Can Manufacturers Make Dealers Sign New Agreements To Sell Electric Vehicles?
Paul R. Norman , Sarah J. Horner | 01.21.21
From GMC’s Hummer EV to Mack’s LR electric truck, manufacturers across the auto industry are gearing up for the future of sustainable transportation — and imposing new requirements in the process. But can a manufacturer make a dealer sign a new agreement just to sell electric vehicles? Maybe. But only if those requirements are “reasonable.”
Wisconsin law requires motor vehicle manufacturers to offer all models of a line make to all dealers franchised for that line make. In other words, a manufacturer must offer all models sold under its brand to all of its enfranchised dealers equally. This means that when a manufacturer launches a new electric vehicle model, it may not restrict certain dealers from their ability to sell that model.
On the other hand, Wisconsin law allows motor vehicle manufacturers to impose “reasonable requirements … for the sale, marketing, or servicing of particular models.” This is where new electric vehicle (“EV”) program standards come into play. If a manufacturer’s EV program standards fall within the scope of “reasonable requirements,” those standards are permissible under Wisconsin law. For example, requiring a dealer to install a charging station could be considered a reasonable requirement for the sale of EV models. But requiring only rural dealers to install 5 new fast charging stations with 240-volt capacity might not be so reasonable.
The bottom line is that Wisconsin dealers have a right to challenge manufacturers who try to limit their ability to sell certain models by requiring compliance with unreasonable program standards. As the electric vehicle trend takes center stage, now is a good time to remind Wisconsin dealers that they can push back against a manufacturer’s EV program requirements if they find them unnecessary for the sale of EV models or too costly to achieve under the circumstances.
The information provided is for general informational purposes only. This post is not updated to account for changes in the law and should not be considered tax or legal advice. This article is not intended to create an attorney-client relationship. You should consult with legal and/or financial advisors for legal and tax advice tailored to your specific circumstances.