In 2020, Colorado became a leader in consumer choice in the automotive sector by ensuring all residents have the choice to buy electric vehicles (EVs) directly from a manufacturer. Unfortunately, legislators are considering passing a measure to take the state back in time and restrict consumer choice.

Gov. Jared Polis and the legislature took a bold step five years ago when they passed a law allowing manufacturers to sell directly to consumers if they produce only EVs and don’t have franchise dealers in the state. This legislation, in addition to accelerating transportation electrification and enhancing American economic and national security, supported consumer choice.

According to data from Atlas Public Policy, more than 150,000 EVs have been sold in Colorado since this law took effect. In December, Polis announced Colorado led the nation in EV sales in the third quarter of 2024, with more than one in four new vehicles sold being electric. These sales have brought in millions of dollars of tax revenue to the state and created jobs at dealerships, service centers and across the auto supply chain.

However, Senate Bill 25-160, which recently passed the Colorado Senate, would create a new restriction by blocking direct sales from EV manufacturers defined as an “affiliate.” In this case, the definition of affiliate attempts to legally tie independent EV manufacturers with financial investments from legacy automakers to dealer networks they have no relationships with. If legislators capitulate to large dealership groups by enacting this bill into law, progress toward a secure and prosperous electric transportation future will be stifled, and Coloradans will have fewer vehicle options.

As a result, many consumers may be forced to travel out of state to buy or service their EVs. These Coloradans will pay taxes in other states instead, taking away much-needed revenue that could have funded Colorado’s priorities. As Colorado faces a likely multi-year, billion-dollar-or-more budget deficit, legislators should enact policy to keep tax revenue in the state. Additionally, with automotive sales and service being a top consumer complaint year after year in Colorado, lawmakers should work to protect consumer choice by ensuring their constituents have service options available in their local communities.

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In defense of anti-consumer legislation like this, some express concern direct-to-consumer sales will harm the viability of franchise dealerships. Though it is true a healthy dealership sector is important to ensuring consumer choice, we actually don’t have to choose between the two.

Laws restricting the freedom to buy directly from a vehicle manufacturer were first enacted in the 1940s to protect dealerships at a time when three large domestic vehicle manufacturers dominated the U.S. market. But over the past 80 years, things have changed. A wide variety of manufacturers from both the U.S. and abroad now compete in the U.S. market, and many car dealerships have been transformed from neighborhood mom-and-pop shops to multi-billion-dollar companies that do not need the same protections to remain successful. Dealerships across the United States are increasingly consolidating under publicly traded companies and have investment structures similar to automotive manufacturing groups.

Furthermore, the data indicates franchise dealerships in states like Colorado actually benefit from additional market competition.

According to data from the National Automobile Dealers Association, franchise dealers perform better in states like Colorado that have freedom-to-buy laws. In states that allow direct sales from at least one EV manufacturer, franchise dealerships saw their sales revenue increase nearly 80% between 2012 and 2021. During that same time, dealerships in states that do not allow direct sales only saw a 61% increase in sales revenue.

Dealership employment saw a similar trend during the same period; states that allow direct sales saw an almost 11% increase in employment, whereas states that don’t saw just more than a 6.5% increase.

Colorado leaders should reject anti-consumer legislation and maintain the freedoms that have helped make the state a national leader in EV adoption and economic growth during the last five years.

Bradly Nelson is an EV industry professional who previously worked for the Electrification Coalition, a national nonprofit that drives the policies and actions to accelerate electrification of the U.S. transportation sector.