End of Tax Credit Could Be End of Lucid

By Douglas A. McIntyre Published Nov 15, 6:25AM EST

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End of Tax Credit Could Be End of Lucid — © Kim Grosz / iStock via Getty Images

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The end of a $7,500 federal tax credit for buying an electric vehicle could be the end of EV maker Lucid Group Inc. (NASDAQ: LCID | LCID Price Prediction).
Without this sales incentive, the company has little else going for it.
Also: Dividend legends to hold forever.

Shares of electric vehicle (EV) maker Lucid Group Inc. (NASDAQ: LCID) sold off sharply on news that the Trump administration could end the $7,500 tax credit. That credit has been a major reason for EV purchases. Lucid stock is down 51% for the year, and yesterday it ended barely above the $2 level and near its 52-week low mark. Added to a national drop in EV demand, Lucid could finally end its run as an independent company.

The $7,500 federal tax credit is part of why the EV industry in the United States has not faltered more than it has. High prices have undermined EV sales. The tax credit brought many EV prices nearer the price of gasoline-powered vehicles, which sell for as much as $10,000 below EVs on average. The gulf is large when some customers already worry about driving range, the number of charging stations, tire wear, and low engine charge levels in cold weather.

Lucid, in particular, needs the credit. While its cheapest car sells for $70,00, the average price for its Lucid Air Touring model is $85,000. If EV customers worry about prices, Lucid has erected another high barrier.

Lucid’s production and shipments are shockingly low. In the third quarter, it only delivered 2,781 vehicles. Revenue, at $200 million, was also terribly low. Lucid lost $932 million in the period.

The Lucid Air recently scored a five-star safety rating from the National Highway Traffic Safety Administration’s (NHTSA’s) New Car Assessment. That is the highest score possible. However, the modest news will not save a flagging company that lost one of its most important sales incentives.

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About the Author Douglas A. McIntyre →

Douglas A. McIntyre is the co-founder, chief executive officer and editor in chief of 24/7 Wall St. and 24/7 Tempo. He has held these jobs since 2006.

McIntyre has written thousands of articles for 24/7 Wall St. He is an expert on corporate finance, the automotive industry, media companies and international finance. He has edited articles on national demographics, sports, personal income and travel.

His work has been quoted or mentioned in The New York Times, The Wall Street Journal, Los Angeles Times, The Washington Post, NBC News, Time, The New Yorker, HuffPost USA Today, Business Insider, Yahoo, AOL, MarketWatch, The Atlantic, Bloomberg, New York Post, Chicago Tribune, Forbes, The Guardian and many other major publications. McIntyre has been a guest on CNBC, the BBC and television and radio stations across the country.

A magna cum laude graduate of Harvard College, McIntyre also was president of The Harvard Advocate. Founded in 1866, the Advocate is the oldest college publication in the United States.

TheStreet.com, Comps.com and Edgar Online are some of the public companies for which McIntyre served on the board of directors. He was a Vicinity Corporation board member when the company was sold to Microsoft in 2002. He served on the audit committees of some of these companies.

McIntyre has been the CEO of FutureSource, a provider of trading terminals and news to commodities and futures traders. He was president of Switchboard, the online phone directory company. He served as chairman and CEO of On2 Technologies, the video compression company that provided video compression software for Adobe’s Flash. Google bought On2 in 2009.