I’ll admit that I’m biased when it comes to electric vehicles and Lucid (NASDAQ:LCID) stock. I’m generally a fan of the technology and despite mounting concerns over EV environmental impacts, I’ll stick to the facts on this one.
The U.S. Environmental Protection Agency (EPA), research indicates that EV environmental impacts will be lower than those from gasoline-powered vehicles. That’s one reason I’m rooting for Lucid and EVs at large.
Further, I like Lucid because I think its strategy is spot on. The company has been very quick in moving from its July 23 SPAC merger to actual delivery of vehicles, which began on Oct. 30.
Hitting Heavy Early
Lucid began deliveries in late October with its top of the line model, the Lucid Air Dream Edition. It’s no secret that Lucid has Tesla (NASDAQ:TSLA) in its sights.
I think there’s a lot to like from a strategic standpoint as Lucid is making a bold statement. The firm is essentially saying that it can not only compete with Tesla, but exceed it in many respects.
That’s because the Lucid Air slots well against Tesla’s Model S. Lucid has released the Dream Edition as its first production vehicle. It’s Lucid’s top of the line variant.
Tesla’s top-of-the-line Model S Plaid vehicle is its competition. Here, the Lucid Air Dream Edition is comparable in several regards. After Tesla scrapped plans to produce a Model S Plaid+ edition, the Lucid Air Dream is in a class of its own.
It boasts a 520-mile range while the Tesla Model S has a range of 375 miles. Before you correct me, yes I know that the Model S Plaid is roughly $30k cheaper, so there isn’t a basis for a precise apples-to-apples comparison.
Class of Its Own With LCID stock
But that’s my point. The Lucid Air Dream Edition is in its own class. Even Tesla’s best S Model variant does not match its range. Speed is important too. And there Tesla does have merit. It can reach 60 miles per hour in 2 seconds. The Dream Edition will do that in a slightly slower 2.5 seconds.
Either way, Lucid Air owners who’ve taken delivery have a unique vehicle in their possession. Only 575 Lucid Air vehicles will be produced this year and that figure will rise to 20,000 next year, according to CEO Peter Rawlinson.
And consumers will see those vehicles on the streets. They’ll be curious what Lucid is and that novelty will pique interest. Admittedly, I’d assert that the guy or girl driving around in a Lucid Air is much more intriguing than a similar person in a Tesla S Plaid.
That’s why I like Lucid’s strategy of releasing its best vehicle first.
Expansion Strategy
Expect to see lots of Lucid vehicles in the Middle East and Europe where the company will sell vehicles in 2022. It should be noted that Lucid is backed by Saudi Arabia’s Public Investment Fund, which owns a majority of the company after investing $1 billion in the company in 2018.
It then might come as little surprise that Lucid will expand into the Middle East and Europe next year before entering China in 2023.
In either case, Lucid has proven that it can bring an EV to market quickly following its SPAC merger. It has also proven that it can target the top tier of the market, which makes a lot of sense strategically as well.
What to Do
I think the future is bright for Lucid, but I’d wait for a new price baseline to be set before purchasing shares. It clearly has the ability to challenge Tesla and that might be enough to raise prices substantially moving forward.
Lucid looks like an EV SPAC that has made it to the next level — making LCID stock a buy.
On the date of publication, Alex Sirois 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.
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.”
