Senate Bill 167 would circumvent consumer protection laws centered on service/repair requirements and allow automakers to have direct competition with dealerships
Denver—One of the latest newcomers on the electric-vehicle automaker scene is Rivian, which manufactures a high-end pick up/SUV, and it wants access to the Colorado market. However, according to Tim Jackson, president and CEO of the Colorado Automobile Dealers Association (CADA), there was just one problem.
“They want to operate as dealers without a direct seller, but rather with one retail outlet that they can sell out of,” he said.
Senate Bill 167 (SB 167) was introduced into the state’s senate on Feb. 13. A summary of the bill states that it concerns “increasing consumer access to electric motor vehicles by allowing manufacturers to sell their own electric motor vehicles directly to consumers.”
It presented, however, two primary issues for franchise dealerships:
• It would allow all electric vehicle (EV) manufacturers — even those with franchised dealers with franchised agreements — to sell electric vehicles directly to consumers without any of the consumer protections afforded under motor vehicle franchise laws.
• It would allow traditional out-of-state manufacturers with franchised dealers to sell electric vehicles in direct competition with their own dealers, thereby devaluing the large investments made by local dealers in their franchises.
Part of the premise of franchise laws, which date back to 1937 in Colorado (one of the first states to enact such laws), was to develop a level of certainty for consumers that their vehicles could be serviced and repaired post-purchase.
“The government can’t guarantee that an automaker won’t go out of business,” Jackson said, “but they can have public policy to help ensure that there’s someone in the community to service the vehicle and take care of the customer.”
New EV manufacturers that want to enter the Colorado market must have at least one service center to satisfy franchise laws. Tesla, Jackson pointed out, is an example of one EV manufacturer that sells direct and has a service center.
Tesla has been operating legally in Colorado since 2010. CADA states that under current law, they were able to obtain a license to sell EVs to consumers directly — without a franchised dealer.
Jackson reached out to all Colorado dealers, which resulted in upward of 130 dealership representatives showing up at the Capitol to oppose SB 167. One dealer brought 50 people.
They were successful in obtaining an amendment to SB 167 that was more favorable to CADA’s view, he said.
“‘If you’re a manufacturer that has franchise agreements in Colorado, then you can’t compete with the dealers,’ as Jackson summarized the amendment. “So long as that amendment stays, then our concerns are assuaged. If it passes under its original form, it would be very detrimental.”
On Monday, March 9, the bill passed a House committee meeting with the agreed-to amendment. As such, Jackson said CADA is now neutral on SB 167.
According to CADA, Rivian admitted during a Senate Transportation & Energy hearing, Feb. 18, that it has not made an effort to apply for a license under the model used by Tesla.
“There wasn’t actually any legislation required to have EV manufacturers operate in Colorado — they already can,” Jackson said. “All they have to do is apply for a license, but they have never applied for — or been denied — a license.”