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Lucid sues Texas in attempt to overturn franchise laws – Automotive News

by Nov 7, 2022Blog0 comments

Lucid Group Inc. filed a federal lawsuit in Texas accusing the state’s rules on auto dealerships of “economic protectionism” that hurt the company’s ability to sell its electric vehicles there.
In a suit filed in Austin, Lucid said the state is acting anti-competitively in forcing companies to sell their products through established dealerships.
The Newark, Calif.-based company, which markets its vehicles online and through a network of Lucid-owned Studios, maintains that its direct sales and in-house after-sales service are so closely tied that using an independent franchised dealer would not be economically viable and would harm 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,” according to the plaintiff’s statement.
No one responded to an email request for comment at Lucid.
The case comes as Lucid struggles to develop its business selling its high-end plug-in Air sedan, which currently retails for more than $100,000. The company has cut production targets twice this year, claiming more than 37,000 reservations for the sedan in the second quarter and delivering just 1,398 vehicles in the third.
Lucid is testing out a similar legal strategy to one tried largely successfully by Tesla Inc. in Michigan. After more than three years of litigation, the parties settled and Michigan consumers can now buy Tesla vehicles and get them serviced there.
Austin, Texas-based Tesla faces similar challenges in its home state, and is unable to sell directly to Texans.
The case is Lucid Group USA Inc. vs Monique Johnston et al., 1:22-cv-1116, U.S. District Court, Western District of Texas (Austin division).
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