Electric vehicle (EV) manufacturer Lucid Group (NASDAQ:LCID) just revealed price reductions for certain vehicle models. It seems that the company is emulating similar price cuts implemented by EV makers like Tesla (NASDAQ:TSLA) and Ford (NYSE:F). This may turn out to be a savvy move, but today’s traders are selling LCID stock.
According to Lucid’s press release, “customers can receive a $7,500 EV credit on the purchase of” the Lucid Air. It’s a limited-time offer that starts today and “is available for select configurations of Lucid Air Touring and Air Grand Touring models purchased by March 31, 2023.”
Is it a coincidence that Lucid Group chose $7,500 as the dollar amount of the discount? Probably not, as the Inflation Reduction Act specifies $7,500 as the tax credit for qualifying EVs.
Lucid’s EVs might not qualify for the government’s tax breaks because they evidently don’t meet the price thresholds. Nevertheless, “We think our customers still deserve a $7,500 credit for choosing an EV,” stated Zak Edson, Lucid’s vice president of sales and service. The Lucid Air Pure starts at $87,400, while the Touring starts at $107,400 and the Grand Touring starts at $138,000.
What’s Happening With LCID Stock?
So, how is the market responding to Lucid Group’s attempt to match the price-cutting strategies of Tesla, Ford and others? Interestingly, LCID stock actually fell 3% this morning.
Perhaps financial traders feel that Lucid’s EV price reductions are “too little, too late.” Lucid Group’s vehicles will still be relatively pricey, even after $7,500 discounts.
It’s understandable that Lucid is attempting to make some of its vehicles more affordable. During a time of elevated inflation, however, it might still be difficult for Lucid to bolster its EV sales.
Furthermore, Lucid Group has an earnings release coming up on Feb. 22. LCID stock traders may be nervous about this. Today’s share-price action reflects some investors’ doubts about the company’s ability to complete in the crowded EV field, even with Lucid Group now joining the price-cut trend.
On the date of publication, David Moadel 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.
