Car dealers, who have long been a roadblock in the rollout of EVs in the US, are continuing with their old tricks and filing lawsuits against new spinoff EV brands, like Sony Honda’s Afeela and VW’s Scout, which had hoped to extricate themselves from the dealership model.
Ever since the beginning of the EV revolution in the US, car dealerships have been a thorn in the side of progress.
Across the US, there are laws requiring automakers to sell cars through franchised dealerships. These laws originate from the early days of the automotive industry, when they also allowed car companies to scale their sales networks much more rapidly in the early days of the car boom in the US. And after setting up these franchises, it wouldn’t be particularly fair for automakers to be able to come in and undercut them, so the cat is sort of out of the bag at this point.
In their most optimistic portrayal, they also ensure that repairs are readily available across the country, that competition for sales helps keep prices down, and that manufacturers can’t throw their weight around and unfairly control the market.
But as is the case with most legislatively mandated middle-men, it hasn’t all been rosy. Every American knows that the car purchasing process is time consuming, hostile, full of tricks and of dealership personnel who have much more interest in earning a commission than in providing accurate information about the model you’ve come in asking questions about. Car dealers are routinely ranked as among the least-trusted profession in America (with the second-lowest positive trust rating, behind lobbyists, in this year’s Gallup survey).
Worse, when it comes to EVs, car dealers are often ignorant or outright hostile, and this pattern has been consistent (though slowly improving) for the more than a decade since EVs have been available to the US car buying public. Many EV purchasers have permanently sworn off dealers as a result of the comparatively better experience they’ve gotten when purchasing vehicles from one of the EV startups like, Tesla, Rivian or Lucid.
But the dealer lobby has long caused difficulty for these startups. Despite each of these being new companies with no franchised dealers, certain states have laws disallowing them from selling car on their own. They need to seek loopholes or ship in cars from out of state in order to sell cars over the internet, and dealerships keep lobbying to change laws to make it more difficult for new companies. There is a long and complicated history of these disputes.
And just like every objectively good thing in today’s world, the EV/dealership battle has taken on a political angle, with the party that’s only interested in doing bad things unsurprisingly choosing to do bad things in this case as well. (And, oddly enough, the bad CEO of the largest EV company in America gave hundreds of millions of dollars in bribes to the party which wants to eliminate EVs – and which is allied with the Tesla’s most significant enemy over its history: the auto dealers).
But the dealerships’ opposition doesn’t just end at startup EV brands – they’re now voicing their opposition to EVs from large manufacturers’ new spinoff brands, and the opposition might end up being even more fervent in this case.
Dealers take legal action against spinoff EV brands
Recently, both Honda and VW have come out with spinoff EV brands which they hope will help them attract the EV consumer who has realized the benefits of internet purchasing and isn’t interested in going back to a dealership. These brands, Sony Honda’s Afeela and VW’s Scout, have both announced they’ll be building their own sales networks.
Car dealers aren’t happy with this. The National Automobile Dealers Association (NADA) said it would challenge VW in court over the decision to sell Scout vehicles directly to consumers. And the California New Car Dealers’ Association (CNCDA, also the source of Electrek’s favorite quarterly EV sales breakdown) sent a cease-and-desist letter to Honda in May, and has now filed a formal lawsuit against Honda seeking to block sale of its upcoming Afeela vehicle, which will be available in California (only) starting next year.
CNCDA’s complaint says that not only does the decision to go direct to consumer violate the trust between Honda and its dealers, but that it also violates a new 2024 California law, which was sponsored by the CNCDA and opposed by Honda, which CNCDA says stops automakers “from using affiliated brands to compete with their own franchised dealers.” CNCDA says that the Sony Honda Mobility joint venture should count as an affiliated brand of Honda.
The argument may be stronger in this case than it is against the startups. EV startups never had a franchised dealer network to begin with, so they aren’t unfairly competing against dealerships that they had previously granted a license to.
But that’s not the case for VW and Honda. Both of these car companies have franchised dealers, and now a subsidiary of theirs, or a joint venture, or whatever-you-want-to-call-it, wants to compete against those dealers.
Well, sort of, anyway. They wouldn’t be selling the same car as those other dealers, as the Afeela and Scout would only be available in direct-to-consumer form, and presumably other VW and Honda vehicles will still exist and be sold at dealerships.
We’ll have to see if that argument works in front of the courts. But it looks like we’re in for many more years of the same sort of legal wrangling we’ve seen from dealerships – instead of any sort of effort to improve the EV buying experience on their part.
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