As our world becomes increasingly digital, we’ve been able to buy more and more things online, and that trend has only increased since everyone has been stuck at home due to COVID-19. One of the last things to make the switch to buying online was cars. Rather than going to a car dealership and test driving a car that who knows how many people have already been in, many people feel safer just ordering a car from a website and having it delivered to their door, but is that legal?
While it is legal for auto dealers to sell cars online (and some dealers have gone that route) electronic vehicle manufacturers have allegedly created a problem by trying to use the internet to sell their cars directly to consumers, rather than going through a licensed auto dealer as required by Illinois law. This direct-to-consumer tactic is the basis of a lawsuit recently filed in Cook County Circuit Court by the Illinois Automobile Dealers Association, as well as other trade associations, and various auto dealers.
The lawsuit was filed against Rivian, a startup that makes electronic trucks and is converting a Mitsubishi plant in Normal, IL into a factory for its own electronic trucks and SUVs. The company plans on opening a showroom in Chicago’s Fulton Market district later in 2021, but in the meantime, it has already begun taking advance orders of its electronic vehicles online.
Both the Illinois Vehicle Code and the Illinois Motor Vehicle Franchise Act require all sales of vehicles to the public to be made through licensed and independent franchised dealers. But last summer, the Illinois attorney general’s office released an “informal opinion” saying that law does not necessarily require carmakers to open their own franchise dealerships to sell their vehicles. Such an interpretation of the law could make it legal for Rivian and Lucid (another electronic vehicle manufacturer who is also named as a defendant in the lawsuit) to sell their cars directly to consumers online.
The lawsuit against Rivian and Lucid also names the Illinois Secretary of State as a defendant for allegedly turning a blind eye to the allegedly illegal actions of the new vehicle manufacturers.
This is not the first time an electronic vehicle manufacturer has gotten into hot water for trying to use the internet to sell their cars directly to consumers. In May of 2019, Tesla entered into an administrative consent order with the Illinois Secretary of State and Illinois auto dealers in which it was agreed that Tesla could have no more than 13 dealer licenses in the state of Illinois. As part of that deal, the Illinois Secretary of State agreed not to issue licenses to any other vehicle manufacturers that would allow them to sell their cars directly to consumers.
Pete Sander, the president of the Illinois Automobile Dealers Association, said in a statement that the lawsuit is meant to protect consumers as well as the franchised dealers who provide jobs all over the state.
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