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Tesla lawsuit challenges Louisiana ban on selling cars directly to consumers

Yahoo Finance reporter Pras Subramanian details how Tesla is suing for the right to sell cars directly to consumers in the state of Louisiana, which outlaws it, and how companies Lucid and Nikola have filed to raise funds via stock offerings.

Video transcript

[AUDIO LOGO]

- Tesla filing a lawsuit challenging a Louisiana law that restricts its ability to sell vehicles directly to consumers. Yahoo Finance senior autos reporter Pras Subramanian here with the details. Pras, long been a question between dealers and states and Tesla. This has long been in the making.

PRAS SUBRAMANIAN: Yeah, it's been an issue with Tesla for many years. They've always wanted to sell directly. You go to their showroom, or even now on their app, but many states want-- 10 of them, to just ban that practice outright. They wanted you to go through independent dealers. These are really old laws about how protecting consumers and sort of--

- The dealers, right?

PRAS SUBRAMANIAN: Yeah. Yeah.

- The dealer lobby.

[INTERPOSING VOICES]

PRAS SUBRAMANIAN: Exactly. Oh yeah, big lobby.

- Very powerful

PRAS SUBRAMANIAN: In fact, Tesla is suing a dealer association-- a couple of dealers, some officials with the DMV in Louisiana-- to change that law. They say that it's anti-competitive, it doesn't give consumers choice in the matter. So Tesla is trying to use that as another test case. So if they can win here, they'll take it to places like Texas, and maybe New Mexico or places where they can actually try to challenge these direct bans to car sales.

SEANA SMITH: It certainly will be interesting to see what happens in this space because, like you said, it pertains to many more states, not just Louisiana. Pras, while we have here, we want to stick with the EV space. There's also a bit of news, Lucid and Nikola both making moves here to raise cash. What can you tell us? Because we know it's a very, very competitive landscape. They need more money.

PRAS SUBRAMANIAN: Yeah, you know Lucid filing a shelf registration for $8 billion in common stock, preferred-- even debt, Nikola for $400 million to kind of raise new funding. Basically, they're just trying to-- at this point in the stage of their companies, they're trying to get more runway as they burn so much cash.

You know, Lucid burned $2 billion last quarter. They have about $4.5 left in cash and cash reserves. So you can imagine by middle next year, they're almost out of cash. So they filed to have flexibility for in the future what could be a turn in the economy. Component prices going up, stuff like that, so they want to kind of have a flexibility.

And remember, Nikola-- former CEO, Trevor Milton, tried to block that at the meeting, and he actually lost, so they were able to get that through. So they'll have the flexibility in the coming years, hopefully, for them.