In a filing in Chicago on Friday the Illinois Automobile Dealers Association lodged an appeal against December's judgement that Lucid and Rivian could follow Tesla's sales model and supply cars to customers direct from the factory. The EV companies see this as a way of trimming the fat on their business, while the dealers see the practice as an ever-growing risk to their industry.
In December of 2022 Associate Judge David Atkins ruled that the state of Illinois was justified in issuing dealer licenses to Lucid and Rivian. The ruling referenced a 2017 deal that legislators made with Tesla allowing it to operate its own dealer network. This was updated in 2019 (and agreed to by the dealers) allowing for up to 13 Tesla-owned dealerships within Illinois. In 2020 the Illinois attorney general's office issued an "informal opinion" that said OEMs were under no obligation to set up a network of franchised dealers.
Lucid Airs in Chicago waiting to be delivered to or picked up by their new owners.
Joe McMahon, executive director of the IADA, told the Journal Gazette & Times-Courier that the Tesla deal was made on a one-time basis and can't be applied to this case, citing the Illinois Motor Vehicle Franchise Act which says that all vehicle sales "must be made through licensed and independent franchised dealers."
"We think the law is pretty clear: You can’t be a manufacturer and a dealer... The Illinois Vehicle Code basically states that you have to go through franchised dealers."
The ever-growing transition to electric vehicles is something the IADA wants to stay squarely at the center of, with Illinois Governor J.B. Pritzker hoping to have one million EVs on the road in the state by 2030.
Legacy Brands & Dealers
It's not just the newcomers that are having issues with dealers over EV sales, with Ford and GM both wrestling with ways to transition to selling their future vehicles in a way that keeps them competitive with the direct-to-consumer set.
Ford has issued a set of rules for its dealers to follow if they want to sell EVs for the Blue Oval including no-haggle pricing and investing hundreds of thousands of dollars in training and charging infrastructure. Ford is offering two levels of dealer EV certification which can run from $900,000 to $1.2 million. The higher of the levels is known as "elite" and will see Ford ship dealers a larger allocation of EVs. Don't want to pay up? You'll only be getting internal combustion and hybrid cars and trucks to sell.
GM faced similar sticking points with its Cadillac and Buick dealers, and chose to offer buy-outs for dealerships that don't want to move forward with EV sales. Buick's set to go all-electric by 2030 and while GM's training and upgrade investment fees were lower than Ford's at about $200,000 they were still too much for a number of dealers. Caddy dealers were offered a similar program in 2020 with payouts ranging from $300,000 to more than $1 million according to a CNBC report. Roughly 320 of Cadillac's 880 dealers chose to take the buyout.
Not your grandma's ride to church: Last year's Wildcat concept gave us a glimpse of luxury electric Buicks to come.
What comes next for auto dealers is difficult to parse out. The transition to EV sales and service will be costly and with Ford and GM puts them at the mercy of the OEMs if they want a look-in at all, while the newer start-ups don't seem to have much of a use for them in any capacity. The required investments don't make sense for dealerships in areas with little to no charging infrastructure or demand for EVs and the ones that do upgrade will undoubtedly see their business models altered significantly. As Bob Dylan said, the times they are a-changin'.
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James Walker is an Automotive Journalist at Torque News focusing on Lucid Motors. If it's got wheels he's interested, and he's looking forward to seeing what kind of cars the EV revolution brings us. Whether it's fast, slow, new, or old, James wants to have a look around it and share it in print and on video, ideally with some twisty roads involved. You can connect with James on Twitter, Instagram, and LinkedIn.