In fighting dealer lawsuit, Rivian says Tesla deal is proof it can sell directly to consumers too
Rivian has fired back at the auto dealers looking to stop it from selling directly to consumers, arguing that a failed 2017 lobbying effort is proof the electric automaker's direct-sales plan is legal.
In a new court filing, Rivian also argues the auto dealers undercut their own argument against direct sales by entering into an agreement with Tesla allowing it a limited number of dealer licenses.
“It is not up to (the auto dealers) to decide which EV manufacturers can and cannot sell directly to consumers. They are not the keepers of the gate for motor vehicle dealers, and are not allowed to choose the winners and losers,” Rivian’s lawyers wrote in the filing.
The Illinois Automobile Dealers Association filed its lawsuit in March in Cook County court, alleging that plans to sell electric vehicles directly to consumers—without going through a dealer—are illegal. They asked for a judge to issue an injunction to stop Rivian from directly selling or dealing new EVs, unless it gets a license from the state or enters into an “arms-length contract with an unaffiliated Illinois licensed motor vehicle dealer” for its sales.
The lawsuit is just one part of a nationwide legal fight between legacy auto dealerships and young EV companies like Tesla and Rivian. Tesla, as the country’s most established EV manufacturer, was the first to confront the issue.
In its 23-page attempt to get the lawsuit dismissed, Rivian and co-defendant Lucid attack the auto dealers’ claims on several fronts.
Rivian says the Illinois Automobile Dealers Association (IADA) tried in 2017 to change state law to expressly ban manufacturers from selling directly to consumers without a franchised dealer.
That effort failed—and that’s proof IADA knows direct sales remain legal, Rivian says.
“The IADA’s failed legislative effort is eye-opening and makes clear that (the auto dealers) are well aware that Rivian and Lucid can be motor vehicle dealers,” Rivian’s lawyers wrote.
Tesla has litigated direct-to-consumer sales in many states through the years, including in Illinois. Tesla eventually reached a consent order with the car dealers and Illinois secretary of state’s office in 2019. That allowed Tesla to get dealer licenses, but only up to 13 of them.
“(The consent order) proves that Illinois law does not bar Tesla, and by extension similarly situated Rivian and Lucid, from possessing motor vehicle dealer licenses,” Rivian’s lawyers said.
Rivian and Lucid admit that while they can’t be franchisees, they can be motor vehicle dealers under state law.
Rivian has a powerful ally in the fight: Illinois Attorney Kwame Raoul. His office is representing the Illinois secretary of state in the lawsuit. The attorney general has sided with Rivian.
“(The auto dealers) are wrong about their primary contention in this case: that the Secretary of State cannot legally grant motor vehicle dealer licenses to auto manufacturers,” the attorney general’s office wrote in support of a motion to dismiss the lawsuit.
The Cook County case remains pending. It was due for a court check-in status Thursday.
The Amazon-backed Rivian recently began production of its electric vehicles in Normal, with customer deliveries starting last month. Direct sales are already happening, with plans to open showrooms (including one in Chicago) while also selling Normal-made vehicles online.
Rivian is expected to become a publicly traded company later this year.