Many states already allow EV manufacturers to sell directly to consumers and businesses: Arizona, California, Colorado, Delaware, Florida, Idaho, Illinois, Maine, Maryland, Massachusetts, Minnesota, Mississippi, Missouri, New Hampshire, Oregon, Rhode Island, Tennessee, Utah, Vermont, and Wyoming.
There is a lot of upfront capital investment needed to manufacture vehicles and pay employee salaries. Under a direct-to-consumer sales model, as soon as vehicles are manufactured, they are delivered right to the customer without stopping at a dealership..
The business model for the existing franchise dealers also appears at odds with a business only selling EVs:
Traditional automakers are also rethinking the relationship between dealerships and EVs and exploring the possibility of giving consumers and businesses the choice between both options. In 2020, GM offered a buyout to Cadillac dealerships that chose not to invest in the EV transition; one in five accepted the offer. In 2021, Volvo announced that, as the brand goes all-electric, all of its vehicle sales will be done online and it will only use the existing dealer networks for test drives and service.
Yes, you can still buy vehicles from these companies by ordering online. The vehicle’s delivery will usually be to a designated pick-up location or to your home via a delivery truck. But when state laws prevent direct sales, some EV companies cannot establish physical retail locations, conduct test drives, hire product specialists to answer questions, or teach customers about new vehicle technologies, and will likely require maintenance to be performed out of state.
Data show that franchise dealers and the direct sales model are so far successfully co-existing. Some dealerships oppose giving consumers and businesses the freedom to buy direct, even though in states that allow direct sales, there has been no documented harm to existing dealerships and business models. Traditional automobile sales and dealer revenue have increased nationwide since 2012, when Tesla began selling to customers directly. New U.S. automobile sales increased from 15.8 million units in 2013 to 17.5 million units in 2019—and revenue for the dealership industry has increased from $676 billion in 2012 to more than $1 trillion in 2019, according to the National Automobile Dealers Association.
In states that allow customers the freedom to buy direct, the dealership industry has thrived—with more of dealerships outperforming the national average in sales and employment.
Research also shows that consumers want choice. A recent report from Cox Automotive showed that only 1 in 3 consumers is “very satisfied” with the current dealership model, demonstrating an opportunity and need for improvements.
The report also found that
In the event of corporate bankruptcies or product recalls, consumer protections are provided by state governments and bankruptcy courts, not by dealerships. This is the same for both electric and gasoline vehicles. The consumer is still protected.
Each state has a different story; some states have always been open for direct-to-consumer sales, some state legislatures have worked proactively to open the state, some state legislatures closed the door after Tesla began opening retail locations, and, in some cases, the state supreme court ultimately decided the outcome. No matter the history, preventing consumers from the freedom to buy from new EV manufacturers limits the EV marketplace, inhibits consumer choice, and does a disservice to the state’s economy.
The sooner the EV market grows and more makes and models are offered to consumers, the sooner more EVs will turn over into the secondhand market. The secondhand market is generally where lower-income customers purchase their . Currently, 80% of EV sales are done through direct sales; states should be doing all they can to increase consumer choice and allow for direct sales to accelerate this adoption.
Amy Malaki is the Director of Partnerships and Policy at SkyNRG and SkyNRG Americas, pioneering global leaders in sustainable aviation fuel production and supply. Prior to SkyNRG, Amy was the Associate Director for the transportation portfolio at the ClimateWorks Foundation where she developed philanthropic investment strategies to advance a sustainable, equitable and low-carbon mobility system. She also pioneered the organization’s international aviation decarbonization strategy. Prior to that she focused on Asia business development at Better Place, a Silicon Valley electric vehicle network startup. She has a B.A. in Chinese and China studies from the University of Washington and an M.A. in international policy studies (energy and environment) from Stanford University.