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Rivian Sues To Sell Its EVs Directly In Ohio (techcrunch.com) 74

Posted by BeauHD from the time-to-get-with-the-times dept.
Rivian has filed a federal lawsuit in Ohio to challenge a state law preventing it from selling electric vehicles directly to consumers, arguing the rule is anti-competitive and outdated. The law currently protects legacy dealerships while allowing Tesla a special carve-out, and Rivian wants similar rights to apply for a direct-sales license in the state. TechCrunch reports: "Ohio's prohibition of Rivian's direct-sales-only business model is irrational in the extreme: it reduces competition, decreases consumer choice, and drives up consumer costs and inconvenience -- all of which harm consumers -- with literally no countervailing benefit," lawyers for the company wrote in the complaint. Rivian is asking the court to allow the company to apply for a dealership license so it can sell vehicles directly. Ohio customers have to buy from Rivian vehicles from locations in other states where direct sales are allowed. The cars are then shipped to Rivian service centers within Ohio.

Allowing Rivian to sell directly would not be treading new legal ground, the company argues in its complaint. Tesla has had a license to sell in Ohio since 2013 and can sell directly to consumers. What's stopping Rivian is a 2014 law passed by the state's legislature. That law, which Rivian says came after an intense lobbying effort by the Ohio Automobile Dealers Association (OADA), effectively gave Tesla a carve-out and blocked any future manufacturers from acquiring the necessary dealership licenses. "Consumer choice is a bedrock principle of America's economy. Ohio's archaic prohibition against the direct-sales of vehicles is unconstitutional, irrational, and harms Ohioans by reducing competition and choice and driving up costs and inconvenience," Mike Callahan, Rivian's chief administrative officer, said in a statement.
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Rivian Sues To Sell Its EVs Directly In Ohio More

Rivian Sues To Sell Its EVs Directly In Ohio

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  • Rivian service centers are not dealers?

    • Re:Rivian service centers are not dealers? (Score:5, Insightful)

      by caseih ( 160668 ) on Monday August 04, 2025 @08:59PM (#65566622)

      Not as the law is written. The difference is who owns them. Under dealer franchise law, dealerships are not owned by the manufacturer and must buy the vehicles which they then sell. Whereas Tesla owns all their dealerships and thus sell directly to consumers, which Rivian rightly wants in on.

      There may have been good reasons for these dealership laws years ago, but now that Tesla has carved out exceptions for themselves, it's only fair that all manufacturers should be able to do the same thing.

      • According to the summary of the article above, the law in its current form was passed after Tesla got their license.
        Corruption.

        • Not particularly. There are good reasons for Ohio to do this, and Tesla was just the first to do it, before the legislature woke up. The only problem is that this law is halfbaked and used as protection for dealerships.

          Take a look at the BER (Block Exemption Regulation) in the EU which was set up for similar problems and has been very successful in restoring competion without overburdening the industry. If they had something similar I'm pretty sure it would be better than this abomination.

          Anyway, US politic

      • There are still good reasons for those dealership laws, they're designed to keep some money in the local communities and ensure that major purchases which require dealer support like vehicles will not be entirely at the whim of a company that has no significant ties to the state.

        The fix is to remove the Turdla carveout, not give Rivian another one.

        • Re:Rivian service centers are not dealers? (Score:4, Interesting)

          by nealric ( 3647765 ) on Tuesday August 05, 2025 @10:51AM (#65567578)

          Yeah, let's keep money in local communities by forcing everyone in that community to pay money to an unnecessary middleman. The service issue can be addressed by requiring authorized service center or mobile support within a certain radius of the sale.

        • > they're designed to keep some money in the local communities

          Debatable. The amount of profit on a new car sale is typically less than 5%, and cars are often sold at a loss. Dealers make their money from used car sales and servicing. And dealerships themselves are often chains, with the same group owning large numbers of dealerships for different vehicles, their ties to the local community being generally that they know where the land is at.

