Tesla makes cars in Texas but has to re-import them for sale in the Lone Star State

The Tesla factory in Fremont, California.

The Tesla factory in Fremont, California.
Photo: Ben Margot (PA)

The Texas legislature adjourned May 31 without making changes to state auto dealer franchise laws, meaning the only way Tesla could sell electric cars made at its next plant in Austin will be to ship them out of state and re-import them.

The reader first reported that franchise laws currently prohibit automakers like Tesla from selling cars directly to consumers, but instead require that cars be purchased from third-party dealers, which means Tesla stores cannot sell or ship to Texans. As it stands, loopholes allow Tesla to operate “galleries” where prices are not discussed, but no Tesla facility in Texas can process the documents and cars must be delivered for collection. external deposits:

Any Texan can go online and order a Tesla from the company’s website. But no orders can be placed or processed at Tesla’s Texas facilities. A buyer noted that his paperwork was sent by FedEx to and from a Tesla store in Nevada for completion.

Once ordered, the vehicle is shipped to one of Tesla’s eight service centers in Texas. The buyer must first pay online (from outside the facility compound) and can then drive it, which means Tesla did not actually “deliver” the car to a buyer, but simply made it available to be “picked up” by a current owner.

Texas is not unique in these restrictions. It’s just remarkable because Tesla is actually building a factory there. From 2018, some sixteen states had laws that would prevent Tesla from opening its own dealers, while nine others had limits on the total number of stores the company could operate. California, where Tesla’s main U.S. facility in Fremont is located, does not have a similar law in place.

Tesla CEO Elon Musk said the Austin manufacturing plant employs 10,000 people by the end of 2022 and could start building cars as early as the end of 2021. The $ 1.1 billion project will manufacture Tesla models, including the Semi, compact Model 3, Model Y and Cybertruck.

HB 3479, a legislative proposal that would have exempted companies that only manufacture battery-powered vehicles and did not have franchise distributors in Texas, never left the committee after being heard in May, according to the Drive. This bill was designed primarily for Tesla and would exclude most of the other major electric vehicle manufacturers, but the Reported yard it could benefit other companies including Rivian, Lucid and Canoo. Another more radical electric vehicle bill, HB 2221, stalled after being voted out Committee. That means Texas lawmakers essentially dropped the case before the end of the session. These and similar proposals have been fought by auto distributors and car dealers, who (rightly) fear that manufacturers may simply view them as unnecessary middlemen and lower their prices, leading to the bankruptcy of dealerships.

Musk tweeted at the end of last month that “Tesla would certainly appreciate changing the law, so that [the workaround] is not required! ”But it seems pretty unlikely that the situation will change anytime soon.

The Texas Legislature does not meet every year and is not expected to meet again until January 2023. According to New York Post, the only option remaining for Tesla to sell cars directly in the state anytime soon would be for Governor Greg Abbott to convene a special session on the subject. voter suppression bills, and his office did not respond to the Post’s requests for comment on Tuesday. Similar proposals have gone unheeded in 2013 and 2015.

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