A group of car dealers has filed suit against Secretary of State Jesse White and two electric vehicle makers claiming state law prohibits unlicensed and unregulated manufacturers from owning dealerships.
“There’s a host of issues out there that are required by dealer licensing laws … We just think that if the manufacturers want to try and sell direct, they have to abide by those same types of rules and regulations,” said Pete Sander, president of the 2,300 member Illinois Automobile Dealers Association.
Two new electric vehicle companies, Lucid Motors and Rivian, are taking online orders directly from Illinois buyers, bypassing the traditional automotive sales path through independent Illinois dealership franchises.
“This action is against Illinois law,” Sander said.
IADA is suing White, Lucid Motors and Rivian to get clarification from the courts on the issue. Consumers will lose out if manufacturers can bypass competition among local dealer franchises, Sander said.
“There’s no discounting of prices. There’s no rebates. There’s none of those situations that can benefit a customer,” Sander said.
The secretary of state’s office, who is named in the suit, says they can’t comment on active litigation.
Franchise dealerships compete every day on price, on parts and service, on warranty work and on trade-ins, Sander said. That competition will go away if franchise dealerships are undercut by manufacturer-owned dealerships and online sales, he said.
“We warned the Secretary of State’s office that consumers will be the losers if it does not enforce the laws it is required to enforce,” Sander said.
Tesla began the controversy with traditional Illinois dealerships in 2009, when it was granted permission to sell directly to Illinois customers in spite of opposition from IADA. Tesla now has 13 dealerships in Illinois. One Illinois Tesla dealership license is directly held by Tesla founder Elon Musk, who owns a 1% share in the Tesla manufacturing company.
Lucid Motors has a showroom in Oak Brook, while Rivian manufactures electric pickup trucks in its plant in Bloomington-Normal.
Sander said his member dealerships have invested in EV technology and sell and service many different types of electric vehicles.
“Our dealers have embraced the technology,” Sander said. “We are not anti-manufacturer or anti-electric vehicles. We just want to make sure that as far as the sales process goes, it is fair and equitable.”