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Sunday, September 19, 2021

Tesla Will Make EVs In Texas but Can They Sell Them In Texas?


Tesla has announced that their next factory will be in Texas and construction is well underway. You can call it Giga Austin or Tera Texas, either way, this is great news. The Cybertruck and Semi are both expected to enter production from this site and it will mean jobs and revenue for the region. Tesla and the state of Texas seem to have a budding new friendship. Elon Musk has sold his California homes, moved to Boca Chica, Texas (or is that Starship, TX?) Speaking of Boca Chica, we can't forget about all the SpaceX activity in the state too. The Boring Company has even opened an office in the area. Musk is clearly all-in on Texas, but it is unclear if this will be a two-way relationship. 

The Lone Star State has named Giga Austin as The Manufacturing Project of the Year. And the state of Texas was given the 'Gold Shovel Award' by Area Development magazine for their business-friendly policies. 

Texas governor, Greg Abbott said, “The Lone Star State offers innovative businesses, the freedom to flourish with our pro-growth economic policies, a predictable regulatory environment, and our young, growing, and diverse workforce."

So with this mutual love-fest and pro-economics policies, certainly Texans will be able to buy the products that Tesla makes in the factories in Texas, right? Well, not directly. 

Currently, Texas state law does *not* allow Tesla to sell vehicles in the state. If you're a Texan and you want a Tesla, it has to be registered in another state and then transferred into Texas. When Giga Austin is online, it will be even more ridiculous. The vehicles will be legally required to be shipped out of the state before they can be delivered to someone that lives in Texas. You will not be able to go to the factory, take a tour, and drive home in your new just-off-the-line vehicle.

That's right, if you live in Texas, your vehicle will need to be loaded onto a truck and carried across the state line to New Mexico, Oklahoma, or Louisiana. Then the car carrier can turn around and take your vehicle to a Tesla service center where you can pick it up after you've paid for it online via a server that's outside the state. Note the loophole, this vehicle pick up is now not a "deliver", it's just an existing owner picking up their vehicle.

Why is this? As in many states, the auto dealership association has a significant amount of local political power. Tesla is not a member of their club. Tesla does not sell cars to dealerships, where dealerships add their mark-up, haggle on prices, sell you rust-proof undercoating, sell you service contracts, check with the backroom three times while you wait... Since they are not getting their cut, they want to do all they can to slow Tesla down in their region and they are using all of their political clout to do just that.

They say "everything is bigger in Texas," I guess that applies to cronyism and protectionism too. Maybe that saying doesn't apply to free markets and direct competition.

Oh, and if you thought, at least this means you won't have to pay Texas vehicle sales tax, I have bad news for you. Texas still requires their pound of flesh. 


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