5 Reasons Why Texas and Tesla Deserve Each Other

Tesla Motors (NASDAQ: TSLA  ) CEO, Elon Musk, knew that changing the rules of retail in the auto industry wouldn't be easy. However, the state of Texas now poses the biggest threat to Tesla's disruptive retail strategy to date. The Lone Star State currently has strict regulations in place, which prevent Tesla from selling its all-electric vehicles directly to Texas consumers.

As the second-largest and second-most-populous state in the country, this creates a serious roadblock for the EV start-up. In an effort to transform the dreaded dealership experience, Musk pleaded Tesla's case in the heart of Texas last week saying: "What we're asking for from the Texas Legislature is really simple, it's just, let us sell our products directly to the people of Texas like we're able to do in the rest of the country."

Tesla has testified and won cases in other states including New York and Massachusetts, in which dealership associations had sued the EV maker. In fact, Tesla is now allowed to sell directly to consumers in the following states: New York, Florida, New Jersey, California, Colorado, Oregon, Washington, and Massachusetts. While this is certainly a start, Texas is a big piece of the puzzle for Tesla.

Supporting American business in Texas
State Sen. Craig Estes and state Rep. Eddie Rodriguez have already showed their support by filing bills on Tesla's behalf, according to the company. And why shouldn't they? Tesla and the state of Texas are well matched for a number of reasons.

The most obvious of these is the fact that Tesla is an American company, creating American jobs -- and what's more American than Texas? In his meeting with Texas legislators, Musk even hinted that Tesla could build a second manufacturing plant in Texas in coming years. "When we do establish a manufacturing plant outside of California, Texas would be a leading candidate for that," Musk said.

Not to mention, if Texas allows Tesla to implement its direct sales model in the state it would create thousands of new jobs. Of course, a flood of new jobs and a potential Tesla factory in Texas would be in addition to the "tens of millions of dollars" the company would invest in the state by opening stores and service centers there.

Moreover, new Tesla stores in Texas would bring an additional $7 million-$12 million to the local economy in their first year and approximately 20 new jobs, according to Tesla.

Finally, Tesla and Texas also align on the subject of sustainable energy. This may be surprising to some people since Texas is known for its oil refineries. However, the truth is that Austin is one of the 10 greenest cities in the United States. To be sure, Austin is on track to be carbon neutral by 2020. This makes Tesla's zero-emissions cars a perfect fit for the capital city's clean energy goals.

Made in Texas
The Texas market is so important to Tesla's future that Musk even teased the idea of a Texas-inspired electric truck. "I have this idea for a really advanced electric truck that has the performance of a sports car but actually more towing power and more carrying capacity than a gasoline or diesel truck of comparable size," he said.

From its American roots and green technology initiatives, to new job creation, investments in the local economy, and the potential for a Texas-based manufacturing plant -- the union of Texas and Tesla is a no-brainer. If Texas doesn't amend the franchise dealership rule to let Tesla do business in the state, I'll be shocked.

Near-faultless execution has led Tesla Motors to the brink of success, but the road ahead remains a hard one. Despite progress, a looming question remains: Will Tesla be able to fend off its big-name competitors? The Motley Fool answers this question and more in our most in-depth Tesla research available for smart investors like you. Thousands have already claimed their own premium ticker coverage, and you can gain instant access to your own by clicking here now.


Read/Post Comments (11) | Recommend This Article (3)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On April 16, 2013, at 8:26 PM, VickieDayton wrote:

    No one ever claimed that Texas legislators are smart.

  • Report this Comment On April 16, 2013, at 8:35 PM, Baldurdash wrote:

    Tesla is still a band?

  • Report this Comment On April 16, 2013, at 8:40 PM, peterwolf wrote:

    Here's how this will go down folks.

    Texas will get Tesla to move from California ( as they've done with so many California companies) and bring its manufacturing jobs to Austin or Dallas. In addition, because the brain-dead California Congressional Caucus is incapable of looking out for California's interests ( unlike their skilled Texan counterparts), they'll sponsor legislation in D.C. to federally fund Tesla in Texas in case it operates at a loss, in order to maintain alternative energy companies in the U.S.

  • Report this Comment On April 16, 2013, at 8:54 PM, Fooloprunes wrote:

    Tesla's execution may be impeccable, but unless there is a major breakthrough in battery technology, Tesla can only be a "boutique" vehicle manufacturer, so I doubt it can have much impact on the Texas economy.

    Besides that, a Tesla is going to look a bit silly with longhorns sprouting from its hood :)

  • Report this Comment On April 16, 2013, at 9:19 PM, Jeffkory wrote:

    Texas probably don't need a flood of jobs until their border problem is fixed..

  • Report this Comment On April 16, 2013, at 9:53 PM, MACSLACKERSON wrote:

    OH, THAT'S AN EASY ONE:

    IF YOU WANT SUCCESS,

    BUILD THE PLANT(S) IN OHIO.

    DU'UH.

    SOMETIMES SMART PEOPLE

    ARE SO DUMB.

    DON'T MESS WITH TEXAS.

  • Report this Comment On April 16, 2013, at 11:44 PM, rapnjoe wrote:

    Go Tesla !

  • Report this Comment On April 16, 2013, at 11:57 PM, Albert0Knox wrote:

    Texas government is very corrupt and political. It is definitly NOT about what is best for Texas or our citizens. the franchise law defends powerful established statewide dealerships. they have enormous power. Additionally Perry would like nothing more than to see Tesla fail (even though Musk has SpaceX facilities in Texas). Perry still has laughable dreams of a presidential run and would LOVE to kill an electric car with his own bare hands.

  • Report this Comment On April 17, 2013, at 2:05 AM, donkohoty wrote:

    Mr Musk.

    Keep up the good work.

    I salute you.

  • Report this Comment On April 17, 2013, at 2:20 AM, SuntanIronMan wrote:

    @Albert0Knox

    That is pure nonsense.

    Governor Perry has already explicitly said that he supports Musk plans to sell Tesla cars directly in the state of Texas.

    He is the governor though, not a state legislator. It isn't his decision one way or the other what happens. He supports the idea though, as do others. So there is a fair chance it will happen eventually.

    Also, Perry is a supporter of electric cars and electric car infrastructure, with a lot of private business in the state supporting the electric car industry. Texas is a electric car friendly state.

  • Report this Comment On April 17, 2013, at 11:38 AM, JackB125 wrote:

    Governor Perry has already promised to sign the bill if it is put before him.

Add your comment.

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 2366523, ~/Articles/ArticleHandler.aspx, 8/22/2014 7:20:12 AM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...


Advertisement