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Really Cool All-Electric Cars from Tesla are Having Problems Selling in Texas? Going Green, Tax Incentives & HOV Lane Access have Drivers Flocking to “All-Electric”

Tesla has been making a lot of waves in the automotive world. Proving that electric cars are a viable option for consumers, and that they can keep up with their internal combustion counterparts.

Tesla has been getting a lot of press in a world looking for alternatives to greenhouse gases.

Tesla Model S Midnight Metallic Grey

Note: Image above is a 2017 Tesla Model S with approximate price of $74,000. With a hefty price tag many believe sales to continue to grow. Particularly with many incentives offered by states.

However, in the southern part of the United States the company has been met with skepticism at best and hostility at worst.

However, in the state of Texas, it might be illegal to buy one of Tesla’s cars at all.

Best Selling All-Electric Vehicles Sold in the United States

The demand for all-electric vehicles is on the rise and expected to continue. Below is a table of the top selling all-electric vehicles in the United States for 2017.

The two top models are manufactured by Tesla. And without the market of Texas? 

RankElectric VehiclePriceUnits Sold
1Tesla Model S$68,00029,421
2Tesla Model X$79,50017,129
3Nissan Leaf$29,99014,006
4BMW I3$44,4507,625
5Fiat 500e$32,9955,330

What’s Going On with Tesla in Texas & a Bit of History

Tesla the company draws its inspiration from the historical figure of Tesla the scientist. The company was founded by Elon Musk.

Considered the father of modern electronics, Tesla is responsible for key discoveries such at alternating current, and his work influenced radio, television, and nearly every type of device we use today.

Tesla vehicles sales from 2015 to year end of 2017

Note: Since high-tax states offer incentives for all-electric vehicles companies such as Tesla continue to grow quarter by quarter. Not only with tax breaks, but access to HOV lanes for single drivers owning an all-electric vehicles.

Tesla was also vehemently against making a profit off something simply because he could, and this way of looking at the world also seems to be something that the company adopted along with the name.

This has led them to challenge the traditional fashion in which cars are sold.

Model X with Falcon Wing Doors

Image Credit: Consumer Reports

Note: 2017 Tesla Model X with falcon wing doors. Debuted in 2015, nearly 12,000 were sold by the 3rd quarter 2017.

That challenge hasn’t been well-received in many places, but in Texas it’s been particularly hostile. Tesla’s business model involves opening a company-run store and selling cars directly to the public.

There is no use of franchise auto dealerships, or any other sort of middleman. Tesla makes the cars, Tesla sells the cars. In Texas, apparently, that isn’t legal.

Sales of Tesla Vehicles Since 2015

QuarterTotal ProductionModel S salesModel 3 salesModel X salesTotal sales
Q1 201511,16010,04510,045
Q2 201512,80711,53211,532
Q3 201513,09111,597611,603
Q4 201514,03717,27220617,478
Q1 201615,51012,4202,40014,820
Q2 201618,3459,7644,63814,402
Q3 201625,18516,0478,77424,821
Q4 201624,88212,7009,50022,254
Q1 201725,41813,45011,55025,051
Q2 201725,70812,00010,00022,026
Q3 201725,33614,06522011,86526,150

Source

Traditional Franchise Car Dealerships Feel Threatened by Direct-to-Public Sales

Industry experts say that the traditional franchise car dealership feels threatened by the change to the business model of direct-to-public sales.

It cuts out the franchise entirely, and removes them from what they feel has been a hard-earned place in the supply chain.

Model 3 Tesla

Image Credit: Consumer Reports

Note: The new model 3 by Tesla. You get all the bells and whistles of the Model X except the price tag is only $35,000. Which is going to dramatically increase the market for all-electric drivers.

As such car dealerships have taken steps to make sure that anyone who wants to sell cars in Texas must do so via a franchise, or not at all.

Tesla, showing some spunk for a tiny car company, has refused to do any such thing.

At the moment they have “galleries” in Texas where their cars are on display, and where those interested in getting more information about electric cars can go, but they aren’t allowed to sell their cars there.

They’re galleries, not stores.

Super Charger Station for recharging.

Image Courtesy of Tesla

Note: The above image is a supercharger station for Tesla all-electric vehicles. One of the obvious issues for all-electric cars is the charging station infrastructure. Thus far, Tesla has seem to overcome the issue. You will see more charging stations in the future.

States with Electric Vehicle Charger Station Infrastructure

Below is a list of six states with electric vehicle charger station infrastructure. California is the top spot with 3,358 charger stations for Tesla vehicles. Or other all-electric vehicles such as the Nissan Leaf.

All states offer the federal tax credit of $7,500. And states with income tax offer a tax credit as listed.

However, single all-electric drivers enjoy the incentive of being able to drive in the “High Occupancy Vehicle” or HOV lane.

RankStateNumber of VehiclesSuper Charger StationsCharger StationsTax Credit*HOV Lane for Solo Drivers
1California257,973433,358$2,500 rebate (based on income eligibility)Yes
2Florida20,28814762$0Yes
3Nevada7,2566312$0Yes
4Maryland8,28511405$3,000Yes
5Colorado8,5239365$5,000No
6Tennessee5,3087360$0Yes

*All states federal $7,500 income tax credit.

Why all the Fuss?

Tesla is a tiny company, expecting to sell no more than 28,000 cars across the entire world in the next year. However, what they represent is something that has the traditional system shaking in its shoes; a business model upset.

If bigger car companies decided all of a sudden that they didn’t need middlemen either, then car dealerships would have some serious problems.

They would have to actively fight for their space and sales, more so than they’ve had to do already with the automotive collapse and additional vehicular related problems in the recession.

A car company deciding all at once to do all the work itself, and to keep all the profits, would make the cost of doing business enough to completely ruin a lot of dealerships.

