Lucid Group Stock Looks Like It’s a Solid Buy Before Earnings
InvestorPlace - Stock Market News, Stock Advice & Trading TipsLCID stock is a promising long-term EV stock that started deliveries of its first electric vehicle in late October.The...
The global automotive industry will experience massive growth in production and sales. Many more consumers will transition to electric cars over time as they become cheaper than traditional fossil fuel-burning models.
That day may be coming sooner, thanks largely to increased technological advancements that have been made recently. LCID stock, which has been down substantially in the last three months, will gain from this trend.
There was plenty of hype about this company before Churchill Capital IV Corp's special purpose acquisition companies (SPAC) merger with Lucid Group. All that excitement died down after a while, though.
LCID Stock and the Tesla Threat
Tesla (NASDAQ:TSLA) is leading the way in both electric vehicles and renewable energy. They're doing this at a good pace and have expanded into China and parts of Europe.
This means less volatility on behalf of investors since its financials aren't dependent solely upon single-market sales. But range is a problem for TSLA in a way that it isn't for LCID.
Lucid Motors is one of the best in the world regarding range. The Air Dream Edition has a range of over 520 miles which makes it eligible for EPA-rated certifications.
This is a victory for Lucid Motors CEO and CTO Peter Rawlinson, who led the development of the Model S when he was working at Tesla.
He believes that the Air will surpass Elon Musk's company's features and performance. The impressive range of the Air is due in part to its 113kWh battery pack and aerodynamic design.
The Lucid Air sedan starts at $77,400 before the government's generous plug-in vehicle tax break – up to an estimated maximum value on these federal incentives worth around $7,500 total. This vehicle directly competes with several Tesla models.
Manufacturing Process Sets Lucid Apart
Lucid plans to design and manufacture all of its up-front vehicles in-house. Lucid currently manufactures all of its cars from a base in Arizona.
It is expected to manufacture over 500,000 vehicles per year by 2030.
With the recent release of their new vehicle platform, Rawlinson said they are committed to releasing more affordable cars.
Moving forward, the company wants to offer models in a range between $40,000 and $45,000. He's not sure if they'll ever offer an even cheaper car, though.
Interestingly, Lucid's approach to EV charging is different from Tesla's in many ways. But one major difference may be their lack of investment in fast-charging stations.
"Do we want to have the capital burden of a fast charging network? No, we can go asset light in that," said Rawlinson about this decision.
The benefits of an asset-light approach include reduced risk, increased flexibility, lowered operational costs, increased speed to market, and more focus on growth.
Lucid will be launching a Gravity sport utility vehicle next year and plans to build 500,000 cars as part of its upcoming line-and-facility expansion.
Lucid has to produce a less expensive Lucid Air to increase its margins. They also plan on making an SUV in 2024 that will help them capture markets for SUVs.
LCID Stock: Primed and Ready for the Big Time
With the right strategies, Lucid Group has a bright future ahead. The stunning 520-mile driving range of the Air is a testament to the company's superior in-house tech and all-electric approach.
Overall, this is a promising stock in the long-term with strong growth prospects. You should take into account the potential earnings of this company.
Since Lucid has not turned a profit yet, the stock is still a speculative investment. However, it has all the potential to become an effective EV player.
On the publication date, Faizan Farooque did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
Faizan Farooque is a contributing author for InvestorPlace.com and numerous other financial sites. Faizan has several years of experience in analyzing the stock market and was a former data journalist at S&P Global Market Intelligence. You can check out his work on InvestorPlace and TipRanks.
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