Scout has been issued a cease-and-desist letter from the California New Car Dealers Association ordering the company to stop taking deposits on its EVs, citing a law that makes it illegal for automakers to compete directly with their "existing" dealership franchises.

The key word there is “existing.” 

This is why Tesla is allowed to sell vehicles directly to consumers in California; it had no established franchises with which its direct sales model could have possibly competed.

 But while Scout Motors may pitch itself as an independent startup, CNCDA is pointing to the conspicuously large figure lurking behind the curtain: Volkswagen.

Scout was (of course) aware of the law, and even lobbied for language that would carve out room for it to establish its own dealership franchises (separate from other VW Group brands).

By bypassing that entirely in favor of direct sales, CNCDA argues, Scout is engaging in misconduct.

https://www.thedrive.com/news/dealers-move-to-block-scouts-unlawful-direct-sales-plan-that-cuts-them-out-entirely