Tesla Motors CEO Elon Musk is firing all barrels against dealers in Texas in a franchise-law battle over whether the electric-car maker can sell its cars directly to the public.
Labeling many dealers as "extremely heinous" in an internal company e-mail, Musk is trying to rally support for Tesla's bid to carve out an exemption to a Texas law that prohibits manufacturer-owned dealerships. He plans to attend a Texas House committee hearing Tuesday, April 9, on behalf of the Tesla-backed legislation, a company spokeswoman confirmed to Automotive News.
Musk asked Twitter followers for support several times leading up to a Texas Senate hearing on the bill last week.
In the e-mail to employees, published on Forbes.com, Musk fired his most direct shots at dealers. He asked employees to contact Tesla fans or friends in Texas to rally at that hearing, and called Texas laws the "most restrictive" in the country, saying consumers are getting "ripped off by the auto dealers as a result."
"For everyone in Texas that ever got screwed by an auto dealer, this is your opportunity for payback," Musk wrote.
The Tesla spokeswoman confirmed the e-mail, saying it "unfortunately" found its way outside of the company.
The Texas Automobile Dealers Association opposes the legislation, arguing it will hurt dealers and consumers.
Karen Phillips, the association's general counsel, called Musk's e-mail to employees inappropriate. Texas legislators should be able to see beyond the number of people at a hearing and focus on the merits of the law, she said.
"We know he's incorrect, and we know that name calling is not constructive," Phillips said. "It shows the type of person we're dealing with."
Four dealers, including the Texas association's chairman, testified against the legislation last week. Senators took no immediate action, leaving the bill pending in committee.
While the Texas showdown is Tesla's most direct challenge to existing franchise laws, it's only the latest in a series of battles at the state level.
As dealers in some states try to tighten franchise laws against factory-owned dealerships, Tesla has been aggressively lobbying policymakers, reaching out to fans to foster public support and countering with its own franchise law proposals.
The EV maker chalked up a win in Minnesota last month when the state dealer association there dropped its pursuit -- for the time being -- of a bill that would have prevented Tesla stores in the state.
In Massachusetts, the state dealers association and Tesla are backing separate bills addressing factory ownership. Tesla, which also faces lawsuits by dealers in Massachusetts and New York, continues to track legislative activity in other states.
At last week's hearing, Diarmuid O'Connell, Tesla's vice president of business development, complained about the "gymnastics" Texans have to go through to buy a Tesla and have it serviced. He calls Tesla's current operating situation in the state "expensive, time-consuming and just ridiculous."
Staffers at Tesla's two so-called gallery locations in Houston and Austin are prohibited from sales activity. They can't talk about pricing or take orders. Buyers must contact out-of-state Tesla representatives to complete a sale and make their own shipping arrangements.
Tesla's service centers in Austin and Houston aren't allowed to evaluate vehicles for warranty repairs. Owners must call a dealership in Fremont, Calif., which determines remotely whether warranty work is needed. The California dealership then can subcontract out the fix to the Texas service centers.
The Texas association argued that Tesla is trying to create a monopoly for itself after a revision last week to the Senate bill's language. It specifies the exemption only for current U.S.-owned makers of electric vehicles that have never before sold through franchised dealers.
O'Connell said the wording is Tesla's attempt to make the exemption as narrow as possible to alleviate dealer concerns about incoming foreign automakers bypassing the franchise system.
