As dealer associations, skyrocketing profits and political schemes intertwine, a theory has emerged. However, this is just one of my theories, but I would like to explore it and share it here.
It appears there have been a number of proposed anti-EV bills in many states, ranging from West Virginia to Oklahoma, while efforts to open currently closed states, including Georgia and Connecticut, face challenges – even as Rivian seeks to invest $ 5 billion in a manufacturing plant in Georgia and owners of electric vehicles of Connecticut have been pushing for years to open up the state.
Now, what I’m about to point out is just a theory – consider it speculation on my part. I will explore this theory and some of the legislative proposals that are passing or have passed through various state governments this year.
My Theory: Rising Profits Mean Dealers Have More Money to Lobby State Governments
Dealerships across the country are seeing increased profits. And as those profits grow, they have even more money than usual to spend lobbying state legislatures to try to block direct sales from Tesla, Rivian, Lucid and other automakers that would like to sell directly to their customers.
Dealerships are seeing a record increase in profits due to vehicle shortages and, of course, record profit margins. Kelly’s Blue Book cited a report from the National Automobile Dealers Association (NADA) noting that the pre-tax net profit of average new car dealers in the first 9 months of last year was up 128.2% compared to the same period for 2020 – not 28.2% but 128.2%. The article goes on to point out that the shortage of semiconductor chips leads to a shortage of new cars and, in turn, has led to soaring prices for new and used cars throughout the past year.
Data from Edmunds shows that the average transaction price for a new vehicle fell to $728 above MSRP in January 2022 from $2,152 below MSRP in January 2021. In January 2020, that number was $2,648 below of the MSRP. Jessica Caldwell, Executive Director of Knowledge at Edmunds, said:
“The overwhelming majority of consumers paying above list price would have been unthinkable just a year ago. vehicles they want, but there is also a vast population of people who are forced to do so simply because they need transportation and have no other choice.
NADA waits even more profits for this year. NADA Chief Economist Patrick Manzi said:
“The major theme for new vehicle sales in 2021 was limited inventory. The coronavirus pandemic and resulting microchip shortage and production cuts have significantly limited new car and truck inventory at dealerships to The constraints have further led to the suppression of new vehicle sales, as well as shortages of used vehicle inventory and increased vehicle prices.
We know dealer associations across the country will go far enough to protect their business model. Whether it be publicly attack me on Twitter or sue a city to prevent Tesla from providing services to its customers, I believe dealerships will continue to push their agendas within state governments.
We can perhaps consider this as a double protectionism instead of evolving with the market. This hurts car buyers and owners of electric vehicles. I reached out to James Chen, Vice President of Policy at Rivian, for comment and he said:
“Attempts by franchise dealerships to use the multi-state legislature to be the sole source of access to the automotive market and new transportation technologies violate fundamental tenets of consumer rights and the free market. This anti-consumer excess cannot be allowed, and Rivian will continue to work with the public and policy makers to ensure consumer choice.
We interviewed Chen about this last year. (See below.) Unfortunately, things have only gotten worse since then.
A look at several anti-EV bills from 2022
I have write about it briefly. In February 2022, House Bill 4560 has been introduced to West Virginia. If enacted, it would restrict over-the-air (OTA) software updates as well as online vehicle sales. If a buyer wanted to buy a software upgrade, they had to go to the dealership. …
In Oklahoma, the state legislature passed a bill in committee. The bill would require Tesla to close its existing stores and service centers in the state. Oklahoma already does not allow the direct sale of electric vehicles. However, the new legislation would make it difficult for automakers who only make electric vehicles of the same function in the state.
An anonymous source at a car manufacturer told me that IInterpreters of the bill have said it’s so restrictive it could even stop retailers like Walmart from selling wiper blades or other automotive staples.
What’s worse, they told me, is that the bill also gives dealers the right to sue other companies they believe are violating these laws without having to face spurious charges. they lose the case.
Maybe it’s Oklahoma’s way of telling Tesla it’s mad at Elon Musk for choosing Austin over him. Or maybe the dealers are emboldened by their increased profits. Or maybe it’s a mix of both.
Teslarati Noted that the author of this bill, Representative Mike Dobrinski, was none other than the owner/dealer of Dobrinsky Chevrolet, Inc. Prior to this, Dobrinski was the owner/dealer of Dobrinski of Kingfisher, Inc. According to TeslaratiTesla owners traveled to the capital to speak with Rep. Dobrinski about HB 3994which he said was a way to protect Tesla owners in Oklahoma.
According to Oklahoma News 4, Dobrinski only introduced the bill because he wanted to force Tesla, General Motors and Ford into a conversation they hadn’t wanted to have – as a sort of attention grabber. But Dobrinski said the real purpose of the bill was to protect local dealerships. State dealer associations rejected the offers in compromise.
Currently, Mississippi allows direct sales and has a Tesla Service Center. However, there is an active effort to change this while preventing not only Tesla but also Rivian and Lucid from opening outlets. Rivian’s vice president of public policy, James Chen, addressed this topic on Mississippi Talk Radio.
I covered the saga extensively in Connecticut with the dealer associations there. I have interviewed Connecticut State Senator Will Haskell who is actually an advocate for electric vehicle freedom and allowing his constituents to buy them in the state when the average dealer in the state is just sold 1.3 EV in 2020.
In recent news, a poll put forward by the Hartford Business Journal shows Tesla owners want Connecticut allow direct selling EVs.
Dealer profits and rising anti-EV bills
Again, this is just a theory, but is it really a stretch to think that dealers feel emboldened by their profit increases? I have a feeling we’ll see more of this proposed anti-EV and anti-Tesla legislation in the coming year.
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