FTC Makes Statement In Favor Of Tesla, Direct-To-Consumer Sales Should Be Legal
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In 2014, General Motors backed a Michigan law that banned the direct sale of automobiles to consumers. It wasn’t alone; New Jersey and other states have also put similar laws in place. Tesla has experienced meteoric success with its high quality electric vehicles which have caused automakers and dealer networks to quiver in their boots as their formerly secure position in the market was threatened.
A direct sale model involves no haggling, meaning that consumers are able to purchase the car for what it is actually worth instead of having to negotiate their way down to what still may not be a fair price. If Tesla can sell directly to the consumer, the pipeline of sales from the automaker to the dealer and then to the consumer would be disrupted.
The Federal Trade Commission’s (FTC) new statement deters dealers from having a monopoly of the sale of vehicles. It argues that this was not only done in favor of Tesla but in defense of all business entities who desire to sell their products directly. In their public statement, the FTC asserts “blanket prohibitions on direct manufacturer sales to consumers are an anomaly within the larger economy.” The impetus for FTC’s statement is that Michigan State Legislature allowed Elio, a manufacturer of highly efficient three-wheelers, to sell direct. With this amount of inconsistency circulating among state lawmakers and courts, the FTC needed to step in and create a more universal policy.
A ruling in line with this statement would change everything for consumers, dealers, and automakers. Consumers would receive additional protection because the dealer network would no longer be a fact of life, in which case shoppers could buy cars for the listed price. Additionally, automakers would have the freedom to choose how they sell their cars, would would lead to an increase in competition, leading to economic growth. Finally, the vise grip independent dealers hold is finally being challenged, which should cause a dramatic shift in the way drivers purchase their vehicles.
Tesla has not only pioneered new technology in the automotive world, but it turns out that it may have begun a new era of economic competition.