Illinois’ car dealers have sued the state and electric car maker Rivian, accusing the state of giving electric vehicle manufacturers too much leeway to sidestep longstanding state law requiring auto makers to sell their vehicles through licensed franchise dealerships.
On March 25, the Illinois Automobile Dealers Association and the Chicagoland Automobile Trade Association, together with other automotive dealer trade associations and a litany of individual car dealers from throughout the state, filed suit in Cook County Circuit Court.
The lawsuit named Illinois Secretary of State Jesse White as a defendant, along with Rivian and associated companies.
Rivian manufacturing facility, Normal, Ill.
| Rivian
Rivian is based in Plymouth, Mich. The company manufactures many of its electric vehicle components at a factory in downstate Normal.
According to the complaint, Illinois state law has required auto makers to sell and service their vehicles through local franchise dealers since 1979. According to the complaint, the law specifically forbids manufacturers from operating as their own franchisees, as well.
“There are no provisions in the Vehicle Code that permit manufacturers to be licensed as dealers,” the car dealers wrote in their complaint. “No one may sell new motor vehicles in Illinois without a license and the only licensing path is that of the franchised dealer – with no option of licensing available to a manufacturer seeking to wear two hats – that of dealer and manufacturer.”
However, the complaint said, the Secretary of State’s office, under White, has been “slowly eroding” the requirements of the state’s vehicle sales law, to allow electric car makers Tesla and Rivian to sell direct to consumers.
Tesla obtained a state license to sell their vehicles in Illinois in June 2009. After years of objections from the state’s car dealers, the complaint said the state and Tesla entered into a so-called administrative consent order, capping Tesla’s dealership presence in Illinois at 13.
Tesla is not named as a defendant in the action.
However, in the years following, Rivian opened its factory in Normal, seeking to become the “Tesla of (electric) trucks.”
This time, when pressed by the car dealers, the complaint said White’s office secured an opinion from Illinois Attorney General Kwame Raoul, stating his office believes the law doesn’t prevent manufacturers from operating as dealers, but merely forbids them from being their own franchisees.
According to the complaint, when the dealers raised their concerns with the Attorney General, the author of the informal opinion recommended the dealers work with state lawmakers to change the law.
The complaint said the Secretary of State has continued to allow the expansion of direct-to-consumer electric vehicle sales with the arrival of manufacturer, Lucid.
The complaint seeks a court order requiring White’s office to enforce the state law, and stop “hiding behind” the Attorney General’s opinion, which the dealers said “ignores the relevant provisions” of the state law.
According to a release accompanying the filing of the lawsuit, the legal action would have huge implications for the Illinois automotive sales industry, which generates $34.4 billion in sales and $2/2 billion in sales tax annually. The industry employs 42,000 people directly, the dealers said in their release.
“We welcome new manufacturers to Illinois, especially those who are building innovative vehicles,” said David Sloan, president of the Chicagoland Automobile Trade Association. “Our franchised members already sell dozens of electric and hybrid vehicles. We ask that manufacturers sell them in Illinois according to state law. We’re not demanding they cease operations in the state, just that they franchise a dealer.”
Sloan’s counterpart at the state association, IADA President Pete Sander, said: “Our patience has run out. It is time for everyone to step back and let the court decide what is in the best interest of the people of Illinois.”
The car dealers are represented by attorneys with the firm of Burke Warren Mackay & Serritella P.C., of Chicago, including Ira M. Levin, Danielle J. Gould, Eric P. VanderPloeg and Gino D. Jacobazzi; and attorneys John S. Elias and Janaki Nair, from the firm of Elias Meginnes & Seghetti P.C., of Peoria.