Tesla has a massive presence in Texas, and CEO Elon Musk also owns a SpaceX production facility in the region, but his EVs still get no tax rebate.
The world-famous electric vehicle maker, Tesla, is not eligible for a tax rebate for selling its EVs in Texas. Tesla has multiple factories worldwide, including Shanghai, China, and Berlin, Germany. In the U.S., Tesla recently inaugurated its latest Gigafactory in Austin, Texas, and delivered the initial batch of vehicles manufactured in the facility during a grand opening party dubbed the “Cyber Rodeo.”
The Giga Texas, as it’s called, aims to manufacture Tesla’s popular EVs, including the Model 3 and Model Y, for the Eastern United States. Furthermore, it also plans to produce the upcoming Tesla Semi and the Cybertruck in the future. In addition to a Tesla Gigafactory, Musk also has a SpaceX facility in Boca Chica in Texas, which is primarily a rocket production facility.
However, despite creating thousands of jobs and contributing a considerable sum to the state’s economy, Tesla is not eligible for a tax rebate under the state’s Light-Duty Motor Vehicle Purchase or Lease Incentive Program managed by Texas Commission on Environmental Quality. It is primarily because Tesla does not comply with the state’s long-standing Franchised Dealer law. The same law prevents Tesla from selling its electric vehicles directly to buyers in Texas.
Tesla Gets No EV Tax Rebate In Texas
According to the law, car manufacturers can only sell or lease their vehicles in Texas through a state-licensed new vehicle dealer or a leasing company. Tesla, however, does not follow this rule and prefers to sell its vehicles directly to customers. As a result, Tesla makes its electric cars in the Giga Texas facility but transports them outside state lines to sell directly to buyers.
A spokesperson from Texas Commission on Environment Quality told The Center Square, “Under Texas law, vehicles purchased directly from the manufacturer or an out-of-state dealer not licensed to sell or lease new vehicles in Texas are not eligible for a rebate.” What’s surprising is that in addition to EVs, the program also includes electrified vehicles from BMW, Audi, Bently, Porsche, etc. The list also consists of a 2018 RAM Dodge RAM 2500, which runs on a CNG/GAS powertrain.
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The Texas law is in place to “protect competition” and provide a more “effective” and “efficient” vehicle delivery model in the state, according to a Texas Automobile Dealers Association spokesperson. Texas isn’t the only place with such a law, as Michigan also mandates cars to be sold or leased via licensed dealers. Despite not receiving EV rebates, Tesla did receive $50 million in state tax incentives under Texas’ Tax Code Chapter 313 program in 2020. In recent years, new Tesla rivals have sprung up on the market, offering a high driving range at a low buying price. So, will this law hold Tesla back in Texas? Only time will tell.