          > ensure that major purchases which require dealer support li

  • Ask the voters (Score:3)

    by Drethon ( 1445051 ) on Monday August 04, 2025 @07:37PM (#65566512)

    I wonder what they would say

    • Re:Ask the voters (Score:5, Insightful)

      by evil_aaronm ( 671521 ) on Tuesday August 05, 2025 @01:45AM (#65566918)
      In Ohio? The voters might well and truly say, "We are for this!" And then their elected leadership would say, "Fk that; our corporate sponsors don't want it," and then draft legislation to specifically do the opposite. Ohio's legislature is doing just that on other issues.

    • Re: (Score:1)

      by jonadab ( 583620 )
      A few decades ago, the vote would've gone heavily in favor of requiring car dealerships to be locally owned; but at this point, I imagine a lot of Ohio voters would kinda shrug and check one of the options more or less at random. If there are still a lot of people here who care deeply about the issue, I'm not aware of it. (Maybe among the remaining members "silent generation"?) Ohio consumers have thoroughly embraced large chains (such as Meijer and Menard's and Ollie's and so on) for most of their brick

  • why do we still need car dealerships that are not owned by the manufacturers

    • Re: (Score:2)

      by Luthair ( 847766 )
      I can see both sides here - we only need to look at the behaviour of Wells Fargo to understand what will eventually go wrong with manufacturers running all dealers. That said, I don't see why we should protect the dealership model either since many have behaved unethically for decades.
      • When you pose the question as an either-or, it's definitely hard to make a choice.
        Fortunately, one doesn't have to.

        You allow the manufacturer to have its own dealers, and you statutorily force it to sell inventory to independent dealers in a non-discriminatory way.
        That way, if either party becomes an unethical shitbag, you go to the other.

        • The issue there is that to be a dealer, you need to make a significant investment in resources, specifically those around servicing vehicles.

          No dealer is going to want to make that investment without a guarantee of exclusivity within certain parameters.

          • The issue there is that to be a dealer, you need to make a significant investment in resources, specifically those around servicing vehicles.

            So?
            Do you think Costco doesn't need to make a significant investment in resources?

            No dealer is going to want to make that investment without a guarantee of exclusivity within certain parameters.

            Dealers don't get exclusivity... Someone can open up a Ford dealership across the street from another Ford dealership.

            What on Earth are you fucking talking about?

            • Dealers don't get exclusivity... Someone can open up a Ford dealership across the street from another Ford dealership.

              While it may be possible, I believe the paperwork could make it difficult. Unless your hypothetical street is 10 miles wide there is a process to be followed. I assume an existing dealer would object to another dealer of the same make across the street.

              I have copied some of the Ohio revised code below and included links if you wish to read more.

              (A) Except as provided in division (C) of this section, when a franchisor seeks to enter into a franchise to establish an additional new motor vehicle dealer

              • You misunderstand me.

                As said:

                When you pose the question as an either-or, it's definitely hard to make a choice.

                In the tear-down of franchise laws to allow manufacturers to sell direct, we also get rid of the non-competitive franchise laws that exist.

                The goal is a fair playing field to keep all parties honest.
                Getting rid of franchise protection, and preventing them from being fucked in the ass by the manufacturer is what protects us from them.
                Making sure dealers exist is how we protect ourselves from the manufacturer.

      • What does Wells Fargo have to do with this? Banks never operate on a franchise model as far as I know. All branches are owned by the one company. And Wells Fargo has never made cars. What am I missing?

        • I have the same question. And it's REALLY WEIRD to see people here defending the unnecessary middleman model.

      • Re:why do we still need car dealerships that are n (Score:5, Interesting)

        by registrations_suck ( 1075251 ) on Monday August 04, 2025 @11:34PM (#65566788)

        I find the "we must have a middle man to ensure lower costs for consumers" argument to be rather unpersuasive.

        • I imagine you do.
          Single suppliers would never hike up prices on a captive market.

          We should get rid of antitrust laws, too.
          Why should we force competition?

          • The competition is Tesla / BYD / etc. Not other dealerships.

            • You mean as in Samsung is the competition for Apple? Do you feel that works out well, given the issues with their respective monopolies on the play store and app store?

              As soon as you have only a few players in the market, you run the risk of implicit cartels. Like when Shell was dominant in my country, other gas station managers just called the Shell priceline each morning and took a few cents of the official Shell price. This created massive profits for Shell and others.

              Implicit cartels are very hard to re

              • Does the fact you can buy them from Best Buy and similar places affect your assessment of that?

