Florida limits direct car sales for traditional automakers but makes exceptions for Tesla.

Gov. Ron DeSantis (R-Fla.) recently signed a new law that shakes up the car industry in Florida, with a twist that benefits electric vehicle (EV) makers like Tesla, Lucid, Rivian, and Polestar.

The legislation, set to take effect on July 1, puts restrictions on major car manufacturers, preventing them from selling vehicles directly to consumers if they already have agreements with independent dealerships in the state.

DeSantis approved HB 637 on Tuesday. While similar laws exist in other states, Florida is unique in its provision that benefits specific companies. Tesla, for example, has challenged a ban in Louisiana, calling it “protectionist, anti-competitive, and inefficient.”

The text of Florida’s bill states that car manufacturers or their agents cannot own or operate a dealership if they have existing franchise agreements with independent dealers. However, the law does allow for licenses to be issued to those not prohibited by this section.

This means that legacy automakers cannot sell directly to customers if they already have franchise agreements. On the other hand, Tesla can continue to sell its vehicles directly to buyers without intermediaries, while other EVs, like those from Ford, would be subject to retail pricing from a dealer.

The law also prevents automakers from dictating prices to franchise dealers and requires them to maintain vehicle allocations to dealerships at previous levels. This provision aims to prevent excessive markups by dealerships, as seen in a case where a Ford dealer added a $69,000 markup to an F-150 Lightning.

Unlike other states, Florida’s law stands out because it creates an exception for specific companies. Tesla, for instance, has permission to directly sell its vehicles to customers in Delaware and Michigan.

Critics Say Bill Makes Buying Vehicle ‘Cumbersome’

Critics of the law argue that dealerships introduce unnecessary costs and sales pressure, resulting in additional fees on top of the manufacturer’s suggested retail price.

On the other hand, proponents, such as the Florida Automobile Dealers Association (FADA), believe that dealerships play a crucial role in providing warranty work, service, and customer support, according to Inside EVs. FADA also argues that dealerships foster price competition, prevent monopolies, and simplify the buying process.