Dealer laws are “as close as you can get to corruption”

• Rivian CEO RJ Scaringe pointed to a “horrific state-by-state level of rules”
• Dealers’ lobbying efforts have made it hard for Rivian to interact directly with customers
• Rivian’s aware it has a service backlog, views it as a short-term problem

Rivian CEO RJ Scaringe isn’t a fan of U.S. dealership franchise laws. These laws work against the EV maker, which has a direct-sales model rather than franchised dealers.

On Wednesday during a roundtable with Green Car Reports and other media Scaringe said “we have this horrific state-by-state level of rules that are as close as you can get to corruption.”

The CEO was referring to franchise laws for car dealers, which are widely protected by heavy lobbying efforts.

“You essentially have lots of dealers that paid for lots of laws that make it really hard for us to interact directly with the customer,” Scaringe said. 

Scaringe had been asked whether, after VW’s recent investment of $5.8 billion into Rivian, the U.S. EV maker might be able to leverage the dealer network of one of the world’s largest automakers.

Rivian’s CEO then noted with an upbeat smile that “Europe doesn’t have the same rules,” and “there’s certainly opportunities there.” Rivian plans to sell both the smaller upcoming R2 and R3 crossover SUVs in Europe, but the R1T and R1S are deemed too large for that market.

“Service is the bigger thing,” continued Scaringe. “You don’t need 5,000 retail location in the U.S. to sell 3 or 4 million cars a year. Tesla’s a good example,” he said.

“You do need a lot of service infrastructure,” Scaringe went on to say. But even that’s changing because historically a customer needed to go into a dealer anytime a car made a clicking noise.

Often, depending what is needed, that service can come to you. Rivian handles more than half of its service with its in-house mobile service crews going to customers rather than customers coming to them.

Scaringe admitted the automaker has a service backlog in the U.S., as it tries to build as much service infrastructure as fast as it can. But in some U.S. markets the product is scaling faster than the automaker can build out the infrastructure.

“That’s a short-term anomaly,” Scaringe said. Long-term the executive said the team believes it’s going to build a robust service infrastructure.

In Europe, Scaringe said there’s a question whether Rivian partners with someone for service. “It’s certainly an opportunity,” he added.

But in America, with the franchise laws, the possibility of Rivian partnering with anyone else for service would be complicated.