                On the hardware side of things, there are of course a lot more alternatives than just Samsung and Apple, so I don't think there is a problem there.

                The App Store situation is different though because there's only two of them, and they are not direct competitors.

                • True, but while the hardware isn't exactly the issue *right now*, once the Chinese manufacturers get hit with higher tariffs and/or outright bans, that will change rapidly.

                  I don't think Samsung or Apple have great ambitions to own all the stores outright, because there isn't an aftermarket in the way that cars have one so who cares, right?

                  As for Apple and Samsung not being direct competitors... true. I think the issue for app stores is more that in the case of Android, Google competes with the manufacturers

            • A fine demonstration of a lack of understanding toward markets.

              Ask yourself, if Apple existed, why wasn't Microsoft able to claim they weren't a monopoly?
              Samsung and Apple?

              Once one has made the material investment in a car, they are a captive market.

          • There are plenty of supplies of cars.

      • Indeed, which is why the EU has the Block Exemption Regulation which handles this. The new version (2013 or so) has been quite successful, especially in the car industry.

    • Most car dealerships are NOT owned by manufacturers.
      Large companies own a lot of car dealerships. Auto Nation and Lithia for example

    • We don't.

      This is pure protectionism of the existing players to keep newcomers out.

      • This is the dumbest shit I've ever read.

        The only people it keeps out are manufacturers. You and I are free to open franchises dealing in cars.
        Are we not newcomers?

        The only fucking people it keeps out are those with monopoly power over the source of what is being marketed.
        • And dealers want to maintain their monopoly on selling new cars. Dealers should be able to sell any brand of new cars they want and the competition law should prevent manufacturers under pricing a dealer. In a free market (which this is not), as a compromise, Rivian et al should be able to sell cars direct as long as they don't undercut any dealer who makes a deal with Rivian to sell Rivian products. Dealers should make their after market service a reason for customers to go to them instead.

          • And dealers want to maintain their monopoly on selling new cars.

            Of course they do.
            And fuck them.
            They want their monopoly, and manufacturers want to replace them with their own, like they did before franchise laws came into existence.

            Dealers should be able to sell any brand of new cars they want and the competition law should prevent manufacturers under pricing a dealer.

            Agreed 100%- you and I are on the exact same page.

        • > You and I are free to open franchises dealing in cars

          Not in the US you're not.

          Car manufacturers require their dealerships be healthy. They don't contract with dealerships that are too close to other existing dealerships unless they intend to close down that other dealership.

          (I worked in the industry at one point, working for a company providing analytics services for the dealer management departments of most of the US car manufacturers. They're more likely to close dealerships near you than let you ope

  • Back when the 2013 talks were going on, both the Republican legislature and the representatives from the OADA acted in such deplorable ways in the closed door sessions; lying, screaming, etc. It didn't help that state representatives had deep family ties to specific auto dealers.

  • Protecting any business model should be illegal (Score:4, Insightful)

    by rwrife ( 712064 ) on Monday August 04, 2025 @07:42PM (#65566528) Homepage
    I can't fathom how anyone would think protecting a business model, especially one that is nearly 100 years old, is a good idea.

    • $orry I can't hear you.

    • As an avid player of tabletop fantasy roleplaying games, I appreciate the throwback to the middle ages of trade guilds that still persists today.
      My only hope is if we can extend protection to state religion and important families, perhaps special consideration in our legal code for one of the founding families. Assuming they have documentation on their ancestors' trip on the Mayflower

      • I see where you're going with this! So you think the future of the American economy is fantasy tourism and school trips? I'm ready to invest! Do you think they'll accept Yuans?

        • I'm pretty sure they will accept Yuans. After all, they're more likely to have any value a decade from now.

    • Simple. Because the dealer model enforces at least a semblance of a competitive landscape where the dealership would otherwise simply not sell them inventory for the purpose of reselling- not honor warranties for third-party sold cars, etc. That kind of bullshit.

      Dealership model laws are a form of anti-trust. And they worked.

      That being said, I don't think manufacturers should be restricted from selling directly to customers. Rather, I think they should have to compete fairly with dealers. Keeps both sid
      • Gah- where the *manufacturer* would otherwise simply not sell them inventory.

