The Georgia Supreme Court recently upheld the constitutionality of Georgia’s direct sales ban under the Georgia’s Motor Vehicle Franchise Practices Act but clarified that the constitutional protection afforded under the Act is not automatic and depends on whether a challenged regulation was enacted for the constitutionally permitted purpose of preventing fraud or unfair competition. Lucid Grp. USA, Inc. v. State, 2026 WL 436574 (Ga. Feb. 17, 2026).
Georgia’s constitution expressly authorizes the legislature to regulate new motor vehicle sales “in order to prevent frauds, unfair business practices, unfair methods of competition, impositions, and other abuses.” Lucid Group USA—an electric vehicle manufacturer—applied for a dealership license in Georgia but the State denied it because of the direct sales prohibition. Lucid sued, claiming that the direct sales prohibition violated the Georgia Constitution’s due process and equal protection provisions, as well as its limits on general and special legislation. Lucid argued, in part, that the statutory exception that permitted Tesla to operate dealerships in Georgia despite being a manufacturer was an unconstitutional special law. The trial court dismissed Lucid’s complaint, finding, in relevant part, that Lucid’s due process and equal protection claims were barred by Paragraph II(c)’s express authorization for the General Assembly to regulate the motor vehicle industry. Lucid appealed.
The Georgia Supreme Court affirmed in part, vacated in part, and remanded. It held that the phrase “in order to” in the constitutional provision limits the legislature’s regulatory authority and does not categorically bar due process or equal protection challenges, requiring courts to examine whether the challenged provisions were enacted to prevent the specified abuses. The Georgia Supreme Court further concluded that the Act’s dealership and anti-ownership provisions constitute a general law with uniform statewide operation and that Lucid lacked standing to challenge the narrow statutory exception applicable to Tesla. However, the court determined that Lucid could pursue broader constitutional challenges to aspects of the statutory amendment as a whole, and it remanded the case for further proceedings consistent with these holdings.