EV company Lucid’s (NASDAQ: LCID) stock sold at $57 in November 2021. It began to plunge and, despite some tiny recoveries, has collapsed to $3. The most accurate picture of Lucid’s problem was one pointed out by The Wall Street Journal recently. “For EV Startups, Things Are Going From Bad to Worse.”
Lucid’s earnings are nothing short of awful. The company delivered only 2,781 vehicles in the third quarter. The company lost $992 million on revenue of $200 million. An increase in sales would drive the cost or revenue up, so unit sales will need to soar for Lucid to break even.
Lucid has gotten billions of dollars from the Saudi Public Investment Fund’s Ayar Third Investment Company. However wealthy the Saudis are, at some point, they will lose patience unless Lucid has a sharp turn of good luck.
Lucid also has the barrier of the price of its vehicles. In an industry where manufacturers try to reduce prices to attract EV buyers, Lucid sells cars for $80,000 or more. Almost every model is “available now,” according to the Lucid website. That points to potential excess inventory.
Lucid has also received poor reliability scores from Consumer Reports. The reports are closely followed.
Lucid’s stock may well not recover. The EV sector, in general, is in too much trouble. There are too many competitors at the high end, led by BMW and Mercedes, each of which has enormous amounts of cash and the ability to take on debt.
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