Tesla tries a new, ambitious approach at Texas Capitol

[(Otto Mation)]

By Patrick Svitek,, The Texas Tribune

AUSTIN (The Texas Tribune) – Tesla is not giving up at the Texas Capitol. In fact, it’s getting more ambitious.

Instead of looking to create any kind of carve-out that favors the high-end electric car maker, legislation filed Friday would simply allow any vehicle manufacturer to sell directly to Texans — bypassing the middleman dealers — in Tesla’s biggest challenge yet to a longstanding state ban on the practice.

The proposal “will allow manufacturers of vehicles any weight, class, size or shape to sell direct to consumers,” said state Rep. Jason Isaac, the Dripping Springs Republican who filed the legislation in the House. “It’s a simple, free-market bill to allow that to happen.”

State Sen. Bob Hall, R-Edgewood, is carrying the legislation in the upper chamber. He and Isaac filed their bills, Senate Bill 2093 and House Bill 4236, on Friday with hours to go until the deadline to submit legislation for the biennial session. 

The legislation is likely to face an uphill climb in the Capitol, where previous efforts to make Texas more friendly to Tesla’s business model have failed. The company does not yet mass-produce its cars, instead allowing customers to order customized vehicles that it later delivers to them. In Texas, Tesla showcases its cars at galleries in the Austin, Dallas and Houston areas, but because the galleries are not franchised dealerships, state law restricts employees at those locations from sharing information about purchasing the vehicles. 

Last session, Tesla beefed up its presence at the Capitol — more than doubling the size of its lobbyist team — and pushed legislation that would have allowed manufacturers that have never sold their cars through independent dealerships in Texas (like Tesla) to operate up to 12 stores. The House bill did not get a committee vote; the Senate proposal never even received a hearing.

This time around, Tesla is hopeful the legislation is written in a way that assuages concerns that it is giving preferential treatment to the company. 

“There are no carve-outs, incentives, subsidies, breaks or deals for any manufacturers here,” tweeted David White, who has previously served as a spokesman for Tesla in Texas. “This is all about the consumer and it’s the direct sales model Texans have been asking for.” 

Dealerships have long argued the Texas direct-sales ban protects customers by ensuring that they have locations where they can buy cars across the state, not just in highly populated cities where manufacturers, if given the chance to sell directly, might otherwise set up shop. The opposition to such legislation also has an ally in Gov. Greg Abbott, who said after the 2015 session that Texas’ automobile sector seems to be “working quite well the way that it is.”

“Tesla’s legislation seeks to unravel the entire franchised dealer system in Texas, in favor of direct sales of motor vehicles by a manufacturer,” Texas Automobile Dealers Association president Bill Wolters said in a statement Friday. “SB 2093 and the reduced competition it will bring about in the new vehicle sales and service market will come at the expense of Texans and Texas.”

“No other vehicle manufacturer is seeking to change the law, and Tesla doesn’t need to either,” Wolters added.

For Isaac, the issue goes beyond Tesla. He recalled having something of an epiphany after recently touring an Amazon facility in Texas and seeing robots zip around with pallets: What if similar technology could one day be used to haul containers up and down the state’s highways?

“I really believe in the next 10 to 20 years we are going to see a complete change in our transportation system,” Isaac said, “and the last thing I want is any barrier to that technology being available.” 

Isaac acknowledged his bill faces a “really, really steep uphill climb” at the Capitol. However, he said, “I think we should have the conversation.”

Read more:

• Abbott has suggested Texas law does not need a loophole to allow Tesla to do business in the state.
• Tesla struggled to make progress under the pink dome last session.

Disclosure: Tesla Motors Inc. has been a financial supporter of The Texas Tribune. A complete list of Tribune donors and sponsors is available here.

This article originally appeared in The Texas Tribune at https://www.texastribune.org/2017/03/10/tesla-tries-new-approach-texas-capitol/.

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The post Tesla tries a new, ambitious approach at Texas Capitol appeared first on Covering Katy News.

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[Sparrow]

I would think the likes of GM, Chrysler, and Ford could increase their bottom line with such a revised way of doing business. Why let the dealers see all the profits?--just take them for themselves and their shareholders. Cut out the middle man.

 

I've always thought that an interesting evolution of the car shopping experience would be for the highway-side car dealerships to go by the wayside and instead car brands would be in the mall (yes, the mall). Why is it when I go to buy a car I have to pick and choose from the current inventory on the lot? Why can't I order a vehicle made with exactly the features and colors that I want? It's kind of like going to Sears and buying clothes off of the rack as opposed to getting a custom tailored suit. What's wrong with signing a contract to buy a car and getting it a week or two later delivered to my doorstep? The car companies would benefit from reduced inventory on hand--what sense does it make to be holding millions of dollars of inventory (outside in the elements no less)? Wouldn't it be great to go to one location and have the option of seeing what Volvo, Ford, Chevy, Honda, Toyota, Kia, Lexus, Mercedes, Tesla, etc. all have to offer?

