A new report by the Connecticut Center for Economic Analysis—which acknowledges in its opening sentence that it was commissioned by the Connecticut Auto Dealers Association (CARA)—paints a gloomy picture for the state’s economy if legislation allowing the direct sales of electric vehicles in the state is passed into law—arguing that the bill “increases risks” to existing dealers, and that “those risks would threaten” 40k jobs and $3.9 billion in GDP.

These numbers are unbelievable for a reason: They aren’t based on legitimate assumptions or any factual evidence. The study uses vague language to paper over its disingenuous premise, ultimately harming the public policy debate in Connecticut. The study’s conclusions should be disregarded for the following reasons:

• This study is an attempt to counter the actual evidence from data provided by the National Auto Dealers Association showing that states which are open for direct sales have outperformed states that do not allow direct sales in dealership revenue and employment by a significant margin.
• The report’s topline numbers are based on an impossible scenario due to the contractual and legal provisions protecting Connecticut’s franchise dealerships.
• The report does not account for the benefits of direct sales—which include cost savings for consumers, bolstered consumer protections, job growth, and open-market competition.
• The report’s findings are based on a logical fallacy: It points to the jobs and economic benefits provided by dealer locations and argues that SB 127 would undermine these benefits, yet the purpose of SB 127 is to enable new, EV-only manufacturers to build dealerships in the state.

SB 127 is a straightforward fix to state law that enables EV-only manufacturers like Tesla and Rivian to build retail locations in Connecticut. To understand direct sales and SB 127, click here.

More detail on these flaws in the study below.

This study is an attempt to counter the actual evidence from data provided by the National Auto Dealers Association (NADA) showing that states which are open for direct sales have outperformed states that do not allow direct sales in dealership revenue and employment by a significant margin.

Since Tesla pioneered the direct sales business model in 2012, it is clear from a review of NADA’s state-level data on sales and employment that states, where traditional dealerships coexist alongside Tesla’s manufacturer-owned dealerships have outperformed the national average. Meanwhile, states like Connecticut that are closed to direct sales underperformed open states by nearly 30 points in sales revenue, and by 9 points in employment growth.

Connecticut is no exception—seeing sales and employment growth rates that are far below the national average. Connecticut’s auto dealers have not benefited from the healthy competition allowed by open markets.

The report’s topline numbers are based on an impossible scenario due to the contractual and legal provisions protecting Connecticut’s franchise dealerships.

The report makes the following claim about SB 127: “If passed, it would at present apply only to a handful of stand-alone global companies manufacturing exclusively EVs, they could then market in Connecticut. Yet, established manufacturers are trending towards manufacturing exclusively EVs, most notably Volvo and General Motors (GM) by 2035. While those legacy manufacturers who move to just EV production are unlikely to terminate contracts with all current dealers in Connecticut, legally they could.”

This is an utter falsehood. The author is correct that traditional auto manufacturers are unlikely to terminate their franchise contracts—but legally they are prohibited by Connecticut law from canceling or even failing to renew a franchise without “good cause” by this section (Sec. 42-133l.) of the statute.

“Good cause” is defined very specifically in this section, and only applies to insolvency, closing for business, conviction of a felony, fraud, or revocation/suspension of license. Dealerships and traditional automakers are aware of these protections: for example, Cadillac recently had to offer buyouts to franchisees who didn’t want to sell EVs. Dealers are entitled to renewal of their franchise contracts in perpetuity by state law as long as they meet these conditions.

The report does not account for the benefits of direct sales—which include cost-savings for consumers, bolstered consumer protections, and open-market competition.

In addition to being based on an incorrect legal premise, the report’s conclusions are based on an extremely rudimentary analysis: It establishes a best-case-scenario snapshot of the economic contributions from Connecticut’s franchised dealerships, and assumes this industry is zeroed-out in 2040.

As noted above, this scenario is not possible legally due to franchise protection laws. However, it also paints a picture of a stagnant economy where market segments stack like Legos, and removing the traditional-dealership brick leaves a void that cannot be filled. By this logic, the state of Connecticut would have never recovered from the decline of its arms manufacturing and shipbuilding legacy from the 1800s.

Connecticut’s economy will not recover through protectionism, but instead by enabling new businesses to enter the state and existing businesses to evolve. Direct sales will contribute to Connecticut’s economy in the following ways:

• By stimulating the electric vehicle market in Connecticut and prompting the installation of charging stations—both in public and in people’s homes.
• By enabling American manufacturers to invest in the state and build retail locations.
• By allowing Connecticut’s architects, mechanics, electrical engineers, construction workers, attorneys, salespeople, administrative staff, and other professionals with opportunities for 21^st-Century jobs with new electric vehicle manufacturers.
• By creating greater flexibility for electric vehicle buyers and saving them the time and cost to travel out of state to purchase an electric vehicle.
• By protecting consumers by requiring manufacturer-owned dealerships to be regulated by existing Connecticut law; and by providing an alternative for customers who are dissatisfied with the current franchise dealer system.

