Freedom To Buy
North Carolina Case Study

Outdated laws in North Carolina are standing in the way of consumers and businesses’ freedom to buy the vehicles of their choice. These restrictions on car and truck buyers are obstructing economic growth and blocking North Carolinians’ access to the latest automotive technologies.

North Carolina’s leaders need to update these laws so that consumers don’t face unnecessary obstacles when purchasing a vehicle.

What’s Prohibited?

Under North Carolina law, consumers and businesses cannot buy a new vehicle straight from a manufacturer—whether that’s an SUV or a car, or a bus that is purchased by a city or a school district. Instead, customers must buy new vehicles and get them serviced through a franchised car dealership, which is a third-party company. 

If you want to buy a Ford truck or have warranty services or repairs performed on that truck, you must go to a Ford dealership owned by a third-party company. Vehicle manufacturers are not allowed to own retail locations that offer vehicle sales and maintenance services.

What’s the Latest?

This issue is coming to a head because there are new car manufacturers emerging that offer vehicles directly to consumers and businesses, without using the old system of franchised dealerships for sales and service. Consumers and businesses in many other states have access to these vehicles, but North Carolinians are forced to travel to other states if they want to purchase vehicles from these companies. And if they do purchase one, they must leave the state again to receive maintenance service from the manufacturer.

Most of the vehicle manufacturers that have emerged recently have been companies that make electric vehicles (EV). An EV has batteries instead of a gasoline tank, and an electric motor instead of an internal combustion engine. These vehicles plug in to refuel rather than using gasoline or diesel fuel. 

They have far fewer moving parts than gasoline or diesel vehicles. As a result, they require far less maintenance. For example, EVs never need oil changes, spark plug replacements, or emissions checks.

A New Model for New Technologies

44% of all electric vehicles sold in the United States have been sold directly from the manufacturer to the consumer or business, according to data from Atlas Public Policy. Tesla first started opening showrooms for people to see, test drive, and purchase EVs directly, rather than through a franchised dealership. Most other EV only manufacturers have followed suit. However, in 18 states, laws forbid any automaker from opening a store and giving consumers and businesses the freedom to buy directly from them. Another nine states, including North Carolina, allow only one automaker, Tesla, to open retail stores and sell directly to state residents. But customers in these 11 states cannot purchase vehicles from any other new EV-only manufacturers, such as Aptera, Arrival, Lucid, Rivian, or VinFast.

North Carolina is home to an electric bus and van manufacturer called Arrival, and a light-duty manufacturer VinFast, neither of which can sell directly to consumers, small businesses, package delivery companies, school districts, or cities in North Carolina that might be interested in purchasing their vehicles to help lower their fuel costs or reduce emissions

Consumers and Businesses Deserve the Freedom to Buy

Vehicles are one of the only products that face this outdated restriction on consumer choice. If you want to buy an iPhone, you can go to Best Buy or you can buy it directly at the Apple Store, where you can also get service from an Apple expert. The North Carolina government should not force consumers or businesses to go through a third party.

The way we purchase many goods has changed in recent years, and our laws need to keep up. Just last year, the legislature had to amend the dealer statute to allow at-home delivery of new cars, rather than making people pick up a car at the dealership. We ought to modernize the laws on vehicle sales, too.

Many of the laws related to car dealerships were enacted in the 1940s to protect dealers at a time when there were just three big automakers. Today, we have dozens of car makers from all over the world and new ways of buying cars through online sales services like Carvana and CarGurus. Our laws need to catch up with these new realities. Direct-to-consumer sales and dealerships can coexist. In the 32 states that allow customers the freedom to buy, auto dealerships and EV showroom sales are both thriving. In fact, traditional automobile sales and dealer revenues have increased nationwide since 2012, when Tesla began pioneering the direct-sales model. Since emerging from the pandemic, dealerships are seeing record profits.

Compared to gasoline vehicles, EVs are a new and different product, and consumers have lots of questions about them before they decide to buy. That requires an employee to spend more time talking to a customer. New EV manufacturers offer a standard product at a set price, with no commissioned salespeople, unlike at franchised dealerships. This ensures customers—whether an average consumer or a fleet operator—do not feel pressured when they start exploring this new technology.

North Carolinians Cannot Afford Limitations on Their Vehicle Choices

EVs are not vulnerable to rising gas prices at the pump due to global oil shocks. They also require very little maintenance, saving consumers money over the life of the vehicle. North Carolina should NOT limit the ability of its residents, businesses, and local governments to shop for, purchase, and maintain electric trucks, buses, and cars, especially when fuel prices are so high.

Allowing drivers and fleet operators the freedom to buy from manufacturers would not cost the state or its taxpayers a dime. In fact, it could save cities, counties, and school districts money as they transition to electric buses and other EVs to reduce fuel costs

Allowing drivers and fleet operators to buy from the manufacturer would help North Carolina’s economy by ensuring that showrooms are built and sales and service occur here in North Carolina, rather than in neighboring states like Tennessee. Even some traditional car makers are considering adding a direct-to-consumer option, rather than working only with franchised dealers. Prohibiting direct-to-consumer sales prevents vehicle manufacturers from investing in the state.

Tell N.C. Leaders to Give Drivers and Fleet Operators the Freedom to Buy EVs

Contact your state legislators to let them know you think consumers and businesses have a right to shop for and purchase vehicles without being forced to go through a third party.

Amy Malaki

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.