Dealers win pivotal change to Colo. EV bill

In what Colorado auto dealers are calling a victory, state senators last week approved legislation that would allow Rivian and other electric vehicle manufacturers to sell directly to consumers — but only after scaling the bill back to exclude traditional automakers with franchised retail networks.

That change softened the Colorado Automobile Dealers Association's opposition and gave proponents the votes needed to pass the bill Friday, Feb. 28, after lawmakers delayed a vote for several days. The dealers association, which had fiercely opposed the original bill, said it supported the amendment and now was neutral on the proposal, which goes to the state House for consideration.

Dealers were able to block the most controversial provision, which would have allowed an automaker to own, operate or control a dealership selling EVs it manufactures. They argued that would allow brands with franchised dealership networks to compete directly with dealer-owned stores, despite traditional automakers' public statements that they weren't interested in doing so.

Rivian and other EV makers also gained a path forward to sell directly to Colorado consumers, a move backed by Democratic Gov. Jared Polis' administration and environmental groups. But the revised language prevents traditional automakers, such as Ford Motor Co., from doing the same with, for instance, its upcoming Mustang Mach-E crossover.

The way the bill initially was written, "there would have been a lot of pullback of [dealer] investments," association President Tim Jackson said. "This provides some security on that investment."

The Alliance for Automotive Innovation, the newly formed trade group that represents automakers, said it opposed the revised bill because all companies would not be treated equally.

"Any inequitable rules under state franchise law, including the amended Senate bill, will have a discriminatory effect in the market and provide unequal protections for consumers," the alliance said in a statement.

State Sen. Chris Hansen, a Democrat from Denver and a bill co-sponsor, said automakers were not involved in final negotiations over the amended legislation.

The key revision: An automaker could own, operate or control one or more dealerships if it "manufactures only electric vehicles and has no franchised dealers of the same line-make in this state."

The new version now would appear to limit direct sales to automakers that exclusively build EVs, such as Tesla and Rivian.

The dealer association contends that existing state franchise law already allows Rivian to apply for a dealer license, though Rivian has said the law is ambiguous and the bill would provide clarity.

Rivian did not respond to messages seeking comment Friday. The company has said it will build its electric pickups and SUVs based on customers' orders, not churn out vehicles to be stocked on dealership lots.

The company is hesitant to invest in property and commit to long-term leases if it's not certain under state law that it will be able to obtain a dealer license, James Chen, Rivian's vice president of public policy, previously told Automotive News.

"Our bill will not interfere with their contracts between [dealers] and their manufacturers," Chen said. "This is about opening up Colorado to additional investment and allowing a new entrant with an exciting new technology to be able to invest in Colorado."

The bill appeared to have an uphill climb at the start of last week.

After dealers embarked on a letter-writing campaign and worked to sway senators against the bill, legislators pulled dealers and other stakeholders together for a meeting Wednesday, Feb. 26, to work on a compromise, Hansen said. He said then that he was optimistic a vote would happen the next day, but he later said it didn't become clear until Thursday that the votes for passage had materialized.

"I think that's what really led to the breakthrough — that we were able to demonstrate that we had [a] high chance of success of getting a majority," Hansen said. "We were able to then move forward on a negotiation."

Hansen and Jackson said the back-and-forth work on the final language continued until late Thursday.

State Sen. Rhonda Fields, the Democratic assistant majority leader, said on the Senate floor that she received "a whole stack of FedEx packages" from dealers across Colorado and had been "a strong no" until the compromise amendment was reached.

"I am now a 'yes' because it doesn't create this double standard as it relates to car dealerships, creating an unfair practice for them," Fields said.

"I want to thank all those who came to the table to discuss this bill because it's truly what democracy looks like, when you can get everyone at the table and design a public policy that's good for everyone across our state."

New market entrants beyond Tesla and Rivian — including Lucid Motors, Canoo and Byton — could benefit from the bill if it becomes law, said Sam Abuelsamid, principal analyst at Navigant Research. Whether other companies would qualify depends on whether the bill is limited to battery-electric vehicles or electrified vehicles that include plug-in hybrids, he said.

"Just avoiding franchised dealers does not necessarily guarantee you're going to get all of that extra revenue added to your bottom line," Abuelsamid said. "Between the cost of operating your own retail network and service, and then executing on the manufacturing side, it's going to be challenging for a startup to be cost-competitive overall."

Bollinger Motors, a Detroit startup planning to produce electric pickups and SUVs, said via email that it is "setting up relationships with independent dealers to provide sales and service." It said buyers can place a deposit online and finish the sale through one of those dealers.

Colorado Energy Office data shows more than 25,000 electrified vehicles are driving on state roads. Tesla is the leader, with more than 9,400.

Polis' administration has made electrification a priority, signing into law a set of statewide goals to shrink Colorado's greenhouse gas emissions. The state also adopted California's zero-emission vehicle standards and extended tax credits on electrified vehicles through 2025.

Hansen said the administration was "directly involved" in final compromise talks.

Audrey LaForest and Richard Truett contributed to this report.