Electric vehicle manufacturer Rivian is suing Ohio’s Department of Motor Vehicles over the state’s partial ban on companies bypassing dealerships in order to sell cars directly to consumers. Within this federal lawsuit, Rivian has called the ban “Irrational in the extreme.”
The manufacturer, which produces the R1T, R2, and R3, argues that it decreases competition and reduces consumer choice, also noting that Tesla is allowed to sell directly to consumers in the state, which the company notes is seen as an unfair advantage.
“Ohio’s prohibition is pure economic protectionism for the benefit of Ohio’s existing auto dealers, putting their profits ahead of comsumers,” Rivian states in its complaint.
As The Verge’s Andrew J. Hawkins points out, the dealership model was established in the early half of the 20th century, when major auto manufacturers such as Ford and General Motors used to sell direct-to-consumer, which raised concerns around monopolistic practices. This led to state laws surrounding franchising, which in turn saw the popularization of car dealerships across North America.
Companies such as Tesla, however, have found workarounds to sell direct-to-consumer, avoiding the dealership model. Currently, more than a dozen states also have an outright ban on direct-to-consumer auto sales. In contrast, some states (including Ohio) have only a partial ban, as part of an agreement reached with Tesla and Ohio’s dealer association, which saw Tesla open three brick-and-mortar locations in the state to abide by the ban.
This is the first time Rivian has sued a U.S. state over its direct-to-consumer ban; however, the manufacturer was sued by Illinois’ dealer association for violating their ban, but the case was dismissed.
Even the VW group has been caught up in the dilemma, with its EV subbrand Scout being sued by California car dealers over its plan to bypass the state’s franchise law. Tesla had to deal with something familiar, settling with the state of Louisiana for challenging the ban.
Source: The Verge
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