Despite Tesla win, Michigan aims to block direct sales model from expanding

Rivian and Lucid have a lot to lose when it comes to dealer franchise regulation battles.

Sean Szymkowski
It all started with Gran Turismo. From those early PlayStation days, Sean was drawn to anything with four wheels. Prior to joining the Roadshow team, he was a freelance contributor for Motor Authority, The Car Connection and Green Car Reports. As for what's in the garage, Sean owns a 2016 Chevrolet SS, and yes, it has Holden badges.
Sean Szymkowski
2 min read
Tesla store

These stores don't exist in Michigan, but residents can now take delivery of their car in-state.

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It remains illegal for automakers to sell their vehicles directly to consumers in Michigan, but a deal the state ironed out with Tesla earlier this year essentially opened a backdoor to the process dealerships want halted in its tracks. Now, the Michigan legislature aims hit the brakes on direct-to-consumer sales for good, and it could have major ramifications for startups Rivian and Lucid.

Bloomberg reported Monday on the latest bill introduced in the Michigan legislature, which looks to block all other electric carmakers, save for Tesla, from selling cars directly to buyers. Dealership franchise laws require an automaker to sell a vehicle through a dealer and not operate their own retail centers. These laws don't exist nationwide, and Michigan's long been a tricky state to take delivery of a Tesla in. In January, Tesla struck a deal with the state's attorney general to allow delivery of Tesla vehicles in the state; previously, soon-to-be Tesla owners needed to travel to a neighboring state to take delivery of their car.

With the agreement, the state did not amend its dealer franchise laws, but the goal of the new bill is to provide a final and concise decision on how future startups can operate in the state. And if the bill passes, any future startup would need to abide by the established franchise laws that prevent automakers themselves from competing with dealerships.

Rivian's vice president of public policy told Roadshow in a statement, "If the Michigan Automobile Dealers Association succeed in pushing through passage of HB 6233, no other EV only manufacturer except Tesla (who would be grandfathered in) could support sales or service of their vehicles to Michiganders. This means that Rivian, a company with a substantial presence in Michigan, would be barred from taking care of its own customers in a state where the company has invested substantial capital and created hundreds of jobs to help lead electric vehicle adoption from Michigan." The company plans to begin production of its R1T electric pickup and R1S electric SUV next year.

Lucid, which plans to start delivering its Air electric sedan next year did not immediately return a request for comment.

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