Rivian sues Ohio over direct car sales ban

Scout Motors, the new SUV brand from Volkswagen Group, has also raised some hackles with its plan to sell direct. VW and Audi dealers are suing the company, claiming they should have been offered the right to sell its cars since they also sell other brands from the giant automaker. (The dealers' argument conveniently ignores the fact that those dealers don't have a right to franchises for Porsches, Lamborghinis, Bugattis, or the other brands within the VW Group empire, but don't go expecting consistency here.) A separate group of California car dealers is also suing Scout over direct car sales.

Rivian v Ohio

In Ohio's case, the most recent affirmation against direct car sales came in 2014, with a state law that forbids issuing a license to sell cars to anyone who is "a manufacturer, or a parent company, subsidiary, or affiliated entity of a manufacturer, applying for a license to sell or lease new or used motor vehicles at retail," although it did make an exception for Tesla.

Rivian says that Ohio has no legitimate interest in preventing it from selling cars to Ohioans and that the state "allows manufacturers like Rivian to perform warranty service and other repairs on vehicles in Ohio, to rent vehicles to consumers in Ohio, and even to sell new vehicles to Ohioans from out-of-state dealerships which can be delivered to Rivian service centers in Ohio. Nonsensically, the thing that Rivian cannot do is actually complete the sale of Rivian vehicles in Ohio."

Last year, Rivian CEO and founder RJ Scaringe told journalists that the "horrific state-by-state level of rules... are as close as you can get to corruption," and that "you essentially have lots of dealers that paid for lots of laws that make it really hard for us to interact directly with the customer."

He's not wrong about the vociferous opposition to OEM direct car sales. "The direct sale model is nothing more than an effort to crush competition and suck profits out of local communities to Silicon Valley and Wall Street," the New Jersey Coalition of Automotive Retailers said.

And Rivian has faced lawsuits from dealerships in Michigan (successfully) and Illinois (unsuccessfully) in the past.