Why the Best Lucid Stock Position Is No Position at All

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Lucid Group (NASDAQ:LCID) was once a highly promising business. However the near-term outlook isn’t great for LCID stock. Lucid Group might have visually interesting vehicles, but if it can’t sell enough, it’s going to be awfully difficult for Lucid to stage a turnaround in the fourth quarter.

Furthermore, Lucid Group has ambitions in a country far from the U.S., and there’s no guarantee that the company will sell many EVs there. All in all, it’s difficult to build a compelling argument to invest in Lucid Group now.

LCID Stock’s Disappointing Performance

LCID stock briefly jumped to $13 in January of this year but recently fell to just $5 and change. As of mid-October, the stock was down year-to-date.

That’s disappointing, but perhaps it’s just the market expressing its frustration with Lucid Group. The automaker continues to post one unprofitable quarter after another. Moreover, Lucid’s cost of revenue and net earnings loss have grown.

Apparently, Lucid Group is pinning its hopes on the company’s endeavors in Saudi Arabia. There, the company is proudly establishing an EV production facility.

Don’t expect Lucid Group produce or deliver huge numbers of vehicles there soon, though.

In its “first phase,” Lucid’s Saudi production facility “has the capacity to assemble 5,000 Lucid vehicles per annum.” That’s not a lot of vehicles for an entire year, so don’t expect a massive near-term revenue bump.

Eventually, Lucid Group expects that its “complete manufacturing facility” in Saudi Arabia will “have capacity to produce a total of 155,000 electric vehicles per annum.”

However, the company’s press release hinted that this could potentially happen “after the middle of the decade.”

Is Lucid Group Desperate to Sell More EVs?

Turning out attention back to the U.S., Lucid Group is well-known for selling expensive EVs. For example, an edition of the Lucid Air Sapphire Edition vehicle reportedly sells for around $250,000.

Most Americans can’t afford that, so maybe it’s not a great idea for Lucid Group to commercialize such pricey vehicles. Presumably to remedy this problem, Lucid recently introduced the Air Pure RWD vehicle model with a “starting price of $77,400.”

If you’ve purchased a new car, you’ll surely know that what customers actually end up paying is almost always thousands of dollars more than the advertised “starting price.” in other words, Lucid Group’s Air Pure RWD will still be unaffordable to many Americans.

Besides, there are American EVs out there that, after tax credits have been applied, will cost substantially less than $77,400. So, don’t count on legions of car buyers suddenly lining up to purchase the Lucid Air Pure RWD.

Interestingly, LCID stock quickly sank after Lucid Group announced this vehicle model. Most likely, investors interpreted Lucid’s attempt to entice customers with a lower EV price as an act of desperation.

The market, evidently, isn’t convinced that Lucid Group’s strategy will significantly boost demand for its vehicles.

Don’t Assume That LCID Stock Will Bounce Back

Clearly, introducing a $77,400 “starting price” vehicle didn’t impress investors very much. Lucid Group’s shareholders might run out of patience in the fourth quarter if the company doesn’t prove that it can sell more EVs.

In addition, Lucid Group could take a very long time to ramp up its EV production in Saudi Arabia. For these reasons, LCID stock gets a “D” grade and isn’t a high-confidence EV-industry pick in 2023’s fourth quarter.

On the date of publication, neither Louis Navellier nor the InvestorPlace Research Staff member primarily responsible for this article held (either directly or indirectly) any positions in the securities mentioned in this article.

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