Most states are against direct sales from automakers, which bypass the common dealership scheme. Because of that, dealer franchises hate it. Their powerful dealer lobbyists spend millions trying to keep consumers from having a better car buying experience. Rivian is one automaker trying to get direct sales going. According to Automotive News, the company has an ace up its sleeve for Georgia lawmakers: jobs for direct sales.
Last fall, Rivian made a huge announcement. It wanted to invest in Georgia and bring thousands of jobs to the state. The company announced that it had plans to build a $5 billion plant that would eventually employ 7,000 workers and build 400,000 vehicles a year (a tall order for a company that sells vehicles that are more than the median U.S. household income).
State lawmakers damn near drooled over the plan. Georgia governor Brian Kemp even proposed spending $125 million on land and training for the plant. But Rivian had a favor to ask: Pass Georgia house bill 460 to allow direct sales in the state. Not just for them, but for all manufacturers. Rivian has pretty much backed the state of Georiga into a corner.
Some lawmakers are on board. Per Automotive News:
I can’t tell you we’ve had great success with the automobile dealers,” said Rep. Chuck Martin, a co- sponsor of House Bill 460, which seeks to allow new EV-only companies to sell direct in Georgia. “They have a monopoly, and they want to keep it.
While the state has allowed an exemption for Tesla to perform direct sales since 2015, no other automaker has been allowed to perform direct sales. Of course, dealers see this as a direct threat to their existence. President of Atlanta-based Jim Ellis Automotive Group Jimmy Ellis pretty much argued that dealers give customers the best product selection and service:
Dealer agreements and franchise laws ensure consumers “get the best product, backed by good service, and if anything goes wrong, there’s protection for them,” said Jimmy Ellis, president of Atlanta-based Jim Ellis Automotive Group. “We’re all about electric vehicles — we know how to do it, and we will be the absolute rock stars when they really start rolling out,” he said. “There’s just simply not a need for a separate distribution, sales and service channel for motor vehicles, especially when they’re riskier and don’t offer the efficiency and effectiveness of the franchised network system.
He then pointed to Tesla’s struggle with vehicle service to emphasize his point. Dealers are even arguing about a loss of jobs. But we all know what that is about: Franchise dealers know that direct sales are a better way to do business for the customer. They’re just so stuck in their ways and greedy that they don’t want to change. So with the cards in Rivian’s hands, it will be surprising to see if the company can pull off an upset that will be a big win for vehicle sales everywhere. Dealerships may want to start counting their days.