Tesla Builds a Fan Base
Story by TERRY BOX
Photograpy by TOM FOX
Most young car buyers like Brad Holt can barely afford to fantasize about luxury sedans such as the ultra-chic $70,000 Tesla Model S.
Moreover, the all-electric Tesla — a long, slinky new sedan that is probably the highest-profile electric vehicle ever — can’t even be sold in Texas technically.
But the 26-year-old Holt, an independent film producer in Dallas, wanted one so much that he took all the money he earned from his first big job and poured it into a deposit on a Model S — before he had even driven one.
“I’m very interested in gadgets and techie stuff, and the transition to renewable energy,” said Holt, who also does video production for the University of North Texas. “This is all my favorite stuff in one package.”
Brad Holt of Dallas is a fan of his all-electric Tesla Model S. His car sports a vanity plate “OFFGAS.”
Though still a fledgling brand selling one expensive model of car, California-centric Tesla has already won widespread acclaim for the fleet Model S.
Among the Tesla’s accolades, Motor Trend named it the 2013 Car of the Year, calling it “one of the quickest American four-doors ever built.”
It has generated plenty of controversy, too, especially in Texas.
Tesla wants to sell directly to consumers here, avoiding the costly dealer networks that most automakers rely on.
But that violates Texas law, which prompted a bruising battle last summer with politically powerful new-car dealers — a fight Tesla ultimately lost.
Enacted decades ago, Texas’ law aims to protect dealers whose multimillion-dollar businesses could be rendered worthless if an automaker decided to just sell directly to consumers.
Texas law doesn’t prohibit anyone here from buying a Tesla off the website. But without a franchise, the company can’t facilitate a sale at its galleries or service centers in Texas, meaning employees there can’t discuss car prices, options, offer a test drive or take an order for a vehicle.
Despite the restrictions, Texans bought at least 1,000 of the 13,000 cars Tesla sold in the U.S. through the second quarter. Texas buyers order the vehicles — which can cost more than $90,000 with options — from Tesla’s website.
“The limitations to our business notwithstanding, we have a great franchise in Texas,” said Diarmuid O’Connell, vice president of corporate development at Tesla. “We could do better if we were unfettered.”
The Palo Alto-based company is headed by brash, tough-talking entrepreneur Elon Musk, 42, who co-founded PayPal and also runs a space exploration company called SpaceX.
“We want to sell direct while we are a low-volume manufacturer trying to get a business with a new technology established,” O’Connell said. “When we get to the third car, when we are selling hundreds of thousands of vehicles, it may make sense to go to a dealership model.”
The Tesla’s digital console is equipped with a touchscreen featuring Google Maps, a web browser, rear camera,hands-free phone and music system. But don’t expect any concessions from new-car dealers in the next Texas legislative session, says Lee Chapman, president of the Dallas-Fort Worth Metropolitan New Car Dealers Association.
“We think they should play by the same rules we do,” Chapman said. “And we think dealers could help them sell more vehicles than they can on their own.”
Tesla has “galleries” in Austin and Houston where potential customers can view and touch a Model S, and three service centers in Farmers Branch, Austin and Houston.
Tesla officials would not say how Texas ranks in comparison with other states, some of which allow direct sales.
But the company prominently included Texas in the network of supercharging stations it is building in the U.S., which will allow Tesla owners to recharge their batteries in less than an hour.
The charging stations are being placed along the West and East coasts and on routes between the two.
Tesla opened stations in three Texas cities: Columbus (near Houston), San Marcos and Waco.
Two more will be built between Dallas and Houston, the company says.
“The Texas market is really strong for us despite our not being able to sell cars there,” said Alexis Georgeson, a company spokeswoman.
The company could not say how many Texas sales Dallas accounts for.
But Georgeson called the Model S a “great fit for Dallas,” describing the area as a “huge market for us.”
Prospective buyers can see the Model S — Tesla’s only car — at the galleries in Houston and Austin. Tesla also organize sprivate test-drive events in North Texas to give consumers a chance to slide behind the wheel of the 362-horsepower Tesla, which is rated the equivalent of 94 miles per gallon in the city and 97 on the highway.
A couple of months after the cars get ordered from Tesla’s factory in Fremont — a former Toyota plant — they can be delivered to the service center in Farmers Branch.
Andrew Clavenna, an orthopedic spine surgeon from University Park, drove a Tesla at one of the events before deciding to order his.
At the time, he was considering other high-end vehicles such as the BMW M5 and Audi S8.
“When you start looking in that [luxury] segment, the pricing is not that different from one car to the next,” said Clavenna, 39, who is often on standby at Dallas Cowboys games in case players suffer a serious injury. “And it was a big consideration that I could lose all that hassle of upkeep with a conventional car.”
Fitted with the more powerful battery pack, the Model S can go about 260 miles between charges, Tesla says.
The most powerful models can blast to 60 miles per hour in 4 seconds, Motor Trend says, which is quicker than most muscle cars and many exotics.
“It’s just instant acceleration, almost like a roller coaster,” said Clavenna, who sold a 2007 Porsche 911 to buy his Tesla.
Sometime in the next year or so, Tesla plans to introduce an electric SUV called the Model X, followed in 2015 or 2016 by a smaller, cheaper, more mainstream sedan known as the Model E.
Those higher-volume vehicles may determine Tesla’s fate, said Jessica Caldwell, a senior analyst at Edmunds.com.
“The Model E will be the tipping point on whether Tesla is viable,” she said.
Meanwhile, Tesla expects to sell between 20,000 and 25,000 vehicles this year, which could slightly exceed those of the $29,000 Nissan Leaf electric car.
“Their selling model is kind of goofy,” Caldwell said. “But they’re pretty strong, and the bottom line is they are doing really well.”
The company’s stock sold for about $165 a share last week, giving it an astonishing market capitalization of nearly $20 billion.
“Texas should be a really good market for us,” said O’Connell, Tesla’s vice president of corporate development. “You can buy television sets directly from a manufacturer that are more expensive than some cars. Why exclude cars?” ■
The charge port on Holt’s Tesla glows in the night.