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Should I Invest in Lucid Motors Stock?

Lucid Motors has plans to release its new EV this year, presenting an opportunity for investors to buy in on a stock with increasing potential.

Lucid Group, Inc.
company nameLucid Group, Inc.
sectorConsumer Cyclical
industryAuto Manufacturers
address7373 Gateway Boulevard, Newark, CA, United States
countryUnited States
websitehttp://www.lucidmotors.com

Lucid Motors has had a lot of exciting developments in the past few months. There are several promising aspects about the new generation of EV's coming to the market in the next few years to go along with the positive response from investors despite hitting a few early snags. 

The question is can the currently unreleased Lucid Air and Lucid Motors' subsequent models live up to the value they presented to investors.

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About Lucid Motors 

Lucid Motors is an emerging auto manufacturer set to release its new luxury sedan EV, Lucid Air at the end of October 2021.  With over 10,000 reservations for their project, they are on the watchlist for investors seeking a potential rival to Tesla.

The company, formerly known as Churchill Capital IV Corp, claims to be on track to release a new electric vehicle with around 1,080 horsepower with a range of over 500 miles per charge.

The Lucid Air is a mid-sized EV with much interior space and a glass cockpit, which is a display of three large screens, 2 of which are touch-controlled.

The long-awaited Lucid Air also challenges Tesla with its Lidar (Light Detection and Ranging) technology to aid its autonomous driving system in addition to its 32 sensors. The system uses a pulsed laser to gauge the range of objects on the road.

While the less expensive models of the Lucid Air are on track to be released in 2022, topping out at approximately $77,000, the original batch of EV's will cost a total of $160,000.

Lucid motors had somewhat of a challenging road leading up to the current day, where they are now finishing the production of their first batch of Lucid Air vehicles.

In addition to having issues during the pandemic, the company's introduction came after a list of other promising EV manufacturer startups that were looking to steal the spotlight.

Companies like Lordstown Motors, Fisker, and Nikola have preceded Lucid Motors in the race, after which the EV market experienced a lull, laying a difficult path for the company to trudge through.

The company's leader is CEO Peter Rawlson, previous Vice President of Vehicle Engineering at Tesla. 

With over 30 years of experience in the automotive industry, his other notable positions include Chief Engineer at Lotus Cars, Head of Vehicle Engineering at Corus Automotive, and Principal Engineer at Jaguar Cars.

The CFO Sherry House has over 20 years of experience pushing the financial efforts of businesses. 

Her most extensive endeavors include Waymo, a google self-driven car project where she served as the driving force of Waymo's global corporate development before she took over as Head of Investor Relations.

Bull Case

  • After Churchill Capital Launched Lucid Motors, they announced that the company is valued at $24 billion, and has since then increased that valuation to $39 billion.
  • As of July 13th, Lucid Motors announced $900 million worth of reservations for the Lucid Air, topping out at over 13,000.
  • Lucid Motors claims that the Air is the "quickest, longest-range, fastest-charging electric car in the world," 
  • Lucid Motors touts that the battery efficiency for the Lucid Air outclasses both Amazon's Rivian R1T as well as Tesla, in addition to Porche, Jaguar, and Audi.
  • Saudi Arabia's Public Investment Fund raked in a $20 billion profit from investing in Lucid Motors in 2018. The $2.9 billion investment has paid off significantly, and now the investment fund owns over 60%.
  • Over the last month, shares are up more than 20%
  • LCID plans to deliver 22,000 vehicles by 2022 and open 20 service and retail locations by the end of 2021
  • The upcoming Dream Edition R claims the title of being a "mic drop" by Motor Trend, boosting investor interest in August.
  • The company plans to accrue over $2 billion in revenue in 2022 alone.
  • Electric vehicle sales have doubled from over a year ago.
  • The Global sales of electric vehicles have the probability to rise to 14 million by the year 2025, a stark increase from the year 2020 number of 3.1 million. From there, Bloomberg expects the trend to catch on further and rise to 60 million by 2040.
  • EV sales in China are expected to take 25% of automotive sales by 2025. Germany is expected to take a larger portion of the market at 40%.
  • Lucid Motors already has plans to start producing the "Gravity" their electric SUV in 2023.

Bear Case

  • As of early October 2021, Lucid Motors only has a 42 out of 99 IBD Composite Rating, according to IBD Stock Checkup
  • The release of the Air has been delayed twice due to the pandemic.
  • The PIPE investor lock-up period expired in September, making it too late to sell shares to the public, dropping the stock almost 11%
  • Questions have been raised about if the company can finance its growth.
  •  The company’s lofty $39 billion valuations, while impressive, are set before the roll-out of even its first car.
  • There is currently a semiconductor shortage looming over the electric vehicle industry that threatens to tank production, although the CEO believes it will be over within a year.

Lucid Motors Competitors

TSLATesla, Inc.
$892.71
SymbolTSLA
Price$892.71
Change$26.91
Change %3.11%
Volume$28,018,789.00
Marketcap894.29B
FFisker Inc.
$14.43
SymbolFSR
Price$14.43
Change$0.0950
Change %0.66%
Volume$3,344,764.00
Marketcap4.37B
NNikola Corporation
$11.07
SymbolNKLA
Price$11.07
Change$0.0827
Change %0.74%
Volume$4,672,756.00
Marketcap4.44B
FFord Motor Company
$16.50
SymbolF
Price$16.50
Change$0.4550
Change %2.84%
Volume$80,585,688.00
Marketcap65.89B
GGeneral Motors Company
$58.36
SymbolGM
Price$58.36
Change$0.6850
Change %1.19%
Volume$8,995,112.00
Marketcap84.72B

Final Verdict

It's hard to find many reasons why investors shouldn't show interest in Lucid Motors. There are a lot of great things happening for the company. 

However, the new line of electric vehicles is still in its infancy. Issues of things like safety and customer appeal have yet to meet the test in real-world applications. 

In the vehicle market, competition is stiff, and problems like that can tank market prices quickly. For the ambitious buyer that believes in the management team, this could be a huge opportunity. The plans for production and growth are a good sign. 

For more conservative investors who like to have a complete picture before pulling the trigger, perhaps the wait-and-see approach is the best option.

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