Latest in Car

Image credit:

FTC: State bans on Tesla's direct sales model are hurting competition

Jon Fingas, @jonfingas
April 24, 2014
Share
Tweet
Share

Sponsored Links

Tesla has just gained a valuable ally in its battle to sell cars directly to customers: the Federal Trade Commission. The regulator now argues that state bans on direct sales are "protectionist," propping up the traditional dealership business model rather than protecting companies from unfair abuses by automakers. It's the "competitive process" that should decide which sales model is better, not the law. The FTC also doesn't buy the notion that Tesla's modest US sales (22,500 in 2013) are a threat to the wider industry (15 million). It believes that the only thing at risk is the old way of buying cars, which might not be necessary now that customers can skip the sales pitch and do most of their research online.

Not surprisingly, Tesla agrees "wholeheartedly" that state rules need to change. The National Automobile Dealers Association is less than enthusiastic, however. It maintains that customers "lose virtually all bargaining power" in a middleman-free environment, since they couldn't simply go to an independent store to haggle for a better deal.

The FTC's criticism stops short of announcing any formal action, and it's not clear that anything will change. The Commission exists primarily to regulate companies, and it may have a tough time pressuring individual states; right now, it's just hoping that legislators will see the bans as anti-competitive and reject them accordingly. Still, it's clear that dealers shouldn't expect much FTC sympathy if the dispute over Tesla's sales strategy ever reaches the federal level.

All products recommended by Engadget are selected by our editorial team, independent of our parent company. Some of our stories include affiliate links. If you buy something through one of these links, we may earn an affiliate commission.
Comment
Comments
Share
Tweet
Share

Popular on Engadget

The 2020 Engadget Holiday Gift Guide

The 2020 Engadget Holiday Gift Guide

View
Scientists find neutrinos from star fusion for the first time

Scientists find neutrinos from star fusion for the first time

View
Belkin’s new wireless charger tries to do what AirPower promised

Belkin’s new wireless charger tries to do what AirPower promised

View
Vava’s 4K ultra short-throw projector is $840 off at Amazon

Vava’s 4K ultra short-throw projector is $840 off at Amazon

View
Google shows off 'Cyberpunk 2077' running on Stadia at 4K

Google shows off 'Cyberpunk 2077' running on Stadia at 4K

View

From around the web

Page 1Page 1ear iconeye iconFill 23text filevr