Tesla Representative Among Panelists At FTC Hearing On Auto-franchise Laws

Tesla has been fighting battles with franchised car dealers over its direct-sales model on a state-by-state basis for the past few years. State auto dealer associations have campaigned against the carmaker, and in some cases have pursued legislation to outlaw direct sales.

Although Tesla has won these battles in some states, it remains unable to sell cars in others. This debate over direct sales will now be moving to the national stage Jan. 19, when the Federal Trade Commission (FTC) will hold a series of panel discussions on topics related to the auto industry.

One of these discussions will focus on state auto dealer franchise laws, with the FTC describing the topic as follows:

“Some states restrict the ability of carmakers to sell their vehicles directly to the ultimate consumer, mandating the use of independent, franchised dealers. Several new entrants into automobile manufacturing have sought to bypass or overturn these restrictions and deal directly with the public. Are restrictions on direct distribution in this industry in the public interest? This panel will include experts on both sides of this contentious issue.”

Tesla general counsel Todd Maron will be among the six panelists, along with the vice president of government affairs for Elio Motors, Joel Sheltrown. The balance of the panel will represent non-manufacturer entities, including representatives from the New Jersey Coalition of Automotive Retailers, the American Automobile Association, and the National Automobile Dealers Association.

The FTC’s interest in the franchise-law question came about after legislators quietly passed a direct-sales ban in Michigan last year. In a letter to those legislators, the FTC called the ban “protectionism” for dealers, and stated that it is “likely harming both competition and consumers.”

In April, a proposed exemption for three-wheeled “autocycles” was introduced, seemingly to help Elio, as the company is raising funds to build an 84-mpg, two-seat, three-wheeled vehicle at a former GM plant in Shreveport, Louisiana.

Because the FTC is a federal agency, not a legislative body, there is little direct action that it could take to revolutionize the longstanding state franchise model. At the same time, the fact that the FTC is hosting this type of event is a sign that it sees the potential for trouble on the horizon. Certainly, the auto industry is poised for massive changes in the coming period, including autonomous driving, car-sharing and more. The manner is which cars are manufactured, sold, serviced and scrapped will change as well, and the laws that govern the auto industry will need to adapt to those shifts.

This very interesting discussion will be webcast live Jan. 19, with a link being provided on the FTC website on the day of the event.