State lawmakers in Washington recently passed legislation carving out an exemption from a state law which prohibits auto manufacturers from selling directly to consumers. The action enables Rivian and rival Lucid to bypass the traditional requirements to sell their electric vehicles only through franchised dealerships, and prompts the question: “How will this affect other franchise arrangements, even those protecting major farm tractor and combine manufacturers?”

The Washington legislation emerged after a prolonged effort by the two electric vehicle makers to gain direct access to consumers stalled against political pressure by the state’s car dealer associations. In the end, the EV auto startups threatened to take the matter to a state popular vote through Washington’s direct-referendum laws – a scenario that could likely have seriously damaged the long-standing dealer franchise business model. 

Polls in Washington indicate strong support for “buyer’s choice” in car-buying so the dealers climbed on board noting the legislation applies only to two EV makers.

Long-time opponent of direct-sales, Rep. Andrew Barkis, ultimately voted for the measure, saying “the writing was on the wall” for dealers. He told the Wall Street Journal, “This is the next generation of car sales. Now, the same could happen in other states.”

With the new legislation in hand, the two EV automakers are now focusing on other states that, like Washington, ban direct auto sales but also allow ballot initiatives. Those include Arkansas, Ohio, Oklahoma, Montana, Nebraska and South Dakota. In more than a dozen states, franchise laws prevent any auto manufacturer from selling motor vehicles directly to consumers. Elsewhere, a patchwork of laws limits the practice only to EV startups or to specific manufacturers. Tesla pioneered its national sales effort after opening its first retail outlet in California with litigation targeting various loopholes in specific states with laws banning direct sales.

On-Line Tractor/Combine Sales?

What happens in the auto industry frequently spills over into the worlds of other OEM businesses, including agriculture. Does the crack in the dealer dam against direct auto sales in Washington indicate a potential threat to franchised dealers selling major brands of farm equipment?

Matthew Larsgaard, is involved in both the auto and farm equipment sales industry, and his reasoned answer is: “It’s not likely.”

Larsgaard is President and CEO of the Automobile Dealers Association of North Dakota, and the Pioneer Equipment Dealers Association, a trade association for approximately 350 franchised equipment dealers in Minnesota, North Dakota and South Dakota.

He says many states have laws which prohibit motor vehicle manufacturers from selling vehicles directly to consumers as a matter of consumer protection, but he knows of no state laws affecting similar sales by farm equipment manufacturers. 

“Over the years several states have opened up the manufacturer direct sales prohibition and allowed a Tesla, for example, to sell motor vehicles, but I don’t see implications of that affecting dealerships of major farm equipment,” he explains. “I’m not aware of any state that has a prohibition which would restrict a (farm equipment) manufacturer from selling parts, whole goods, etc., directly to consumers.

“Because of that, it’s unlikely any implications may be drawn from the Washington legislation that would affect the current farm equipment dealership distribution model.” He cites current on-line parts availability through major farm equipment OEMs as an uncontested example.

“The new Washington exclusion specifically states if a manufacturer has never had a franchise agreement with a dealer; operated at least one service facility in the state of Washington as of Jan. 1, 2026; exclusively produce battery-electric vehicles, of which 300 were registered in the state before Jan. 1, 2026, then that specific manufacturer is excluded from the state’s current direct-sales prohibition,” he says. “One can certainly argue that is a pretty tight, narrowly-defined law specific to the state of Washington and Rivian and Lucid.

“It simply defines who may sell a motor vehicle and under what terms and conditions that entity may sell a motor vehicle.”

Published reports indicate German automaker Volkswagen is currently embroiled in several lawsuits with dealers nationwide over its plan to sell its new Scout vehicles directly to consumers, but because of the stipulations written in the Washington law for Rivian and Lucid, VW is not included in the exclusion.

Larsgaard agrees there may be additional, similar exclusions enacted by other states for various reasons which means the patchwork of such regulation will become even more intricate.

“The patchwork already exists,” he says. “Not one franchise law, dealer protection law or warranty reimbursement law is exactly alike in the nation”.