Car Dealers Fighting Losing Battle Against Tesla

Industry News / 17 Comments

EV startups like Rivian and Lucid are joining the fight.

The years-long battle between franchised automotive dealerships and their powerful lobbyists against Tesla and newer electric vehicle startups like Rivian and Lucid is back in the news as 11 states are now considering legalizing direct sales. The only way to buy a new Tesla Model S or Rivian R1T, to name just two examples, is directly from the company instead of a franchised dealership.

Dealerships argue that customers benefit from privately owned dealers for a number of reasons, among them pricing competition, warranty repairs, and helping local economies. Electric vehicle brands say consumers receive the same necessary basic services and transparent pricing. Equally important, things like over-the-air updates and other software-related services that EVs require can be done more efficiently in a direct manufacturer-customer relationship.

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Despite efforts from groups like the National Automobile Dealers Association to block direct sales through legislation at the state level, the direct sales method is gaining momentum. Automotive News reports the following states have introduced (but have yet to pass) legislation this year allowing direct sales to some extent: Connecticut, Georgia, Kansas, Massachusetts, Nebraska, Nevada, New York, Ohio, South Carolina, Texas, Vermont, and Washington.

In Illinois, the Illinois Automobile Dealers Association recently filed a lawsuit against Rivian over its refusal to allow franchised dealerships. The lawsuit puts state officials in a bind: take sides with the IADA or Rivian, which is headquartered in the state. But there are those who believe the two business models can co-exist.

2022 Rivian R1T Truck Front Angle View Rivian
Front Angle View Rivian
Front Angle View Rivian

"I don't preclude [franchised dealerships] from ultimately being able to sell electric vehicles or sell a lot of electric vehicles," said Daniel Witt, Lucid's head of public policy. "I do think that there's enough space for both business models to ultimately be successful."

However, so-called legacy brands like GM have committed to an all-electric future, so by 2035 every Buick, Chevy, Cadillac, and GMC dealership in America will only sell EVs. EV technologies eventually won't greatly differ brand to brand and Tesla's and other EV startups' whole case for direct sales may no longer be relevant. For now, the country's dealer associations will continue fighting for the status quo, but consumer demand for new Teslas and Rivians may force states to adapt to the changing times.

Front Angle View Lucid
Rear Angle View Lucid
Dashboard Lucid
Source Credits: Automotive News

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