There has been a battle brewing for the past couple of weeks in Colorado between EV startup Rivian and the state’s franchise dealers. Legislators from both parties proposed an amendment that would allow automakers to sell electric vehicles directly to consumers. On today’s show, we’re pleased to welcome back Tim Jackson, President and CEO of CADA, the Colorado Automobile Dealers Association. Tim gives us his perspective on this legislation, and how the CADA is reacting to it.
VIDEO TRANSCRIPT:
Jim Fitzpatrick: Hi everyone. Thanks so much for joining me in another edition of CBT news today we have a special guest with us, Mr. Tim Jackson, president and CEO of CADA, the Colorado Auto Dealers Association. I know if you’ve been in the industry any longer than a day, you know this gentleman, he is everywhere that the industry is and he’s fighting the good fight every day. Welcome to the show, Tim.
Tim Jackson: Hey, good to see you Jim. Thanks for having me on.
Jim Fitzpatrick: Sure. It’s always good having you on. You’re like man of the month in Colorado, beating up the OEM and showing them that you’re not going to take it. Let’s jump right in and ask you about Rivian. I mean, that’s been making some big headlines and so where does that whole thing stand now?
Tim Jackson: It’s been really interesting and Jim and for any of your viewers that may not know where we’re at on this, a bill was dropped the day we arrived at the NADA show. It was Senate bill 167. We anticipated something would be coming because there was a similar bill that we had killed last year in the Colorado house on a third reading vote of a 35 to 30. So we were anticipating some bill. But typically the process in Colorado and probably most states is that if somebody is planning around a bill, you have stakeholders, everybody comes around a table, you see, okay, you want it this way and you’re over here and one at that way and you try to get some balance and see if there can be a meeting of the minds or meeting in the middle.
Jim Fitzpatrick: Sure.
Tim Jackson: There was not only not any meeting of the minds or meeting in the middle, there wasn’t the dialogue or the opportunity to have a meeting of the minds or meeting in the middle and interesting. In Colorado it’s typically called figuring out the Colorado way. So figuring out how we can work together to accomplish everybody’s goals.
Jim Fitzpatrick: So where does the bill sit now?
Tim Jackson: Okay. It was read across on the 13th of February. It was a Senate committee on the following Tuesday. We caused enough positive, slowed down and didn’t get to the Senate floor until the following Monday, which was a week ago, this past Monday. And it took five days to get it through the Senate floor because we had so many votes against it. We did agree to a compromise. The way the bill was originally written, it would allow the traditional automakers that have franchise agreements with dealers in the state to sell EVs and directly compete against those dealers.
Jim Fitzpatrick: Wow.
Tim Jackson: And that would be disaster.
Jim Fitzpatrick: So whether you’re Ford or Nissan with the lead for Toyota, all those OEMs could then open up shop and sell directly to consumers under the way it was written.
Tim Jackson: Under the original drafting of the bill. Yes. The downside is it was a really bad bill and it was really bad for consumers and bad for dealers and we think also ultimately bad for automakers. But there was an upside and that upside was it got everybody’s attention and everybody came out to fight that bill. And so we brought about 120 to 130 people to the Capitol Senate hearing on about a 26 hour notice.
Jim Fitzpatrick: Wow.
Tim Jackson: That was quite a feat. In all my 15 years we’d never had nearly that type of activation.
Jim Fitzpatrick: Out of the 126, was it mostly dealer principals?
Tim Jackson: It was dealer principals and senior managers, some general managers. But people that understood that this really had ramifications because they built their and made their investment in their infrastructure, in the rebuilding their facility requirements, all the things that they’ve done to sell those EVs and everything else for that matter. And this would be a direct assault on that investment.
Jim Fitzpatrick: That’s right. That’s right. Who was behind that bill? Who was writing that bill and where did the … Where are the OEMs in all of this? The OEMs are very big on telling everybody how much they support their franchise dealers and they love them and they love working with them. And that’s kind of the backbone of their business. But it seems like they would come to the dealer’s defense at some level for this. No?
Tim Jackson: And now we have a new manufacturers association, it’s called the Alliance of Automotive Innovation. And they couldn’t get to an agreement on where they stood on this. So they had to take … They took a path, they were neutral on the bill until we got the amendment on and they don’t like the amendment because they want an even playing … A level playing field. And so they’ve been on the sidelines and now are against the bill.
Jim Fitzpatrick: So then they see that the level playing field means allowing them to sell directly to consumers in Colorado.
