South Carolina legislators have postponed discussion on a bill that would enable consumers to purchase vehicles directly from automakers like Rivian, Scout Motors, and Tesla in South Carolina, bypassing the need for franchise dealerships.

“I think the message was a pretty loud and clear message from the committee members, these stakeholders need to come together and work out these differences and find some middle ground where they can they can both coexist in that space, because there was no appetite to change the laws as they are currently,” said state Rep. Mark Smith, R-Dorchester, who chaired the House panel and was one of the bill’s co-sponsors.

A local representative informed MyrtleBeachSC News that the state was “done with Scout Motors!”

Understanding the Impact of Scout Motors on the South Carolina Automotive Market

Scout Motors intends to persist in pushing for a change despite the decision made by House lawmakers. The company does not intend to utilize dealerships to sell its vehicles once production begins at the Blythewood assembly line in 2027. The recent hearing highlighted the clash between Scout Motors and the powerful auto dealership lobby. Scout contended that the proposed bill does not exclusively favor their company, which is constructing a $2 billion plant in Blythewood, pointing out potential benefits for electric vehicle manufacturers like Tesla and Rivian.

“There are no gimmicks, no endless negotiation with several trips to speak to their manager or intense pressure to leave with a new car,” said Zach Kahn, a senior managing policy advisor at Tesla, which supports the change. “Instead, we spend time educating customers on our new technology, answering questions and preparing them for EV ownership. We offer uniform, transparent pricing, and do not look at our service operations as a profit center.”

Scout intends to establish an experience center at its Blythewood facility and set up outlets nationwide for vehicle sales and services. Dealers claim they never received government financial aid to expand their operations, whereas Scout Motors obtained $1.3 billion in incentives to establish its $2 billion plant in Scout Carolina.

Cody Thacker, the vice president of growth at Scout, stated that the legislation does not impact current franchise dealerships. He also pointed out that in states permitting direct sales, franchise dealerships continue to be successful.

“We’re also here in the South Carolina community, paying taxes, sending our kids to Little League and participating in charitable causes,” Thacker said.

“Thousands of us are your neighbors, too, just like franchise dealers.” Thacker also pointed to a 2000 state attorney general’s opinion that said a bill that barred automobile manufacturers from opening retail locations in South Carolina was unconstitutional. “After this legislature passed a dealer bill deemed patently unconstitutional in 2000, the dealer lobby has continued to pursue more and more protectionist rules to shout out competition,” Thacker said,

The Attorney General’s office published an opinion on Friday stating that the existing laws are constitutional.

Volkswagen, which is backing the Scout Motors venture, also has dealerships in South Carolina, as well other brands it owns such as Audi and Porsche.

“Scout wants to come in and circumvent our state franchise laws, but yet their website didn’t say anything about services provided. How are they going to take care of their customers versus a franchise dealer that’s in almost every community in the state,” said Claude Burns, who owns Chevrolet, Cadillac and Ford dealerships in York County.

The dealers are displeased that Scout got $1.3 billion in incentives while not receiving financial aid from the state.

“Free market is not free cash, despite popular opinion, Volkswagen received $1.3 billion incentives and loans to be a manufacturer in South Carolina and build cars, not to then become a retailer and compete against their own retail dealer network,” said Sims Floyd, the executive vice president for the South Carolina Automobile Dealers Association.

Scout contends that the motivations behind constructing its Blythewood facility were unrelated to the decision to engage in direct sales.

Incentives from the state for car manufacturers are common, with Isuzu investing $280 million to establish a factory in Greenville as announced by the governor’s office on Wednesday. In support of the project, the state’s Coordinating Council for Economic Development granted job development credits and allocated a $7 million grant to Greenville County.

“State incentives for Scout Motors and the liberty of citizens are unrelated,” Thacker said.

“Let’s be fair. It’s not fair for us to give that kind of money and hey, we’re going to boot our dealers out,” said state Rep. Carl Anderson, D-Georgetown. “Our dealers ought to have the opportunity of being here and staying here.”