June 17, 2021

Gp Delivers

The excellent automotive artisans

Car Dealers Sue Rivian, Secretary Of State Over EV Sales

A group of Illinois car dealers has filed a lawsuit against Rivian and Illinois Secretary of State Jesse White, alleging that plans to sell electric vehicles directly to consumers—without going through a dealer—are illegal.

The lawsuit, filed in Cook County court, is part of a nationwide legal fight between legacy auto dealerships and young EV companies like Tesla and Rivian. Tesla, as the country’s most established EV manufacturer, was the first to confront the issue. Rivian is apparently next.

The new lawsuit was filed Thursday in Cook County court. At issue is whether Rivian (or any manufacturer) can sell new vehicles directly to consumers. That’s already in motion, with plans to open showrooms (including one in Chicago) while also selling Normal-made vehicles online.

The Illinois Automobile Dealers Association argues state law prohibits manufacturers from running a new-vehicle franchise. That trade group and its allies say “independent dealers are vital to the state’s economy and safety and underly the legislature purpose behind the Vehicle Code and the (Illinois Motor Vehicle Franchise Act).” They argue the Illinois Secretary of State’s office has “abandoned its enforcement role” and “bowed to political pressure” by agreeing to lessen its licensing requirements for certain new-to-the-market manufacturers, first Tesla and now Rivian.

“The (Secretary of State) is turning a blind eye to Rivian’s unlicensed sales operations,” the car dealers claim in their lawsuit.

The lawsuit was first reported by Crain’s Chicago Business.

The car dealers are asking a judge to issue an injunction to stop Rivian from directly selling or dealing new EVs, unless it gets a license from the state or enters into an “arms-length contract with an unaffiliated Illinois licensed motor vehicle dealer” for its sales.

The Secretary of State’s office is apparently leaning on legal guidance from the Illinois attorney general’s office that states the law “does not expressly require newly established motor vehicle manufacturers to establish and utilize franchise dealerships for the sale of new motor vehicles in Illinois,” according to the lawsuit, which disputes that legal finding.

Tesla has litigated direct-to-consumer sales in many states through the years, including in Illinois. Tesla eventually reached a consent order with the car dealers and Secretary of State’s office in 2019. That allows Tesla to get dealer licenses, but only up to 13 of them, according to the lawsuit.

Rivian had no comment on the lawsuit Friday. A spokesperson for the Secretary of State’s office says they’re reviewing the lawsuit and will do so with the attorney general’s office.

Rivian will make its electric vehicles at its manufacturing plant in Normal, with billions in investment from Amazon, Ford and many other backers. The company already had 890 employees in Normal as of early March, with plans to hire hundreds more soon.

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