Rivian wins big as Colorado passes electric vehicle direct sales law

Coloradans can look forward to a Rivian store of their own in the not-too-distant future, thanks to a new law allowing electric vehicle makers to sell direct.

Last month, we reported that Rivian was helping to push legislation that would let it sell direct in Colorado. Tesla could sell direct in Colorado but others couldn’t, due to a ban on direct sales that passed the state legislature in 2010. Tesla already had a store, so it was grandfathered in. Rivian was supporting legislation to let it and other EV makers also sell direct.

Back then, the bill was opposed by the Colorado Automobile Dealers Association because it would have allowed any EV to be sold direct. So Ford could have opened its own store(s) to sell the Mustang Mach-E direct to consumers, outside of Ford dealerships in the state. That version of the bill failed, and the new version allows only direct sales of EVs where the manufacturer exclusively makes EVs. Here’s the bill summary:

This law has now been signed by Colorado governor Jared Polis.

James Chen, Rivian’s VP of Public Policy, tells Electrek that: “The Colorado effort has been all about how Rivian can best serve its customers and making sure we’re there to support them. We believe manufacturers should be free to determine how best to serve their customers. In states where we’re not allowed to sell directly, we’ll find a way to support those customers, whether through changing legislation, or providing support from a neighboring state, or whatever it takes.”

Sean Mitchell, host of the popular Youtube channel All Things EV and a Denver resident, helped advocate for the law. He credits the work of the Denver Tesla Club in particular for their grassroots work contacting state legislators. Sean tells Electrek:

The dealers and dealer association pushed back at every point in the legislative process. They said that it wasn’t necessary. That Rivian could just apply for a dealer license. The challenge is that Rivian would be required to make a significant capital investment without the guarantee they would get the license. The dealer association knows the game and tactics – this is their home field advantage. They do everything possible to muddy the water for any business model outside dealerships. This is directly spearheaded by the Association CEO, Tim Jackson. He’s crafty in the way he words his rebuttals to companies like Tesla and Rivian to make it sound like dealerships are the only ones who can serve consumers. This is just not true. The purpose of this bill was to give consumers the choice between the two business models. Thankfully, consumers won with 167.

Colorado Automobile Dealers Association president Tim Jackson gave an interview (with transcript) to CBT Automotive discussing the fight. It’s a worthwhile interview for anyone interested in automotive-dealer politics. Jackson stresses that his main concern is not the EV startups, but existing OEMs having to honor their franchise agreements with their dealers. Here are a few highlights:

• If the original bill had passed, Colorado would have been the first state to let an OEM with franchised dealers side-step those dealers in the state.
• The bill was introduced while his group was out of town for the first day of the National Automobile Dealers Association convention. Jackson said: “[This issue] keeps me up at night. But more importantly, I really saw my life flash in front of me on this issue because it wasn’t well thought out, but it was well executed by doing the sneak attack.”
• There have been direct sales models in the past, where an OEM was allowed to buy out its dealers and sell direct. This was apparently tried by some premium brands but failed, according to Jackson.
• The interviewer suggests that the legacy OEMs were interested to see the original bill pass: “And if anything, [the legacy OEMs] should be at the table there in the state capital’s supporting [dealers] rather than kind of taking a wait-and-see and saying, ‘Well let’s see if they can get this passed.'”

Electrek’s Take

Rivian wanted the ability to sell direct, and we’re glad they got it. That’s straightforward. Less straightforward is imagining how the original bill would have played out. Would Ford have sold its gorgeous Mach-E Mustang in its own stores? Do you think that would have been better, or worse, for total unit sales in the state? Keep in mind, the overwhelming percentage of new-car sales happen via franchise dealers.

And I’d certainly like to believe that when someone walks into a Ford dealership, they’ll be drawn to the Mach-E and choose it over an Escape or Explorer. If true, having them in dealer lots would help speed up EV adoption. But legacy OEMs’ franchise dealers have proven to be poor partners to EV sales, so it would have been interesting to see a legacy OEM give it a go without a dealer screwing things up.

What do you think? Let us know in the comments.