Electric vehicles (EVs) offer numerous benefits: cleaner air, reduced healthcare costs, financial savings for consumers, jobs in the technology and innovation sectors, and reduced carbon emissions. We must get more clean EVs to consumers to take advantage of these benefits.
Direct-to-consumer vehicle sales (“direct sales”) get EVs to consumers quickly, as EV manufacturers without a franchise dealer network sell a vehicle directly to a customer. There are many benefits to this model of sales for the EV buyer, including:
- Direct sales offer consumers more choices by allowing the EV-only manufacturer to sell direct to consumers through showrooms
- Consumers are able to interact with trained product specialists within showrooms, creating a positive purchase experience.
- Consumers can have their EV serviced in the state if needed.
- Direct competition allows new EV manufacturers to drive down prices for consumers, as investment is spent on innovation and better products and services for consumers.
Unfortunately, there is legislation in some states that prohibit direct sales of EVs, which ultimately hurts the consumer. The direct sales model is common and available to consumers for every other product across our economy—i.e., in the electronics industry (you can buy products directly from Apple or HP), the food industry (you can buy products at the farmer’s market or from the seller online), and many more examples. The business model of the EV-only manufacturers is not compatible with a network of franchise dealers for these reasons:
- New EV manufacturers do not have the volume of EVs available to stock traditional franchise model dealerships, making it a moot point to establish a network of dealers if those dealers don’t have cars to sell.
- Franchise dealerships make a lot of their money from the repair and service of the gas engine and other components. EVs have about 10x fewer moving parts and require far less service and maintenance on the vehicle, making the current business model for a franchise dealership not suitable and unsustainable for exclusively selling EVs.
- A showroom, in contrast with a dealership, has a few EVs available for display.
- Franchise dealers also make commissions for their sales, encouraging the sale of higher-priced vehicles. New EV manufacturers offer a standard product at a set price, without commission.
New EV manufacturers generally offer a standard product at a set price without commission, versus franchised dealerships that generally provide a per vehicle salesperson commission. By allowing for new EV-only manufacturers to sell direct to consumers, all retail sellers of EVs stand to benefit, including those under a franchise dealer agreement, as the overall awareness and demand for EVs increases.
We urge states to support their EV consumers by allowing the direct sales of these clean vehicles to consumers and ease the purchase process. Many states already allow EV manufacturers to sell directly to consumers: Arizona, California, Colorado, Delaware, Florida, Idaho, Illinois, Maine, Maryland, Massachusetts, Minnesota, Mississippi, Missouri, New Hampshire, Oregon, Rhode Island, Tennessee, Utah, Vermont, and Wyoming. The trend is to open states, not close them off to new investment by EV manufacturers who wish to increase sales of EVs in their state.
NEW! See two new letters in support of EV direct sales, one from 75 academics and one from 26 non-profit organizations representing environmental, energy innovation, free-market and consumer advocacy interests. The academia letter also includes signatures from Nobel Laureate Vernon Smith, and 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, as well as former FTC Commissioner Josh Wright, and former head of the FTC’s Antitrust Division Doug Melamed.
- Coalition letters – 2021
- State factsheets – 2021
- A study from Acadia Center in May 2017, “Assessment of Employment Impacts at Existing Car Dealerships,” shows states that allow direct sales for EVs do not impact franchise dealer jobs
- Sign-on Statement to State Government Leaders About the Anti-Consumer Effects of Laws Prohibiting Direct Distribution of Automobiles, February 2015
- The Federal Trade Commission: Who decides how consumers should shop?
- The Department of Justice: Economic Effects of State Bans on Direct Manufacturer Sales to Car Buyers
- University of Michigan Law Professor Dan Crane is a preeminent expert on direct sales. See his website dedicated to this issue
Photo credit: Expert Meetings Plus