Texas won't allow Tesla to sell directly to customers

Tesla has lost its battle to sell its battery-powered vehicles directly to consumers in the state of Texas.

A bill backed by Tesla that would have made it possible for the EV maker to bypass local dealers and sell directly to customers failed to make it to the floor of the Texas House or Senate for voting before the Legislature's regular session came to a close on May 27. The Legislature won't meet again until 2015.

"The Legislature did the right thing," Karen Phillips, general counsel of the Texas Automobile Dealers Association, which opposed the legislation, told Automotive News.

Over the past few months Tesla has challenged franchise laws in several states with mixed results. Tesla has lost battles to sell directly to customers in Texas and Virginia, but has won cases in Minnesota, Massachusetts and New York.  Another case is pending in North Carolina.

Tesla will maintain company-owned outlets in states that have upheld franchise laws, but employees won't be allowed to conduct sales activities.

Elon Musk, the founder and CEO of Tesla, has vowed to take his efforts to circumvent franchise laws to the federal level if more states ban the automaker from selling directly to its customer base.