Here in America, the argument for car dealers is that they’re in it for the consumer—a needed layer of protection between the big, scary car companies and the little guy who could get fleeced at any time.
But automakers don’t seem to be buying it anymore. Perhaps that’s why all of these new EV startups are defaulting to direct-to-consumer auto sales, at least where they’re legally allowed to do so. And in places where they’re not, newcomer Scout Motors is putting its foot down and asking big daddy government to put an end to dealerships creating “burdensome restrictions” on new car companies.
Welcome back to Critical Materials, your daily roundup for all things electric and tech in the automotive space. Today, Scout tattles on the automotive dealership industry, Tesla makes a bathroom joke and Trump’s pick to head the National Highway Traffic Safety Administration wants to fast-track robotaxis. Let’s jump in.
30%: Scout Motors Says Dealerships Amount To ‘Burdensome Restrictions On Competition’
Photo by: Scout Motors
Scout Motors has yet to sell a single vehicle, yet it’s already throwing punches at one of the most entrenched institutions in all of America: the car dealership.
Automotive News reports that Scout’s vice president for government and regulatory affairs, Blair Anderson, presented the U.S. Department of Justice with an 11-page letter. The pages were inked with tales of injustice and a firm (but polite) request to abolish state franchise laws that protect traditional car dealers.
Scout says that these laws are protectionist relics that do nothing more than block competition, choke innovation and make it just way too hard to build any sort of new car brand without fighting a legal battle over who has the right to sell something that they don’t even make.
By eliminating the dealership and selling directly to consumers, the brand says that it’s able to offer a better buying experience and even lower prices to consumers by keeping the middleman’s hand out of the four-wheeled cookie jar.
Dealers, of course, don’t like this—especially from a Volkswagen Group brand. They have relationships and franchise agreements with Volkswagen, Audi, Porsche and the rest, and they want their cut. Scout (and its parent company) argues that this isn’t the case and that Scout is its own brand.
Scout also isn’t the only automaker to face this issue. Just about every brand that has direct-to-consumer sales has had to fight a similar battle in one way or another as some states put in place laws to protect dealer franchises. Tesla, Rivian, Polestar, Lucid, Vinfast and the late Fisker are just a few of these brands. In the past, Tesla even utilized a loophole by selling its cars on Native American tribal lands.
Specifically, Scout’s letter was to the Anticompetitive Regulations Task Force, a team that U.S. President Donald Trump ordered into power via executive action earlier this year. The goal of the team is to alleviate “regulatory burdens placed on the American people.” Scout believes that this is one of those burdens.
Here’s an overview of the letter from Automotive News:
“Outdated legacy state motor vehicle franchise laws — written decades ago in response to yesterday’s circumstances — have mutated into legal shields for established franchise dealership networks, barring any other business model from existing, let alone competing with these networks,” Anderson said in the letter dated May 23.
[…]
Anderson claimed no other sector of the U.S. economy features more anti-competitive laws that hinder innovation, economic growth and consumer welfare than the auto industry and state dealer franchise laws.
“We urge the Department of Justice and this Administration to probe these protectionist, anticompetitive schemes and to open the automotive industry to fair competition and innovation,” Anderson wrote. “These schemes are in direct conflict with the possibility of free and open markets where all can compete.”
Scout is staying remarkably planted in this battle. The launch may still be two years away, but it clearly doesn’t want dealerships interfering with the launch of its all-electric, retro-inspired Traveler SUV or Terra pickup. Whether or not it’ll win the fight isn’t clear, but it’s going to at least try.
60%: Tesla’s First Robotaxi Service Expansion Is A Grower, Not A Shower
If you’ve been keeping up with Tesla’s Robotaxi rollout, you’d know that the automaker has been geofencing its cars to a small area in Austin until it’s comfortable with expanding. Apparently the automaker has gotten a bit too comfortable because its new service area is… well, just look at the map up there.
And not only did the coverage area expand, but so did the jokes. In addition to Tesla’s changes to the map, it also increased the price that it costs to take a trip. The fee went up from $4.20 (one of Musk’s favorite numbers) to $6.90. Har-dee-har-har.
