Mississippi recently approved a bill (HB401) that changes how car dealerships are operated. This podcast explores how the law impacts customer experience practices and consumer choices in purchasing electric vehicles in the future.
As usual, you can find this podcast episode on major podcast platforms: Spotify, Apple Podcasts, iHeartMedia, Amazon Music, Google Podcasts, and Anchor.
Table of Contents
Introduction – New Mississippi Law Explained
Mississippi Motor Vehicle Commission Law HB401 was passed on March 14, 2023, and will take effect before or after July 1, 2023. It revised provisions relating to a manufacturer’s ownership of a motor vehicle dealership.
Specifically, the law included the following wording that prohibits any dealership from selling plug-in/electric only vehicles. There is a carve-out provision for before dealerships that are operating prior to August 1, 2021.
“(c) The ownership, operation or control of not more than one (1) motor vehicle dealership location within this state by a manufacturer that manufactures and sells only motor vehicles that are plug-in electric vehicles that do not rely on any nonelectric source of power in all modes of operation, provided that the dealership has been continuously licensed since August 1, 2021, and provided that the ownership or controlling interest in the dealership is not transferred, sold or conveyed to another person required to be licensed under this title.”
For reference, Tesla is the largest electric vehicle manufacturer in the world. Along with this American success story, there are others like Fisker, Rivian, Lucid Motors, and Nikola that are designing, building, and/or manufacturing products in the United States.
Direct Sale Ban And Other Information
Since the 1930s, there are variations of law that prohibit a car manufacturer from directly operating a dealership in competition with franchisees. Over time, this evolves into banning a car manufacturer from selling vehicles physically or online and/or operating a service center location. This impacts electric vehicle manufacturers who like to use the direct-to-customer through online channels or at a mall location.
These states have laws that restrict or ban direct sales or services from an auto manufacturer:
- New Mexico
- South Carolina
- South Carolina (a 2019 bill allows electric-only manufacturers to sell in the state)
- West Virginia
Contrary to many, the majority of earnings for a car dealership is from after-sale service over actual vehicle sales. With fewer parts to service overall, electric vehicles do not require as many service calls which could impact revenue for a traditional car dealership.
Hello and welcome to another episode of Retail Mashup. I’m DeAnn. I’m Larry.
Focus Of This Podcast – Mississippi Law
Larry, this week I wanted to start by talking about something that is very concerning to me, and that is some of the legislation being enacted by some states. Here in the US specifically Mississippi passing legislation that is limiting the ability of car dealerships that sell EV “electric vehicles” to operate in the State of Mississippi.
And I understand what they’re doing. They’re trying to preserve their fuel and gas business, which they are very familiar with. Very established. It’s a southern state. I live in a southern state, so the weather here allows people to keep cars on the road longer. I myself have a 20-year-old BMW gas-powered, still operates like a charm.
Limiting Customer Choices
It’s paid for. So I’m really not motivated to trade it in for an electric model anytime soon. So I am gonna need gas for at least a few more years. I understand the thinking, but my concern is over two things. One is the limiting factor of what this does to the state of Mississippi. It is creating an environment that is not progressive to attract new residents to move in into the future or even to attract some of the federal funding that’s coming online in the next few years around developing infrastructure for electric vehicles.
Limiting American Innovation
More concerning is what rules like this do to national brands. For example, they are flat-out working on electric vehicle models. Ford and General Motors are on track to switch at least half of their lineup to electric within the next five years, and they are on target for that deadline.
The federal government is really mobilizing teams to create charging infrastructure across the country. Everybody’s focused on it. So how does a car company offer consistent customer service when some states are pretty much blocking their ability to serve a certain percentage, a growing percentage of their clientele?
And when you also think about companies like Tesla, Tesla actually closed all their stores at one time and decided they were only going to online. They’re still very focused online. They did ultimately reopen some of those stores, but they are very e-commerce as well.
Mississippi Citizens Losing Out?
You better believe that residents living in Mississippi are going to have access to Tesla electric vehicles. But how are they going to deal with companies like Tesla? How are they gonna get them serviced? How are they going to charge them when they’re heading out of state to visit relatives?
This is the kind of thing that is extremely difficult for companies to manage and is becoming a growing operating energy and customer experience challenges as well. I don’t know if you have any thoughts about that. It’s been top of mind for the week.
