If speculation does become reality, then Churchill Capital IV (NYSE:CCIV) will soon take Lucid Motors public via a special purpose acquisition company (SPAC). If we assume that that is indeed the case, does it make sense to buy into CCIV stock now?
There are indications, or rumblings at least, that Lucid Motors’ flagship Lucid Air EV sedan could challenge Tesla’s (NASDAQ:TSLA) Model S sedan.
Therefore, the real question to consider in this case is Lucid Motors as a business investment. That will be strongly dictated by the company’s ability to manufacture and sell the Lucid Air sedan.
Manufacturing in Place
Back in December it was reported that Lucid Motors had completed its Arizona manufacturing plant. The company was in the process at that time of commissioning equipment to manufacture the Lucid Air electric vehicle (EV).
The Casa Grande, Arizona plant is the company’s first and was then anticipated to have an initial production capacity of 10,000 vehicles per year. That number is expected to eventually reach 300,000 annually.
However, the company provided a later press release stating that initial production capacity would be nearer 30,000, with it expected to rise to 400,000 vehicles annually in the future.
If Churchill Capital does merge with Lucid Motors, perhaps some of the proceeds will be used to offset the cost of Lucid’s initial greenfield investment. That investment was part of a $700 million outlay.
Vehicle Lineup
One of the more important considerations is the manner in which models are scheduled to be released by Lucid Motors. While the company’s lowest priced offering, the Lucid Air Pure, costs a hefty $69,900, it will not be the first produced vehicle from the plant.
Lucid Motors maintains that vehicles will leave the production line in the spring of 2021. I suppose that technically could mean as late as June 20, but no word on a definitive date.
In any case, Lucid will release more upscale versions of the Lucid Air when they initially roll off the production line. The Lucid Air Dream will arrive first, followed by the Grand Touring and Touring models. The Dream is scheduled to retail for $162,000, the Grand Touring, $132,000, and the Touring, $88,000. These prices take into account a federal tax credit of $7,500.
The Tesla S long range, Plaid and Plaid+ are fairly comparable to the various Lucid Air trims. If the Lucid Air Dream does make it to market before the end of spring as promised, it will be ahead of Tesla in one regard.
The Tesla S Plaid+ isn’t scheduled for release until late 2021. It will cost $132,990 after tax credits but compares well against the Lucid Air Dream at $30,000 less.
Lucid Revenues
It’s clear Lucid hopes to sell its most expensive model first with the Lucid Air Dream. That would mean higher revenues if it does sell well. Assuming the highest priced model also has the highest margins, the company has a fair strategy.
It is also trying to jump ahead of Tesla before Tesla can release the Plaid+ version of the Model S. Investors can only guess whether that will come to be or not. There’s a fair argument to be made that Tesla has the edge, given that it is so far ahead of Lucid Motors.
Although I cannot find reservation figures, it is known that Lucid Motors has opened several retail locations from which to take orders, in addition to its online portal.
So, how does this relate to CCIV stock? What more do we know other than that it has potential as an investment in the SPAC EV space?
The Takeaway on CCIV Stock
Really, we don’t know much.
If the rumors turn out to be true, and Churchill pairs with Lucid, then sure, CCIV stock will jump. Investors can make that gamble. It’ll work out in the short term. But in the longer term, it’s much harder to evaluate Lucid Motors and CCIV.
Will the Lucid Air models turn out to be good vehicles? Again, nobody knows. Aesthetically, I like them. But that doesn’t mean much. I can’t say I’d invest in CCIV and Lucid, but if the facts I presented above inspire you, there’s a reasonable case there too.
On the date of publication, Alex Sirois did not have (either directly or indirectly) any positions in the securities mentioned in this article.
Alex Sirois is a freelance contributor to InvestorPlace whose personal stock investing style is focused on long-term, buy-and-hold, wealth-building stock picks. Having worked in several industries from e-commerce to translation to education and utilizing his MBA from George Washington University, he brings a diverse set of skills through which he filters his writing.”
