Rivian May Have A Huge Legal Fight Coming Up

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Direct-to-consumer sales are controversial in the US, but Rivian hopes to get a pass.

Electric vehicle startup Rivian could face a legal fight similar to what Tesla faced across the country. Like Tesla, Rivian is banking on the ability to circumvent the traditional US dealer franchise model, wherein a private dealership franchise is responsible for 100 percent of an automaker's new vehicle sales - something that Rivian sees as essential to its business model as a relatively low-volume automaker that builds vehicles to order.

Rivian is lobbying at least a couple of states - including Colorado and Washington, according to Automotive News (subscription required) - to pass bills that could allow Rivian to sell vehicles directly to consumers without having to support a third-party dealership franchise.

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Tears ago, after Tesla adopted a similar sales model, the EV startup faced a massive backlash spurred by automobile dealers who were concerned by the prospect that Tesla's strategy might prompt other automakers to also circumvent their dealership franchises. That backlash led to new laws being passed in several states to effectively ban Tesla from selling to consumers there.

Now, Colorado is turning into something of a battleground as Rivian pushes for legislation to permit its direct-to-consumer model, and automobile dealers urge lawmakers not to. An amendment added on February 21st aimed to make the bill more palatable to dealership franchises by barring traditional automakers from competing directly with their dealers, but many dealers still oppose the bill.

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"We're not enamored with the amendment," says Colorado Automobile Dealers Association President Tim Jackson. "You can't put lipstick on a pig. It's still a pig."

The bill could still allow all automakers, including those with established dealership franchises, to sell EVs directly to consumers, which has prompted a lot of concern from Colorado dealers. The amendment added last Friday was intended to address related concerns, but dealers still fear it will allow automakers to circumvent their franchises.

"We believe [automakers] do want to work with their dealers," says Jackson, "but we think it would be tempting to go around that dealer body to sell direct if they thought it would be an advantage."

Rivian will put its first two consumer models - the Rivian R1T electric pickup truck and R1S electric SUV - into production later this year. The company sees direct sales as vital in part because it plans to make the vehicles to order rather than mass-producing vast quantities to fill out dealer lots.

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Source Credits: Automotive News

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