Hint hint — this story has the makings of another whole untold story at the bottom.
I only touch on it here, and have really said nothing about it until now. It has to do with one lone Texan pitted against three hired guns for Tesla who had a showdown on making a hole for Tesla.
Unfortunately no one recorded this back-and-forth between Tesla’s legal council, its Washington lobbyist, an economics professor, versus one auto dealer president.
It’s been said “you can catch more flies with honey than vinegar,” and could a new take on that in Texas be Tesla can catch more legislators’ ears with a Gigafactory?
That possibility was one angle discussed in a piece by San Antonio Express-News business writer Neal Morton who confirmed his city is one of the potential candidates posturing and preening itself as attractive now in the eyes of Tesla Motors.
According to his report, Texas Governor Rick Perry is leading the negotiations with Tesla for a $5 billion factory that could bring 6,500 jobs, with groundbreaking as soon as this year.
“They made it clear to us they want to go through state-level entities, then screen down to the local level,” said Mario Hernandez, president of the San Antonio Economic Development Foundation often governor’s office. “The governor has signed a nondisclosure agreement [with Tesla], so the information they revealed is very limited at this point.
“We are in direct contact with the governor’s office, and at this point they are on the lead.”
As you may recall also, Tesla is barred from operating its sales and service centers in Texas.
This remained true after May last year when the Texas Auto Dealer Association (TADA) led a successful campaign against Tesla which petitioned the state legislature to make a hole in the laws allowing Tesla through.
The TADA said it had a raft of reasons why and no one but HybridCars.com gave them full billing, but the court of public opinion is still less than convinced.
In speaking to an analyst for Kelley Blue Book on the subject, the San Antonio reporter Morton aired the notion that Tesla could in time exert far more clout in a way that legislators understand – by talking about their constituents’ dollars and jobs.
If Tesla were to set up shop somewhere in Texas like San Antonio – proximal also to Toyota and a potential rocket and spacecraft venture in Brownsville – and then Texas laws were such that cars sold poorly in state, how would that go down politically?
“I hadn’t considered that angle, but it does make a lot of sense,” said Kelley analyst Alec Gutierrez apparently in response to a leading question by the reporter. “If you talk about building a factory, bringing jobs, supporting the (Texas) economy, I can see that as a rather bold play by Elon Musk.
“If he’s running into hurdles trying to sell his cars there, what better way to circumvent that than bringing jobs?”
But the TADA is sticking to its guns, and said in a statement it would welcome anyone offering job creation in Texas “as long as they play by the rules.”
The rules include car sellers must submit to franchising.
The state auto dealer association figures its members invest over $10 billion in Texas as it is, “so legislators will not be easily tricked into abandoning a system that has worked so well for consumers for years to allow a direct sales approach.”
Fans are quick also to accuse dealers of attempting to maintain a unethical, and self-centered economic hegemony.
The TADA is well aware of the bitterness felt by some against it, but has insisted while its members do stand to gain, this is not its sole rationale. Rather, it’s a complex balance of control against concerns over other OEMs that stand to use the Tesla case example as a wedge to erode economic safeguards.
The TADA argues also at stake – even if it is not widely reported – is consumers’ welfare, local small economies, even safety concerns.
Last fall HybridCars.com spoke with TADA President Bill Wolters in follow-up to the long piece linked above in this piece.
He said he had personally been willing to help Tesla craft its strategy so that it could still operate essentially the same as it has. These include:
• A mall-based showroom
• Off-site service
• Technical advisors rather than salesmen
• One set price
• Control of the number of outlets and dealership process
• Ownership if there is an investor of Tesla’s choosing who has a buy-out provision.
These can all be done within the confines of existing Texas state franchise law, but the media has typically not reported the full extent of Texas’ arguments.
Last fall we offered Tesla an opportunity to comment on the above bullet points that were the subject of a Tesla versus Texas debate that was never published, but Tesla declined.
Tesla is following its own path, and if its Gigafactory is constructed in Texas, it may get its way. Or, if it settles elsewhere, it will have less potential leverage and have to figure something else out when the Texas state legislature reconvenes after a two-year period in 2015.
In any event, eyes now are on a future, said David Marquez, economic development director for Bexar County, Texas, the county in which San Antonio resides.
“Everyone’s gunning for them, and it will become a little bit of a beauty pageant,” he said. “Everyone’s scrubbing their databases to check for contacts they have, (and) it’s most important that you know somebody who knows somebody.
“I’ve got my staff researching to try to see what’s in the pipeline,” he added. “But every other major city and economic development group in Texas is doing the same thing.”
San Antonio Express-News