A HOST of major car brands have been banned from selling their vehicles directly to consumers in certain US states.
Car manufacturers such as Tesla and Rivian cannot sell cars directly to consumers after a state law was passed requiring automakers to sell through third-party dealerships.
Tesla are banned from selling their cars directly at their own dealerships – in contrast to more traditional automakers like Ford or GM (stock)[/caption]
The issue also affects Rivian, another major EV maker in the US (stock)[/caption]
This law, dating back to the 1990s, applies to all automakers, not just Tesla.
However, Elon Musk’s brand is known for its direct-to-consumer sales model – which directly conflicts with these laws, in contrast to more traditional automakers like Ford or GM, who already operate within the dealership model.
Tesla bypasses dealerships entirely, meaning the law disproportionately affects them.
According to Slashgear, these laws exist to protect dealership franchises by preventing automakers from competing directly with them, although Tesla does have a work around on the rule.
In Wisconsin, where this ruling is prominent, Tesla instead uses loopholes like having galleries to guide customers to purchase online or in other jurisdictions.
And in some states, Tesla uses service centers or partnerships with Native American tribes to legally sell vehicles.
Indeed, over a dozen states, including Texas, South Carolina and Kansas, have similar bans, while others allow limited direct sales.
Naturally, Musk has been trying desperately to change this law by investing millions in political campaigns to overturn them in states like Wisconsin.
Tesla, currently the most successful electric car manufacturer in the US, with multiple models among the best-selling EVs in the country, would likely be even more popular if the company had a greater number of dealerships.
Like Musk, Rivian CEO RJ Scaringe also finds the ruling abhorrent.
In the past, he told reporters that direct sales laws are a “horrific state-by-state level of rules that are as close as you can get to corruption.”
Scaringe also vented his frustrations at the statutes existing in the first place.
He said: “I think you essentially have, like, lots of dealers [that] have paid for laws that make it really hard for us to interact directly with the consumer.”
CYBER-GRAVEYARD
The news comes after Tesla made headlines in Michigan recently with a graveyard of over 100 unsold Cybertrucks causing issues for other drivers.
The US firm is under significant pressure from authorities after a host of unsold Cybertrucks were discovered parked at a shuttered shopping center.
Several local residents and social media users have posted images and videos showing rows of Cybertrucks lined up at Hunter’s Square shopping center on Orchard Lake Road.
Speculation is rife, with many believing the site, which is near a Tesla service centre in West Bloomfield, is being used as an overflow site to manage unsold inventory.
Meanwhile, a popular Ford dealership has closed down for good to make room for a major auto shop chain with over 220 locations across the country.
It comes as another auto brand has filed for bankruptcy.
The CEO has revealed what the final nail in the coffin was for the business and his fears of a domino effect.
Tesla and Rivian are both known for bypassing dealerships entirely, meaning the law disproportionately affects them (Stock)[/caption]
