Gov. Ron DeSantis (R-Fla.) recently signed a new law that limits most car manufacturers from selling vehicles directly to the public, while providing advantages to EV makers such as Tesla, Lucid, Rivian, and Polestar.
The legislation, set to be enforced from July 1, imposes obstacles for major car manufacturers, which are prohibited from bypassing independent dealerships and selling vehicles directly to consumers if they had existing agreements with independent dealers in the state prior to the law’s enactment.
DeSantis approved HB 637 on Tuesday. Similar laws are in place in other states, but Florida is the only one to contain a carve-out that benefits certain companies. Tesla has challenged a ban in Louisiana, calling it “protectionist, anti-competitive, and inefficient.”
The text of Florida’s bill states that “a licensee, a manufacturer, an importer, or a distributor” or their agent “may not directly or indirectly own, operate, or control, by contract, agreement, or otherwise, a motor vehicle dealership for any line-make in this state” if they have “manufactured, imported, or distributed motor vehicles of any line-make which have been or are offered for sale under a franchise agreement in this state with an independent person.”
However, it also states that “any person who is not prohibited by this section” may be issued a license.
This means that legacy automakers can’t obtain licenses to sell directly to customers if they already have franchise agreements in place. The law prevents automakers from selling vehicles through factory stores and is similar to regulations in other states.
This means that Tesla could continue to sell its vehicles directly to buyers without an intermediary, while a Ford EV would be subject to retail pricing from a dealer.
The legislation also prevents automakers from dictating specific prices to franchise dealers and requires manufacturers to maintain vehicle allocations to dealerships at previous levels. This provision blocks automakers from curbing excessive markups by dealerships. Last year, a Ford dealer doubled the price of an F-150 Lightning, adding a $69,000 markup.
Unlike other states such as Louisiana, New Mexico, and Texas, which also prohibit automakers from selling vehicles directly to consumers, Florida’s law stands out as it creates an exception for specific companies.
Tesla has permission to directly sell its vehicles to customers in Delaware and Michigan.
Critics Say Bill Makes Buying Vehicle ‘Cumbersome’
Critics of the law argue that dealerships introduce unnecessary costs and sales pressure, resulting in additional fees on top of the manufacturer’s suggested retail price.
On the other hand, proponents, such as the Florida Automobile Dealers Association (FADA), say that dealerships play a crucial role in providing warranty work, service, and customer support, Inside EVs reported. FADA believes that dealerships foster price competition, prevent monopolies, simplify the buying process, create jobs, and generate tax revenue.
General Motors said in a statement to CBS MoneyWatch that it will continue to assist its customers while adhering to the laws of Florida.
The Alliance for Automotive Innovation (AAI), an industry group speaking for Ford and Stellantis, the parent company of Chrysler, previously urged DeSantis to veto the bill.
Wayne Weikel, vice president of State Government Affairs for AAI, expressed concerns about the legislation in a letter to DeSantis.
Weikel requested a veto of the bill, highlighting issues such as mandated revenue sharing for dealers from over-the-air updates (OTAs), unnecessary investigations by the Department of Highway Safety and Motor Vehicles, restrictions on vehicle reservations, and unequal treatment of traditional automakers compared to new EV market entrants.
“This legislation will add unnecessary cost to the motor vehicle franchise statute at the expense of consumers and make Florida an outlier regionally and nationally in laws that govern the relationship between automobile manufacturers and their franchised dealers,” Weikel wrote (pdf).
AAI argued that the bill would complicate the vehicle buying process, diminish the ownership experience, increase costs, and interfere with existing private contracts between manufacturers and dealers.
The letter stated that vehicle owners may not be able to get features in Florida that are available in other states and all costs to the motor vehicle franchise system.
Weikel emphasized the need for a balanced approach that considers the interests of both entities while promoting choice and competition for the benefit of consumers.
