Electric car manufacturer Tesla, the brainchild of billionaire Elon Musk, has long sought legal permission to bypass car dealerships and sell directly to consumers in the Lone Star State. Current Texas law requires all new car sales occur through a dealership. Clearly, if Tesla were given the ability to sell directly from the manufacturer to consumers, car dealerships would be bypassed, making the mainstream auto industry an enemy of Tesla’s efforts.
During the previous two legislative sessions, Tesla’s lobbying efforts failed. First, Tesla’s adversaries in the established auto-dealer industry were well-funded and well-organized. Second, lawmakers didn’t like the fact that Tesla’s proposed bill essentially created a “carve-out” for them, but no one else.
Last summer, however, the tide seemed to turn. Tesla succeeded in winning the support of Republicans at the Texas GOP convention after they embraced a more authentic free-market approach to the proposed legislation. Activists even went as far as making the deregulation of auto sales a plank in the Republican Party of Texas’ platform.
Tesla’s cause is not without controversy. The company invokes the conservative language of free markets and less government regulation to argue that they should be allowed to sell directly to consumers. Critics argue that a company which could not exist in the free market without extensive taxpayer subsidies should hardly be a darling of the right. The battle might be framed as crony capitalism vs. government subsidies, arguably forcing legislators to choose the lesser of two evils.
During the current legislative session, State Senator Bob Hall and State Representative Jason Isaac authored a pair of bills for Tesla’s efforts, Senate Bill 2093 and House Bill 4236. Senate Bill 2093 was referred to the Senate Committee on Business and Commerce; House Bill 4236 was referred to the House Committee on Licensing and Administrative Procedures.
Neither bill has received a committee hearing. At this late date, the Tesla bills are officially dead.
A look at the campaign finance records of the relevant committee members provides a likely explanation for Tesla’s defeat, once again, at the Texas Capitol.
Mr. T. Dan Friedkin, CEO of Gulf States Toyota, the largest auto dealer in Texas, and one of the most prolific political donors in Texas, has undoubtably influenced the outcome. For starters, in the last election cycle, Mr. Friedkin, invested heavily in the Texas Senate. Lieutenant Governor Patrick received $200,000 in contributions directly from Mr. Friedkin. And Mr. Friedkin’s related PAC, Gulf States Toyota PAC, contributed $4,000 to Business and Commerce Chairman State Senator Kelly Hancock and $2,500 to committee member State Senator Robert Nichols.
On the House side, Gulf States Toyota PAC contributed a combined $21,500 to members of the House Committee on Licensing and Administrative Procedures. The members of that committee who received funds from Mr. Friedkin’s PAC include State Representatives John Kuempel, Charlie Geren, Senfronia Thompson, Ryan Guillen, John Frullo, Ana Hernandez, Craig Goldman, and Chris Paddie.
Gulf States Toyota PAC also contributed $10,000 each to two high-profile players: State Representative Todd Hunter and State Senator Jane Nelson. State Rep. Hunter serves as chairman of the House Committee on Calendars and State Sen. Nelson serves as chair of the Senate Finance Committee. Due to their seniority and powerful committee positions, it’s virtually impossible to pass a bill in either chamber without the support of these individuals.
When it comes to campaign dollars, Elon Musk gave relatively few gifts, especially in comparison to the heavy spending by his competition. Mr. Musk donated a total of $10,000 to Texas legislators: $5,000 to State Senator Konni Burton, and $2,500 each to State Representatives Todd Hunter and Ron Simmons. Although Mr. Musk and Tesla’s efforts may be lacking in direct campaign contributions, they are still spending money. Rather than donating to political campaigns, it seems Mr. Musk & Co. prefer to enlist the efforts of lobbyists who have existing relationships with legislators. Tesla has employed lobbyists at the Capitol the last few sessions, but the 85th marked a sharp increase in the number of people in Austin being paid to push Telsa’s agenda.
The bottom line:
While Tesla’s efforts are also well-funded, there’s no doubt the relationships built by the auto dealer industry over many years in the Texas Capitol, primarily through Mr. Friedkin and his deep pockets, seem to have once again prevailed.
Our Capitol Crowd series outlines and highlights the politicians, advocacy groups, and donors that have the biggest impact during the 140-day legislative session. Check back throughout the session for updates.