Illinois auto dealers file appeal after judge dismissed lawsuit newstrendslive

The Illinois Automobile Dealers Association has appealed a December court ruling that allowed EV automakers Rivian and Lucid to continue cutting out the middleman and selling directly to consumers.

The appeal, filed Friday in Chicago, challenges that decision and to a large extent, the evolving EV sales model nationwide.

“We think the law is pretty clear: You can’t be a manufacturer and a dealer,” said Joe McMahon, executive director of the Illinois Automobile Dealers Association. “The Illinois Vehicle Code basically states that you have to go through franchised dealers.”

Henry Haupt, a spokesman for the Illinois secretary of state’s office, which licenses auto dealers in Illinois, declined to comment on the appeal.

In December, a Cook County judge dismissed a 2021 lawsuit brought by the dealers against the startup EV manufacturers for allegedly violating a state law requiring franchised dealers to sell new cars. The court ruled the state was correct in issuing dealer licenses to Rivian and Lucid, as it had previously done with Tesla.

The association, which represents more than 700 auto dealers operating 2,300 franchises across the state, cited the Illinois Vehicle Code and the Illinois Motor Vehicle Franchise Act as mandating that all vehicle sales to the public “must be made through licensed and independent franchised” dealers, an argument it is renewing in the appeal.

Leslie Hayward, head of policy communications for Rivian, declined to comment, while Lucid Motors did not respond to a request for comment on the appeal.

Tesla, the leading EV manufacturer, pioneered the direct-to-consumer sales model after the introduction of its Model S in 2012. McMahon claims Tesla was licensed to open dealerships in Illinois in 2017 as part of a one-time agreement with the secretary of state to avoid litigation.

The auto dealers, the secretary of state and Tesla entered into an administrative consent order in 2019 agreeing that Tesla could have no more than 13 dealer licenses in Illinois.

A Tesla dealership in Westmont on March 8, 2019.

In 2020, the Illinois attorney general’s office issued “an informal opinion” stating that the motor vehicle law does not expressly require new manufacturers to establish franchise dealerships to sell their vehicles, opening the door for Rivian and Lucid to launch their own direct-to-consumer sales networks, according to the dealers’ lawsuit.

Fueled by legislation, incentives and consumer demand, EV sales are growing nationwide, with the market share more than doubling last year to 5.1% of new vehicle sales through November, according to car shopping website Edmunds.

Rivian, the startup EV truck manufacturer that launched production of its electric trucks at its downstate Normal plant in September 2021, has struggled to meet growing demand. The California-based company produced 24,337 vehicles last year, missing a downwardly revised production target of 25,000.

The converted Mitsubishi plant has 7,000 employees and an annual production capacity of 150,000 vehicles, but has been hampered by supply chain issues. Rivian had 114,000 electric pickup trucks and SUVs on back order as of November, the company said.

Illinois Gov. J.B. Pritzker has set the goal of having 1 million electric vehicles on the road by 2030. There is still a long way to go, with 57,311 EVs registered in Illinois as of late December, or less than 1% of the state’s 10.3 million vehicles, according to Haupt.

As automakers go electric and sales ramp up, Illinois dealers want to stay squarely in the mix, McMahon said.

In addition to the lawsuit against Rivian and Lucid, the association has filed a protest with the secretary of state’s office against Ford, alleging the automaker is withholding allocation of EVs to dealers that don’t “voluntarily” participate in a potentially costly certification program, McMahon said.

The complaint, which was brought by 27 Ford dealerships in Illinois, said the automaker is violating the state’s franchise act by requiring investments of up to $1.5 million per dealership on equipment and staff training; the installation of Level 3 public charging stations; and changes to their existing sales and service agreements including exclusive web-based sales and nonnegotiable pricing on EVs.

Ford, which became the No. 2 EV automaker in the U.S. behind Tesla in 2022, defended the certification program as “doubling down” on dealerships and benefiting customers.

“EVs require specialized equipment, training and charging infrastructure to support sales, service and ownership for our customers — these are the core elements of the Model e EV Program,” Ford spokesman Marty Gunsberg said in an email Friday. “Ford provided national investment estimates when the program was announced with instructions for dealers to complete their own due diligence as the actual cost will vary by dealer.”

Gunsberg said 1,920 dealers, or 65% of Ford’s U.S. network, enrolled in the EV program. During the rollout, “multiple dealers have reported costs coming in well below Ford’s estimates,” he said.

At the same time, Gunsberg acknowledged that some dealers with limited EV penetration chose not to participate. Dealers will have a second chance to enroll in 2025 as Ford scales its EV production, he said.

Haupt declined to comment on the hearing request before the Motor Vehicle Review Board, which is scheduled for Feb. 14 in Chicago.

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