Investing

Crippled Lucid Buried by Competition

Douglas A. McIntyre

Published: June 6, 2024 7:10 am

24/7 Insights

• The outlook for electric vehicle makers remains uncertain.
• Lucid Group Inc. (NASDAQ: LCID) in particular faces nearly insurmountable problems.

Lucid Group Inc. (NASDAQ: LCID), the penny stock electric vehicle (EV) maker, has been in trouble for over two years. Its stock is down 80% over that period. And the competition is getting worse in a sector with slowing sales.

In the past several months, many EV companies have retreated in large capital expenditures. Yet, Ford posted double-digit percentage increases in EV sales in May, compared to the same month a year ago. Kia and Hyundai are attacking the market as if EV sales overall were surging. InsideEV recently ran a headline: “‘Foot on the Accelerator’: Hyundai and Kia’s EV Push Pays Off as Rivals Back Down.”

BMW and Mercedes continue to extend their lines of luxury EVs, with plans to hamper sales of high-end Teslas. South Korea’s Genesis has done the same.

And then there is Tesla Inc. (NASDAQ: TSLA), still the leader in U.S. EV sales, with about 50% of the market last year.

Lucid has three problems. It is too small. It needs more money. And, at about $80,000, its cars are way too expensive.

In the most recent quarter, Lucid’s revenue was $172 million, barely above the $149 million it had been the year before. It lost $680 million, compared to the year-ago loss of $780 million. It is hard to see how the company could manage to dig itself out of that hole.

Why would anyone own Lucid stock? They shouldn’t.

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