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InMotion: Lucid Joins Assault on Direct-Sales Bans

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In our inaugural InMotion newsletter published in September, we wrote about Tesla’s recent lawsuit seeking to free itself of Louisiana’s direct sale prohibitions (click here to view). On November 1, 2022, Lucid Group USA, Inc. (“Lucid”) launched a similar bid seeking to have the Texas direct-sales prohibition ruled unconstitutional and permanently enjoined. See Lucid Group USA, Inc. v. Monique Johnston et al., Case No. 1:22-cv-1116 (W.D. Texas). 

Background

Lucid is an electric vehicle manufacturer that began delivery of its first vehicle, the Lucid Air, in 2021.[1] The Lucid Air is a luxury EV sedan that ranges in price from $87,400-$242,000.[2] Lucid sells its products without a franchised dealer network.[3] Rather, it employs a direct-sales model that it claims is incompatible with independent dealer distribution.[4]

Lucid operates a warranty and repair service facility in Houston, Texas, and it plans to open “Studios” elsewhere in Texas.[5] But to purchase a Lucid vehicle, Texas residents must order the vehicle from out-of-state Lucid-owned Studios and have the vehicle delivered in Texas.[6] 

Lucid operates in this manner because Texas law prohibits manufacturers from obtaining a license to sell motor vehicles from a physical location in Texas.[7]

Lucid’s Complaint and Motion for Summary Judgment

In its two-count complaint, Lucid argues Texas law is unconstitutional for the following reasons:

Contemporaneous with the filing of the complaint, Lucid also filed for a motion for summary judgment for which no briefing schedule has yet been set. 

Outstanding Questions

Lucid’s lawsuit raises at least three questions:

We Can Help You

BFKN’s Motor Vehicle Group will monitor this lawsuit and will provide updates as appropriate. In the meantime, if you have any questions regarding this lawsuit or other manufacturer/motor vehicle dealer issues, please contact us.


[1] (See Complt. at ¶ 13.)

[2] https://www.lucidmotors.com/stories/update-lucid-air-pricing (last visited November 28, 2022)

[3] (See Complt. at ¶ 20.)

[4] (See Complt. at ¶ 27.)

[5] (See Complt. at ¶ 29.)

[6] (See Complt. at ¶ 30.)

[7] (See Complt. at ¶ 36.)

[8] (See Complt. at ¶¶ 53-59.)

[9] (See Complt. at ¶¶ 60-66.)

Motor Vehicle Group

BFKN’s Motor Vehicle Group works with automotive, truck, and motorcycle manufacturers across the country and around the world to implement market representation and development initiatives, litigate protests and lawsuits, and develop effective dealer agreements, standards, and policies. Our attorneys are knowledgeable and creative strategic partners. Whether litigating, counseling, or negotiating transactions on behalf of our clients, we bring to the table extensive in-depth knowledge of the motor vehicle industry and exceptional legal ability, a combination that uniquely positions us to help our clients efficiently and effectively solve difficult problems and achieve their business objectives.

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