Lucid Loses Texas Direct-Sales Appeal — Texans Can Still Buy From Out of State

The Fifth Circuit has affirmed the judgment against Lucid Group USA’s constitutional challenge to Texas’s manufacturer-dealer restriction, leaving the existing limit on Lucid’s in-state direct-sales structure in place. The court released its published opinion on September 4, 2026, rejecting Lucid’s as-applied Equal Protection and substantive Due Process claims.¹²

That does not mean Texas residents are barred from buying Lucid vehicles. In the district-court record, Lucid said Texas permits it to sell new vehicles to Texans from out of state while allowing the company to service vehicles, operate galleries and offer demonstration drives in Texas; the challenged restriction prevents Lucid from operating its own Texas dealership to sell its cars there.³

The distinction matters because the appellate ruling did not create a new Texas ban. It affirmed the lower-court judgment in a dispute over a restriction that was already being applied to Lucid. The Fifth Circuit opinion says the Texas Department of Motor Vehicles notified Lucid in 2021 that it could not sell vehicles at its Plano studio because of the state’s manufacturer-dealer prohibition.²

Why Lucid lost the appeal

Lucid challenged the Texas restriction as applied to its business under the Fourteenth Amendment’s Equal Protection and Due Process Clauses. The Fifth Circuit held that its earlier decisions — including cases involving Ford, International Truck and Tesla — controlled the rational-basis analysis and required affirmance of the district court’s judgment.²

The opinion describes Texas Occupations Code § 2301.476 as barring a vehicle manufacturer or its affiliate from owning, operating, controlling or acting as the dealer for the same type of vehicle it manufactures. Under the court’s description of the statute, direct sales to Texas consumers run through independent dealers acting as manufacturer franchisees.²

Lucid’s current public site still lists its Legacy West studio in Plano and offers links for available vehicles and demo drives.⁴ That page establishes that the studio remains open as a Lucid location; it does not establish where a legally binding vehicle sale is completed or what transaction steps employees may perform in Texas.

A unanimous result with two skeptical concurrences

The panel’s result was unanimous, but two judges wrote separate concurrences that questioned how comfortably the court’s existing precedent fits Lucid’s situation.²

One concurrence expressed doubts about whether the Fifth Circuit’s 2024 Tesla decision should foreclose Lucid’s as-applied challenge and questioned the rationality of applying the rule to relatively new market entrants. The other said it had serious reservations about applying the Tesla precedent to Lucid. Both judges nevertheless agreed that existing circuit precedent controlled the case and joined the judgment affirming the district court.²

Those concurrences are not dissents, and they do not change the legal result. They instead expose the tension inside the ruling: Lucid lost under binding Fifth Circuit precedent even though two members of the panel separately questioned how well that precedent maps onto a non-franchised EV manufacturer.²

For Texas buyers, the immediate consequence is narrower than a statewide Lucid sales ban. The appellate judgment leaves the challenged restriction on Lucid’s own in-state dealership/direct-sale model in place, while the district-court record describes out-of-state sales to Texas customers as permitted.²³

Sources

Footnotes

1. Fifth Circuit Opinions — latest opinions, September 4, 2026 — U.S. Court of Appeals for the Fifth Circuit. https://www.ca5.uscourts.gov/opinions Establishes that No. 25-50319, Lucid Group USA v. Johnston, was released as a published opinion on September 4, 2026. ↩

2. Lucid Group USA v. Johnston, No. 25-50319 — U.S. Court of Appeals for the Fifth Circuit opinion, republished by FindLaw, September 4, 2026. https://caselaw.findlaw.com/court/us-5th-circuit/378725.html Establishes the appellate holding, statutory description, 2021 Texas DMV notice, controlling-precedent analysis and the two concurring opinions. The Fifth Circuit is the factual originator; FindLaw is the public republication inspected by the newsroom. ↩ ↩² ↩³ ↩⁴ ↩⁵ ↩⁶ ↩⁷ ↩⁸

3. Lucid Group USA, Inc. v. Johnston et al, Western District of Texas record — public court record reproduced by Justia. https://law.justia.com/cases/federal/district-courts/texas/txwdce/1%3A2022cv01116/1194557/92/ Establishes the litigation record’s distinction between the challenged Texas dealership restriction and activities Lucid said Texas permits, including selling new vehicles to Texans from out of state. Some descriptions of practical effects reflect Lucid’s litigation position and are attributed accordingly. ↩ ↩²

4. Legacy West — Lucid Motors. https://lucidmotors.com/locations/studios/legacy-west Current company location page establishing that Lucid lists its Plano studio and offers available-vehicle browsing and demo-drive links. It does not establish the legal location or mechanics of a vehicle sale. ↩