Academic supporters include a Nobel Laureate and seven former chief economists
of the Federal Trade Commission and Department of Justice
LOS ANGELES—A growing coalition of national and regional organizations representing a broad range of public interests have signed on in support of lifting state restrictions preventing the direct sale of electric vehicles (EVs) by manufacturers and removing requirements that all new vehicles be sold through third-party dealerships.
The letter states: “Some of us frequently find ourselves on different sides of public policy debates. However, today we find common ground on an issue of considerable public importance concerning sales of electric vehicles. Specifically, we urge that any state laws still prohibiting car companies from selling their cars directly to consumers, or opening service centers for those vehicles, be amended to permit direct sales and service of EVs.”
The 26 signatories include the national organizations of Plug In America, EVHybridNoire, the Consumer Federation of America, Advanced Energy Economy, the Information Technology and Innovation Foundation, Securing America’s Future Energy, the Mackinac Center, and R-Street. Environment America was joined by 29 state chapters 23 and U.S. PIRG affiliates; several state or regional organizations participated, including two chapters of the International Brotherhood of Electrical Workers, as well as Michigan, New York, and Connecticut Conservation Voters. The organizational letter expands upon a 2015 letter signed by many of the same groups, which called for direct sales of all vehicles—whether electric or internal combustion.
Since 2015, three states—Wyoming, Utah, and Colorado—have fully opened direct sales from manufacturers not party to franchise dealer agreements. Several others reduced restrictions on direct sales through legislative efforts, court rulings, or legal settlements. At present, 21 states and the District of Columbia are fully open to direct sales. Nine states include an exemption for a single manufacturer, and 20 states are entirely closed to direct sales. In states closed to direct sales, motorists must often cross state lines to test-drive or take delivery of an electric vehicle.
While acknowledging that the signatory organizations may differ in their reasons for supporting the policy, the letter states that the current restrictions are “not supported by legitimate public policy objectives.” The letter presents the negative consequences of prohibitions on direct sales, include slowing market penetration of electric vehicles, interfering with consumers’ freedom to decide how to purchase cars, and interfering with free markets to privilege special interests.
The companion letter signed by academics argues that, in addition to American EV start-ups including Tesla, Rivian, Lordstown, Lucid, Bollinger, and other new market entrants, the policy “is also important to the legacy automobile companies like General Motors, Ford, and Chrysler, which should be allowed to compete with the start-ups on a level playing field.” Professor Daniel Crane of the University of Michigan Law School, who coordinated the support from leading academics, stated, “In addition to the organizations advocating for direct EV sales, the 75 academics who have joined in support of this effort are peerless in reputation, expertise, and experience.”
In addition to Nobel Laureate Vernon Smith, the letter is signed by seven individuals who previously held the role of chief economist at the Federal Trade Commission or Department of Justice Antitrust Division: Jon Baker, Dennis Carlton, Martin Gaynor, George Hay, Francine LaFontaine, Dan Rubinfeld, and Fiona Scott Morton. Signers also include former FTC Commissioner Josh Wright and former head of the FTC’s Antitrust Division, Doug Melamed.
In 2020, approximately 80 percent of electric vehicles were sold via direct sales despite the lingering prohibitions, while the nation’s 16,000 franchised dealerships sold fewer than three EVs per dealership.
In addition to the organizations who joined this year’s sign-on statement, a growing list of groups that have supported direct sales can be found on EVDirectSales.org.