- Rivian is suing the State of Ohio because of a 2014 ban on direct-to-consumer sales that does not allow the brand to sell cars directly in Ohio.
- However, the state did make a deal with Tesla in 2014 that allowed it to operate its own direct-to-consumer stores. (Albeit limited to three stores maximum)
- Rivian says Tesla's carveout is unfair.
Columbus, Ohio, may be a fart in the wind when it comes to the national wealth and median income compared to New York or Los Angeles, but there’s still a solid population of wealthy and high-earning individuals. It’s not uncommon to find plenty of not-so-cheap big luxury SUVs and crossovers on the streets; I have no doubt a brand like Lucid or Rivian would be a no-brainer for people looking to go electric in style. But while we already have Tesla and Polestar, why don’t we have a Rivian or Lucid store?
Turns out, it’s because of Ohio’s ban on direct sales of cars to consumers—a ban that some insist has a special carveout for Tesla. Thus, after years of Tesla being the only direct-to-consumer king in town, Rivian’s had enough. As initially reported by The Verge, Rivian has filed a lawsuit claiming that Ohio's ban on direct-to-consumer stores is unfair and anti-consumer.
Currently, Rivian has no brick-and-mortar showroom anywhere in Ohio. It does operate several service centers outside of Cleveland, Cincinnati and Columbus, but these are not “demo” centers, where prospective buyers can get hands-on with the product, and do any sort of purchase deal in the back.
No, Ohio Rivian drivers actually buy their cars in another state, although these out-of-state purchases can be arranged to be picked up at the local Rivian service center. It’s a logistical mess. Rivian services the cars, rents out loaners, and even does deliveries of new vehicles, but when it comes to actually completing the sales deal, buyers have to go elsewhere. Rivian alleges that this places undue hardship on both Ohio buyers and Rivian itself “for no legitimate reason.”
In 2014, the state passed a law that banned direct-to-consumer manufacturer sales, saying that no dealer’s license would be given to any “manufacturer, or a parent company, subsidiary, or affiliated entity of a manufacturer,” effectively banning companies from selling cars directly.
However, this came after Tesla had already established two direct sales locations in Columbus and Cincinnati. However, Rivian insists that this was not the brand being grandfathered in, since it allowed Tesla to build a third store in Cleveland after this law was passed. Rivian insists that this is a carve-out, and not fair that Rivian can’t get one either.
The lawsuit’s language is pretty clear about how it feels about Ohio and its dealers. Rivian sees the ban on direct sales as effectively a racket from the Dealer Association, and not a great way to protect Ohio consumers (since they must effectively exit the state to complete a purchase). But it does seem like the brand is willing to play ball if it wins the lawsuit, and do everything it needs to to become a registered dealer in Ohio.
This is the first time Rivian has directly sued a state for its anti-direct-to-consumer sales policies. It’s not clear which way this could go, and if it’ll open up the state to future direct-to-consumer brands. Rivian and Lucid both have more affordable models on the horizon. These cheaper models would have wider appeal in places like Ohio, compared to the sometimes more than six-figure EVs the two brands have on sale now.
If Rivian wants its R2 to be successful, it’s going to need to get any purchase roadblocks out of the way before it launches.
Contact the author: kevin.williams@insideevs.com
