Are We Sure Lucid Motors Can Be the Next Tesla?

LCID stock - Are We Sure Lucid Motors Can Be the Next Tesla?

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It has not been an easy run for growth stocks lately. Excluding Tesla (NASDAQ:TSLA), it has also been a tough ride for electric vehicle (EV) makers like Lucid Motors (NASDAQ:LCID). From the 52-week high, LCID stock is now down almost 62% as it languishes near last month’s low of $20.49. The stock did not respond well to the company’s earnings report that released on Feb. 28. Non-GAAP earnings were in-line, but GAAP earnings were a miss. While revenue grew more than 600% year over year as the company now has deliveries, it came in significantly below analysts’ expectations.

As you may have guessed, production and deliveries have been a culprit to the decline in LCID stock price. Unfortunately, the company had to cut its 2022 production numbers from its predicted 20,000 vehicles down to a range of 12,000 to 14,000 vehicles. Lucid’s chief executive officer stated, “This reflects the extraordinary supply chain and logistics challenges we’ve encountered and our unrelenting focus on delivering the highest-quality products.”

To help with its supply chain issues, the company recently announced plans for a new battery plant. LG Energy Solutions will be investing $1.4 billion to build a battery manufacturing facility in Queen Creek, Arizona — within an hours drive from Lucid’s manufacturing plant in Casa Grande, Arizona. Lucid hopes this move will help its long-term growth. By 2030, the company plans to have the Arizona factory producing 500,000 EVs annually.

Along with its promising EV technology, investors continue to wonder if Lucid can become the next Tesla. It is not that Lucid can’t be Tesla-like in the future when it comes to production. However, many non-Tesla supporters fail to separate some of the things that make Tesla unique. For starters, it has Elon Musk, who seems to carry a premium with him. Second, the company has an entire energy business to consider, alongside an EV-leading production setup. It has numerous locations around the world in North America, China and Europe.

So, can Lucid get there from an automotive perspective? Of course it can — eventually. But production delays are a part of life for automakers and Lucid Motors is working through those issues now. In fact, significant issues.

It will need to stabilize its production plans to start working on “being the next Tesla.” Production increases and stabilization would be a great start for LCID stock’s future to go well. However, it also needs the bear market in growth and EV stocks to come to an end before it can find sustainable upside momentum.

On the date of publication, Bret Kenwell 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 Publishing Guidelines.

Bret Kenwell is the manager and author of Future Blue Chips and is on Twitter @BretKenwell.

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