FTC leaning Tesla’s way

Snow ballIt’s funny how when you remove self-interest from the discussion, you can indeed find powerful Tesla allies. Three members of the independent Federal Trade Commission co-signed a blog post that props Tesla, spanks car dealers and warns politicians that banning Tesla’s factory-direct business model is bad public policy: “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.” The main mission of the FTC is protecting consumers from anti-competitive business practices. Wait, you say. Dealers are anti-competitive? Haven’t they been touting their indispensable role in fostering competition and keeping prices down? So much for that.

Will the entire FTC body issue a statute to officially end the Tesla ban in five American states? Maybe, maybe not. Does the Tesla ban really have a negative impact on Tesla sales in the first place? Maybe, maybe not. Heck, the ongoing publicity might actually help. Last month, a posse of 70 law and economics professors voiced support for Tesla, while GM opposed*. This kind of attention could be construed as free advertising.

One problem with the FTC blog post: It uses Tesla’s low sales volume as a reason to give it a pass. Bad reason. In a few months we’re going to witness Model X Mania, with Gigafactory output to follow eventually. Volume isn’t going to remain low. Nevertheless, today is a good day for Tesla and a very, very bad one for dealer groups. The snowball effect that haunts the collective subconscious of car dealerships is gaining momentum. Surely other automakers will happily delete independent middlemen if the climate warms to the idea.

* Yes, this means GM is now at odds with FTC officials. Uh-oh.

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