Tesla CEO pushes Texas to allow direct-to-consumer car sales

AUSTIN, Texas Wed Apr 10, 2013 6:40pm EDT

Tesla Chief Executive Office Elon Musk attends a celebration at his company's factory in Fremont, California, June 22, 2012, as the car company began delivering its Model S electric sedan. REUTERS/Noah Berger

Tesla Chief Executive Office Elon Musk attends a celebration at his company's factory in Fremont, California, June 22, 2012, as the car company began delivering its Model S electric sedan.

Credit: Reuters/Noah Berger

AUSTIN, Texas (Reuters) - Tesla Motors Inc (TSLA.O) Chief Executive Elon Musk is pushing to change Texas law to allow his electric car company to sell directly to consumers, and he took his fight to the state Capitol on Wednesday.

Texas law prevents Tesla from selling its cars directly to the public - as it does in other states - because it does not have a relationship with a franchised dealer. In Texas, new vehicles are generally required to be sold through dealers.

"Nothing could be further from what Texas is all about," Musk told reporters at a Capitol press conference on Wednesday, citing examples of Texans such as Michael Dell who have succeeded in direct-to-consumer sales.

A proposal in the Texas legislature would allow U.S.-based manufacturers of electric or battery-powered vehicles to sell directly to consumers in the state.

The Texas Automobile Dealers Association opposes the legislation, which is pending before committees in the House and Senate.

"We don't see any business reason or law reason that this product should receive a special exception from the law that applies to everyone else," said Rob Braziel, CEO of legislative affairs of the Texas Automobile Dealers Association.

Braziel said the association is worried that any manufacturer of electric vehicles could use the new law to compete directly with their own dealers.

State Representative Eddie Rodriguez, an Austin Democrat and the House author of the bill, said that he'd like to see the auto dealers come to the table to negotiate.

"I'm not trying to dismantle the current system," Rodriguez said. "But at the same time, we can't let the system get in the way of breakthrough technology."

Musk said he's been warned that the legislation is unlikely to succeed but that he wants to give the effort his best shot.

He said he discussed the proposal about a month ago with Texas Governor Rick Perry and that the governor agreed to support the measure if it lands on his desk. However, the governor's office did not confirm that.

"Unfortunately, I'm not privy to the personal conversations the governor has, so I can't confirm that for you," Perry spokesman Josh Havens said in an email. "The legislature will debate a number of bills this session and the governor will thoroughly review any that make it through the process and arrive on his desk."

Meanwhile, Tesla is allowed to show cars at educational galleries in Texas, but staffers there are not allowed to discuss prices or offer test drives, Musk said.

"Is Texas a free enterprise state or not?" Musk asked. "In this particular area, it is the worst in the country."

Musk reiterated on Wednesday that Tesla will report its first quarterly profit when it announces first-quarter results and that the company had exceeded it sales target for that period.

The automaker went public in 2010 and has narrowed its losses as production of the Model S sedan ramped up late last year. Earlier this month, Tesla said it was partnering with Wells Fargo & Co (WFC.N) and U.S. Bank (USB.N) on a financing product that it says will make its electric cars accessible to more people.

(Editing by Bernard Orr)

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