Tesla sets up shop in Dallas -- minus test-drives and sales

You can touch, but you can’t drive, a Model S electric car in the latest Tesla Motors gallery in Dallas’ Northpark Mall.

Tesla plans to open the doors to its 2,200-square-foot gallery Friday morning in the state with some of the most restrictive auto dealer franchise laws in the country. Under the legislation, galleries cannot offer test drives or discuss pricing or purchasing. Texas citizens who wish to buy a Tesla vehicle must order it online and have the car registered in California, then have it shipped and re-registered in Texas within 90 days of its delivery.

The company opened its first Texas gallery in Houston in October 2011, and added another location in Austin in 2013.

Though direct sales tactics are not allowed, representatives can discuss the vehicles’ technology. Tesla spokeswoman Alexis Georgeson said the galleries have proven to be a powerful tool in marketing its electric vehicles in the area.

“Our galleries create strong awareness for our product,” Georgeson said. “[They] are our advertising.”

According to Georgeson, there are nearly 2,000 Tesla vehicles registered in Texas, and the company has a strong following in the state. She said some Tesla owners have even been offering test drives to strangers to spread the word.

A bill was introduced to the Texas Legislature in March 2013 that would exempt Tesla from the restrictions on factory-owned dealerships under franchise laws. The proposed legislation failed to make it to the state House of Representatives floor by the end of its session, and legislators aren’t scheduled to reconvene until 2015.

The Texas Automobile Dealers Association -- which opposed the 2013 bill -- applauded Tesla’s foray into Dallas.

“We certainly welcome anyone to Texas who wants to follow the law and play by the rules like everybody else,” said Robert Braziel, CEO of legislative affairs for TADA. “The gallery complies with the law.”

Tesla has been considering Texas, along with Arizona, Nevada, New Mexico and California, for the site of its new battery factory. Texas Gov. Rick Perry has been courting the investment -- estimated to be valued at $5 billion -- with suggestions of reviewing or altering the state’s franchise laws.

“We do not believe … that economic development efforts to bring any business to Texas should in any way be connected to changing established laws in Texas for the singular benefit of any one company,” TADA chairman Rick Cavender wrote in an open letter to the Texas Legislature in March.

Earlier this week, two states moved forward on franchise law battles. The New Jersey Assembly passed a bill that would allow Tesla to sell directly to consumers. New York Gov. Andrew Cuomo signed into law legislation that permits the company to continue selling from its five company-owned stores, though it limits the opening of additional sites.

Tesla operates 52 stores across 17 states and Canada, and has galleries in Arizona, Maryland and New Jersey in addition to Texas. The company plans to open stores in Connecticut, Pennsylvania and Tennessee.

Georgeson said Tesla will continue to run its galleries in Texas, but plans to take up the franchise law battle again in 2015.

“We will continue to operate galleries in accordance with Texas law until, hopefully, we can get the legislation overturned.”

You can reach Katie Burke at kburke@crain.com -- Follow Katie on Twitter: @KatieGBurke



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