Policy: Technology

Federal government sides with Tesla against state governments

|
Beltway Confidential,Opinion,Joel Gehrke,FTC,Elon Musk,Auto Industry,Technology,Tesla

Regulators in the Federal Trade Commission sided with Tesla, the electric car manufacturer, against state government regulators in a fight about which businesses and industries government rules should protect.

"FTC blog supports direct car sales as good for consumers," Tesla CEO Elon Musk tweeted triumphantly. New York State lawmakers have been pushing a bill that would ban direct car sales, which is part of Tesla's business model, at the behest of lobbyists who want Tesla to be required to sell its cars to car dealerships, who then mark up the price and sell them to consumers.

“If you allow someone to come into the market with no overhead, that's an unfair advantage,” car dealership lobbyist Deborah Dorman told reporters in February.

"So when you see a proposed regulation, never buy the credulous consumer-protection explanation," the Washington Examiner's Tim Carney suggested in March while discussing Dorman's comment. "That's probably part of the motivation of supporters, but you also need to consider how the regulation protects incumbent businesses and empowers government officials."

The Federal Trade Commission has its own consumer protection counter to Dorman's lobbying, though, which is what has Musk so happy.

"American consumers and businesses benefit from a dynamic and diverse economy where new technologies and business models can and have disrupted stable and stagnant industries, often by responding to unmet or under-served consumer needs," an FTC blog post reads. "When that occurs in an industry long subject to extensive regulation, existing businesses — like automobile dealers — often respond by urging legislators or regulators to restrict or even bar the new firms that threaten to shake up their market."

Tim couldn't have put it better. "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," the FTC continues. "What it could represent is a real change to the way cars are sold that might allow Tesla to expand in the future and prove attractive to other manufacturers, whether established or new ones that have yet to emerge, and consumers."

It might be tempting to buy the credulous consumer-protection explanation offered by the FTC, especially given that it has the extra advantage of being correct. But are there any other factors that might contribute to this endorsement from the federal government?

"In May, the company announced that it had repaid, nine years early, a $465 million loan it had received from the Department of Energy," Mother Jones noted in October.

View article comments Leave a comment

More from washingtonexaminer.com