Photo: Lucid
Lucid filed a federal lawsuit in Texas, accusing the state’s rules on auto dealerships of being tantamount to “economic protectionism,” preventing the company from selling its electric vehicles in the state.
Once considered a strength, dealer networks have become a liability for carmakers in the past years. This has been exposed by successful EV startups like Tesla, which sell their vehicles directly to consumers in many U.S. states. However, some states don’t allow this, mandating that cars be sold only via franchised dealers. Texas is one of them, and Lucid has made it a goal to change that.
In a lawsuit filed in Austin, Lucid argued that forcing companies to sell their vehicles through established dealerships represents anti-competitive practices. Like other startups selling EVs, including Tesla and Rivian, Lucid markets its cars online. More than that, the startup uses a direct-sales model and in-house after-sales service. The lawsuit argues that all services are closely interconnected and that using an independent franchised dealer network would not be economically viable, harming the business.
“That tight and fast feedback loop, and the benefits it brings to Lucid’s customers, would be impossible with third-party dealers interposed between Lucid and consumers,” writes a plaintiff’s statement cited by Automotive News.
Lucid is not the only company that started fighting franchise laws in several U.S. states. Tesla has done so for many years and has had success in some cases. In fact, Lucid is following Tesla’s successful recipe in Michigan. After more than three years of litigation, the parties settled, and Tesla can now sell its vehicles directly and offer service to Michigan customers without employing an independent dealership. Nevertheless, Tesla is still unable to sell directly to customers in its own state Texas.
Lucid has faced challenges in ramping up production of its Air Sedan, which currently retails for more than $100,000. Although the company claimed more than 37,000 reservations in the second quarter, it only delivered 1,398 units in Q3. It’s unclear whether a favorable verdict in Texas would help Lucid sell more cars. But surely, Tesla would be the main beneficiary of such a decision.
In a lawsuit filed in Austin, Lucid argued that forcing companies to sell their vehicles through established dealerships represents anti-competitive practices. Like other startups selling EVs, including Tesla and Rivian, Lucid markets its cars online. More than that, the startup uses a direct-sales model and in-house after-sales service. The lawsuit argues that all services are closely interconnected and that using an independent franchised dealer network would not be economically viable, harming the business.
“That tight and fast feedback loop, and the benefits it brings to Lucid’s customers, would be impossible with third-party dealers interposed between Lucid and consumers,” writes a plaintiff’s statement cited by Automotive News.
Lucid is not the only company that started fighting franchise laws in several U.S. states. Tesla has done so for many years and has had success in some cases. In fact, Lucid is following Tesla’s successful recipe in Michigan. After more than three years of litigation, the parties settled, and Tesla can now sell its vehicles directly and offer service to Michigan customers without employing an independent dealership. Nevertheless, Tesla is still unable to sell directly to customers in its own state Texas.
Lucid has faced challenges in ramping up production of its Air Sedan, which currently retails for more than $100,000. Although the company claimed more than 37,000 reservations in the second quarter, it only delivered 1,398 units in Q3. It’s unclear whether a favorable verdict in Texas would help Lucid sell more cars. But surely, Tesla would be the main beneficiary of such a decision.
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