 employees.
Tesla in Texas
Tesla CEO Elon Musk gives the opening keynote at the SXSW Interactive Festival in Austin in 2013. (File Photo/The Associated Press)
“Texas legislators have gotten this right time and time again that current Texas franchise auto dealer laws ensure competition and protect consumers,” he said.
Under the state’s occupations code, consumers may look at Tesla cars in the company’s three “galleries” in Dallas, Houston and Austin, but can’t test drive them without an appointment. They also can’t buy the cars onsite. A Tesla employee can discuss the technology but cannot discuss price, take orders or direct the customer to the company’s website.
In Texas, shoppers can test drive a Tesla only on Thursdays through Saturdays and only if the company first obtains a test drive event permit, Tesla says. The only way to buy a Tesla is to order online. The car will arrive registered in California, which means the customer has to re-register it in Texas. To have a Tesla worked on at one of the company’s four maintenance centers in Texas, service calls must be routed through the company’s California offices.
Tesla says Texas is one of only five states with such a burdensome process.
Though it has been trying to get the dealer-franchise law changed since 2013, Tesla has been outgunned by the auto dealers’ much bigger presence and millions in campaign contributions. That’s in spite of Tesla beefing up its spending on lobbyists last session. According to the campaign finance watchdog group Texans for Public Justice, Tesla spent $1.3 million on lobbyists, compared with the dealers’ $1 million.
In Dallas, company spokesman White, a veteran of several statewide GOP campaigns, showed off a red Model S Tesla in the exhibit hall and distributed a one-page handout. It noted that several GOP organizations support direct sales. It quoted former Gov. Rick Perry, who in 2014 was courting Tesla’s $5 billion battery factory, which ultimately went to Nevada. The state’s auto-sales laws “are old and some would say antiquated protection for car dealers,” Perry said.
Last week, the dealers fought the platform language.
Williams, the congressman, called all five members of the platform subcommittee on the economy, said subcommittee chairman Alan Arvello of Amarillo.
Asked about the calls, Williams spokesman Vince Zito said in an email, “Like all Members of Congress, Rep. Williams uses his spare time to help support his political party.”
In testimony to the full platform committee, car dealer lawyer Crocker and former state party executive director Beth Cubriel, a convention delegate from the Austin area, both sought to link Tesla to President Barack Obama. The car dealers’ group has hired Cubriel to do public relations work.
Platform subcommittee chairman Arvello, a physician assistant, said the pressure seemed to backfire.
“The more we were getting calls and having people try to influence us to vote against it, just some of that Texas emotion took over from my committee,” he said. “It was like, we’re going to do this!”