Tesla Motors has no problem selling cars in California, China, or Germany, since direct sales are no problem in these places.
On the other hand, the situation is very different in Texas and New Jersey, and some other states, where direct sales by automakers to customers is prohibited. These laws have been in place for decades to protect the dealerships from competition with their own suppliers. Even in places where Tesla Motors has no dealerships, which is everywhere, because Tesla Motors has never sold a franchise, and doesn’t want to, the ADAs (Automobile Dealership Associations) have pushed for laws that specifically rule out Tesla Motors’ direct sales tactics.
The federal government has been quiet regarding these State squabbles, but this week three Federal Trade Commission (FTC) officials effectively told the ADAs they should just shut up and go back to protecting the dealerships and stifling competition. Sorry, that last part was mine. The ADAs assert that Tesla Motors’ direct sales will be bad for competition, and therefore, bad for the consumer. The reality is that the dealerships are just protecting their stranglehold on the automobile market. Their contention with Tesla Motors is really unfounded, perhaps more a show of fear than anything else.
Still, what could the ADAs possibly fear from Tesla Motors? According to the FTC, not much. From the FTC blog, these two quotes merit serious consideration by law makers and the ADAs who are pushing them. “Out of 15 million cars sold in the U.S. in 2013, Tesla accounted for a little over 22,000. This hardly presents a serious competitive threat to established dealers. … We hope lawmakers will recognize efforts by auto dealers and others to bar new sources of competition for what they are—expressions of a lack of confidence in the competitive process that can only make consumers worse off.”
Photo credit: sara~ / Foter / Creative Commons Attribution-ShareAlike 2.0 Generic (CC BY-SA 2.0)