Could Buying Lucid Stock Today Set You Up for Life?

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LCID, or Lucid Motors, is drawing a lot of interest from investors due to its production of remarkable electric vehicles (EVs). The Air sedan offers the longest battery range compared to any other EV currently available, and it even managed to set a Guinness World Record for the greatest distance covered on a single charge. Additionally, the Gravity SUV boasts the quickest charging time for an EV outside of China.

However, while I understand the enthusiasm, I wouldn’t advise purchasing Lucid stocks just yet in expectation of a lifetime setup. Here’s my take on the matter.

1. Lucid is still years away from mass-market adoption

As an onlooker, I note that Lucid’s most affordable sedan model begins approximately at $70,000, a figure that seems rather steep for many American consumers. However, Lucid plans to introduce a more budget-friendly vehicle later this year, projected to cost less than $50,000. This potential move could broaden their consumer base and boost sales significantly, but the challenge lies in Lucid’s current production levels being insufficient to make a tangible difference.

Regardless of the vehicle being priced under $50,000, which is often the case with new electric vehicles, the companies usually sell these at a higher price point. As a result, it might take several years before they can produce enough low-cost models to make a substantial impact on the market.

2. The EV market is on a rough road

In the second quarter of this year, electric vehicle sales dropped by about 6% more than expected, and there might be further declines ahead. Notably, Congress has passed a law that will phase out the federal tax credit of $7,500 for new EV purchases as early as September – a significant acceleration from the original expiration date in 2032. Although Lucid’s vehicles were priced too high to qualify for the credit, the company managed to exploit a loophole, enabling them to use the credit to reduce leasing expenses instead.

Furthermore, five billion dollars had been earmarked by the federal government for establishing electric vehicle (EV) charging stations across the U.S., but there’s ongoing legal conflict with certain states over this funding. This is causing hesitation among many prospective buyers due to concerns about insufficient charging infrastructure.

Furthermore, President Trump’s tariffs are stirring fear among car manufacturers, including American ones such as Lucid Motors. Sourcing all automotive parts within the U.S. is virtually impossible, leading to increased production costs. In response, Lucid’s leadership has hinted at potential price increases for their vehicles due to these tariffs.

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3. Lucid isn’t profitable, and leadership is a big question

In the latest quarter, Lucid posted a non-GAAP net loss of approximately 20 cents per share, marking an enhancement compared to the same period last year, yet the results remain less than satisfactory. At present, the company carries a significant debt burden exceeding 2 billion dollars.

Over the last two years, a significant number of top-level managers, including the previous CEO, have departed from the company, leaving its current CEO in charge since just February. This constant change at the top brings both leadership turmoil and financial uncertainties as the company strives to expand vehicle production, introduce new models, broaden its customer base, and achieve profitability.

This doesn’t mean Lucid won’t succeed, but it’s a big gamble

A noteworthy development for Lucid is the agreement they’ve struck with Uber, which will see Lucid receiving approximately $300 million as they supply up to 20,000 Gravity SUVs over the next six years. Although this deal is promising, I believe the immediate surge in stock price following the announcement of the partnership might have been a bit hasty, given that Lucid needs to demonstrate its ability to manufacture and deliver vehicles at a pace sufficient to meet Uber’s demands.

If Lucid Motors manages to boost production, enhance its financial stability, and successfully persuade buyers to buy their more affordable electric vehicles over the next few years, it could potentially make for a worthwhile investment. However, to ensure a stock provides long-term financial security, it needs to consistently generate substantial profits over many years and maintain a steady stream of customers. Unfortunately, Lucid is currently quite far from achieving that level of profitability and customer base to set an investor up financially for life.

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2025-07-25 12:01