Rivian Challenges Ohio Law Prohibiting Direct-to-Consumer Vehicle Sales

Rivian has filed a lawsuit against Ohio, challenging the state's law that prohibits carmakers from selling vehicles directly to consumers. The law requires vehicles to be sold through independent, franchised dealers. Rivian is seeking to have the same rights as Tesla to sell vehicles directly to consumers. The lawsuit aims to challenge the state law and potentially open up more sales channels for Rivian.

Rivian Automotive has filed a lawsuit against the State of Ohio, challenging a state law that prohibits carmakers from selling vehicles directly to consumers. The Ohio law mandates that vehicles must be sold through independent, franchised dealers. Rivian, seeking the same rights as Tesla, aims to challenge the state law and potentially open up more sales channels for the company.

Rivian argues that the ban on direct sales is "irrational in the extreme" and decreases competition and consumer choice. The company notes that Tesla is allowed to sell its vehicles directly to customers in Ohio, presenting an unfair playing field for other EV makers. The lawsuit contends that Ohio's prohibition is "pure economic protectionism" for the benefit of existing auto dealers, putting their profits ahead of consumers [1].

The decades-old dealership model evolved in the early 1900s, but as the automobile industry grew, state franchise laws arose to address concerns about monopolistic practices. Dealers have since made direct-to-consumer sales as difficult as possible, filing lawsuits and lobbying heavily through their trade group, the National Automobile Dealers Association (NADA). Ohio's law is among a dozen states with outright bans on direct-sales, while some states have adopted partial bans [1].

Rivian's lawsuit highlights the inconsistency of Ohio's policy. While the state allows manufacturers to perform warranty service, rent vehicles, and sell new vehicles from out-of-state dealerships, it prohibits in-state vehicle sales. Rivian argues that this imposes an extraordinary burden on Ohio consumers and the company itself, serving no legitimate state interest [1].

This lawsuit is the first time Rivian has sued a state over its direct-sales ban. The company was previously sued by Illinois' dealer association for violating its ban, but that suit was dismissed. Rivian's Chief Administrative Officer, Mike Callahan, stated that the company believes consumers should have the choice to purchase vehicles directly, and that Ohio's prohibition is unconstitutional, irrational, and harms Ohioans by reducing competition and choice [1].

Rivian is not alone in its battle against direct-sales bans. EV companies like Scout, a subbrand of Volkswagen, and Tesla have also been involved in similar legal battles. Tesla recently settled its lawsuit against Louisiana challenging that state's direct-sales ban [2].

References:
[1] https://www.theverge.com/news/718186/rivian-ohio-lawsuit-direct-sales-ban
[2] https://seekingalpha.com/news/4477735-rivian-files-a-lawsuit-in-ohio-to-have-the-same-right-as-tesla-to-sell-direct-to-consumers