The study considers none of these factors when assessing the impact on Connecticut’s economy from a legally impossible scenario, in which no new cars are sold in the state after 2035, which brings us to our final point:

The report’s author conflates direct sales with online EV sales, and the findings are based on a logical fallacy: It points to the jobs and economic benefits provided by dealer locations and argues that SB 127 would undermine these benefits, yet the purpose of SB 127 is to enable new, EV-only manufacturers to build dealerships in the state.

The sales activities that would be permitted by SB 127 are unrelated to online vehicle sales. EV buyers in all 50 states are already able to buy electric vehicles online due to the interstate commerce clause. The purpose of SB 127 and direct sales is to enable auto manufacturers to build retail locations in Connecticut.

The study defines its dire scenario as one “where dealers are displaced by out-of-state commerce facilitated by Bill 127.” Ironically, this is the current situation for the manufacturers that are urging to be allowed to sell their vehicles in the state of Connecticut. These companies are currently forced into online-only out-of-state commerce…enabling them to invest in Connecticut will result in more in-person auto retail, more jobs, and more economic growth.

Rivian Brings New R1T to CT in Support of Direct Sales

With the fate of SB 127 hanging in the balance in the waning days of the 2021 legislative session, a pre-production version of the Rivian R1T all-electric pickup truck made an appearance in CT. It could be found Thursday in Hartford, where legislators and the governor were given the opportunity to go for a drive and see the future of electro-mobility. The fate of the bill in the Senate is expected to be determined over the next few days. It would then still have to go before the House.

On Friday, a last-minute gathering came together, where some members of the EV Club CT, were also able to get a look. We hope to bring them back to CT once they have started production later this year.

Group photos by Paul Braren

May 13, 2021

Electrification Coalition Support of SB 127 Comes from National Security Perspective

The Electrification Coalition supports SB 127. Its mission statement states: “Accelerate the adoption of plug-in electric vehicles to improve our national and economic security.” Several prominent retired military leaders, including Admiral Dennis Blair, are affiliated with the organization because of the national security benefits of reducing our country’s dependence on oil. Admiral Blair made the following remarks in testimony before Washington legislators on the subject of direct sales of electric vehicles:

“Our group has long seen electric vehicles, and specifically the domestic EV industry, as the most promising solution to break oil’s monopoly over the transportation system. And as the world shifts from gasoline to EVs, China’s dominance of the entire EV supply chain makes scaling up the U.S. market even more urgent.

“As has been made clear in state after state, direct sales is one of the most effective and powerful policy levers to enhance EV deployment.  Some 80% of EVs sold in the country are through direct sales, and states that are open to direct sales see adoption rates of up to 5 times the rates of states that are closed—even in the absence of other direct incentives.”

–         Admiral Dennis C. Blair, Former Director of National Intelligence and Commander In Chief, U.S. Pacific Command

This Bill is Pro EV and Pro CT

Transportation Committee Vote Moves Bill to Full Chamber

The Transportation Committee, by a vote of 26 to 10, moved SB 127 to the full chamber.

There were several legislators who voted in favor of the bill, but who specifically said they have not definitively made up their minds with respect to the upcoming vote on the floor of the chamber. We will publish some of the questions and objections when we update this post.

Transportation Committee Chair, Senator Haskell, deserves our thanks for his leadership in picking this up and moving it forward, after his predecessor on the committee had decided to set it aside. We also thank Rep. Steinberg who has been a consistent advocate for years in favor of this measure.

This is the final roll call.

What I inferred from the hearing today reinforces what I watched/read during the public testimony period. Legislators are hearing from dealers, of course, who oppose the legislation. They are also hearing from constituents and constituents are supporting the legislation. There is no negative sentiment among the public about this bill.

We don’t take anything for granted. When we have updates with respect to further negotiations around the bill or voting in one or both chambers, we will post them (among other things).

Tesla is keeping its “Engage” page live for ease of contacting your legislators.

