By John Bozzella
Washington state just drilled a big hole in the dealer franchise system with a law allowing electric vehicle-only manufacturers to skip dealers and sell directly to consumers.
It’s a discriminatory law that undermines the existing automotive retail system with two sets of rules: one for legacy automakers and one for everyone else.
That would be bad enough. But this shortsighted franchise law is a legal roadmap for Chinese automakers to one day enter the U.S. market by bypassing dealers, too.
Washington, like most of the country, requires automakers to sell new vehicles through a franchised dealer. Rivian and Lucid wanted the same special, direct-to-consumer treatment Tesla got from Washington years ago.
The Alliance for Automotive Innovation opposed the plan, but it passed thanks to the backing of the Washington State Auto Dealers Association.
Their logic? Let those two EV-only manufacturers sell vehicles directly in Washington — as long as policymakers pull up the drawbridge and prevent any other manufacturer from selling direct in the future. Build the wall higher, and the franchise system is safe.
For now, maybe. Forever? That’s harder to say.
Three manufacturers are now permitted to sell directly to consumers in Washington state. Why wouldn’t a Chinese automaker hellbent on selling here try to be the fourth (and fifth and sixth)?
It’s no secret China has a plan to dominate global automaking and dismantle American automotive leadership. They build too many government-subsidized vehicles and have flooded Europe, Mexico and South America to offload product at cut-rate prices.
Right now, the industry in the U.S. has a degree of protection from this because of high tariffs, national security bans on Chinese technology and state laws requiring manufacturers to sell through the franchise system.
Are the first two ― tariffs and national security rules — permanent American policies? They’re certainly appropriate right now given the Chinese Communist Party’s notorious record of anti-competitive trade practices, intellectual property theft and surveillance risk. But permanent? Who can be certain of that?
That leaves state dealer franchise laws as a protective measure against Chinese automakers in the U.S. That is, unless other states follow Washington’s lead or the courts inevitably get involved. That’ll blow a hole in the franchise system big enough for a fleet of Chinese vehicles to drive down our streets one day.
The solution is hiding in plain sight. One set of retail rules that require all manufacturers to sell through franchised dealers — whether they entered the market 100 years ago or five years ago and no matter what kind of powertrain they produce.
Every manufacturer — Tesla, Rivian, Scout, Afeela and legacy automakers — should operate under the same rules.
I took some heat in the pages of Automotive News last year for describing automaker frustration with the reimbursement rates dealers get for warranty work. It’s a cost that’s been going up in recent years.
A real tension, but it pales in comparison to the clear and present threat China poses to the auto industry in the U.S.
Still, it angered some dealers who said they want to hear automakers publicly support the franchise model. We’ve done that in word and deed all over the country — including opposing similar direct-to-consumer proposals in almost 20 states.
Those proposals didn’t pass because we worked side by side with dealer associations in those states to advocate against them. It’s a partnership that works.
By the way, a New Hampshire proposal this year would have permitted all legacy automakers to sell directly to consumers. Automakers still opposed it. That’s what you do when you support the integrity of the franchise system.
But when state dealers, in this case the Washington State Auto Dealers Association, don’t stand up for the system? Unfortunately, you get a result like Washington state.
Automakers and dealers are in this together. We rely on each other to deliver and service great cars and trucks across the country. But the competitiveness of the auto industry and the dealer franchise system will suffer if Chinese automakers are allowed to do in the U.S. what they’re already doing around the world.
We ought to be working together to strengthen and protect the franchise model from current and future challenges.
Top of the list? Preventing Chinese automakers from building and selling inside the U.S.
John Bozzella is CEO of the Alliance for Automotive Innovation.
*Originally appeared in Automotive News (Washington state shows Chinese automakers the path to enter U.S., bypass dealers; March 17, 2026)