Tesla Buyers Denied $2,500 Rebate in Texas

By · November 08, 2013

Tesla store in Austin, Texas

The Tesla store on Century Oaks Terrace in Austin, Tex.

Tesla Motors has its hands-full these days—with the third vehicle fire in six weeks and difficulties finding an adequate supply of batteries to meet growth expectations. On top of that, Tesla has to deal with Texas. The company is already not allowed to sell its vehicles in the Lone Star State. Now, Texans who manage to buy a Tesla are being blocked from receiving a planned $2,500 rebate for buyers of electric vehicles.

Under the Light-Duty Motor Vehicle Purchase or Lease Incentive Program, starting in April or May 2014, buyers of plug-in electric vehicles as well as compressed natural gas (CNG) and liquid petroleum gas (LPG) vehicles will be eligible for a $2,500 rebate. If the vehicle is leased, the rebate will be pro-rated on a four-year lease, so for example a three-year lease would receive $1,875, Guy Hoffman, Texas Emissions Reduction Plan Risk Assessment Manager with the Air Quality Division of the Texas Commission on Environmental Quality told PluginCars.com.

Tesla cars, although they are plug-in electric vehicles, won’t qualify for the $2,500 rebate, however, said Hoffman. That exclusion rests on the wording of the Texas Administrative Code, which states that only one incentive will be provided for each new light-duty motor vehicle purchased or leased in the state.

“Since Tesla vehicles are purchased directly from the manufacturer out of state, they would not meet this requirement,” said Hoffman.

Politics and Plugs

This is just the latest volley in an on-going battle between Tesla and the State of Texas over Tesla’s right to sell cars. In Texas, Tesla is prohibited from both selling and servicing its vehicles because the vehicles are not sold through a franchised dealer network.

Tesla operates two Tesla stores in Texas, in Houston and Austin. Employees in those stores are banned from discussing pricing or how to reserve a Tesla for purchase, as well as any financing or leasing options. The stores also cannot offer test drives.

In April, the Texas legislature considered a bill that would have exempted Tesla from the state’s franchise law so long as Tesla sold fewer than 5,000 units annually in Texas. Tesla put out a press release showing that 86 percent of respondents to a poll by the Austin Business Journal wanted Tesla to be allowed to sell in Texas. The bill did not pass.

Car dealers are major contributors to political campaigns and have been very successful at influencing the legislative process around the nation. They are protected from competition at many levels through individual states’ franchise laws.

By trying to open its own stores, and sell over the internet, Tesla has run afoul of powerful political interests, and not just in Texas. Dealers in Virginia and California have also tried to block Tesla from selling there.

In Virginia, the Department of Motor Vehicles rejected Tesla’s application to open a dealership. Tesla threatened to take the DMV to court and a compromise was reached allowing Tesla to open one store in the state. In California, dealers called Tesla’s advertisements misleading and asked the Department of Motor Vehicles to investigate. Tesla ignored the complaint and it remains unresolved.

Tesla did not respond to a request for comment for this story.

Update based on response from Tesla (11/12/13): To date, Tesla has more than 1,000 Model S on the road in Texas. The company said it will have a total of five Tesla Superchargers in Texas by the end of 2013, enabling free long distance throughout the triangle. The first stations were opened in Waco, San Marcos, and Columbus. Two additional stations are slated to open along the I-45 in Corsicana and Huntsville, connecting Dallas and Houston.

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