Headline photo courtesy of Will Cross

Post by Barry Kresch

Grassroots Momentum for the EV Freedom Bill

The atmosphere was electric as about 100 EV enthusiasts came to Westport from all over the state for a press conference supporting The EV Freedom Bill, legislative bill number SB 127. Lame puns aside, I have been part of this EV Club for 9 years, and this issue feels like it has been around for most of them, but today felt different. The grassroots energy was palpable in a way that it hadn’t been in the past. Perhaps it is due to Tesla registrations having grown to almost 6,000 in the state. Or the excitement of new, really cool, EV companies entering the market also looking to sell direct. Or energized engagement on the political front.

This bill, which in earlier guises had come to be referred to as the “Tesla Bill,” would permit EV-exclusive manufacturers that do not have an existing franchise dealer network to open stores in CT. At today’s event, Tesla was joined by Rivian and Lucid. Others are expected to adopt this business model or, more to the point, this or some other new model not envisaged in the existing dealer franchise laws that were written almost 100 years ago.

The bill also requires that companies opening stores have a sustainable model for servicing vehicles that are sold here.

The Way Forward In A Changing World

Passing this bill would be a tangible step toward supporting innovation. The industry is changing. Fissures are showing in the traditional automobile business, despite their actions to forestall competition by keeping new EV companies out of the state. 17% of Cadillac dealers opted to drop the franchise rather than embrace GM’s making this its centerpiece EV brand. Volvo announced an aggressive timeline of moving to an all-electric lineup by 2030 and moving EV sales online in the short-term. We don’t know the fine print of how this changes the relationship between the dealers and the manufacturer. If sales are online, do the dealers ever take title to the vehicle? And if they don’t, are they still a dealer? We reached out to Volvo for elucidation but have not received a response. We are guardedly optimistic that these changes are signs of a more serious effort to sell EVs.

SB 127 was introduced by Sen. Will Haskell, who organized the press conference, and Rep. Jonathan Steinberg, both of whom represent local districts. There were a number of other state and local officials present. This was the speaker order lineup:

• Senator Will Haskell (SB 127 co-sponsor)
• Barry Kresch, President of the EV Club of CT
• Rep. Jonathan Steinberg (SB 127 co-sponsor)
• Jim Marpe – Westport First Selectman
• Jeff Curry – Lucid Motors
• Kaitlin Monaghan – Rivian
• Lori Brown – League of Conservation Voters
• Daniel McInerney – International Brotherhood of Electrical Workers
• Senator Bob Duff – Majority Leader
• Former Senator Art Linares

Paul Braren has posted video of all of the speakers on his blog.

Journalist David Pogue recorded remarks that were played to the group. A schedule conflict prevented him from appearing in person but you can hear what he had to say. (His remarks are just short of 4 minutes.)

The presentations took place at the Westport Train Station in front of a depot building with a solar array that powers the building and 4 adjacent EV charging stations. These were the first solar-powered public chargers in the state. They were installed in 2012, which is when I met the club founder, Leo Cirino, and became a member.

Model Y and Lucid Air – charging stations are to the right of the building by the white Chevy Volt

Long Way To Go

In his remarks, Sen. Haskell noted that the state had a long way to go to reach its goal of 500,000 EVs in the fleet by 2030. I’ve written a lot about that and noted that given where we are today, 13,800 EVs, it will be necessary to maintain a 49% compound annual growth rate to get there. This may sound high, and it is, but it is actually worse than it sounds because this figure is growth in net registrations. Each year, there are new vehicles added to the file, but there is also turnover from vehicles leaving the file. In 2020, the turnover was the equivalent of 52% of the vehicles that were new to the file. So from an acquisition perspective, it means we need to double each year. Without SB 127, we’ll never get there.

There are many that we need to thank for a successful event including members of the EV Club and the Tesla Owners Club, not only for coming, but also for reaching out to our legislators; the public officials who support this bill; the IBEW; and Tesla, Rivian, and Lucid.

As encouraging as it was to see this level of support, it’s not over. The bill will be called for a committee vote on Wednesday. If it passes, then it goes before the full chamber. It feels like we’re only to the quarter-finals. We will update this space as we move up the brackets.

Tesla Model X in chrome wrap. Model Y on the right.

Lucid Air Interior, Who are those masked men – Barry Kresch and Bruce Becker getting set for the presser, Senator Haskell speaking about the bill (Majority Leader Duff in the background)

One final note: We have been asking people to tell their legislators they support this bill. That doesn’t stop with the press conference or even the committee vote. It is important they hear from you. Tesla has set up an “engage” page for CT that enables a 1-click message or the opportunity to customize it for yourself. You may have to set up an account. You don’t need to be a Tesla owner to do that.

Press Conference on March 22 for SB 127

The office of CT Senator Will Haskell is organizing a press conference for Monday, March 22. It will be held outdoors at the Westport Train Station (New Haven-bound side) at 10 AM.

