Several Dealer Associations Focused on OEM Distribution of Electric Vehicles

BSM has been asked by several Dealer Associations to examine whether the OEM plans for distribution of Electric Vehicles runs afoul of existing franchise protections. In particular, dealers and their state and metro associations have expressed concern with the electric vehicle ordering systems being put into place as well as the potential for the sale of EVs over the internet from the OEM, to the customer.

The system for ordering EVs established by some of the OEMs involves the customer bypassing the dealer and ordering direct from the OEM’s vendor. This process includes selecting the vehicle, submitting a deposition and selecting the dealership with which the customer will complete the transaction. If no dealership is selected, the OEM will assign a dealership to the customer.  The dealership’s role is presumably to negotiate the price of the vehicle and deliver the vehicle to the customer.

Likewise, dealers are concerned that OEMs, those with and those without franchised dealers, may wish to compete with Tesla by offering the entire vehicle sales process online through an OEM vendor. This concern will involve an analysis of internet commerce law along with state motor vehicle franchise laws.

We look forward to providing recommendations to our Dealer Association clients as to the best means for protecting the franchised dealer’s position in the sale and delivery of electric vehicles.