Musk at Giga Texas opening. Source: Tesla
Despite having just moved its headquarters to the state capital of Austin to sit alongside its recently opened Gigafactory Texas, Tesla has been excluded from the state’s electric vehicle incentive program.
Tesla officially made Gigafactory Texas its headquarters in late 2021 in a move that is expected to create at least 20,000 direct jobs and 100,000 indirect jobs over time. But its insistence on selling directly to consumers, avoiding franchised car dealers, still does not go down well.
Texas offers locals rebates of up to $US2,500 for the purchase or lease of electric car in its “Light-Duty Motor Vehicle Purchase or Lease Incentive Program”
And though the list of eligible vehicles is long and comprises 142 different models from basically every major automaker – including 22 models from BMW, 17 from Porsche, 15 from Audi, 6 each from Mercedes-Benz and Volkswagen, 7 from Volvo, and 14 from Ford – Tesla’s name is absent.
“The program currently requires that eligible vehicles must be purchased or leased from a licensed new vehicle dealer or leasing company in Texas,” says Laura Lopez, a media and community relations manager for the Texas Commission on Environmental Quality, who spoke to The Center Square.
“Under Texas law, vehicles purchased directly from the manufacturer or an out-of-state dealer not licensed to sell or lease new vehicles in Texas are not eligible for a rebate.”
Some Texas lawmakers have tried to introduce legislation designed to roll back this prohibition, but they have failed to advance and the Texas Legislature is not due to return until 2023.
“Texas franchised dealer laws protect competition and provide the most efficient and effective delivery model for new and used car sales in Texas,” claimed Jennifer Stevens, a spokesperson for the Texas Automobile Dealers Association.
“The current system works well for Texas and Texans.”
Ironically, this means that Tesla will need to ship its made-in-Texas vehicles out of state before then delivering them to Texas Tesla buyers.
“The prohibition on direct vehicle purchases from manufacturers comes down to Texas’s antiquated franchise laws,” explained Zach Whiting, senior fellow of technology policy at the Texas Public Policy Foundation, speaking to The Center Square.
“Understandably, the auto dealerships oppose changes to the franchise laws … However, technology has opened new possibilities to purchase the vehicle you want, not necessarily a vehicle in a dealer’s lot.
“As a matter of liberty within the free market, one should be able to purchase whatever vehicle, from whomever, wherever, and however one wants and can afford.”
Ironically, even Ford has predicted that EV sales will be made directly to the consumer, by-passing dealerships. And Carla Bailo, president and CEO of the Center for Automotive Research in Michigan, says dealership laws “are protecting something that might be going by the wayside in any case.”
“The dealer, unfortunately, hasn’t always been a pleasant experience for a lot of people.”
Keyword: Texas excludes Tesla from electric vehicle rebates program