The showrooms of the two electric-car makers, Tesla and Rivian, are located just steps apart in University Village and look very similar.
Bright lights, shiny cars, and sales pitches for futuristic vehicles.
But in Washington state, the consumer experience at the two stores is very different.
Tesla has the typical dealership routine: a salesperson, a 30-minute test drive, ample opportunity to ask questions. That’s not the case at Rivian, where employees are prohibited by law from taking customers on test drives or discussing car prices.
The difference has to do with decades-old state laws that govern how auto dealerships and manufacturers operate and transact with each other. In fact, Tesla is the only EV maker in the state that can “sell directly to consumers,” giving shoppers everything a traditional dealership can offer.
Rivian and other startups, including Lucid, which also owns U-Village showrooms, have protested the laws, which vary from country to country. In Washington, there have been two failed attempts in the past five years to pass legislation that would have reduced the influence franchised auto dealers have over new-car sales.
The debate among EV companies and dealers has centered on technical interpretations of the law, fairness and what business models should be allowed to thrive as auto emissions continue to contribute to global warming.
But what are these laws?
All 50 states allow customers to test drive and buy plug-in hybrids or EVs at traditional dealerships, but the availability of test drives directly from automakers like Tesla, Rivian and Lucid varies by state.
In some states, manufacturers, including Tesla, can’t operate physical stores and EVs can only be sold at traditional dealerships. Nearly half of the states, including Washington’s neighbors California, Oregon and Idaho, allow EV-focused companies to set up stores, offer test drives and talk to potential buyers about sales, according to a report by research and consulting firm Atlas Public Policy and funded by the Electrification Coalition.
But in Washington state, people looking to buy a Rivian or Lucid vehicle can’t have a traditional buying experience. To buy a Rivian or Lucid, customers must order it online, have it shipped to Washington and register it again, or travel to another state to buy the vehicle and drive it back.
Matthew Phillips, president of the Washington State Automobile Dealers Association, said EVs like Rivian could be sold in the state if the company was willing to adopt a franchise dealership model like another EV maker, VinFast Inc. Phillips said dealers have invested in on-site charging and training employees to sell EVs, and would welcome a deal with Rivian.
But Rivian, Tesla and Lucid have refused, arguing that being able to sell directly to consumers is key to their success and what’s best for buyers. The EV makers argue they can maintain more consistent pricing and educate customers about the technology than dealers can.
Leah Missick, deputy president of Climate Solutions’ Washington office, said the dealership model of storing cars in parking lots for long periods of time doesn’t make sense for EV companies when new vehicles are frequently sold out to buyers on waiting lists.
Can and should the law be changed?
The debate comes at a time when EVs are making up a growing share of new vehicle registrations in Washington state, which has announced it will ban new gas-powered car sales by 2035. Lucid and Rivian have also struggled to turn a profit and reach the kind of mass production and market share that Tesla has achieved.
Manufacturer-dealer laws date back to the 1950s, when the three U.S. automakers wielded significant influence in the market and laws were enacted to protect dealers from unfair trade practices by the manufacturers, said James Di Filippo, lead author of the Atlas public policy report. U.S. automakers have deconsolidated since then and international competition has intensified, but auto dealers continue to fight for those protections, he said.
As internet use exploded around the 2000s, several states, including Washington, also passed or strengthened laws banning direct sales from manufacturers, according to the Justice Department report.
In Washington state, Tesla received a dealer license in 2009 and began opening stores and selling cars directly to consumers. In 2014, the state legislature passed a bill that further tightened regulations between dealers and manufacturers, but included a provision that allowed only Tesla to continue operating and opening stores.
A Tesla-backed bill from the last session included a provision that would have allowed direct sales by all manufacturers that only make EVs, but it was ultimately removed before the bill stalled.
Climate advocacy groups including Clean & Prosperous, Climate Solutions and the Port of Seattle signed a letter in support of direct sales by zero-emission vehicle manufacturers, arguing that the change would expand access to EVs, lower costs for consumers and create a level playing field among EV companies.
“Buying a new car can be exciting, but also incredibly stressful,” Missick said. “To fight the climate crisis, we want to help people get better, cleaner cars as quickly as possible, and this is just one of the tools we have to help them do that.”
A lobbyist for the Washington State Automobile Dealers Association said at the hearing that allowing direct sales would eliminate 50 jobs at each of the 300 dealerships it represents. Phillips, the association’s president, said the decades-old law exists to level the playing field between local, community-based dealers and Wall Street-backed manufacturers, which have always had an unfair advantage over dealers.
Dealers are expanding into both rural and urban areas and must compete with each other to provide customers with the best experience and lowest prices, he said.
“We’re talking to people who haven’t yet decided or even considered buying an EV,” Phillips said. “If we want to get more EVs into Washington state, the best way to do that is through the existing franchise network system.”
Washington state has one of the highest rates of EV adoption in the nation after California. Electric vehicles and plug-in hybrids made up 20% of all vehicles sold in the state last year, more than double the national average, according to the Department of Environmental Protection. But gasoline-powered vehicles still make up about 98% of the state’s passenger vehicles and account for about 45% of the state’s greenhouse gas emissions.
