Shares of Lucid (NASDAQ:LCID) finished the day in the red despite an encouraging announcement this morning. The emerging electric vehicle (EV) company has signed multi-year agreements with Panasonic Energy, a subsidiary of Panasonic (OTCMKTS:PCRFY). Panasonic has more than 100 years of battery experience and is known as a global battery leader. LCID stock trades for just under $8 after the announcement.
The agreements will see Panasonic supply Lucid with lithium-ion EV batteries for the Air and the upcoming Gravity SUV. The financial terms of the agreements were not disclosed in the press release.
This is a major accomplishment for Lucid, as EV companies across the board have dealt with battery supply chain inefficiencies and rising battery component prices this year. That has contributed to LCID stock’s year-to-date decline of more than 75%. In fact, today’s closing price of $7.99 is only five cents above the 52-week low of $7.94.
CEO and CTO Peter Rawlinson added:
“Panasonic is a fantastic partner with both innovative technology and depth of experience. This agreement will help us meet the growing demand for lithium-ion batteries as we continue to ramp production of the full Lucid Air line-up in 2023 and expect to begin production of our Gravity SUV in 2024.”
LCID Stock: Lucid Enters Into Battery Agreements With Panasonic
The agreements appear to be beneficial for both companies. Lucid will now have a reputable and reliable battery source, while Panasonic will be able to expand further into the U.S. Furthermore, production of the batteries will begin in Panasonic’s facility in Japan, while future production is expected to be aided by a recently announced $4 billion facility in De Soto, Kansas.
Panasonic is also Tesla’s (NASDAQ:TSLA) main automotive battery supplier. In January, the conglomerate announced that it would invest $705 million to produce a new lithium-ion battery for the EV leader. These new batteries are expected to increase range by about 20%.
With a battery supplier intact, all eyes are now on Lucid to execute properly. As of Q3, the company had over 34,000 vehicle reservations and the capacity to produce 300 vehicles per week. In addition, the reservations represent potential sales of $3.2 billion.
During the quarter, Lucid produced 2,282 vehicles, which more than tripled the number of vehicles produced during Q2. That led the company to reiterate its yearly production guidance of between 6,000 and 7,000 vehicles.
On the date of publication, Eddie Pan did not hold (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.