Illinois automobile dealerships file lawsuits against Rivian and Lucid over direct sales model

Illinois automobile dealerships file lawsuits against Rivian and Lucid over direct sales model

Two associations of automobile dealers have filed lawsuits against are Rivian and Lucid over the electric vehicle (EV) manufacturers’ controversial decision to sell their vehicles through the direct-to-consumer sales route. The Illinois Automobile Dealers Association and the Chicago Automobile Trade Association said they decided to sue Rivian and Lucid over their direct-to-consumer sales model after the Illinois Secretary of State’s office didn’t pay heed to their complaints.

Rivian and Lucid have openly announced their respective decisions to open showrooms in Chicago and Oak Brook areas of Illinois. Rivian is advancing with its plans to start delivering its all-electric R1T truck in June, while Lucid aims to start deliveries of the Air electric sedan by the end of current year.

When asked for a comment on the lawsuits filed in Cook County Circuit Court, dealer Association President Pete Sander said that they were left with no choice but to file the lawsuits to protect consumers as well as franchised dealers who are making a significant contribution to the local economy.

Despite the growing opposition, the direct-to-consumer sales model is expected to gain momentum in the future. In February this year, Ohio State Sen. Michael Rulli (a Republican from Salem) announced that he would introduce a bill that would grant Lordstown Motors an exemption from selling its fully-electric pickup truck, the Endurance, through third parties.

But, the Automobile Dealers Association was prompt to announce that it would lobby against any such legislation.

Zach Doran, president of the Ohio Automobile Dealers Association, said, “Ohio’s time-proven system of independent and locally-based auto dealers has been fueling local economies and serving consumers for decades. Major auto manufacturers, including those with a large Ohio presence such as Honda, Ford, Chrysler and GM, operate successfully within this system.”

Various automobile dealers associations have pointed out that automakers like Ford and GM have also invested heavily in the EV technologies, but they will continue to sell their vehicles via independent auto dealers.

In Illinois, nearly 700 dealers operating are operating more than 2,300 franchises, which provide employment to as many as 42,000 people and support the state economy by paying various taxes.

Nevertheless, an increasing number of industry experts are of the view that direct-to-consumer sales model will gain popularity and the traditional dealership sales model will eventually die away with ICE vehicles as most consumers don’t like the traditional sales model because they are tricky as well as time consuming.