Rivian Sues Ohio Over Direct Sales Ban, Exempting Competitor Tesla

According to foreign media reports, American electric vehicle manufacturer Rivian has filed a lawsuit against the state of Ohio, accusing its 2014 law of granting special exemptions to Tesla while prohibiting other electric vehicle manufacturers from selling products directly to consumers.

Image Source: Rivian

In the lawsuit filed on August 4th, Rivian claimed that the direct sales ban violates the Constitution and suppresses market competition by protecting Ohio's franchised car dealers from the impact of new market entrants.

In the lawsuit, Rivian pointed out: "There is no legitimate reason for Ohio to prevent its citizens from purchasing vehicles through Rivian-owned, licensed dealership locations in the state. This prohibition not only reduces competition and limits consumer choice, but also increases costs and inconvenience for consumers, all of which harm consumers without providing any substantial compensatory benefits."

Rivian added that although the company operates a service center in Ohio and assists customers with vehicle registration in the state, consumers must complete their purchases and arrange deliveries in other states in the U.S. It is reported that Rivian launched the R1T pickup truck and the R1S crossover in 2021 and plans to introduce a smaller crossover next year.

Rivian is seeking an injunction to prevent Ohio from enforcing a ban on direct sales against the company. Rivian claims that the 2014 Ohio law prohibits direct sales while granting an exemption to Tesla, which has three stores in the state. In the filed lawsuit documents, Rivian states that this special provision "not only allows Tesla to continue selling vehicles through its two existing dealerships in Ohio but also permits sales through an additional dealership."

The litigation document has been filed with the United States District Court for the Southern District of Ohio. Charles Norman, Director of the Ohio Bureau of Motor Vehicles, is named as the defendant in his official capacity.

The Ohio Bureau of Motor Vehicles, named as a defendant, responded in an email statement: "The Ohio Bureau of Motor Vehicles does not comment on pending litigation, especially lawsuits that seek to overturn laws passed by the Ohio General Assembly."

The Ohio Automobile Dealers Association (OADA) has acknowledged being aware of the case. In a statement to Automotive News, OADA said, "OADA is not a named party in the case but will continue to monitor the progress of the litigation."

In addition, it is worth mentioning that Tesla initiated a lawsuit in Michigan in 2016, becoming the first to legally challenge state franchise laws. This paved the way for other electric vehicle startups. Some related lawsuits have resulted in limited victories or settlements allowing direct sales, including Tesla’s case in Michigan.

In May of this year, Scout Motors, a subsidiary of Volkswagen Group, urged the U.S. Department of Justice to abolish state franchise laws, claiming they are outdated and anti-competitive. Scout Motors plans to launch a direct sales model in 2027 and is currently facing lawsuits from dealer groups in Florida and California, as well as opposition from the National Automobile Dealers Association.