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The Bill of Selling EVs Directly To Consumers in Colorado Is On To The House Now

by Eva Fox February 28, 2020

The Bill of Selling EVs Directly To Consumers in Colorado Is On To The House Now

Vehicle manufacturers were not able to own, operate, or control any Colorado-owned vehicle dealer or used car dealer. If the bill "Concerning increasing consumer access to electric motor vehicles by allowing manufacturers to sell their own electric motor vehicles directly to consumers" will be approved, then it will allow EV automaker to own, operate or control a dealer who sells EVs of a manufacturer'sline-make.

Early cars were sold by automakers to customers directly or through various channels. But in 1898, this changed when William E. Metzger founded the first dealership in the United States.

Direct sales by an automaker to consumers are now limited by most states in the US through franchise laws that require new cars be sold only by licensed and bonded, independently owned dealerships.

A car dealership or vehicle local distribution is a business that sells new or used cars at the retail level, based on a dealership contract with an automaker or its sales subsidiary. It employs automobile salespeople to sell their automotive vehicles. It may also provide maintenance services for cars, and employ automotive technicians to stock and sell spare automobile parts and process warranty claims.

Tesla has rejected the dealership sales model based on the idea that dealerships do not properly explain the advantages of their cars, and they could not rely on third party dealerships to handle their sales. However, in the United States, direct manufacturer auto sales are prohibited in almost every state by franchise laws requiring that new cars be sold only by dealers. In response, Tesla has opened city center galleries where prospective customers can view cars that can only be ordered online. These stores were inspired by the Apple Stores. Tesla's model was the first of its kind, and has given them unique advantages as a new car company.

Sean M Mitchell posted on Twitter that a bill that would allow EV manufacturers to sell their cars in Colorado on their own is under consideration.

In the past, EV manufacturers were not able to own, operate, or control any Colorado-owned vehicle dealer or used car dealer. But if this bill is accepted, then it will allow EV automaker to own, operate or control a dealer who sells EVs of a manufacturer'sline-make. The bill reads:

"Current law states that, with certain exceptions, a motor vehicle manufacturer may not own, operate, or control any motor vehicle dealer or used motor vehicle dealer in Colorado. The bill creates a new exception that allows the ownership, operation, or control of a motor vehicle dealer that sells electric motor vehicles of a manufacturer'sline-make. An "electric motor vehicle" is a motor vehicle that can operate entirely on electrical power."

A bipartisan group of Colorado lawmakers, which provoked a quick response from state car dealers, introduced a bill that would allow automakers to sell electric cars directly to consumers.

State sens. Chris Hansen, a Democrat, and Kevin Priola, a Republican, along with Democratic state House Speaker KC Becker, are sponsoring the bill.

"I really felt like we needed to have parity for all EV manufacturers, and that's really the purpose of the bill," said Hansen, whose district includes part of Denver.

"There is no consumer-protection reason that any car company shouldn't be able to choose how it sells," Daniel Crane, a University of Michigan law professor, wrote in a column published Feb. 3 in Automotive News.

"The more states that allow direct distribution and the more customers who experience it, the less credible the dealer lobby will be in arguing that direct distribution harms consumers," he wrote.

Colorado law follows a January agreement between Tesla and the state of Michigan that will allow the electric vehicle manufacturer to service vehicles in the state through a subsidiary. The deal was concluded after Tesla challenged state laws that prohibit direct sales of new cars outside franchised dealers.

Tesla cannot sell in Michigan, but Michigan residents can buy Tesla cars in other states.

Tesla is interested in selling its cars at the most favorable prices for buyers, so the company doesn't agree that dealers have the opportunity to sell its cars at inflated prices, while leaving buyers no choice. Tesla’s goal is to make affordable electric cars for most people, which will significantly reduce CO2 pollution.

If this bill is approved, it will prove Colorado’s maturity and viability, as well as signaling other states to follow suit.

 




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