Dealers sue Rivian over direct sales model.
The Illinois Automobile Dealers Association (IADA) filed a lawsuit against electric truck and SUV startup Rivian late last week over the the carmaker's refusal to allow licensed franchised dealerships. Michigan dealerships recently did the same in that state. Lucid Motors is also named as a defendant in the Illinois suit. This is exactly the same situation Tesla has found itself in for years in several US states as powerful dealer groups seek to retain the decades-long status quo business model.
In this latest case, the IADA, along with other trade associations and dealers, decided to sue after the Secretary of State "turned a blind eye" to unlicensed and unregulated sales and future sales of vehicles by Rivian and Lucid Motors.
Illinois law currently requires all new vehicle sales to be handled by franchised dealers, not the automakers themselves. "We have no choice but to file this lawsuit, both to protect consumers as well as the hundreds of franchised dealers across the state who contribute to the local economy," said Pete Sander, President of the IADA.
"Protecting consumers," in this case and with Tesla, is a phrase used to make consumers believe they lack the knowledge on how to buy a product, such as electric vehicles. Both Rivian and Lucid have yet to comment on the lawsuit. Ironically enough, Rivian builds its vehicles at a converted Mitsubishi facility in Normal, Illinois.
It also plans to open a Chicago showroom later this year where both the Rivian R1T and R1S can be seen in person and, of course, purchased. The press release announcing the lawsuit goes on to state numerous benefits consumers receive when buying a new vehicle at any of the state's 700 dealers and 2,300 franchises. Some include consumer protection, such as recalls and warranty repairs, parts and services availability, pricing competition, and helping the local economy.
Rivian and Lucid, like Tesla, will provide those consumer services, though the issue of price shopping (or lack thereof) can be an issue. Tesla has managed this by offering discounts from time to time, but its millions of owners clearly don't have any issue with a direct sales model.
Many actually prefer the no-hassle experience, especially since it's done online. Most automakers, including Ford, Porsche, and Nissan, are launching their own online ordering websites since it's become clear consumer habits are changing. Placing an online pre-order for a new GMC Hummer EV, for example, will not give dealers any customer data and nor can they directly respond to reservation requests with automated messages.
The point being, even mainstream brands prefer certain aspects of the direct sales method. But the IADA intends to fight. "Our patience has run out," Sander continued. "It is time for everyone to step back and let the court decide what is in the best interest of the people of Illinois."