      • It does no such thing. There are plenty of single vendor only dealerships. The dealer model provides no benefits that the direct sale model doesn't. You don't get to not honour warranties simply because you didn't go through a dealership. That's not how any of the legal system works.

        • It does no such thing.

          Yes, it does.

          There are plenty of single vendor only dealerships.

          Yes, and their competitor right across the street or in the next town over.
          You're confused about what is meant by competition.

          You don't get to not honour warranties simply because you didn't go through a dealership.

          You have no idea what the fuck you're talking about.

          That's not how any of the legal system works.

          Right now, today, an original manufacturer warranty on a car can not pass on past the first sale.

          Why the fuck do you opine about shit you literally know nothing about, in a country you know nothing about?

          • You countered your own point. The competitors remain in place. The ability to sell to the consumer directly doesn't mean there's no competition. The fact that you can buy a Samsung SSD from Samsung's store doesn't mean Staples went out of business.

            You have no idea what the fuck you're talking about.

            Right back at you my friend.

          • Right now, today, an original manufacturer warranty on a car can not pass on past the first sale.

            Warranty either can be passed or can not be passed. Dealership vs vendor makes no difference in this matter. Unless you can point to me a specific law that separates the way these two are dealt with, and if you can then let's fix that retarded law instead of protecting the dying business of pointless middlemen.

            By the way my last second hand car (2 years old) had the manufacturer warranty transferred to me just fine as well. I literally have no idea WTF you are talking about. But but maybe you live in Ohio a

          • > Yes, and their competitor right across the street or in the next town over.

            Never happens, unless the "next town over" is at least 20 miles away.

            In the US, car companies will not license a dealership if it's too close to one of their existing dealerships. They require dealerships be healthy, so actively promote monopolies in each market in order to achieve that.

      • Re: (Score:3)

        by tlhIngan ( 30335 )

        The dealership model was anti-trust, true. Keyword - was.

        Now it's a form of monopoly where the big dealerships are the ones controlling the market. You can tell because of all the rules preventing you from opening a dealership too close to another dealership - it's Joe's Dealership town and Joe owns all dealerships in town.

        However, we have to realize that maybe that model no longer works. Because direct to customer stores exist - an Apple store competes with Apple resellers, for example. And many other stor

        • No arguments here at all.

          Anticompetitive dealer laws need to go too.
          Also, you can buy a car online- from a dealership.
          There are literally online-only dealerships.

          That aside, I do agree that the manufacturer should be able to be one of those dealerships, and that dealers should be protected from anticompetitive practices from them, and from each other.

    • In that case, you might want to lobby for repealing the Berne convention treaty.

    • Vehicles are the 2nd most expensive things people purchase, after houses.
      The laws got put in place because people would sell cars and then when the person had an issue they would claim that they did not have local respresentation they had to be sued out of state.
      The requirement of a dealer gives a local point that can be sued as well as provide maintenance and support.

      • For a lot of people, it's third at best. Expensive shit people buy:

        Houses
        Most expensive house I bought (two months ago) was $365K

        House remodeling
        We're putting at least $100K into remodeling before moving it

        Land
        I wish.

        Cars
        Our most is expensive car was about $43K (#2 was $31K)

        Education
        I ended up with 100K in student loans, PLUS everything I put in out of pocket.

        Weddings
        My was cheap. $10K, including 2 week honeymoon.

        Divorces
        None, thank god.

        Vacations
        I've been on a vacation that cost about $20K

        Toys (planes, bo

    • There are some pretty important business models that should be protected and regulated. The deregulation of the media industry has led to Sinclair operating 280 television stations in the US. This should have been protected, and I think it would be hard to argue that those laws were not protecting the citizens of the country. Protecting car dealerships? Yeah, those guys are con artists, and are probably a part of why US automakers are so uncompetitive in the marketplace.

    • You could if you were the beneficiary of such a model, or a politician that has such beneficiaries among its powerful and richly donating constituents.

