FTC Sides With Tesla

Lobbyists in several states have been trying to make Tesla’s life difficult and trying to use lawmaker might to prevent the brand from selling cars in these respective states. Now, the Federal Trade Commission (FTC) has offered their opinion on the matter, in particular pertaining to Missouri and New Jersey.

If you’ve been paying attention to Tesla articles beyond the usual adulation of Elon Musk, you probably know dealer associations feel since Tesla owns their dealers and sell direct to the consumer, they have a distinct advantage from the franchise business model that has been used for years. “Why shouldn’t Tesla go through the barriers of entry like we have?” they feel, so they’re putting pressure on lawmakers to make Tesla jump through these hoops.

But the FTC has a different opinion on the matter. According to their website, they have submitted written comments to Missouri State Representative Michael J. Colona and New Jersey State Assemblyman Paul D. Moriarty, both who had requested FTC opinions regarding legislative proposals that would have restricted the ability of Tesla to sell their vehicles directly to consumers. Respectively, the proposed Missouri bill “would expand current prohibitions of such sales by franchisors to also include sales by any manufacturer, regardless of whether they use independent dealers,” while the New Jersey bills “would create limited exceptions to state law that, as currently interpreted, requires motor vehicles to be sold only through independent auto dealers.”

Sounds anti-competitive, no? It seems the FTC feels the same way, stating that the Missouri proposal limits Tesla’s ability “to innovate in their methods of sale in ways that might be more cost-effective and responsive to consumer demand” and “is very likely harming both competition and consumers. By expanding the scope of the existing prohibition to include manufacturers that do not currently use, or even desire to sell through independent dealers, [the proposals] would amplify the adverse effects of the current prohibition” and “discourage innovation.”

New Jersey’s proposal was less restrictive but the FTC still feels “current New Jersey law . . . is very likely anticompetitive and harmful to consumers.”

Tesla is an interesting company not only because they have developed a different car, but they are using different channels to bring it to consumers—cars and dealers are evolving, making it an exciting time to be an automotive enthusiast.

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