I have been following up on this particular development. It is not new, but the specific laws that Mississippi wants to pass would hamper both making American car manufacturers and foreign car manufacturers that want to create a digital sales network.
As to electrical vehicles, I often ask myself, has the government been fully aware of the potential of electric vehicles, and how are they able to capture economic, social, and community benefits because of the platform?
And potentially it could be job creation as well. Many car manufacturers are always looking for a space for their next factory. So given what you talked about, how many of the car manufacturers want to expand their electric vehicle lines into the future, they may have to sunset or tools some of the older factories, and this could open up new opportunities for them to open up new ones.
Including, for example, battery factories too. I am also interested in understanding how citizens are included in the discussions. Are people in Mississippi not wanting to drive electric vehicles or do they not know the merit of electric vehicles over traditional gas-powered vehicles?
I am fascinated by that.
Yeah. How much of that, is lobbyist driven by the Mississippi government? But what I’m more concerned about is, Yes, the opportunities they’re missing in attracting those new plants. They have a large place to open up a factory that makes batteries or components for EV cars.
I know Tennessee has a lot of auto manufacturing. They used to make the Saturn vehicle there before it was discontinued. But I’m thinking too about job opportunities at the community level. Someone who wants to open a car dealership reaches out to Ford. They wanna open up a Ford dealership.
Half of Ford’s lineup is not going to be available to them to sell in the state of Mississippi. As more infrastructure gets built and more attention gets put on EVs, on electric vehicles, that’s gonna become a disadvantage for that car dealer operating in the state of Mississippi.
His business is going to shrink. It’s going to be very hard for him to make a living. And so, concerns me that there’s no mechanism for the national manufacturer, the national brand involved in those decisions. and to try, to help incentivize maybe something a little more nationally guided, in their thinking, rather than serving a small community part of the state population.
I also think that there could be perhaps new opportunities for more digital storefronts. I’m looking into the law. For the listeners on this podcast, it’s specifically calling out to HB 4 0 1 that talks about banning having direct storefronts for electric vehicles.
But the law specifically did not say anything about a digital store where buyers can pick up their car from their computer and perhaps get it delivered outside of Mississippi. Into Mississippi so that potentially could be carved out.
And also there is another carved out where if a company already owns one dealership or more or has a dealership license since August of 2021 and has been selling electric vehicles, they can continue to do so.
There is actually a Tesla store in Brandon, Mississippi that qualifies so that there is one particular dealership, but, like you, there are potential job implications that are going to be missed because of this specific law. It may not necessarily benefit the people in Mississippi who may not have access to newer vehicles at all because if electric vehicles are not available for sale within the state, then they may have to go out of the state to buy one.
Yeah. And only a small percentage of consumers are willing to go to that much trouble to get something. And they’re more likely people do what they see. So if neighbors buy combustion engine cars, then that’s really all they’re going to think about when they go looking for one themselves.
It’s gonna take a lot more effort to go to buy a car that is different. What I see is this tide of new challenges for business operating models, and there really isn’t a good solid strategy yet. No company has really found the formula to help them navigate this challenge of difference.
Different laws, different rules, different circumstances from one product to the next one location to the next. And it’s going to require that they create an operating methodology to deal with all the differences from state to state, the differences from product to product.
Messaging around influencers that go off the rails and start talking about things that are maybe damaging to that brand. So creating that flexibility is almost impossible. And yet it’s becoming a necessity. That’s something that I’ve really been thinking a lot about is what would the structure of a company look like that could create that hyper-personalization and almost a physical version of headless commerce.
If another state creates some kind of legislation that is contrary to selling our products, creating that ability to quickly shift and deal with those situations is really near and dear to my heart and something I think that businesses are going to have to give an awful lot of thought to.
Yeah. Thank you for sharing.
Yeah. Thanks, Larry. And that will be the end of this episode. Feel free to subscribe if you like the episode. And until next time, great.
Limiting car manufacturers from selling electric vehicles directly could impact free market principles, consumer choice, overall sales, and innovation. Mississippi HB401.
Finally, we leave you with a reaction from local Mississippi news media on the HB401 bill.
* We made some modifications to the transcript to improve understandability and flow.
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