A House committee later today will take up the fight for sales between Tesla and the auto dealers of Texas, a legislative battle over “free markets” that has the potential to ultimately create widespread social change in the state.
First, understand that this is not a fight over whether a car or truck can be sold over the Internet. That already happens through dealerships across the state. Go online, look at the dealer’s inventory and make a purchase.
Second, know this bill is not really about bringing free markets to Texas retail sales of new autos by busting the monopoly of licensed franchise dealers. House Bill 1653 would exempt manufacturers such as Tesla from having to sell through a state licensed franchise dealership, but the manufacturer would be limited to having a dozen or fewer sales locations in the state. Limiting the number of manufacturer dealerships just gives Tesla a competitive advantage over the giant motor companies of Detroit while trying to be unthreatening to the majority of Texas dealerships. Such a carve-out for Tesla is not exactly about bringing consumer choice to Texas, even if Tesla In Texas tries to claim otherwise.
SB 639 by Kelly Hancock and HB 1653 by Eddie Rodriguez, Charles “Doc” Anderson, Jodie Laubenberg, Tan Parker, and Ron Simmons will promote consumer choice, competition and innovation by limiting big-government mandates that deny Texans the ability to purchase certain new vehicles directly from the manufacturer.
This bill rightly makes the distinction between protecting consumers and defending the wishes of an incumbent protected class. It does not negatively impact dealers and takes great care to protect the relationships between existing manufacturers and their franchisees.
If the Tesla carve-out is so limited, why is the Texas Automobile Dealers Association, TADA, fighting the legislation? It’s not like the soccer moms are going to suddenly abandon their minivan and local dealer to buy a luxury electric car that has a starting price almost $49,000 more than the median family income in Texas. However, if you are well to do, the appeal of the Tesla S is hard to deny.
A few high-end auto dealers may dislike the new competition. That competition would be there, though, if Tesla founder Elon Musk just paid for and set up a dozen franchise dealerships in Texas. The TADA is fighting because the auto dealers see the Tesla bill as one that could disrupt the entire market in the future. If Tesla breaks the monopoly franchise system now, other manufactures may want to in the future.
And that could have the biggest impact on the Texas economy, the funding of charities and politicians, and the survival of local newspapers since a certain big box store with its system of economy of scale moved into the state’s small towns forty years ago, wiping out the mom and pop pharmacies, groceries and general stores.