Unlike most automakers who sell their vehicles through franchised dealerships, EV maker Tesla Inc. (NASDAQ: TSLA) doesn’t adhere to the dealership model, instead opting to sell its electric vehicles (“EVs”) directly to customers. With plenty of people classifying visiting a car dealership as one of the last things they’d want to do, the move was met with praise from industry analysts and customers alike. If a proposed Washington State bill is successful, every manufacturer who only produces zero-emission vehicles will be able to sell directly to customers in the state.
Under Bill HB 1388, automakers that exclusively produce zero-emission vehicles will be allowed to set up retail outlets and sell their vehicles directly to customers online. Although Tesla is the only carmaker that can do this currently, Washington State Consumer Protection and Business Committee Chair Steve Kirby says this is only because the Department of Licensing “accidentally” granted the pioneering EV maker a license.
In 2014, following public pressure from traditional auto dealers, the company was allowed to operate as many additional stores in the state as it pleased, thanks to a provision in state legislation. However, this exception applied only to Tesla due to the type of vehicle dealer license the company had, essentially blocking future EV makers from selling directly to customers. The new bill seeks to extend this provision to other EV makers as well, granted they meet the required condition of only producing emission-free vehicles.
Up and coming EV startup Rivina, for instance, is launching its first batch of all-electric pickups and SUVs this summer in Illinois, and it would like to sell its vehicles directly to customers without a middleman. The company’s vice president of public policy Jams Chen says this business model is used in “virtually every other industry,” and it can work for the EV sector as well. Rather than threaten existing dealer franchises, Chen says letting EV firms sell directly to their customers is a win for free-market competition.
According to Admiral Denniss Blair of the Energy Security Leadership Council, allowing direct EV sales has EV adoption rates that are up to five times the adoption rate of states that don’t allow direct sales, even when other direct incentives are absent. Via a written statement, a coalition of EV makers, environmental and pressure groups, including Lordstown Motors, Lucid Motors and Drive Electric Motors, have stated that they support the bill.
On the other hand, Scott Hazlegrove at the Washington StateAuto Dealers Association argues that independent dealerships are important to the community, offering the best way to sell and service vehicles as well as providing employment opportunities, service to locals, tax revenue and community support.
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