CEO Elon Musk has a long, documented history of this sort of thing. The Model S once cost $69,420, for example. And his long, legal battle that ultimately dethroned him from the chair of Tesla’s board was over a tweet about taking Tesla private at $420 per share. There’s also a map-shaped joke in this post of his on X.
Regardless of the intent, the new test area is very real, and it’s the first expansion of the service since it went live almost a month ago. The automaker is expanding its service area as it gets more comfortable with the idea of using its cars as a self-driving fleet, something it’s been promising a million of since the end of 2020. However, its cars launched with safety operators, and some of its actions still aren’t great or perfectly predictable.
Tesla is at least doing what Tesla does: keeping the hype train rolling. How fast it can perfect the service is another story that is yet to unfold, but the company believes it can do exactly that without the need for costly equipment like lidar utilized by competitors like Waymo. But then again, the Waymo can see bad weather.
90%: Trump’s Pick For NHTSA Wants To Fast-Track Self-Driving
Photo by: Uber
Jonathan Morrison, U.S. President Donald Trump’s nominee to head up the National Highway Traffic Safety Administration, believes that the U.S. should be fast-tracking the path to self-driving.
While testifying to U.S. lawmakers, Morrison said that he believes that the NHTSA should be crafting rules that loosen up restrictions that companies face when deploying self-driving cars, including increasing the number of vehicles exempted from certain Federal Motor Vehicle Safety Standards by 4,000%.
Here’s the latest from Bloomberg:
Morrison told lawmakers in a hearing before the Senate Commerce, Science and Transportation committee Wednesday that the agency he hopes to soon lead should craft self-driving rules that go beyond the current voluntary guidelines that were enacted under previous administrations.
Current rules limit automakers to 2,500 test vehicles that don’t meet federal motor vehicle safety standards, like having steering wheels and brake pedals. Prior Congressional proposals would have allowed carmakers to request as many 100,000 of these exemptions.
Morrison said during the hearing that NHTSA “cannot sit back and wait for problems to arrive with such developing technologies.” Instead, he said, the agency “must demonstrate strong leadership” by taking proactive steps to put federal rules in place that would allow for the rapid deployment of autonomous vehicles.
The theory is a classic Silicon Valley conundrum. If you regulate too early, you stymie innovation. But if you let things go unchecked for too long, then it’ll be a fight to rip away something that some company has already monetized. And, of course, the safety implications that come with unfettered access to public roadways and unwitting beta test participants.
Consumer safety groups are naturally skeptical. Michael Brooks, the executive director of the Center for Auto Safety, told Bloomberg that if Morrison returns to his position at the NHTSA a second time (the first stint being during the first Trump administration), it’s reasonable to expect another rollback of safeguards.
More from Bloomberg:
[Brooks] noted that during Morrison’s earlier tenure at NHTSA, the agency rolled back safety standards and halted probes of carmakers utilizing autonomous vehicle technology that were initiated by the Obama administration.
“We think it is reasonable to expect more of the same” if Morrison is confirmed as NHTSA administrator, Brooks said in an email.
Just how strict the agency will be towards robotaxis and self-driving cars as a whole will ultimately fall onto the shoulders of Trump. And let’s just say that his current standing with some folks in the robotaxi business is a bit, well, checkered.
And that could be a problem given that two of the 73 open defect investigations are directly related to Tesla’s self-driving features.
Ultimately, Morrison’s point is something that extends way past just robotaxis. If we’re going to accept that we have to crack a few eggs before making a self-driving omelette, then why aren’t we giving the same support to EVs when faced with significant competition from China?
Instead of rewarding innovation and supporting it financially, U.S. lawmakers are ripping away the EV tax credit. Either way, we won’t see movement in Morrison’s recommendations for the few months at the earliest if he’s confirmed
100%: Can Dealerships Be Good For Consumers?
Photo by: Kia
We focus so much on the negative side of the dealership experience. I was chatting with someone regarding Rivian the other day realized that purchasing one would mean a two-hour, one-way trip to the nearest service center if I would need anything.
So, which is the lesser of two evils here? Would you rather ditch the dealership and embrace the future, or just buy from an app and have your next car delivered to your doorstep, but risk dealing with the automaker directly for everything else? Let me know in the comments.
