Electric vehicles (EVs) represent a radical innovation in the automobile industry. However, franchised dealers are generally reluctant to invest in the upgrades required to sell and service EVs, hindering the diffusion in the market. We examined the effect of company-owned stores—as a means for traditional car manufacturers to address this channel conflict with their franchised dealers—in accelerating the diffusion of EVs. We used internal data from a leading automaker in China to analyze the effect of company-owned stores on EV sales in the city markets served by the automaker’s franchised dealers. Our analysis showed that the entry of company-owned stores accelerated the diffusion of EVs in these cities. This effect occurred only in cities with high EV readiness, measured by the cumulative number of EV users and the number of dealers in a city. Our results also highlight how important it is for companies to work with their franchised dealers, as most of the increase in EV sales that followed the entry of the company-owned stores was realized through the dealers. Meantime, the entry of the company-owned stores resulted in a major disruption for the dealers by causing a substantial drop in their sales of hybrid vehicles and a significant drop in the prices of the conventional vehicles sold. Furthermore, the entry of the company-owned stores spurred the entry of other franchised dealers into the city. Our results provide timely evidence to the ongoing debate regarding the legal restrictions on the manufacturer’s ownership of retail operations in selling EVs.