Florida Governor Ron DeSantis has signed a bill that bans most car manufacturers from selling vehicles directly to consumers, solidifying the future of car-selling operations in the state.
The measure, known as HB 637, was championed by the Florida Automobile Dealers Association (FADA) and goes into effect on July 1. It prohibits automakers from engaging in direct-to-consumer sales, directly targeting Tesla‘s (Nasdaq: TSLA) business model.
But fret not Elon Musk, lobbyists representing FADA, along with Capitol Alliance Group, negotiated a deal that allows companies like Tesla, Rivian, Lucid, and Polestar, which primarily focus on electric vehicles (EVs), to continue selling directly to consumers.
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The bill also restricts manufacturers from controlling retailer inventories and prices, protecting dealers’ rights to choose their own model mix and ignore manufacturer-suggested prices. It aims to promote competition among dealers, leading to better prices and services for consumers.
Supporters argue that dealers serve as advocates for consumers when it comes to warranty work and service. However, some economists argue that states should relax regulations on direct vehicle sales to provide consumers with lower prices. Critics argue that the current franchise system protects the interests of auto dealers at the expense of consumers and stifles innovation in the automotive industry.
The debate surrounding the direct-sales model has intensified in recent years, particularly due to its popularity among EV manufacturers. California, the largest EV market in North America, has introduced similar bills to protect the franchise system. Under DeSantis’ leadership, Florida has joined other states in supporting third-party dealers, although the new law falls short of a complete ban.
The passing of HB 637 marks a victory for auto dealers in Florida, who have made significant political contributions in recent years. For example, car dealership chain Braman Motors donated $10,000 to the political committee of Representative Jason Shoaf, who sponsored the bill in the House. While DeSantis has received over $2 million from auto dealers in the last two years.
Information for this story was found via Florida Politics, CBT News, and the sources and companies mentioned. The author has no securities or affiliations related to the organizations discussed. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.
