Lucidity About Franchisees

Lucid Group USA v. Johnston held that Texas’s prohibition on vehicle manufacturers selling directly to consumers does not violate the Equal Protection or Due Process Clauses of the Fourteenth Amendment.

Lucid makes electric cars and sells them through direct-to-consumer “studios” and not franchised dealerships. Texas law, however, bars motor-vehicle manufacturers from owning their own dealerships.

The Court applied rational-basis review, citing precedent about similar manufacturer-dealer separation statutes, explaining that such laws apply “to the automobile industry more broadly” because “the state has a legitimate interest in preventing firms from vertically integrating and abusing the resulting power.” From there, it observed: “There is hardly a more quintessential example of vertical integration than a manufacturer’s extending itself into distribution.” No. 25-50319 (Sept. 4, 2026).