UPDATE: LUCID VEHICLE (pictured above) EXPECTED TO BE BROUGHT TO THE PRESS CONFERENCE.

All EV owners are invited to join us and spread the message that consumers should be able to buy the EV that fits their lifestyle and budget, and be able to do so in CT.

SB 127 would allow manufacturers of exclusively EVs that do not have a franchise dealer network to open stores in CT, which is one of a handful of states that currently prohibit this. Check out this video made by Will Cross of the CT Tesla Owners Club.

Even if you can’t join us, please write to your state senator and representative and tell them you support this bill.

Tesla has put up a page that enables one-click contact for your rep. (You may need to create an account.)

This is an earlier post that goes into more detail about the details of why we support this.

Volvo Is First Manufacturer to Bypass Dealers for EV Sales

When we blogged about the EV Freedom Bill, SB 127, a short while back, one of the facts that we unearthed was that in Germany, Volkswagen had basically given up on its dealerships to sell EVs. It began selling them corporately, using the dealerships as agents. And their strategy worked! The company had a successful introduction of its ID.3 last fall and saw it become a top-selling BEV in Europe. (This car is not being brought to the USA. VW is now taking orders for its larger sibling, the ID.4 in this country.)

It was an interesting development, but it didn’t necessarily mean that we would see the same thing happen here given franchise laws that are generally more restrictive than in Germany, where manufacturers are allowed to own stores. Well, not so fast. The New York Times reported a story about Volvo announcing a transition to an all BEV lineup by 2030, 5 years sooner than what was viewed as an aggressive announcement by General Motors.

If you stay with the article as far as the 13th paragraph, this little tidbit is reported:

“In another break from the practice of traditional carmakers, Volvo’s electric models will be sold exclusively online.”

Volvo is implementing a no-haggle sales policy. Like Tesla. Dealers are being used only for test drives and delivery. In other words, the dealer becomes an agent. Exactly what VW is doing in Germany.

This was punctuated by a club member who lives in Fairfield County and had made an inquiry about the XC40 Recharge a while back. He was invited to an up-close and personal encounter with the car – in New York City. (There is no shortage of Volvo dealers locally.) Here is the invitation:

We presume this is a temporary strategy to prepare for the transition to all-electric. Or perhaps a hybrid strategy like Volvo’s corporate sibling Polestar, which has only 3 dealerships in the country. If it isn’t, then there will be no Volvo dealers and Volvo will have to shake hands with Tesla. Nonetheless, it is a dramatic announcement, and we wonder if this will result in legal wrangling. On the other hand, maybe they’re glad not to have to sell an EV.

Rivian mobilizes reservation holders for support

For those holding reservations for an electric pickup truck or SUV from new EV-exclusive manufacturer Rivian, where and how they will get possession of their vehicle when deliveries begin later this year remains unknown. Like Tesla, they are going the direct sales route. Unlike Tesla, they are just getting started and running the direct sales gauntlet in many states across the country. The issue is once again before the legislature in CT. This club supports it (SB 127). Below is the text of the letter sent by Rivian:

SB 127 – Permit EV Exclusive Manufacturers to Sell Direct in CT

A virtual public hearing was held yesterday by the legislature for this bill. Both written and oral comments were solicited.

Of the 76 written comments and a full day of Zoom testimony, every consumer that testified was in favor of passing this bill. Not really a surprise that consumers support a consumer-friendly bill. It is still opposed by dealerships and the OEMs. Nothing has changed.

It is difficult to read the tea leaves regarding the impact of testimony, pro or con. The bill has to pass a committee vote and then be called for a vote in both chambers. We are encouraged by the large number of comments submitted and the support we are receiving.

Judging by the response in the testimony, constituents are sending a message: protecting the environment is important and consumer choice is important, more important than protecting outdated laws.

Special thanks to Senator Haskell and Representative Steinberg who submitted the bill, as well as Representatives Wood and Michel who came on board as co-sponsors.

This is a link to the full (7.5 hours) video which is posted to the Transportation Committee’s YouTube Channel.

Some relevant time-stamps:

Tesla – 1:29:58

Lucid – 5:13:56

Rivian – 6:39:27

Senator Will Haskell (bill sponsor) – 2:30:19

Mike Liebow (Tesla Owners Club) – 5:30:46 – And check out his pointed comments here

Leadership of EV Club CT:

Analiese Paik – 5:35:42

Paul Braren – 6:52:13

Barry Kresch – 7:10:40

Beats Netflix!

Thanks to all who were involved in this effort. And let’s keep at it.

Paul Braren also wrote a detailed and thoughtful piece on his blog.