Lucid Group’s Business Profile Arguably Makes the Most Sense

  • While electric vehicles are at the forefront of the clean energy debate, not all manufacturers are built the same.
  • Lucid Group (LCID) makes the most sense (arguably) because its business model addresses environmental and economic concerns.
  • The current volatility in LCID stock looks like a discount as opposed to a warning.
A Lucid (LCID) Air displayed in its own vitrine in Madison Square Park in New York. Lucid Motors started trading on the NASDAQ exchange via a SPAC merger.
Source: rblfmr /

While all electric vehicle manufacturers align with the broader environmental impact narrative, not all EV players are built the same — which should be a benefit to Lucid Group (NASDAQ:LCID). Sure, many competitors in the fold (both upstarts and the arms of legacy corporations) are eyeballing mass production. But Lucid is unafraid to speak truth to production, making LCID stock arguably much more attractive than the rest.

You see, we can all talk a big game about environmental protocols, green energy, sustainability and all that jazz. Who would argue against this narrative? We only have one planet. Sure, a discussion exists about colonizing Mars, but it’s more realistic to support the home that we have. It’s high time we start learning to work together instead of fighting each other.

Environmental justice is difficult to achieve because of economic concerns. Specifically regarding LCID stock, the infrastructure to bring EVs to the mainstream will cost time and money.

Considering that we’re short on both thanks to aggressive climate goals and soaring inflation reducing the purchasing power of the dollar, LCID stock perhaps makes the most sense among new EV investments. Lucid isn’t even trying to attain the wholly unrealistic goal of targeting middle-income customers.

LCID Lucid Group, Inc. $21.87

LCID Stock and the Realistic Agenda

California Governor Gavin Newsom has a dream: empower the transition to EVs. It sounds great on paper, but then he pulls the old political trick of forcing the agenda to go through as opposed to letting the free market dictate terms. Newsom directed the state to end new gasoline-powered car sales by 2035.

While this action may appear to be helpful to all EV players, I can imagine such a directive positively affecting only LCID stock and similar luxury-focused investments. Why? Because when all is said and done, EVs are still woefully out of the reach of middle-income households.

It’s one thing to propose an environmentally kosher solution to the vexing climate problem. But it has to make sense for the average person or family. Increasingly, a divide is materializing between the electorate and publicly elected officials. This isn’t a political statement: this is simply data.

According to the U.S. Census Bureau, the median household income was $67,521 in 2020. That’s household income, which means total gross income of all members under the same roof. It’s just not enough to comfortably own even the cheapest EV under present circumstances.

Let’s consider more data. Per Consumer Reports, the average new car price topped $47,000, an all-time high. For new EVs specifically, this category slightly exceeded $60,000.

If you have a financial advisor that suggests you buy a car that’s 89% of your annual household income, you need to fire that person ASAP.

Lucid Knows What’s Up

While I believe that other EV companies aiming for a more realistic price point with their products are noble, I just don’t see the narrative panning out so easily and favorably as some analysts seem to believe. For instance, EV charging is convenient now because very few new car sales are electric powered.

Unless you’re in a really trendy part of town during peak charging time, you’re likely to find a post easily. But what happens when the integration that EV proponents are clamoring for actually happens? Will the most vocal of EV drivers continue to address us petrol buyers with snark and disdain? Or will they wish they would have just kept their opinions to themselves?

Although it’s my speculation, I think Lucid knows what’s up — and that’s what makes me like LCID stock. Lucid specializes in luxury EVs, starting at a low, low price of $77,400. That’s only about 15% higher than the median household income, which is exactly the point.

No financial advisor is going to recommend a family to buy a car that’s 89% of its gross income, let alone 115%. Lucid is clearly targeting the consumer base that can fully, holistically afford EVs — and have the resources to deal with infrastructural gaps, no matter how long they take to materialize.

It’s Just Data

I imagine that not everyone is going to be pleased with the harsh realities of EV integration. But again, I stress that this narrative, while related to present politics, isn’t political in nature. At the end of the day, you must work with the numbers. If the math doesn’t cooperate, it’s better to change the components going into the equation rather than inventing new math to fit the problem — which by the way is a political dynamic.

When you assess the situation objectively, the EV rollout isn’t going to be easy, even if it turns out to be successful. In the meantime, there will surely be many growing pains. LCID stock appears to be one of the few EV-related investments that can survive such pains, perhaps even thrive from them.

On the date of publication, Josh Enomoto 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.

A former senior business analyst for Sony Electronics, Josh Enomoto has helped broker major contracts with Fortune Global 500 companies. Over the past several years, he has delivered unique, critical insights for the investment markets, as well as various other industries including legal, construction management, and healthcare.

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