Electric car makers battle Georgia auto dealers to sell directly to buyers

Electric car makers such as California-based Lucid Motors are pushing for legislation that would allow them to sell their vehicles in Georgia without going through traditional car dealers. (Lucid/TNS)

Credit: TNS

Credit: TNS

Electric car makers such as California-based Lucid Motors are pushing for legislation that would allow them to sell their vehicles in Georgia without going through traditional car dealers. (Lucid/TNS)

Electric car manufacturers want the General Assembly to let them to sell their product directly to Georgia customers, but they’ve run up against strong opposition at the Statehouse from politically powerful auto dealers.

Electric car builders have been here before.

Tesla put on a strong lobbying press to get lawmakers to approve legislation in 2015 letting it sell its cars without going through local car dealers.

But that bill also limited Tesla to five locations statewide.

The company’s dealer-free business model sparked legislative fights across the nation, pitting Tesla against franchise car dealers — represented in Georgia by the Georgia Automobile Dealers Association — that have been protected by state laws giving them exclusive rights to sell new cars.

The new electric car manufacturers say sales at franchise dealers have skyrocketed since the Tesla bill passed. That, they say, shows Tesla’s direct sales haven’t put car dealers out of business.

But car dealers — many of whom sell less-expensive electric vehicles made by big manufacturers such as Nissan — fear allowing builders to peddle their vehicles directly to consumers would cost dealership jobs.

“One thing you need to protect is jobs,” Steve Ewing, owner of Wade Ford in Smyrna, told a House subcommittee Tuesday. “Their people will fill an Apple-type store with a few people in khaki pants and try to compete with dealers that do all the things we need to do.”

Rep. Chuck Martin, R-Alpharetta, who pushed the Tesla bill six years ago, this session sponsored House Bill 460, which would allow other electric car companies to sell locally without going through a franchise dealer.

A House subcommittee held a hearing on the bill Tuesday but took no action on it, likely dooming it for the session. Bills have until Monday to pass at least one chamber to remain alive.

Daniel Witt, senior manager of public policy for California-based Lucid Motors, said electric car companies have had to go through similar fights with dealer lobbies in other states.

He said more than 80% of electric vehicles sold in Georgia come directly through manufacturers now, not through traditional auto dealerships. “There is a preferred method that results in more sales,” he said.

Witt said his company is expected to make 6,000 to 7,000 vehicles this year, not exactly the kind of numbers that should worry independent car dealers. “General Motors makes 10 million a year,” he said. “It’s a vastly different scale. This isn’t (electric dealers) eating their lunch.”

In an interview, Jim Chen, vice president of public policy for Plymouth, Michigan-based Rivian, which makes all-electric pickup trucks and SUVs, said the company wants to sell directly to customers because “we know these vehicles best.”

He said in terms of car sales, companies such as Rivian are “not even a rounding error” when compared with the big auto companies that build the products sold by dealers.

Rivian announced in 2019 a $350 million investment from Cox Automotive, a subsidiary of Atlanta-based Cox Enterprises. Cox Enterprises owns the Atlanta Journal-Constitution.

Alexander Volokh, an associate law professor at Emory University, told the subcommittee that businesses should be allowed the chance to find the best ways to sell their products.

“It shouldn’t be up to us to tell manufacturers the best way to reach their customers,” he said.

But the auto dealers jealously guard the protections they’ve gotten built into Georgia law to keep out potential direct-sales competitors such as Rivian and Lucid.

At the time the Tesla carve-out passed, William Morie, longtime lobbyist for and past president of the Georgia Automobile Dealers Association, said: “Tesla is the first. Hopefully, it will be the last.”

GADA says the state’s dealer model — which employs tens of thousands of Georgians — gives added protections for consumers, such as helping to deal with manufacturer recalls.

Bo Scott, president of Regal Nissan in Roswell, told the subcommittee he has sold more than 3,800 new electric cars since 2012, with the Nissan Leaf costing in the neighborhood of $32,000. The new e-vehicle manufacturers want to sell their models for more than twice as much, he said.

“These are not vehicles that will be available to the average Georgian,” he said.

Lea Kirschner, CEO of the Georgia Automobile Dealers Association, said, “If passed, this legislation will ensure that profits from vehicles travel directly from Georgia to the pockets of Wall Street and Silicon Valley billionaires, rather than staying in the communities where they are purchased.”

Dealers have powerful allies in the General Assembly. Senate President Pro Tem Butch Miller, R-Gainesville, is a car dealer who always makes his voice heard on such issues, and other longtime lawmakers support the auto dealers group rand the current system with local car dealers selling vehicles.

The auto dealers’ lobby and individual car dealers have contributed more than $1.2 million to state races in the past decade, according to a review of campaign disclosures by The Atlanta Journal-Constitution. A large chunk of that has gone to House and Senate Republican caucuses.

The association also spends thousands of dollars most years hosting lawmakers at their annual beachfront conventions, a fairly common occurrence for business associations with large memberships.

Lobbyists for the electric car companies have been fairly pessimistic about whether Martin’s bill will get a vote, given the powerful opposition. They said the issue may wind up in court.

Electric car makers vs. auto dealers

In 2015, after a strong lobbying effort by Tesla, the General Assembly allowed the company to sell its cars in Georgia without going through local car dealers. Now, Rep. Chuck Martin, who sponsored that 2015 measure, has proposed House Bill 460, which would allow other electric car makers do the same thing.

One official from an electric car maker said that’s how more than 80% of the vehicles are sold that way in Georgia.

The electric car makers face stiff opposition from traditional car dealers, who are a powerful force at the Georgia Capitol, making more than $1.2 million in political contributions over the past decade.