Colorado recently approved Scout Motors, the Volkswagen Group–backed electric vehicle startup, to operate as a licensed dealer in the state, allowing the company to sell new, used, and wholesale vehicles directly to consumers. The Colorado Motor Vehicle Dealer Board voted 6–2 in favor of granting the license, concluding that Scout is not a “same-line” manufacturer as VW, Audi, or Porsche and therefore qualifies under the state’s statutory exemptions for brands without existing franchised dealers.

Under Colorado law (C.R.S. § 44‑20‑126(1)), the general rule is clear:

“No manufacturer shall own, operate, or control any motor vehicle dealer or used motor vehicle dealer in Colorado.”

This prohibition protects franchised dealerships from manufacturer control. However, the statute provides an EV-only exemption for new electric vehicle brands, codified at C.R.S. § 44‑20‑126(2)(g):

“Ownership, operation, or control of one or more motor vehicle dealers if the manufacturer manufactures only electric vehicles and has no franchised dealers of the same line-make in this state.”

Regulators concluded that Scout qualifies for this exemption, allowing the company to operate as a direct-to-consumer dealer despite its financial backing from Volkswagen Group.

The Colorado Motor Vehicle Dealer Board is composed of nine members: three new-vehicle dealers, three used-vehicle dealers, and three members of the public. The Board reviews dealer applications, ensures compliance with state franchise statutes, and balances the interests of both dealers and consumers. In this case, a majority of board members determined that Scout met the statutory criteria to operate as an independent EV dealer.

The Board’s decision prompted a lawsuit filed by 10 Volkswagen, Audi, and Porsche dealerships in Denver District Court. The dealers argue that the Board misinterpreted Colorado’s franchise statutes and the EV-only exemption. Specifically, they contend that Scout is effectively affiliated with Volkswagen Group and that its planned extended-range electric vehicles — which include a gasoline generator — should not qualify as pure EVs under the statute. The dealerships are seeking a court ruling to overturn the Board’s approval and block enforcement of the license.

MADA will continue to track the case and provide updates to members as it progresses.