New Colorado Bill Wants Direct EV Sales
Colorado lawmakers–mostly coming from a bipartisan group–are making a move that would enable automotive makers to sell their electric vehicles directly at their consumers.
This particular measure, which has been proposed last Thursday in a state assembly, would make an exemption to a Colorado law that indicates that automakers will be able to own, control, or operate dealerships that are selling their electric vehicles.
To discuss this issue, a Senate hearing is currently underway this Tuesday.
Tim Jackson, the Colorado Automobile Dealers Association president, said in an interview with the Automotive News that this move is not beneficial for both franchised dealers and consumers.
“We believe the franchise [model is] better for the industry, better for the factory and better for the consumer,” Jackson said. He further added that these franchised dealers would go against this legislative bill.
“The dealer is in the middle of that process to take care of the customer locally,” he continued.
State senators Kevion Priola (Republican), Chris Hansen (Democrat), and Democratic House Speaker KC Becker are the ones that are sponsoring this bill. In their definition, they labeled electric vehicles as “a motor vehicle that can operate entirely on electrical power.”
Hansen mentioned that this bill is already their second attempt. They had filed a similar proposal last year, but it was scrapped and rejected on the House floor.
According to the senator, the difference of the current bill is the provision of the legislation that enables any automaker that is into the business of electric vehicles to sell their units directly. The previous measure they made had limited the selling part to manufacturers that only focus on making electric vehicles.
“I really felt like we needed to have parity for all EV manufacturers, and that’s really the purpose of the bill,” Hansen said.
The bill also affects some parts of Denver.
“It’s not a bill about trying to take something away from dealerships,” the senator affirmed.
Michael Dunlap, the Schomp Automotive Group vice president for business development, expressed his “tremendous concern” about this new Colorado bill.
“When we can be there and take care of the consumer and react to their needs on an individual basis, that model serves a consumer much better,” Dunlap said.
Schomp Automotive Group has six dealerships that operate in Colorado.
The issue of direct electric vehicle sales has been dividing the legislative body of Colorado, which is very partisan in nature. Most of the free-market conservative senators are inclined to support “green cars.” Meanwhile, the advocates argue that these franchise laws are weakening innovation anachronistic. Since the entry of Tesla in the various states of the country, automakers should be given the green light to follow the same route.
Daniel Crane, a law professor at the University of Michigan, said that there should be no prohibition to other car manufacturers when it comes to direct sales of their vehicles.
“Just as there is no good basis in public policy to limit Tesla’s right to engage in direct distribution, there is also no reasonable basis to prohibit traditional car manufacturers from it,” Crane explained. “There is no consumer-protection reason that any car company shouldn’t be able to choose how it sells.”
“The more states that allow direct distribution and the more customers who experience it, the less credible the dealer lobby will be in arguing that direct distribution harms consumers,” he followed.
This new proposed bill in Colorado came after a settlement case between the state of Michigan and Tesla just this January. In this proceeding, the state enabled Tesla to have their vehicles be sold directly in the state with the use of a subsidiary. The deal was made after Tesla made a commentary on a particular state law in Michigan that prevents the direct sales of new vehicles that are coming from outside dealerships.
To make it short, Tesla can’t sell its cars to Michigan. However, residents of Michigan can acquire Tesla cars in other places and bring them to the state.
Some have viewed this recent deal between Michigan and Tesla as a threat to the franchise law of the state.
Other companies want to follow the tracks of Tesla. One of these is the start-up company Rivian. The latter expressed its plans to sell its electric units directly from its factory. The investors behind Rivian are Cox Automotive and Ford Motor Co.