Can Elon Musk's Hyperloop Help Tesla Overturn Texas' Tough Franchise Laws?

January 16, 2015

You can say a lot of things about Elon Musk, but you can't say he lets the grass grow under his feet. The serial entrepreneur has spearheaded a string of successful projects over the past two decades, including PayPal, Tesla Motors, and SpaceX.

ALSO SEE: According To Elon Musk, Tesla Model 3 Will Cost $35,000: Would You Buy One?

In 2013, though, Musk unveiled something completely new -- a public transportation concept he called the "Hyperloop". Critics scoffed that it was completely unfeasible, and some went so far as to accuse the man of being a dilettante. Even Musk himself said that the Hyperloop was an ambitious endeavor and that he wouldn't have much time to devote to it.

But here's the funny thing: that wacky, weird, moonshot of a mass-transit project could be just what Tesla Motors needs to upend Texas' strict franchise laws and start making headway in the Lone Star State.

Yesterday, Musk was in Austin, discussing a wide range of topics related to Texas, technology, and future developments. And while Texas clearly lost the battle for Tesla's first gigafactory, Musk floated the idea of constructing a test track for the Hyperloop there. He also published this tweet:

Do you hear that popping noise? That's the sound of Texas' economic development officials opening bottles of champagne to celebrate impending investment.

Of course, Tesla reps were quick to point out that Musk's comments weren't part of any bargain, and that the Hyperloop project is entirely independent from Tesla Motors. But c'mon. Musk isn't dumb. He knows what he's doing, and we have a couple of hunches, too:

1. He could be thinking only of the Hyperloop, with plans to address the Tesla situation through completely different means. This is pretty unlikely, but it's a possibility.

2. He could be conducting a run-of-the-mill charm offensive. Musk and Texas legislators have had harsh words for one another in the past, so perhaps this is his way of saying, "You know what? Let's start over." Down the line, once the two parties become comfortable with one another, maybe they can return to the topic of Tesla, franchise laws, and possibly, a new gigafactory.

3. He could be preparing to bargain. Using phrases like "Most likely in Texas" makes it clear that Musk is inclined to establish a foothold in the state, but only if conditions are right. To ensure that they are, he could bring legislators and other officials to the table for a few rounds of hardball.

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We only know Musk by reputation, but it's readily apparent that he's a smooth operator. He knows that he's hot property right now -- respected, well-liked, moneyed -- and that many cities, states, and countries would love to have his business.

He also knows that states like Texas are important places to sell Tesla's lineup of electric cars. And he's all-too-aware that Texas' network of auto dealers are putting up a lot of resistance, doing everything they can to maintain the strength of the franchise laws that have kept Tesla largely out of Texas.

When Musk debuted the Hyperloop a year-and-a-half ago, we don't know if he envisioned a day when it would become a bargaining chip in his fight against franchise laws. But no doubt, the thought has crossed his mind now. Whether he plans to use it directly or discreetly, we can't say, but we'd be surprised if he left such a powerful weapon in its holster. This is Texas we're talking about, after all.  


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