The EV Sector Can’t Stop Burning Cash

In our discussion, we highlight Lucid (NASDAQ: LCID) Motors’ dire financial situation despite producing 2,110 cars in the second quarter. The company has suffered substantial losses, with its stock down 85% over the past two years and billions of dollars in shareholder value wiped out. We conclude that Lucid’s focus on the high-end EV market and fierce competition from established brands like BMW, Porsche, and Mercedes leave it with limited prospects for survival. Without a significant bailout, similar to what Rivian (NASDAQ: RIVN) received from VW, Lucid is unlikely to avoid bankruptcy by the end of the year.

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Transcript:

So we keep a companies we love to hate list, you and I do.

Do we ever.

We do.

And today we’re going to start with Lucid, the unbelievable, how is it still alive, teeny weeny, teeny EV company.

They announced yesterday that they had produced 2,110 cars in the second quarter of the year.

So let’s think about it for a second.

This is a company that’s lost billions and billions of dollars.

Stock’s down 85% over the course of the last two years.

They’ve wiped out tens of billions of dollars in shareholder value.

So here’s the question.

How can this thing make it like even much past the end of the year?

Well, like we said before, Doug, it’s toast and it’s still toast.

Our other pal Rivian got a bailout, which is what we kind of said would need to be the course of action for them to stay in business.

I don’t think Lucid could make the end of the year because I don’t think they have any avenues short of somebody like VW stepping in and saying, here’s a billion dollars like they did for Rivian.

But I just don’t see it.

And I think they could be totally bankrupt by the end of the year.

One of the reasons I hate Lucid is that they sell cars for $80,000.

It’s like, well, what we’ll do is we’ll take the high end of the EV market as it’s falling apart.

What goes through a CEO’s mind when he says, I’m going to be in a market and I’m going to only sell to the top 1% of a tiny, tiny market?

What do you think that they were thinking?

I have no idea.

And the thing is, it’s not just competition on the EV lines.

There’s competition at that level, that dollar level that is huge.

So that shrinks the market even more for those people that are willing to buy gas-powered engines.

You know, they’re competing with the EV guys.

So, yeah, it makes absolutely no sense because you’re going to have to sell a lot more units than that to even stay in the game.

Well, in BMW, Porsche, Mercedes, all the top car companies now have EV models.

So you’re right.

They’re going up against the gas-powered BMW.

But BMW has a perfectly good lineup of EVs as well.

Absolutely.

That’s right.

I think that what you and I can agree on is they have nowhere to go.

A lot of companies just say it’s a crummy company, but it could eke its way through that crack in the wall.

With Lucid, it’s impossible.

Yeah, and I don’t see anybody stepping in with a billion dollars to help them out at this juncture because the sum of the parts of that company don’t equal a billion dollars likely.

No.

So I think what we can do is what they used to do in the movie review shows.

You take your thumb up there.

Give the thumbs down?

Yeah.

We’re giving them the thumbs down.

We are definitely giving them the thumbs down.

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