South Carolina bill that could let Scout, other EV brands sell direct to consumer stalls
The labor, commerce and industry subcommittee in the state's House of Representatives held an hourlong hearing on the South Carolina Consumer Freedom Act on Feb. 12.
South Carolina law currently prohibits direct-to-consumer vehicle sales. The bill, introduced Jan. 16 in the state's House of Representatives, is designed to apply to manufacturers that haven't previously held a franchise dealership agreement.
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Because the committee adjourned debate, the bill has been put on ice, according to local media reports. The legislative session began Jan. 14 and is scheduled to run through May 8.
South Carolina Gov. Henry McMaster, a Republican, told local media on Feb. 3 that he would sign the bill if it reached his desk.
South Carolina State Rep. Mark Smith, a Republican and the bill's lead sponsor, told the South Carolina Daily Gazette after the hearing that it's 'very clear a lot of work needs to be done on this for both sides.'
Smith did not return phone calls seeking comment from Automotive News. Scout did not immediately respond to a request for comment.
Supporters and opponents of the bill voiced frustration during the hearing.
'Nobody is asking to put franchise dealers out of business,' said Cody Thacker, Scout's vice president of growth. 'We're simply asking South Carolina to remove an antiquated regulation that prevents consumers from making their own economic decisions.'
E. Sims Floyd Jr., executive vice president of the South Carolina Automobile Dealers Association, said the South Carolina Consumer Freedom Act is not a freedom of choice bill. Instead, Floyd said, it 'is a serious attempt by Volkswagen to do away with the franchise law.'
Three dealers spoke against the bill during the hearing including Marc White, who owns Audi Greenville and Steve White Volkswagen in Greenville, S.C.
When Scout first revealed plans to build a manufacturing plant in Blythewood, S.C., in March 2023, White emailed Thacker, a former contact at Audi of America.
White told Thacker he would be interested in becoming a Scout dealer in Greenville, going so far as to note that his company had acquired land off of Interstate 85 suitable for a dealership.
White said Thacker emailed him a nice message back but said Scout was early in the process of figuring out its retail plans. Thacker, White recalled, said he would keep the dealer in mind.
'I never heard back from Cody about opening that Scout point because Volkswagen had other plans,' White said.
Scout in October unveiled prototypes of two vehicles, the Traveler SUV and Terra pickup, and said it would pursue direct-to-consumer sales.
White took issue with VW Group's decision to finally bring a pickup to the U.S. market but only via Scout and not through its existing dealer network. White said VW dealers have been asking for a pickup for years and have watched other import brands introduce pickups in the U.S.
'It undercuts the investments that have been made by us dealer partners of Volkswagen,' White said of Scout's retail plans. 'That doesn't sit well with me.'
White said he would still build a Scout facility on his property and retail and service those vehicles at his expense.
'It's really a shame the position that Scout has put all of us in, and I hope this committee will ensure this bill will not move forward,' White said.
Zach Khan, senior managing policy adviser at Tesla, spoke in support of the bill and said the EV brand has sold more than 13,000 vehicles to South Carolina residents even though buyers have to travel out of state to take delivery of a vehicle.
'Tesla wants to be a much bigger part of the impressive South Carolina economic success story, but we have to be welcomed in the state in order to do so,' Khan said.
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