Billionaire serial entrepreneur Elon Musk moved from California to Texas on the basis of the lighter regulations, but only after giving up on lobbying efforts to undo state rules that prevented him from selling his Tesla vehicles directly to customers in the state.
The Lone Star State forbids automobile manufacturers from owning or operating retail car dealerships. For years, Musk fought to modify the law to accommodate his company, which sold vehicles directly to customers elsewhere.
In 2013, he rallied people to gather at the state’s Senate building and demand that the law be changed.
“It is crazy that Texas, which prides itself on individual freedom, has the most restrictive laws in the country protecting the big auto dealer groups from competition,” Musk wrote in a mass email, according to Forbes.
His effort to change the law failed largely because he was financially steamrolled by the Texas Automobile Dealers Association.
Musk paid eight lobbyists up to $345,000 during the 2013 session, while the auto dealers paid $780,000 to 26 lobbyists, according to Lobby Watch, a Texas watchdog group.
“If Tesla and Elon Musk are serious about breaking Texas’ powerful car-dealer cartel they will need to drop a lot more political cash,” the group wrote in 2013.
Musk beefed up his team in 2015 to 20 lobbyists and spent more than $150,000 on campaign contributions, according to Bloomberg. Despite the increased effort, the reform bill did not receive a floor vote in the state’s House of Representatives or Senate.
“They [the Texas legislator] are thwarting the will of the people,” Diarmuid O’Connell, vice president of business development for Tesla, told Bloomberg in 2015.
Musk’s third attempt to sell automobiles directly to Texans occurred in 2017, but it wasn’t a charm. The bill would have allowed all automakers to sell directly to customers. Past efforts were narrower and only pertained to electric or battery-powered vehicles. Still, the more inclusive approach reaped the same result as the bill failed to pass the Legislature.
“Once again, the legislature failed to act on Texans’ demands for 21st century car-buying options, meaning the state will continue to fall behind and lose out on valuable economic development opportunities,” Tesla said in a statement shortly after the bill failed.
In 2019, Musk moved all car sales online, making the need for dealerships obsolete.
“This will be a fundamental long-term competitive advantage of Tesla that … only a startup could replicate,” Musk said when announcing the change.
The company stated that moving sales online would “lower all vehicle prices by about 6% on average.”
Tesla has several galleries in Texas that display its automobiles. However, to buy one, a customer must go online and purchase the vehicle from an out-of-state dealer.
Musk relocated to Austin, Texas, where he will reportedly focus on two priorities: getting his Starship spacecraft up and running, which recently suffered a setback when an unmanned prototype exploded upon landing, and complete construction of his Gigafactory near Austin, which will manufacture the company’s all-electric trucks, the Cybertruck and the Tesla Semi.
