Did Ford’s EV Failure Trigger Drop in Lucid Stock?

24/7 Wall St. Insights

• Ford Motor Co. (NYSE: F) cutting production of its F-150 Lightning raised questions about electric vehicles in the United States in the short term.
• One troubled EV company is Lucid Group Inc. (NASDAQ: LCID).
• Also: Dividend legends to hold forever.

Lucid Group Inc. (NASDAQ: LCID) has had plenty of problems. These may have been worsened by Ford Motor Co.’s (NYSE: F) decision to cancel the production of its F-150 Lightning EV for the remainder of the year. Ford’s decision is a signal that the electric vehicle market continues to slip.

The Ford decision is particularly troubling for EV makers. Ford has put billions of dollars behind the launch of an EV model of its most popular product, the F-Series. The F-Series has been the nation’s best-selling vehicle for over four decades, accounting for 35% of Ford’s unit sales in the United States. Ford continues to promote the Lightning regularly. It is on the homepage of the company’s website.

Another sign of Ford’s EV commitment is that it lost over $1 billion in the EV division in the third quarter. Although its EV plans may have slowed, it still plans to be a significant player in the sector.

Ford’s Lightning plans must be particularly troubling for shareholders in the much smaller EV makers. Ford’s shares are down 4% in the last three months. Lucid’s are down 33% over the same period.

Ford has a balance sheet and sales beyond its EV unit to cover EV losses for years if necessary. Lucid recently raised $1.7 billion, which will not carry it financially for over two years. The U.S. EV market may not recover fast, and Lucid has several competitors, including GM, Ford, and Tesla.

Lucid will announce earnings on November 7. Investors do not expect the numbers to improve much from the recent quarters. In the third quarter, Lucid produced 1,805 vehicles and delivered 2,781 vehicles. In its most recent release, the second quarter, it had revenue of $200 million, on which it lost $643 million.

After investing billions into EVs, Ford still has billions of losses, so how can Lucid expect to survive?