FTC staff comes out in favor of Tesla, direct vehicle sales

On the subject of Tesla Motors and its efforts to legally sell its electric vehicles directly to consumers without franchised dealerships, the FTC has taken aim at Missouri and New Jersey. The Commission hasn't made any nationwide decision on the subject quite yet, but in a May 16 statement it encouraged the two states to reconsider policies that would further prohibit automakers from selling directly to consumers. And the FTC didn't mince words, calling such laws an example of "protection that is likely harming both competition and consumers." This is much further than the FTC has ever gone before in support of direct vehicle sales.

FTC didn't mince words, saying such laws were "likely harming both competition and consumers."

The statement follows an April blog post from three FTC officials, who wrote that the anti-direct sales mandates were "protectionist" and "bad policy." Tesla has been doing battle with a number of states as well as lobbying efforts from the National Automobile Dealers Association (NADA), which represents 16,000 new car and truck dealerships representing about 32,000 domestic and international franchises. The NADA has been supporting dealers who oppose Tesla's direct sales for years.

In fact, Jonathan Collegio, vice president of public affairs for the National Automobile Dealers Association (NADA), maintained that the states need to retain the right to regulate the automobile sales distribution channel.

"These arguments ignore the fact that fierce competition between local dealers drives down prices both within and across brands. When three Ford dealers compete for the same customer, the customer wins, period," Collegio wrote in an e-mail to AutoblogGreen. ""Finally, it's a major fallacy to compare buying cars with buying other goods, like books or computers. New cars are major purchases that require licensing, insurance, complex financing involving trade-ins, contain hazardous materials, and if operated incorrectly can cause serious bodily injury."

Tesla representatives didn't immediately respond to a request for comment from AutoblogGreen.

New Jersey and Missouri have both been in the news lately. Garden State politicos have created a bit of a grey area, first voting in mid-March to stop Tesla stores from selling cars starting April 1, then extending the deadline to April 15. Tesla appealed the ban with the state Superior Court last month, and the FTC says the " limited, selective set of exceptions" are "very likely anticompetitive and harmful to consumers." In Missouri, Tesla appears to be winning the on-the-ground fight, but if a proposed bill against direct sales there becomes law, it will "amplify the adverse effects of the current prohibition" and "discourage innovation," the FTC says. Read more below.
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