So they’ve taken legal steps to halt innovation and progress. People have noticed.

Fuel Cost per Year for Popular Electric Vehicles

I decided to wrap this article up with the cost of fuel for popular electric and non-electric vehicles.

Not only is Tesla trying to cut out the middle-man dealership, consumers are trying to find more savings through all-electric vehicles.

The average American pays over $2,000 per year in gasoline. And that’s with a price at $2.25 per gallon. It over $2,500 per year when the price per gallon is over $3.15. 

As you can see below all-electric vehicles offer substantial savings at the pump. With savings of $1,400 per year or a whopping $14,000 over ten years is a reason why.

It is about time there is company which is looking out for the consumer and the common working person.

I wonder if the potential car buyers in Texas feel the same way? 

VehicleVehicle Technology EPAYearly
Fuel Cost
Toyota PriusParallel Hybrid$650
Tesla Model XElectric$700
Tesla Model SElectric$600
Honda Civic 1.5Regular Gasoline$1,000
Ford Fusion HybridParallel Hybrid$850
Volkswagen JettaRegular Gasoline$1,200
Ford Focus Electric*Electric$600
Honda Accord HybridGas / Electric$750
Chevrolet Impala 3.6LE85 & Gasoline$1,800
Chevrolet VoltSeries Plug-in Hybrid$650
Nissan LeafElectric$600
Median Dealership “Doc” Fees by State

Since the theme is about Tesla throwing a wrench into the dealerships gig in Texas I decided to put the median doc fees they charge by state.

Most of the states have “no limits” on doc fees. A dealer could charge much higher than the median cost.

Also, included in the property and sales tax rate charge by states. This is included since many consumers are trying to offset the taxes charged by the state with all-electric vehicles.

StateProperty Tax RateAnnual Tax Cost $23,000 vehicleSales Tax RateDealership Median Doc Fee
Alabama0.75%$1742% + county rate
+ city rate = total
$499
Alaska 0.00%$00% + municipality$200
Arizona1.68%$3885.6% + county + city$429
Arkansas
1.04%$2406.5% + county + city
= rate on 1st $2,500
-- plus --
6.5% on balance
$129
California
0.65%$1507.25% + local$80
Colorado
1.79%$4122.9% + county + city
+ district
$598
Connecticut2.41%$5556.35% for vehicle $50k or less
-----------
7.75% for vehicle over $50,000
$499
Delaware0.00%$04.25% "Motor Vehicle
Document Fee"
$292
District of Columbia
0.00%$06% "Excise Tax" for
vehicles under 3,499 lbs
-----------
7% for vehicles 3,500
to 4,999 pounds
-----------
8% for vehicles 5,000
pounds or more
-----------
0% for hybrid vehicles
rated over 40 mpg by
fueleconomy.gov
$300
Florida0.00%$06% + local "discretionary"
= rate on 1st $5,000
-- plus --
6% on balance
$799
Georgia
0.00%$04% + county$599
Hawaii 0.00%$04.166% "maximum
visible pass on rate"
-----------
4.712% for Honolulu
County (Oahu Island)
$245
Idaho 0.00%$06%$299
Illinois 0.00%$06.25% + local (+ 1.25%
more in Chicago)
$169
Indiana1.30%$3007%$198
Iowa 1.00%$2315% "One-Time
Registration Fee"
$180
Kansas 1.80%$4166.5% + local$399
Kentucky1.25%$2886% "Motor Vehicle
Usage Tax"
$450
Louisiana0.10%$235% + local$200
Maine 2.40%$5545.5%$499
Maryland0.00%$06% "Titling Tax"$300
Massachusetts 2.25%$5196.25%$395
Michigan
0.62%$1426%$210
Minnesota1.30%$2996.5%$75
Mississippi3.35%$7735%$260
Missouri1.92%$4434.225% + local$199
Montana0.37%$860%$299
Nebraska
1.44%$3315.5% + city rate
OR county rate
(if no city tax)
$299
Nevada1.72%$3986.85% + local$499
New Hampshire 1.80%$4150%$372
New Jersey0.00%$06.875%$399
New Mexico0.00%$03% "Motor Vehicle Excise"$339
New York0.00%$04% + local$75
North Carolina1.31%$3023% "Highway Use"$599
North Dakota0.00%$05% "Motor Vehicle Excise"$299
Ohio 0.00%$05.75% + local$250
Oklahoma
0.00%$03.25% "excise tax"
for new vehicles
-----------
$20 on first $1,500
+ 3.25% on balance
$299
Oregon0.00%$00%$75
Pennsylvania0.00%$06%
7% for Allegheny County
8% for City of Philadelphia
$134
Rhode Island4.77%$1,1007%$220
South Carolina2.37%$5465% ($500 max)$350
South Dakota0.00%$04% “motor vehicle excise"$129
Tennessee0.00%$07% + local rate on first
$1600 + 2.75% single
article tax on second
$1600 (to $3200)
$500
Texas 0.00%$06.25%$150
Utah
0.00%$04.70% + local$299
Vermont
0.00%$06%$180
Virginia

4.19%$9664.15% ($75 minimum)$599
Washington
0.00%$06.5% + local + 0.3%
"motor vehicle sales/
lease tax"
$150
West Virginia1.70%$3926%$175
Wisconsin
0.00%$05% + county$229
Wyoming1.80%$4154% + county$500
Sources

https://www.caranddriver.com/tesla

https://www.technologyreview.com/

http://www.businessinsider.com/tesla-the-origin-story-2014-10

http://reason.com/reasontv/2017/

Tesla in Texas

Alex L.

Alex L.

Alex L. is a professional blogger for The Glass Clinic. Alex recently earned his Master's degree from Full Sail University. He enjoys writing about various automotive related topics.

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