US Supreme Court Declines to Take on Major Car Dealers’ Case

United States Supreme Court Justices pose for their official portrait at the Supreme Court in Washington on Oct. 7, 2022. Alex Wong/Getty Images

The U.S. Supreme Court declined to take up a case that challenged a Minnesota law that would mandate auto dealers to offer more hybrid and electric vehicles.

The high court did not provide an explanation for declining the case on Monday. No justices offered a dissent.

The Minnesota Automobile Dealers Association (MADA) challenged the emissions law, known as the “clean car” rules, after they were adopted in 2021 by the Minnesota Pollution Control Agency at the request of Gov. Tim Walz, a Democrat. The emissions standards are slated to go into effect in 2024 for 2025 model-year vehicles.

MADA has argued in court filings that the changes will force dealers to sell more electric vehicles than customers actually want, forcing prices to go higher. They argued that the rule is effectively government overreach and asked the high court to scrap the mandate, coming after the Minnesota Court of Appeals in January upheld the law.

“Dealers may only purchase vehicles based on the fleets which manufacturers are allowed to offer, which will contain far more [electric vehicles] than customers in Minnesota demand,” said a court filing from the group, adding: “Because of the early-action credit mechanism and its coercive effect, dealers are immediately faced with vehicle fleet and engine options limited based on the requirements of the Rules.”

In 2021, a federal judge dismissed a lawsuit from MADA and said that the dealers couldn’t claim they were injured because the rule hasn’t yet been adopted.

The group’s president, Scott Lambert, told media outlets that he’s “disappointed” about the ruling, saying that prices will only increase.

“We believe using California’s rules is not a good fit for Minnesota,” Mr. Lambert said in a statement, referring to emissions standards passed by the Golden State over the years. “Minnesota dealers are happy to sell customers electric vehicles if those customers choose to purchase them. But we are not in favor of a mandate that requires us to stock vehicles that have very little demand.”

Environmentalists told the Minneapolis Star-Tribune newspaper that they’re happy with the Supreme Court’s decision not to take up the case.

“Clean transportation is not only important for our health, but it’s necessary for our economy,” said J. Drake Hamilton, with the nonprofit Fresh Energy. “Transitioning to a zero emissions vehicle fleet will provide good paying jobs and save consumers money at the pump.”

With the rules, Minnesota is one of many Democrat-led states that have pushed for more stringent rules designed to phase out internal combustion engine vehicles, which comprise the vast majority of vehicles on the road in the United States. The Biden administration, too, has set a goal for having electric vehicles comprise half of new car sales by the year 2030, while it has proposed $5 billion to build infrastructure around charging stations for EVs.

EV Push

Total EV sales for the third quarter rose nearly 50 percent from a year ago, and accounted for a record 7.9 percent of total industry sales, a recent Cox Automotive report showed. “Higher inventory levels, more product availability, and downward pricing pressure have helped spur continued linear growth of EV sales in the U.S. market,” Cox said.

However, a July Axios report found that a number of U.S. car dealers cannot sell EVs and many dealership owners don’t want them anymore. In July, a separate report, citing dealership owners, made a similar claim about EVs.

An electric car at a Canadian Tire charging station in Scarborough, Ont., on June 14, 2023. The Canadian Press/Doug Ives

“We have turned away EV inventory,” Scott Kunes, the chief operating officer of Kunes Auto and RV Group in the Midwest, told Business Insider. “We need to ensure that we have a good turn on it.”

He added that automakers are “asking us to make a large investment,” adding that “we’re just wanting to see some return on that investment.”

“It’s not just that these vehicles are expensive ... which they are. We’re talking about a much more nuanced lifestyle change,” Sam Fiorani, the vice president of global vehicle forecasting at AutoForecast Solutions, said in the Insider report. The EV ownership experience is different, which includes charging and anxiety over the vehicle’s range.

In late September, a Cox Automotive analyst said that EV supply is far outpacing demand.

“The demand is not keeping up with production, which is the opposite story of a year ago,” Cox Automotive executive analyst Michelle Krebs said. “We call it the ‘Field of Dreams’ moment. Automakers are building more, but not enough consumers have come to the field.”

Reuters contributed to this report.