Tim Jackson: They think that … And can’t speak for them either, Jim. I’m just telling you as my, as I understand it, they view if a Tesla or a Rivian or some other EV automaker can sell direct. Maybe they don’t want to now, but if they ever want to, they want to have that same, right. They want to have that level playing field.
Jim Fitzpatrick: Right. That’s right. And you know, they say that they’re not interested in doing that now, but that could change in a week, that could change with a new vice president in charge of EVs for that particular OEM that says, “No, let’s go ahead and try this.” Right?
Tim Jackson: Yeah. And it has been attempted in the past and you may remember that different manufacturers have bought out all the dealers in a certain market and then created a premium dealer network. All of those failed.
Jim Fitzpatrick: Yeah.
Tim Jackson: What we find is the factories, by the way, they do a great job at building cars. The cars that our manufacturers are building today, I’ve never been better. They’re safer. And that’s evidenced by out of their durability, their longevity of their, their lifelong lasting, if you will. They’re much safer. Traffic fatalities are down. Even as vehicle miles traveled goes up, traffic fatalities … There are a hundred million miles traveled by Americans in our cars on our American highways today before there’s the next traffic fatality. And that’s about a third what it was just 20 or 30 years ago. So they’re much better.
Tim Jackson: They’re much more fuel efficient. Fuel efficiency continues to get better and better, and they’re much better on the environment. Vehicle emissions on tailpipe emissions are virtually 99% lower than they were just 20 or 30 years ago. So our auto makers are really good at building cars, but so far they haven’t been really good at selling cars, but dealers are and that’s why it’s really a great relationship in that regard that we have with our automakers. You build the good cars, we sell the good cars and we both come out ahead.
Jim Fitzpatrick: Sure. Is this something, Tim, that, I don’t want to say keeps you up at night, but is it something that you feel you’ve got to be on the forefront of 24/7? I mean, it seems like this just keeps rearing its ugly head and something–.
Tim Jackson: Well, the last time I saw you, Jim, at the NADA show and between then and now they’ve all been 20 hour days.
Jim Fitzpatrick: Yeah, I bet.
Tim Jackson: So yes it does … It is something that keeps you … Keeps me up at night. But more importantly, I really saw my life flash in front of me on this issue because it wasn’t well thought out, but it was well executed by doing the sneak attack. In fact, it may have even been time because we were out of town for the NADA show. So it’s fortunate that our dealer body has good relationships with their legislators and we could ultimately get those meetings and get those discussions, but it shouldn’t have had to come to that and that’s what’s disappointing. Some people think that a consumer should be able to buy from the factory or the dealers.
Jim Fitzpatrick: And when you think about it, what advantage is that going to give to the consumers in Colorado or the effort to get more EVs on the road in that Rivian would say, “Well, no, we’re not going to sell our products in Colorado if we can’t sell them direct?”
Tim Jackson: Well, I think Rivian would, but I don’t think that would be long lasting. They would find a way in here, and we know that, but Rivian really, for Rivian to succeed and we want them to succeed, they really need to figure out the same thing that Henry Ford and general motors and Toyota and all the other distributors, manufacturers of autos figured out a long time ago. And that is that we’re their best ally. Toyota somebody, a Toyota representative said “Our dealer network is our secret weapon. We don’t want to do anything to harm them.”
Jim Fitzpatrick: Right. Yeah. And if anything, they should be at the table there in the state capital’s supporting them rather than kind of taking a wait and see and saying, “Well let’s see if they can get this passed. And if so, and then the cards are in our favor if we so choose to go down that road one day.” But as you know, you crack the door with one OEM and the other OEMs are sure to follow because they’re just … They’re going to claim that in order to be competitive, they’ve got to do this. Right?
Tim Jackson: Yeah. And one thing that we haven’t talked about here, Jim, and I think you’re covering this very, very well, but that is the downside risk to this or any automaker, whether it’s Tesla, whether it’s Rivian or another automaker coming up out of China, one of the 500 that’s trying to get into the market. Some of those will fail, you know and I know some of those are going to fail.
Jim Fitzpatrick: That’s right.
Tim Jackson: This isn’t wishing anybody any bad luck. But all of them have been on a shoestring at some point in time, maybe a lot of the time. And some had been in the market for 17 years and haven’t made an annual profit yet, right? So some of them will fail. We don’t want consumers to be harmed when they fail. And there’s that … In a factory to direct to consumer model there is … When the factory locks their doors, all of the retail outlets stores lock at the same time. There’s no dealer on dealer street to keep the car running, to take it in as a trade, help paint a low warranty claim or fix it on their own or whatever. And that’s what our dealers do. We’ve done it time and time again. That’s what we’re there for. That’s why we’re spread out all over the state of Colorado and around the country to do. But with the factory to consumer model, there’s no better deal. It’s not only out of town, you have to go out of town to get the bad deal and that’s all the way to Denver.
