Rivian Says It Will Not Use Franchise Dealers To Sell Its Vehicles
Credit to Author: Steve Hanley| Date: Wed, 26 Feb 2020 23:00:36 +0000
Published on February 26th, 2020 | by Steve Hanley
February 26th, 2020 by Steve Hanley
There are so many revolutions happening today it’s hard to keep track of them all. “The order is rapidly fading. And the first one now will later be last, for the times they are a-changing,” Robert Zimmerman sang 50 years ago. Fossil fuel companies are cancelling new exploration projects in Pennsylvania, Canada, and Australia. Larry Fink, head of Blackrock, is talking about social responsibility, for heaven’s sake. And Tesla is selling tens of thousands of electric cars a month all over the world.
Courtesy of Rivian
There’s another slow motion revolution happening and it involves automobile dealers. Tesla is banned from selling directly to customers in several US states. Franchise dealer associations are furiously trying to put the kibosh on direct sales as they work to protect their illegal monopoly status. But Tesla has recently reached an accommodation with the state of Connecticut that allows it to lease its cars directly to people living in the Nutmeg State and Colorado is considering legislation that will allow all electric car manufacturers to sell direct to consumers, according to the Colorado Sun.
Rivian is a strong supporter of the Colorado direct sales law but it wants to be able to sell direct to customers in other states as well, according to The Drive. “We believe that our customers are best served and have the most seamless experience by running that [sales and service] process,” said Rivian vice president of public policy James Chen in a phone interview. “We are not going to a franchised dealer system — period.”
“Rivian’s relationships with its customers will be very different. We want the customer to have that seamless experience with our electric vehicles. That means that with their permission, we would have direct connectivity to them and not a third-party dealer,” he added. Unless a customer opts out of data sharing, Rivian plans to monitor each customer’s vehicle for any issues they might encounter.
“With their permission, we can monitor their vehicles just to make sure it’s operating at optimal condition: that the energy across the cells is being balanced appropriately, that the charging is operating well, that the motors are at peak efficiency, that the cooling systems for the battery, [and] the motors and the cabin are all working in concert with each other,” Chen explained.
“If there’s a problem, we can reach out to that customer, perhaps even before the customer recognizes there’s an issue with their car. And if it’s a software update or fix, we can push that out to them over the cellular network at a time that is convenient to them — i.e. at 2 a.m. when the car’s sitting at home and charging and the owner is asleep. We can’t do that if we have to go through a franchised dealer.”
Rivian says it has obtained an automotive dealer license in Arizona and is seeking licenses in Massachusetts, California, Florida, and Illinois. In states where it cannot sell direct to customers, Chen says Rivian will sell to residents through orders placed at stores in neighboring states, by phone, or online. It should be noted that Chen once worked for Tesla, where he was tasked with developing its response to direct sales bans.
“In many ways, this is about the free market, and allowing a company to choose the business model that best suits its business,” Chen says. “Who knows better how Rivian can operate its business, us or some third-party franchise dealer?”
Dealer groups are not giving up without a fight. One of the things that scares them is that electric cars need far less routine maintenance. Studies show dealerships derive over half their income from their service and parts operations. That in itself should alert shoppers to why they should seriously consider purchasing an electric car. Who wants to spend all that money fixing a conventional car when — not if — it breaks?
So far, Tesla has been fighting dealer franchise laws all by itself. Now it seems it will get some help. The writing is on the wall. The franchise dealer model is dead. Dealers just don’t know it yet. As the old song says, “Your old road is rapidly aging. Please get out of the new one if you can’t lend your hand, for the times they are a-changin’.”
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Steve Hanley Steve writes about the interface between technology and sustainability from his homes in Florida and Connecticut or anywhere else the Singularity may lead him. You can follow him on Twitter but not on any social media platforms run by evil overlords like Facebook.