Shares of luxury electric vehicle (EV) maker Lucid Group (NASDAQ:LCID) have sold off since going public in late July. LCID stock has shed more than 19% of its value since then.
However, all that could quickly change once it starts deliveries of its premium EV sedan, the Lucid Air, in the second half of the year. Lucid has the potential to establish itself in the underserved luxury EV segment with its impressive product range and its unique features.
Naturally, there are obvious risks with investing in LCID stock. It hasn’t got an established product that has exhibited commercial success so far. Future revenues depend on the market reception of Lucid Air. However, an investment in the company creates the possibility for a massive upside for early investors who can take a chance on an exciting niche.
It’s a stock you want to own for the upside but wouldn’t want to put a significant investment into.
All Eyes On The Lucid Air
Lucid Motors could potentially make a massive splash with its first-ever EV product in the coming months. Technology and performance are where the Lucid Air could win over potential customers. The Air’s top-level feature is at an incredible 517 miles on a single charge. That’s roughly 100 miles more than the comparable range offered by its closest contender in the Tesla (NASDAQ:TSLA) Model S Plaid. The Lucid Air also beats the Model S Plaid on horsepower. The Model S Plaid boasts 1,020 horsepower, while the Lucid Air has 1,111 horsepower.
Another competitive edge that Lucid has over its competition is the “Lucid Electric Advanced Platform” (LEAP). It’s a software platform that manages the six key systems of the Lucid Air, including its battery system, transmission and boost chargers. The platform will also be included with Lucid’s other models, including its Gravity SUV, which will be available in 2023.
Lucid has also been making strides in the autonomous driving realm. It launched an ADAS system called the “Lucid DreamDrive.” It features 32 cameras, radar, lidar and ultrasonic sensors to ensure a safer driving experience. Lucid’s cars are all equipped with built-in connectivity features which support the deployment of self-driving technology.
Strong Prospects Ahead
Lucid operates at a much smaller scale than some of the EV industry stalwarts but offers one of the strongest growth potentials among the segment’s startups. It expects to achieve a yearly sales volume of 20,000 cars in 2022, which could rise to 49,000 in 2023. Moreover, the company already has 10,000 reservations to date, equating to $900 million in sales. Based on its current pricing strategy, ranging from $77,400 to $169,000, the anticipated 2022 sales volume could yield $2.2 billion in revenues.
In the longer run, Lucid anticipates a run rate of more than 500,000 units a year by 2030. It expects to generate positive EBITDA (earnings before interest, taxes, depreciation and amortization) by the end of 2024. Moreover, it plans to operate a direct sales strategy and has already opened up the right showrooms in the U.S. It has plans to expand into more territories in the U.S. along with the Europe and Middle East.
Final Word on LCID Stock
LCID stock has had it rough since going public and continues to struggle in building a decent head of steam. However, all that could change once Lucid Air is on the road in the next few months.
Lucid Air has the potential of becoming a major player in the relatively untapped premium EV market. Its preliminary performance will be a good indicator of how much traction it is gaining. All that adds up to LCID stock as a high-risk, high-reward play.
On the date of publication, Muslim Farooque did not have (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.
Muslim Farooque is a keen investor and an optimist at heart. A life-long gamer and tech enthusiast, he has a particular affinity for analyzing technology stocks. Muslim holds a bachelor’s of science degree in applied accounting from Oxford Brookes University.