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Tesla, Rivian still face complicated direct sales laws across U.S. states
Executives from both Tesla and Rivian have commented on the decades-long fight to overturn direct vehicle sales bans across many U.S. states, reigniting a long-held conversation in the electric vehicle (EV) community about dealership policy lobbying groups and online sales models.
Tesla has managed to side-step direct sales bans in many states through legal loopholes such as leasing-only models, processing purchases as out-of-state transactions, or simply opening stores in exempted tribal territories where the company’s stores will be exempt from dealership mandates. In other states, the company is still completely prohibited from selling vehicles, such as in Louisiana, where a U.S. appeals court just upheld Tesla’s right to sue the state over the direct-sales ban in August.
In Connecticut last July, Tesla managed to open a store on sovereign Mohegan tribal land, effectively side-stepping the U.S. state’s ability to prohibit direct sales. The Connecticut Automotive Retailers Association (CARA), a dealership lobbying group, immediately spoke out against the decision, though it gained support from Governor Ned Lamont.
Elsewhere, Tesla, Rivian, and many others sporting a direct sales model also face state store limits, and some executives have recently highlighted the decades-long fight to overturn these kinds of laws.
Other states have bans on service centers, storefronts, or both, while some only allow Tesla to sell vehicles online, though they must make deliveries through a service center. The latter includes Texas, where Tesla’s headquarters is located and where it operates a U.S. Gigafactory. As for Rivian, it faces a similar situation through its Seattle retail “Space,” since company representatives are prohibited from sharing specific details on prices or receiving orders.
As such, the state-to-state laws can be difficult for EV companies like Tesla and Rivian to wade through and operate under, so it shouldn’t come as much of a surprise when they point to dealership lobbying practices that keep them in place as being bad—or to their local teams who are working on overdrive.
Rivian CEO on state-to-state dealership laws
In a report published on Thursday, Rivian CEO RJ Scaringe said that dealership franchise laws were “as close as you can get to corruption,” as stated during a discussion with InsideEVs about whether Rivian’s recent Volkswagen partnership could let the startup work through VW dealerships. The report has reignited long-held discussions about states where Tesla, Rivian, and others aren’t allowed to operate—and seemingly due to powerful lobbying from dealership groups.
“Unfortunately, in the United States, it’s not an easy question,” Scaringe said as to the proposition of selling through VW’s dealers. “We have this horrific state-by-state level of rules that are as close as you can get to corruption.
“I think you essentially have, like, lots of dealers have paid for laws that make it really hard for us to interact directly with the consumer,” the Rivian CEO adds.
RELATED: Tesla granted license for direct vehicle sales in Kentucky
Tesla VP of Finance on state-to-state dealership laws
As a follow-up to the story, Tesla VP of Finance Sendil Palani shared his thoughts in a post on Saturday, praising the company’s local teams in states where direct sales are actively banned:
Tesla has been pursuing the direct-to-consumer model for two decades, and it has been an enormous challenge to pursue what we believe is the best model for customers.
I spent a portion of this past week visiting our Northeast region, and was reminded about how these laws are among our most prominent challenge for Sales and Delivery. Local teams make a heroic effort across the entire customer journey: from allowing customers to learn about our product at non-licensed locations while observing restrictions on sales activities, to managing a large flow of deliveries through a small number of licensed locations, to ensuring that we can properly perform vehicle registration paperwork for multiple states and customer circumstances at each licensed location.
Our customers have to make heroic efforts of their own, from traveling long distances to pick up their vehicle to patiently enduring any kinks in the process.
Sadly, this is common throughout much of the country, resulting in higher costs and a worse customer experience for the affected regions.
