FTC Approves Tesla's Direct Sales Model

cartechboy (2660665) writes "We've all read about Tesla and the ongoing battles its having with different dealer associations. Basically, dealer associations aren't too pleased about the Silicon Valley startup's direct sales model. Today the FTC has had made a statement on the matter and it's actually in favor of Tesla's direct sales model. 'In this case and others, many state and local regulators have eliminated the direct purchasing option for consumers, by taking steps to protect existing middlemen from new competition. We believe this is bad policy for a number of reasons,' wrote Andy Gavil, Debbie Feinstein, and Marty Gaynor in the FTC's 'Who decides how consumers should shop?' posting to the Competition Matters blog. The FTC appears to take issue not with those laws, but with how they're being used, and with the direct-sales bans being passed in several states. Now the only real question is how long will it be before Tesla prevails in all states?"

FTA commented, not approved

[Noah Haders]

To be clear, FTA staff wrote a blog posting in which they approve of new ways in which consumers can shop for goods. They have not approved any new regulations related to Tesla. The summary is accurate, but the headline is a little off.

Re:or

[Sique]

You could actually read the blog post referenced in TFA, then you would know about the background. At first, car manufacturers were relying on local dealers to reach consumers, as 100 years ago, there were not much alternatives. But the manufacturer as the sole source of the product, the dealer was selling had much leverage in pressuring the car dealers to act in ways that benefitted the manufacturer but not the dealer (e.g. pressuring him to list certain cars for specified prices, unlist others, offer certain services etc.pp.), by threatening e.g. to open another car dealership in the vincinity, giving better conditions to dealers that agreed to the conditions etc.pp.

Thus several laws were passed to protect the car dealer from to much pressurer by the manufacturer, and one important detail was forbidding car manufacturers to operate their own dealerships in competition to the independent dealer. But Tesla Motors doesn't even sell via independent car dealers, thus they aren't in competition to dealers of their own products. In this case, all the laws passed to protect independent dealerships from too much leverage of their own supplier don't make sense, as there is exactly zero pressure from Tesla to its dealerships, as as there are none.

Re:Thank God

[NoZart]

Sadly, a big part of the population is very change-averse, because routine/conditioning is easier than adapting to new situations. Maybe this is evolutionary, because short term it's more "energy efficient".

Just look at the whole start-button thing with windows 8. While nearly everyone STILL argues around this little change and how bad it is because the old Startmenu is just the way how things were done for 20 years (which really is the only real argument, as all others are straw men), it really is an improvement in several ways IF one takes the time to adapt to work with it. Yet, even intellectually competent people bash it because it's just CHANGE.

And as this change-averseness (?) is not restricted to the "lower classes" but runs through the whole population, the stupid people will groan at the effort they have to make (and due to mass, loudly) and the intelligent ones will make the decisions to keep things the way they are....

Conspiracy theory?

[Anonymous Coward]

You realize they could just set up a local state dealer and sell through them? It puts the tax in the state which is what they're after.

Always Tesla takes the confrontational approach. Top Gear gives them a bad review because the car breaks down? So they sue Top Gear (and lose). NYT reviewer gives them a bad review because the car drains its power in the cold? Tesla attacks them on the micro-detail of the review instead of improving the cold weather performance. Here they could simply work within the State laws instead its a full on attack. Cars catches fire? Attack the press for reporting it...

Meanwhile everyone else makes electric cars without all the drama queen nonsense!

Re:FTA commented, not approved

[CrimsonAvenger]

"The Fed" is slang for the Federal Reserve Bank. As in "the Fed raised interest rates today".

"The Feds" (note the 's') is slang for the Federal Government. Which has power to regulate Interstate Commerce.

And yes, they have the power, but not the obligation - if they choose to ignore the issue, not much anyone can do about it.

Re:FTA commented, not approved

[i kan reed]

But states are explicitly denied the power for that regulation, by the de facto interpretation of the 10th amendment.

Re:FTA commented, not approved

[whoever57]

This is about how the cars can be sold within a given state. So yes it does have a State's rights aspect and is in the State's rights to pass such laws as they see fit until such a time as it is contested and ruled on by the state's supreme court and/or SCOTUS

You know that the SCOTUS has already ruled that wheat grown by a farmer for his own consumption can be regulated by the Feds and that weed grown by an individual in his garden for his own consumption can be regulated by the Feds, right? Also, think about the last time you went to a pharmacy to fill a prescription -- the laws governing what requires a prescription are federal laws.

The SCOTUS has gutted the interstate commerce clause, allowing it be applied to almost anything.