 

Everyone wins--except the middle men car dealerships.

[BeerNut]

Going further than that I wouldn't mind picking up the vehicle directly from the factory if I could save a few grand.

[samagon]

15 hours ago, Sparrow said:

Why can't I order a vehicle made with exactly the features and colors that I want?

 

You can.

 

You buy a car that's on the dealer lot out of convenience, and a lot of times you can get the car on the lot for cheaper than you would get if you order to your spec.

 

So you go into a dealership and tell them you want a car spec'd a very specific way. They check their inventory, then they check the dealer network inventory. Then they order you a specific vehicle.

 

If it's on another dealer, expect a week or two turnaround.

 

If it's going to be ordered from the factory, you can't really put a timeline other than 1 - 3 months. Some car manufacturers produce in batches. So if you order a car with a sunroof, but they aren't building that spec, well, you'll have to wait for them to finish whatever they're currently building. The only time you can accurately put a timeline on a factory ordered car is when the VIN number is published. Of course, if it's an import, then there may be some time in customs, but that's probably just a few days, but you can never be sure. Some manufacturers have more updated techniques that allow them to make a car with a sunroof at the same time as one without, but most are still not at that level yet. 

 

Anyway, this is why people generally don't factory order a car, they don't want to wait up to 3 months to get a new car, and the dealership wants the money right now, so they'll deal a lot more freely with the cars on the lot.

[UtterlyUrban]

22 hours ago, Sparrow said:

I would think the likes of GM, Chrysler, and Ford could increase their bottom line with such a revised way of doing business. Why let the dealers see all the profits?--just take them for themselves and their shareholders. Cut out the middle man.

 

I've always thought that an interesting evolution of the car shopping experience would be for the highway-side car dealerships to go by the wayside and instead car brands would be in the mall (yes, the mall). Why is it when I go to buy a car I have to pick and choose from the current inventory on the lot? Why can't I order a vehicle made with exactly the features and colors that I want? It's kind of like going to Sears and buying clothes off of the rack as opposed to getting a custom tailored suit. What's wrong with signing a contract to buy a car and getting it a week or two later delivered to my doorstep? The car companies would benefit from reduced inventory on hand--what sense does it make to be holding millions of dollars of inventory (outside in the elements no less)? Wouldn't it be great to go to one location and have the option of seeing what Volvo, Ford, Chevy, Honda, Toyota, Kia, Lexus, Mercedes, Tesla, etc. all have to offer?

 

Everyone wins--except the middle men car dealerships.

1) You can order a car right now, exactly tailored to your specs from all available options.  It won't arrive in 2 weeks though.  But that has zero to do with dealerships and everything to do with manufacturing.

 

2) inventories at dealerships are not on the car manufacturer's books.  The inventory is carried by the dealer --- and there is a key reason for that......  Bob Lutz (no fan of Tesla, admittedly) does a fair job of explaining it here: http://www.roadandtrack.com/car-culture/a26859/bob-lutz-tesla/. Try to look past his GM bias. 

 

3) there is no reason that I can think of for the car brands to all want to share a common space.  The LAST thing a retailer wants is to share space with competitors.  

[samagon]

13 hours ago, UtterlyUrban said:

2) inventories at dealerships are not on the car manufacturer's books.  The inventory is carried by the dealer --- and there is a key reason for that......  Bob Lutz (no fan of Tesla, admittedly) does a fair job of explaining it here: http://www.roadandtrack.com/car-culture/a26859/bob-lutz-tesla/. Try to look past his GM bias. 

 

 

Heh, that article isn't quite panning out.

 

There are some interesting things that Bob Lutz is either really blind to, or willfully ignoring because there's no reason to do it that way.

 

Quote

But the fixed costs for an Apple store are next to nothing compared with a car dealership's. Smartphones and laptops don't need anything beyond a mall storefront and a staff of kids. A car dealership is very different. It sits on multiple acres. You need a big building with service bays, chargers, and a trained sales force, plus all the necessary finance and accounting people. 

 

When I read this, I read someone asking this question 20 years ago:

 

"Who wants to buy a book on Amazon and wait for delivery when they can buy it at Borders Book Store right now?"

 

Bob Lutz either has no imagination to see anything beyond the current model, or has some friends at dealerships that he wants to make happy by saying that a direct model doesn't work.

 

The one and only reason that direct sales don't work in the USA is because dealerships lobby so hard to keep their hooks in the forced distributor model.  https://www.ftc.gov/news-events/blogs/competition-matters/2015/05/direct-consumer-auto-sales-its-not-just-about-tesla

 

Literally, state laws (in many cases) prohibit direct sales of automobiles. The people and companies that make money owning dealerships are not going to relinquish those easily, so they lobby against anything that might show customers a different way that is better and easier.

[BeerNut]

I personally loathe the dealership buying experience.  Last two vehicles I bought were through internet sales department.  Everything went smooth until I went to dealership either they tried to tack on extra shit or balked at the negotiated price.