U.S. states with bans on direct sales models like at Tesla, Rivian
- Alabama (includes service centers)
- Arkansas
- Connecticut (leasing is allowed; tribal land loophole)
- Iowa
- Kansas (includes storefronts)
- Kentucky
- Louisiana (Tesla allowed through special license, “service center” model)
- Nebraska
- New Mexico (includes service centers; tribal land loophole)
- Oklahoma
- South Carolina (includes service centers)
- Texas (Tesla sells through online loophole, “service center” model)
- West Virginia (includes storefronts)
- Wisconsin
U.S. states with store limits on direct sales models like at Tesla, Rivian
- Illinois (limited to 13)
- Maryland (limited to 4)
- Mississippi (limited to 1)
- New Jersey (limited to 4)
- New York (limited to 5)
- North Carolina (limited to 6)
- Ohio (limited to 3)
- Pennsylvania (limited to 5)
- Virginia (limited to 5)
What are your thoughts? Did I miss anything, or do you have a story or opinion to share regarding direct auto sales? Let me know at zach@teslarati.com, find me on X at @zacharyvisconti, or send us tips at tips@teslarati.com.
DOJ echoes Tesla argument in Louisiana direct sales appeal
A Texas man has been arrested and charged with manslaughter after his Tesla crashed into a home last month, striking a woman inside and killing her. The driver, Michael Butler, claimed the vehicle was in self-driving mode, but information from Tesla shows that Butler overrode the system.
Butler was arrested on Wednesday and booked at the Harris County, Texas, jail. He remained in custody through Thursday and Friday; he did not enter a plea, and his next court hearing is scheduled for Monday.
Tesla finally clarifies fatal Texas crash, confirms driver manually overrode acceleration
There are a handful of new clues in the case that could clear Tesla of any wrongdoing, especially as the woman who was killed’s family, the Avilas, filed a wrongful death lawsuit against Tesla and Butler, seeking at least $1 million in damages.
Charging documents from the Harris County prosecutor now show that Butler, who was working DoorDash the evening of the accident, had been using Full Self-Driving mode without incident through the duration of multiple deliveries that evening.
In the moments leading up to the crash, while in FSD and approaching a left turn, Butler pressed the accelerator pedal, overriding FSD’s speed control, and continued to push it until it reached 100 percent. This caused rapid acceleration; the brake pedal was never pressed, and there is no data to show that Butler aimed to turn away from the curb or house.
The charging documents state:
“I noted that the brake pedal was never pressed in the final minute before the crash. I also did not see any data to indicate that the driver attempted to turn away from the curb that he eventually struck. Further, I observed that no mechanical error was detected or recorded by the vehicle before BUTLER and the Tesla struck the curb.”
Additionally, a forensic analysis of Butler’s phone showed that he searched Google around the time of the crash with queries questioning why FSD was “too timid,” “not aggressive enough,” and even searched, “FSD is not aggressive enough for city driving.”
The documents outlined this:
“Investigator Veal also informed me that he had received BUTLER’s cell phone from Deputy Amad and that HDAO digital forensics team had completed a data extraction and download of the phone. Multiple Google searches related to Tesla had been made from BUTLER’s phone in the months leading up the crash. I noted multiple searches in May of 2026 indicating an apparent frustration with Tesla’s FSD mode, including the following searches: “Tesla fsd not aggressive enough 2026 model,” “Tesla fsd not [sic) aggressive enough 2026,” “FSD is not aggressive enough for city driving,” and “tesla fsd too timid.”‘
Tesla had claimed just after the crash that its internal data showed Butler had overridden the system’s speed control and pressed the accelerator completely, causing the vehicle to travel at an excessive rate of speed. Eventually, the car slammed into Avila’s house, killing her.
Butler has now been formally charged with Manslaughter, a felony.
Tesla shocked with its quarterly delivery report yesterday by reporting it delivered 480,126 vehicles in the second quarter of 2026, a 25 percent year-over-year jump that crushed Wall Street estimates of roughly 400,000–408,000 units. Production reached 451,758, with Model 3 and Model Y accounting for the vast majority.
The result ended two years of annual delivery declines and drew down inventory, signaling demand that outpaced earlier production.
Tesla bears had long warned that the expiration of the U.S. federal EV tax credit would hammer demand. Without the $7,500 incentive, they argued, American buyers would balk at higher effective prices, leading to a sharp slowdown.
Will Tesla thrive without the EV tax credit? Five reasons why they might
That narrative has not played out as predicted. While U.S. EV sales faced broader headwinds, Tesla’s global numbers held firm, underscoring the company’s ability to offset domestic pressure through other levers.
There are several plausible factors that explain Tesla’s strength during this quarter. Let’s take a look at them:
Rising Gas Prices
Rising gas prices provided a powerful tailwind, especially in the U.S.
