Lucid Is Squaring Up to Do Battle With Texas Over Direct Sales

With hundreds of EV models looming, more and more manufacturers are starting to realize that the dealership model sucks for car buying. While legacy automakers can’t do much about it because of outdated franchise laws (which have dealers scared), startups have a better chance at making it work. Lucid is the latest startup attempting to get direct sales off the ground. Business Insider reports Lucid is gearing up for a legal battle with Texas DMV over direct sales.

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Lucid’s lawsuit blatantly calls out Texas for hampering competition. In the federal lawsuit, Lucid accuses Texas of “economic protectionism.” The company claims Texas being against direct sales affects its ability to sell vehicles in the state. The company essentially said it can’t sell its vehicles with the traditional dealership business model.

“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.”

The company went even further and seemed to call out Texas for protecting dealerships against the competition of the direct sales model. “This prohibition is irrational in the extreme: It hurts competition, reduces consumer choice, and drives up costs and inconvenience, with no countervailing benefit whatsoever.”

Lucid’s suit comes as the startup is attempting to grow its business in the face of a $670 million loss in Q3 of 2022. It remains to be seen if Lucid will be successful in trying to get direct sales in Texas. One thing is for sure: whatever happens, it’ll put startups much closer on the road to direct sales than legacy automakers.