  • Uneven application of the law is always a court favorite. Could probably make a pretty good supremacy clause argument

  • Outdated and anti-competitive isn't the relevant (Score:4, Informative)

    by JoshuaZ ( 1134087 ) on Monday August 04, 2025 @07:57PM (#65566548) Homepage
    A law can be "outdated and anti-competitive"- but a court is not in general going to strike it down for that. They do claim that the law is irrational which does matter more; courts can and have struck down laws as having no rational basis. But that's an extremely tough burden, and the state just has to come up with some reasonably plausible rational reasons for the law. Reasons used to justify such laws include that they helped alleviate an imbalance in power between car manufacturers, dealers and customers, and that they made sure that there was an easy and natural way for warranties to handle cars. They were also seen as a way to promote local business. Now, in the modern age, all of those seem like pretty poor reasons that don't remotely justify the negatives. But that's exactly the sort of balancing that is the job of the legislator to decide, not the courts.
    • I think they're basically making an anti-trust argument. Their arguments that there are (no longer) any benefits to the ban on direct sales are probably intended to counter the defense that the state has some strong interest that justifies the anti-trust violation.
      • I'm struggling to see how there's a violation of the anti-trust laws. Admittedly, I'm not an expert, but states are allowed pretty large leeway in how they regular businesses, and the Sherman Anti-Trust Act https://en.wikipedia.org/wiki/Sherman_Antitrust_Act [wikipedia.org] doesn't really interact with states doing something like this in any obvious way.

  • Dealerships are political entities (Score:4, Insightful)

    by jacks smirking reven ( 909048 ) on Monday August 04, 2025 @10:16PM (#65566706)

    Specifcally for the Republican Party, generally for your local area your local big car dealers, your "Kunkleman Chevrolet" and such. The dealers do more donating and lobbying than the actual auto industry and that's the party they are in cahoots with if you would.

    Want to Stare Into the Republican Soul in 2023? [slate.com]

    American Gentry [theatlantic.com]

  • ...some of the most hated businesses in the country
    Remove direct sale prohibitions and see if they can survive on their merits

  • Why should this be a thing? (Score:5, Insightful)

    by jonwil ( 467024 ) on Monday August 04, 2025 @11:43PM (#65566794)

    Why is it ok for LEGO or Nike or Apple or Levi's to run their own shops in competition with retailers who also sell those products but it's not ok for Rivian or Tesla or Ford or Toyota to do the same thing?

  • Seems like there is an answer to this (Score:3)

    by DrXym ( 126579 ) on Tuesday August 05, 2025 @04:22AM (#65567086)
    Rivian should be allowed to sell cars direct to users but be required to support agency / franchise dealers in the real world. And their website should list stock from dealers within a radius and allow a customer to ask for an "offer" to undercut the website price. i.e. Rivian get to sell direct but they still have to compete for business.

    • Why though? Either a dealer offers a value adding service or they don't. If you have to pass a law to make those value added services exist then they can hardly be considered value adding or the market itself would ensure they exist.

      Rivian shouldn't compete with dealers. They compete with other car companies. Either they can distribute directly or they can't. There should be no implicit requirement for them to support someone 3rd party business model. If this is bad for the consumer then the consumers will

      • Re: (Score:2)

        by DrXym ( 126579 )
        Because having customers directly order a car from the manufacturer means through an official website gives them an anticompetitive advantage. Not only are cars more expensive, but things like loans, registration fees, servicing, trade-ins, insurance, parts, repairs etc become more expensive. And it's not like dealers can fight back because Rivian (or Ford / Tesla / Toyota) can drown them out. That has already happened for Tesla and is becoming a precedent.

        As much as people despise dealers, they offer com

  • As it almost always goes -- this legislation restricting direct vehicle sales from manufacturers is only around today because the car dealership middle-man is a powerful money-generating force, and most auto-makers seem to prefer it stays in place.

    Tesla got their "carve out" because they had the money to throw at getting made an exception. Rivian should automatically get the same treatment, but we don't live in a country where laws are applied fairly to all.

    In many ways, a dealership network acts as a shiel

  • ... Rivian should have the same rights. Equal Protection Clause [wikipedia.org] of the Constitution and all that*.

    *Yeah, I know that the shyster legislators manage to create law that applies only to their buddies.

  • Nobody wants to live in Ohio. If you're in Ohio and reading this, the entire world is laughing at you missing out on everything not Ohio

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