Following protests from Tesla owners, pending legislation in Texas — intended to remove a legal thorn stinging Berkshire Hathaway Automotive — has been altered to alleviate concerns that the electric vehicle maker would no longer be allowed to service vehicles in the state.
State senators and representatives were flooded with emails expressing worries that House Bill 2940 and Senate Bill 1415, if enacted, would require them to drive out of state for maintenance and repairs.
Geren: Concerns in bill addressed
"We worked out the problems with Tesla so Tesla can continue to work on their vehicles," Republican Rep. Charlie Geren said in a public hearing Tuesday, April 9, on House Bill 2940 in the House Licensing and Administrative Procedures Committee.
The substitute House Bill 2940 would allow vehicle manufacturers to own an interest in a dealership as long as they are not franchised dealers in Texas or a dealership of the same type of vehicle that the company manufactures or distributes, Geren said.
"We've confirmed with the Department of Motor Vehicles that the language in this bill does not negatively impact any legal, operating business in the motor vehicle industry," Geren said.
The DMV also confirmed that the language change does not violate state laws related to repair work or warranties, he added.
Several Tesla supporters spoke during an April 4 public hearing on Senate Bill 1415 in the Senate Business and Commerce Committee, and last week Tesla owner John Kingman testified on the House Bill 2940.
The House bill, as introduced, "could have created a great hardship for the Tesla owners living in Texas or passing through Texas who needed to get their cars serviced here," Kingman said. "And although Tesla Motors' concerns regarding service availability have been alleviated via the substitute bill, they are still being persecuted via language in this bill in respect to direct sales."
Karen Steakley, who works in business development and government affairs for Tesla, told the Senate committee that the substitute "addresses all of our concerns as it relates to service."
Beginning in 2017, the Texas Department of Motor Vehicles issued several violations alleging that Warren Buffett's Berkshire Hathaway Automotive's dealerships were operating illegally, which the company is contesting.
The dealership group's parent company, Berkshire Hathaway Inc., also owns Forest River Inc., which manufactures recreational vehicles. Texas law prohibits a vehicle manufacturer from also operating dealerships, even if the outlets sell other vehicle types.
The law also bans Tesla-owned stores in the state.
The bills were introduced in early March and follow a similar effort two years ago that failed.
In March 2015, Berkshire Hathaway purchased Van Tuyl Group, then the nation's largest privately held dealership group, with 81 stores. Today, Berkshire Hathaway Automotive's website lists 85 dealerships in 10 states, including more than two dozen in Texas.
Berkshire Hathaway Automotive CEO Jeff Rachor could not be reached for comment.
The Texas Automobile Dealers Association is supportive of the new legislation, said Donnie Buckalew, chairman of the Texas dealers association and vice president and general manager of Buckalew Chevrolet in Conroe. Buckalew testified for the substitute House bill last week.
The Senate bill was voted out of the Business and Commerce Committee last week, and the House bill remains pending in committee. The bills must be acted on by May 27, when the Texas legislative session ends.
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