Geopolitical tensions tied to the Iran conflict pushed fuel costs higher earlier in the year, amplifying the lifetime savings of electric vehicles. Even as oil prices later moderated, the psychological and financial impact lingered, encouraging fleet operators and private buyers to accelerate EV purchases. European sales rebounded sharply, helping drive the quarter’s outperformance.
Full Self-Driving Adoption
Advances in Full Self-Driving (FSD) supervised software also appear to have boosted appeal. Tesla expanded FSD availability in select European markets and continued refining the system.
No complaints from me because I finally got to enjoy this drive on FSD; I usually like to manually drive down this mountain https://t.co/RBFniRPSR0 pic.twitter.com/XQ5sOpN1Yg
— TESLARATI (@Teslarati) June 26, 2026
For tech-oriented buyers, the promise of future autonomy and enhanced driver-assistance features adds perceived value beyond the car itself. This differentiation helps Tesla stand out in a crowded market where competitors focus primarily on hardware and basic range.
Pricing Strategy, Affordable Configurations
Tesla’s offerings and its pricing strategy during Q2 further stimulated demand. Tesla introduced lower-cost versions of the Model 3 and Model Y, widening accessibility without sacrificing core margins.
These moves countered affordability concerns and attracted buyers who had been waiting on the sidelines. Combined with attractive financing and leasing options, the pricing strategy converted interest into actual orders more effectively than many analysts expected.
Broad European Recovery
Supported by government incentives, corporate fleet electrification, and easing political headwinds around CEO Elon Musk, Tesla was supplied additional momentum through stronger registration numbers throughout Europe.
Strong exports from the Shanghai Gigafactory and a production ramp at Giga Berlin ensured supply met this resurgent demand. Corporate buyers, in particular, accelerated transitions to EVs to meet sustainability targets, providing a steady volume base.
These elements created a virtuous cycle that delivered the strong deliveries report. While bears correctly flagged the loss of the U.S. tax credit as a risk, Tesla’s diversified playbook demonstrated that it could remain resilient against those headwinds. The Q2 beat suggests the company remains adept at navigating shifting market conditions, even as competition intensifies.
A Tesla Semi was involved in a fatal collision on U.S. Highway 50 in Dayton, Nevada, on Sunday, June 28, 2026, marking the first known fatal crash involving the electric Class 8 truck. The incident occurred around 7:20 a.m. at the intersection with Traditions Parkway, approximately 40 miles east of Reno and close to Tesla’s Gigafactory Nevada.
According to the Lyon County Sheriff’s Office and the Nevada State Police Highway Patrol, a semi-truck struck two passenger vehicles stopped at a traffic signal. The truck hit the vehicles from behind. Two people were pronounced dead at the scene, and a third person suffered life-threatening injuries and was flown to a hospital, Forbes reported.
Preliminary statements gathered at the scene by the Lyon County Sheriff’s Office suggested the truck driver may have fallen asleep at the wheel. However, the Nevada Highway Patrol, which is leading the investigation, stated that the official cause has not yet been determined.
Additional information is expected to be released early the following week. The truck was seized for evidence as part of the ongoing probe.
Responders at the scene included deputies from the Lyon County Sheriff’s Office, personnel from the Nevada Highway Patrol, Central Lyon County Fire Department, and the Nevada Department of Transportation. The crash led to the temporary closure of U.S. 50 in both directions.
The Tesla Semi is Tesla’s battery-electric heavy-duty truck, produced at the nearby Gigafactory in Nevada. Authorities initially described the vehicle as a semi-truck; its make was subsequently confirmed through reporting and scene identification; an interesting bit of information here, as the Semi is not yet available publicly and many do not know that Tesla builds electric trucks.
The investigation remains active, with no further official details on contributing factors or vehicle systems released as of early July 2026.
This incident highlights ongoing scrutiny of commercial vehicle safety on Nevada highways, particularly involving fatigue. Law enforcement continues to gather evidence and witness statements.
Texas man charged in fatal Tesla crash where he blamed Autopilot
Tesla’s strong Q2 deliveries: Four key drivers behind the surprise
