Zak Edson: Texas car buying laws are un-Texan

(Zak Edson is vice president of sales and service for Lucid Group.) The Lucid Air sedan is the 2022 Motor Trend Car of the Year. Texans who visit Lucid Group’s new Studio in Plano can admire its lines, ask questions about its performance, or take it for a test drive. The one thing they can’t do is buy it. According to Texas regulators, it’s illegal for automobile manufacturers to sell new cars directly to Texans. That makes no sense. Worse, it hurts competition, reduces consumers’ choices, and drives up costs and inconvenience — outcomes antithetical to Texas’ free-enterprise traditions. It’s time for that to change. Which is why our company is taking action. On Tuesday, Lucid Group filed a lawsuit asking the U.S. District Court for Texas’ Western District to strike down Texas’ prohibition on our ability to sell vehicles through our own dealerships located in the state. Our suit contends that Texas’ law violates the 14th Amendment’s due process and equal protection clauses.

To understand why Lucid is taking Texas to court, it helps to understand the business of selling cars, and why Lucid’s model is different. Traditionally, new motor vehicles in the U.S. have been sold through middlemen, franchised dealers that are independent of the vehicle manufacturer. The pathologies of that sales model are well known: high-pressure sales tactics, price haggling, hidden fees, and upselling. Lucid exists to give customers a different experience. Our company was founded in 2007 to advance the state of the art in electric vehicles. We recognized early the need for a sales model that would emphasize education and transparency for our customers, and would ensure we can act quickly and continuously in response to their feedback. To do this, we have to take full responsibility for every contact our customers have with our brand. There’s no way to do that with a middleman. Even if we wanted to sell our cars through middlemen, it wouldn’t make sense. To justify the large upfront investment to build out dealerships, independent dealers rely on income from sources other than new-car sales, which account for just 12% of a traditional dealership’s average profits. Much of the rest comes from service, parts sales and used-car sales — all of which would be limited because Lucid is a new manufacturer still building market share and has few existing vehicles on the road.