The Colorado Senate Friday approved a bill 22 to 12 that will allow electric vehicle manufacturers, like Tesla and electric truck manufacturer Rivian, to sell their products directly to consumers, bypassing the traditional dealership system. There is a caveat however, the bill only allows company that sell solely EVs and has no prior traditional system of dealerships already in place to do so.
Rivian lobbied in favor of this law in the weeks leading up to the vote, according to Automotive News. The bill was delayed twice, but came up for a final vote Friday after the addition of an amendment keeping traditional, non-EV manufacturers from the direct marketplace. But the amendment was not enough for Tim Jackson, spokesperson for the Colorado Automobile Dealers Association.
That startup, Rivian, is lobbying to open up Colorado’s dealer franchise law as it prepares to start production of electric pickups and SUVs this year. Lawmakers in that state could vote as soon as this week on a controversial bill that would allow any automaker — including those with existing franchised dealerships — to sell their EVs directly to customers.
An amendment added to the bill Friday, Feb. 21, designed to prevent traditional automakers from opening up next door to their franchised dealers did little to quell retailers’ concerns about what they say are the potential risks should the bill become law.
“We’re not enamored with the amendment,” said Tim Jackson, president of the Colorado Automobile Dealers Association. “You can’t put lipstick on a pig. It’s still a pig.”
Still, it is something. The bill will allow the Teslas and Rivians of the world to operate in a sales model that is better suited to their approach of treating their cars more like high-end electronics but prevent traditional automakers from doing the same. Rivian expects to already be able to sell directly in Arizona, and a recent Michigan settlement with Tesla over a 2014 law barring the practice has paved the way for Rivian to dive into direct-to-consumer sales in its home state. Naturally, General Motors was in favor of Michigan’s 2014 law saying back when the law was signed:
General Motors applauds Governor Snyder’s signing of HB 5606. This will provide stability and support for our dealers, who are focused on delivering a world-class sales and service experience for our customers. Further, it will ensure we compete under the same rules in the marketplace as other automobile manufacturers.
It’s not every day in America that we’re told there’s a wrong way to engage in capitalism. This kind of regulation-induced stagnation of business practices do the exact opposite of fostering a positive consumer experience. There’s a not-unearned stereotype that car dealers are skevy characters who have made buying a car a complex, daunting and financially perilous process. It’s so tough, we have a weekly article dedicated to helping people navigate the murky waters.
While Teslas are certainly more common now then when Anti-Tesla legislation first started hitting States’ books, they are still kind of considered speciality vehicles today. Tesla sold 367,500 vehicles in 2019, for instance, while just GM totaled 2,887,046 cars. Dealerships just might not make sense for an automaker that is mostly made-to-order or a low volume manufacturer. We’d never really know unless companies are allowed to experiment. The rush to legislate back then seemed like an insecurity on auto dealers’ part. It’s almost like, they knew the business model is a pain in consumers’ ass and making cars needlessly expensive and they wanted to prevent any alternative from surfacing. Weird!
Fast forward six short years, and the big automakers have gone from dismissing new comers like Tesla and Rivian to fearing them to attempting to emulate them. And while there are still 19 states where direct sales are limited or outright banned, but it seems like the outcome of this long and expensive fight will eventually be on the side of innovation.