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?"

Comments

What does it mean?

[AK Marc]

So, this doesn't sound binding, nor explicit. If the statement was "state laws restricting interstate commerce are unconstitutional, and anyone enforcing those laws will be taken to court by the US government" then it might mean something, but "we think its bad policy" means nothing. Socks with sandals is bad policy, but that doesn't mean the FTC will do anything about it.

Re:What does it mean?

[EmperorArthur]

Per the US constitution the Federal Government has the power to regulate interstate commerce. If they said that laws preventing direct marketing of interstate goods were unenforceable because it falls within the Fed's purview then many more laws would probably be affected. If they don't then it looks like the FTC is favoring Tesla. The only thing it wouldn't apply to is Alcohol, because the 21st amendment specifically gave the states the right to stop it from coming in.

Re:What does it mean?

[mosb1000]

Think of it as a warning shot. They're letting state legislatures know that they don't approve of these bans, so the local governments will have a chance to decide now whether they will back down or fight. Any court battle with the feds would be un-winnable, since the constitution clearly gives the feds the authority to set policy in this matter. By changing their rules now, the can avoid new federal rules and maintain some level of control over car sales in their state.

Thank God

[JimSadler]

Frankly the stakes are so high that i would not be shocked to see murders in an effort to shut down Tesla. We all need Tesla to succeed big time. The powers that be would do far better to develop a cheaper, better, electric car in order to compete with Tesla than playing all kinds of negative games trying to do Tesla harm. Change is upon us all and there are times when change can sting us all a bit. That does not mean we should get all negative and perverted in our responses to change.

Re:Thank God

[Smallpond]

The manufacturers are pretending to develop electric cars. They have an interest in preserving the status quo. When GM first developed an electric concept car, they named it the "Impact". It's hard to imagine a scarier name for a small, light-weight car. They cancelled the EV-1 despite the customers who loved it.

Re:FTA commented, not approved

[flyneye]

To be clear, once the FTC would approve this, it would knock over the first domino to this in ANY state. Last time I looked, the Fed is Constitutionally required to regulate trade between the states. This isnt going to be a matter of states rights and wont be their decision.

Tesla is a bad model

[Anonymous Coward]

Tesla is a bad automobile dealer model anyway. Everyone who knows about Tesla is aware that they lose money on Tesla cars. Its the carbon credits that Tesla makes money on to balance out the loses. The other scary thing nobody talks about is the expense of replacing the batteries when they wear out. That cost is estimated to be well above the used car value of the Tesla car when they need replacing. Thus making the car worthless to the owner. The direct purchase ideal was simply done as a financial need to Tesla and not really trying to change how cars are bought. I have no problem with a direct purchase model as I too believe the dealer network is just another way to stifle competition. But Tesla has far more issues like the battery costs going forward to challenge the dealer network program.
Unless they can find a way to manufacture batteries cheaply, their cars will be short lived and the business model not sustainable anyway. They need to sell far more cars then they are selling now to even think about making money on them alone.