Jim Fitzpatrick: That’s right. You just don’t have that comp … You don’t have the dealers making deals across the brands and such either. So there’s … You just take that competition right out. Where does this stand in other states, Tim, have you heard, are they entering into other States and trying to do the same thing that they did there in Colorado?
Tim Jackson: Rivian wants to be able to sell direct in every state and we understand that. But we haven’t seen this go so far as to let the other automakers sell direct. And Colorado was the first state that was attempted in that.
Jim Fitzpatrick: Right. Right. And but you anticipate them going state by state and making it so that they can sell their products along … Not alongside Tesla, but alongside that same business model.
Tim Jackson: Right.
Jim Fitzpatrick: Wow. This is … These are some interesting times that we’re in, to see manufacturers-
Tim Jackson: These are very interesting times.
Jim Fitzpatrick: I mean, it’s one thing to have Rivian and Tesla across the street from one another, selling directly to the consumer, bad enough. But if you fast forward 10 years, if people like you and your organization and dealers don’t pay attention, we’re in trouble in this industry-
Tim Jackson: Well, and the people we serve are in trouble. Ultimately consumers will be harmed. And that’s–
Jim Fitzpatrick: That’s right. That’s exactly right. And I couldn’t agree more because as you know, with dealers, they’re always at the forefront of every recall. They take the brunt of it. Right? They’re the ones dealing with the customers. They’re the ones trying to get them in cars while their vehicle’s being worked on and waiting on inventories that can’t be sold because the parts aren’t ready yet from the manufacturer, the vehicle’s waiting on a recall. I mean the dealer has been there through thick and thin with OEMs and certainly trying to help their customers and doing a great job at doing just that. Right?
Tim Jackson: Correct.
Jim Fitzpatrick: Yeah, for sure. Well, we’re going to have to monitor this closely with you and anything we can do to get the word out at CBT, we’re more than happy to do. Before I let you go, let’s talk about your upcoming event in just what, 30 days away, right?
Tim Jackson: We are. A little less than that.
Jim Fitzpatrick: A little less, yeah.
Tim Jackson: It’s one and two and it’s the innovative dealer summit. This is the 13th year.
Jim Fitzpatrick: Wow.
Tim Jackson: It’s held in conjunction with the Denver auto show and the auto show is pushed back one day because we couldn’t do the innovative dealer summit at the end of the month, so it’ll be on Wednesday and Thursday this time instead of Tuesday Wednesday. We do have a really good lineup, Dean Evans from cars.com–.
Jim Fitzpatrick: Yeah, he’s great.
Tim Jackson: And Scott Money formerly of Ford Motor Company. Mitch Paynewall of Ford Motor Company current is going to be in there and speaking so about 40 plus speakers, two days. We’d love to have everybody out if anybody’s interested. Innovativedealersummit.com
Jim Fitzpatrick: yep, absolutely. We’ll show all of the information here on the screen for those dealers that want to sign up or those managers and such. We have been in the past. It’s a world class event. It’s something that if you haven’t gone, go to, if you have gone, then sign up and go again because it’s all new stuff every year and I highly recommend dealers get … Take two days out of your busy work week and go out there. You will come back with a plethora of ideas and information to help you run your dealerships more efficiently, and Tim, you’ve been knocking the cover off the ball with this event for as you said, 13 years. It just keeps getting better and better so. So thanks for doing that.
Tim Jackson: It will be a great event and thanks for your support on it Jim. And it’s … We’re looking forward to it.
Jim Fitzpatrick: Yeah, it’s really going to be great. I wish I could go, we do have a conflict with another event that we’ve got to attend, but nevertheless, I highly recommend dealers look into it. As I said, we’ll show the information here. They can click in the link below us to take them right over to your website to sign up. And so Tim, thanks so much for all the time you’ve given us today, for the update on Rivian and where it stands and man, keep fighting the good fight. I think this is going to be one of those deals-
Tim Jackson: Thank you so much Jim and thanks for all you do.
Jim Fitzpatrick: Yeah, thanks. It’s going to be just one of those issues that dealers have state by state, case by case, are going to have to stay diligent on, and really pay attention to. Right?
Tim Jackson: Right. It will be and you get it and I hope your viewers get it. Thanks for your coverage of it.
Jim Fitzpatrick: Absolutely. Happy to do it. All right. Thanks so much. Have a great weekend.
Tim Jackson: Thank you Jim.
