Lucid stock is trading down 98% from its all-time high set in early 2021.
Lucid’s best-selling vehicle is the Lucid Air Sedan, and production of a high-volume mid-size EV platform is expected to begin in 2026.
Lucid is working with Nvidia to develop Level 4 autonomous vehicles and has secured a $300 million investment from Uber to deploy 20,000 autonomous Lucid Gravity SUVs.
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There was a lot of hype when Lucide Group(NASDAQ:LCID) became public a few years ago. Investors viewed the luxury electric vehicle (EV) maker as a potentially bold new challenger. Teslaready to ride the wave of electric vehicle adoption. The company’s ambitious vision, cutting-edge technology and elegant designs have captured attention.
However, things did not go as planned. After an initial rally in 2021 that saw the stock reach impressive highs, the momentum has faded and Lucid stock is now down 98% from its all-time high. The optimism that once surrounded the company has waned as investors focus on execution, competition and changing adoption rates for electric vehicles.
As Lucid Group looks to regain its footing and get back on track, here’s what investors need to know before buying.
Image source: Lucide.
Lucid Group manufactures luxury electric vehicles, targeting wealthy customers. The company aims to establish itself as a premium brand in the competitive automobile industry by committing to providing a high-quality driving experience.
Its best-selling vehicle is the Lucid Air Sedan, the best-selling EV sedan in the United States, edging out the Tesla Model S. The automaker also offers the Lucid Gravity, an electric SUV that seats up to seven adults and has an EPA-estimated range of 450 miles.
Additionally, management confirmed that the high-volume mid-size platform, which aims to compete with popular models like the Tesla Model 3, remains on track to begin production in late 2026. It is Lucid’s mainstream product and is a crucial step in allowing Lucid to increase production and improve gross margins.
Separately, Lucid announced an initiative aimed at accelerating its path to full autonomy in collaboration with Nvidia. This partnership allows Lucid to deliver one of the world’s first private passenger vehicles with Level 4 autonomous driving capabilities, powered by the NVIDIA DRIVE AV platform.
Also, Uber Technologies announced a $300 million investment in Lucid Group. The investment is part of Uber’s plan to launch driverless rides in the San Francisco Bay Area late next year, using Lucid Gravity SUVs equipped with Nuro’s self-driving technology. The move puts Lucid’s vehicles in direct competition with other robotaxi services. Uber plans to put at least 20,000 Lucid autonomous SUVs on the road over six years.
While this news is positive for Lucid Group, the company continues to burn through cash as it expands. The good news is that revenue is up 45% from last year. The bad news is that it continues to lose a lot of money. Through September 30, the electric vehicle maker posted an operating loss of $2.4 billion, up slightly from the previous year. This was against a total revenue of $834 million.
Data by YCharts.
Additionally, the current regulatory environment is also not favorable for electric vehicle manufacturers. The Trump administration is resetting corporate average fuel economy standards to levels achievable by conventional gasoline and diesel vehicles. This action reverses what the Trump administration called the Biden administration’s “unrealistic fuel economy goals that effectively resulted in an electric vehicle mandate,” potentially reducing regulatory pressure to shift consumers toward electric vehicles.
Morgan Stanley downgraded Lucid Group from Equal Weight to Underweight and sharply reduced its price target. The move builds on a more cautious outlook in the industry, with the analyst saying the electric vehicle “winter” will last until 2026.
Lucid Group is making progress on its large-scale EV product and autonomous driving capabilities. However, the company continues to burn through cash and may face challenges in the near future. Changing regulations and changing consumer preferences could lead to an “electric vehicle winter” according to Morgan Stanley, which would weigh on Lucid over the next year.
Lucid has earned praise for its vehicles, thanks to their cutting-edge range, luxurious design and technology. That said, the company is still losing money, which should give investors pause. I would like to see improvements in its effectiveness and results before purchasing the stock.
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Courtney Carlsen holds positions at Morgan Stanley and Nvidia. The Motley Fool holds positions and recommends Nvidia, Tesla and Uber Technologies. The Motley Fool has a disclosure policy.
Is Lucid Group Stock a Buy Now? was originally published by The Motley Fool
