US Federal Trade Commission backs Tesla again image

While planning its global expansion and a huge battery factory, Tesla Motors, the US electric automaker also has a war at home – with franchised dealers and states that ban its direct sales practice.

Not long ago, prominent officials of the Federal Trade Commission voiced their personal opinion on the matter, saying that banning the direct sales practice of Tesla – which skips franchised dealers and owns its showrooms – is an asset to the end user, the buyer.

Now, yet again some FTC officials make the day for billionaire entrepreneur Elon Musk, Tesla Motors’ co-founder and CEO, as three administrators suggest that states that have imposed laws mandating only the use of an independent dealer should be aborted or at least toned down.

Andrew Gavil, director of the FTC’s Office of Policy Planning; Deborah Feinstein, director of the Bureau of Competition; and Martin Gaynor, director of the Bureau of Economics, backed Tesla when responding to requests for information from Missouri House of Representatives and New Jersey State Assembly members.

“New Jersey’s consumers would more fully benefit from a complete repeal of the prohibition on direct sales by all manufacturers, rather than any limited, selective set of exceptions,” the administrators wrote, noting that “current New Jersey law . . . is very likely anticompetitive and harmful to consumers.”

Franchised dealers have been fighting hard against the direct sales practice, arguing that the current status-quo, where major automakers are only represented by independent dealers is a good strategy, as the dealers provide a layer of protection against the automaker, compete among themselves on pricing and long-term servicing.