For several months now, Lucid (NASDAQ:LCID) stock has been under pressure. Shares are down 50% for the EV maker as the hype has faded away. However, the company keeps executing its growth strategy, which means you cannot afford to ignore this one.
Lucid Motors plans to open a new manufacturing plant in Saudi Arabia. This facility will give Lucid Motors the ability to distribute its products in countries it hasn’t reached yet. It will also help the company spread its manufacturing process across the globe.
Lucid Motors plans to produce up to 150K electric cars per year in Saudi Arabia. Lucid’s expansion strategy is different from most EV manufacturers because the company produces high-end luxury electric vehicles and has a market in affluent countries.
Saudi Arabia has taken many steps to protect its environment and natural resources. It has launched many initiatives to reduce its impact on the environment in recent years. These initiatives are funded by public and private sectors and include projects from sustainable urban design to renewable energy sources.
The Saudi government is looking to bring in new revenue streams. And the irony is that they want to do this by focusing on electric vehicles. Electric vehicles are a hot topic right now. Hence, Saudi Arabia wants to become one of the key markets for these products.
The Saudi Arabian government is putting a lot of effort into switching to electric vehicles, with an ambitious target of 30% of the vehicle fleet being electric by 2030. In the last few years, attitudes towards electric vehicles have changed in Saudi Arabia. As a result, it has become a promising market for Lucid Motors to enter as it increases investment and production.
LCID Stock Is a Buy After Price Correction
Tesla (NASDAQ:TSLA) has been the company to beat in the electric vehicle market. However, several electric vehicle brands are touted as the next Tesla killer. Lucid Motors made a lot of noise in November 2021, right about the time it started delivering the first batch of the “Lucid Air, Dream Edition” after a months-long wait.
After that, shares started to cool off, and when the company announced it was slashing its production forecast in February, LCID stock nosedived. Since that time, it has failed to recover lost momentum. Markets can be unaccommodating to companies with vague futures. Because of this, Lucid will have to avoid straying from its path and losing investors again.
The expansion into Saudia Arabia is interesting. Right now, most electric vehicle companies are targeting Europe and China, the two largest markets for EVs. Lucid is taking advantage of a market that other companies haven’t captured yet. Plus, since the company manufactures high-end luxury electric vehicles, it has a better chance of grabbing clientele in rich countries than in middle-income ones.
The only issue with LCID stock is patience. Lucid will announce its Q1 results on May 5. They will have more information regarding production schedules and pre-orders, which will send the stock higher. In the meantime, it faces a tough economic environment for growth stocks.
On the publication date, Faizan 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.
