Musk Presses Texas Lawmakers for Direct Electric Car Sales

Elon Musk, the billionaire who leads Tesla Motors Inc., pressed the Texas legislature to pass a measure that would allow the electric carmaker to sell directly to consumers.

Musk said at a news conference today in Austin, the state capital, that current law requiring cars be sold by franchise dealers is hurting his business.

Texas would make up 15 percent to 20 percent of Tesla’s U.S. sales, up from 6 percent now, if lawmakers approve a bill to allow direct purchases of 100 percent electric- or battery-powered vehicles, he said. Palo Alto, California-based Tesla’s revenue will be $489 million in the quarter ended March 31, according to data compiled by Bloomberg.

Because of opposition from Texas auto dealers who object to changing the law, “Everyone warned me that you are going to get your ass kicked,” Musk said. “But we’re going to try.”

Tesla, seller of Model S electric sedans priced from $69,900 to more than $100,000, depending on battery size and options, said on March 31 it delivered more than 4,750 of the cars in the quarter that ended that day. Musk also said the 10-year-old company, named for inventor Nikola Tesla, attained its first quarterly profit in that period.

Arranging Purchase

A potential buyer in Texas must contact Tesla representatives in other states to arrange a purchase, including shipping the car to the buyer’s house, Musk said.

Governor Rick Perry, a Republican, told Musk last month that he would support allowing direct sales of electric cars if approved by lawmakers, Musk said. Josh Havens, a spokesman for Perry, declined to comment on Musk’s remarks.

Texas has the most restrictive laws among U.S. states on auto manufacturers selling to consumers, Musk said. Tesla earlier this year won dismissal of a lawsuit in Massachusetts seeking to stop it from operating its own showrooms.

Musk, 41, is also Tesla’s largest shareholder, with about a 24 percent stake in the carmaker’s outstanding shares, according to data compiled by Bloomberg. Tesla also counts Daimler AG and Toyota Motor Corp., which have purchased its battery packs and motors, as investors.

Allowing Tesla or other manufacturers to sell directly to consumers would “limit free enterprise and inflate the cost of vehicles because there would be no competitive reason for manufacturers to keep their costs down,” said Karen Phillips, general counsel of Texas Auto Dealers Association in Austin, which represents 1,250 new-car dealers.

Musk also heads Space Exploration Technologies Corp., based in Hawthorne, California, which is considering building a launch site in south Texas or Florida. The car legislation won’t be used in negotiations with Texas officials over state incentives, Musk said.

Tesla shares increased $1.25, or 3.1 percent, to $41.75 at 2:11 p.m. New York time.

Before it's here, it's on the Bloomberg Terminal.