Houston Matters

Will Texas Ever Allow Car Makers Like Tesla Sell Directly to the Consumer?

Elon Musk’s auto company Tesla Motors sells electric cars directly to the public through self-owned stores, not dealers. It’s a shift in approach for the auto industry, which has operated for a century with dealerships serving as the middle man between automakers and consumers. But Tesla can’t open stores in Texas, or four other U.S. […]

Elon Musk’s auto company Tesla Motors sells electric cars directly to the public through self-owned stores, not dealers. It’s a shift in approach for the auto industry, which has operated for a century with dealerships serving as the middle man between automakers and consumers. But Tesla can’t open stores in Texas, or four other U.S. states, which ban such direct sales by automakers.

State Rep. Eddie Rodriguez of Austin wants to change that. He’s proposed a bill that calls for up to a dozen designated Tesla stores to be allowed across Texas.

Forbes Magazine’s map indicating which U.S. states do and do not allow Tesla stores.

Proponents say allowing Tesla stores to open here would promote a free market and give consumers more choices. Opponents argue the business model amounts to a monopoly, and that the Texas franchised dealer system protects consumers and prevents monopolies through competition on motor vehicle sales and service.

We discuss Tesla’s business model and how it could potentially affect dealerships in Texas if Tesla stores were allowed here. We talk with Rep. Rodriguez about his bill and why he wants Tesla-owned stores to operate in Texas. Then we hear from Carroll Smith, President of Monument Chevrolet in Pasadena, who serves on the board of directors of the National Automobile Dealers Association, which opposes the proposed bill.

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