uFTC Urges Michigan To Repeal Ban That Prevents Tesla From Selling Directly To Consumersr

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  (Nicholas Eckhart)
  

  Last year, Michigan joined the list of states that require car manufacturers to use dealerships to sell their vehicles, effectively banning Tesla from selling its pricey electric vehicles to Michigan residents. Now, staffers at the Federal Trade Commission are chiming in, urging Michigan lawmakers to consider repealing this ban.

  There is currently a piece of Michigan legislation, Senate Bill 268, that would grant makers of autocycles — think of a car and motorcycle combo and you’re on the right path — the ability to sell directly to consumers in some situations.

  The author of that bill, Sen. Darwin Booher, asked the Federal Trade Commission to submit comment on this legislation, and in a letter [PDF] sent last week from FTC staff to Booher, the agency gives its opinion that while the bill would likely promote competition and benefit consumers, it “does not go far enough.”

  By just carving out an exception for autocycles, the FTC staff says the new bill “would largely perpetuate the current law’s protectionism for independent franchised dealers, to the detriment of Michigan car buyers.”

  The FTC staff contends that consumers would more fully benefit from a “complete repeal of the prohibition on direct sales by all manufacturers, rather than the enactment of any limited, selective set of exceptions.”

  The letter makes no attempt to argue that dealerships are any better or worse for consumers than direct sales, instead claiming that “consumers are the ones best situated to choose for themselves both the vehicles they want to buy and how they want to buy them.”

  Before the 2014 law, car makers were already required to sell through licensed dealerships in the state. However, Tesla contended that this regulation only applied to manufacturers who were actually setting up their own showrooms and sales forces in Michigan. Since Tesla didn’t have anyone in the state selling their cars, which are primarily purchased online, it believed it was in compliance with the law.

  So, with the backing of the Michigan Auto Dealers Association, existing state law was amended to clarify that the dealership requirement applied to all car companies who sell, service, display or advertise vehicles in the state.

  Tesla founder Elon Musk has said he’s not averse to eventually using licensed dealerships to sell his vehicles.

  “At some point we’d consider franchised dealers but we want to first establish a few stores of our own,” he explained in January, adding that he’s reluctant to hand off his vehicles to third parties who may not be prepared to sell them. “It is hard to sell electric cars; it’s a lot more effort to sell it than a gasoline car. There’s a lot more education needed.”

  
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by Chris Morran via Consumerist