While electric vehicles (EVs) may represent the future of transportation and mobility, contemporary woes impacted their valuations on Thursday. In particular, premium luxury brand Lucid (NASDAQ:LCID) fell sharply on Thursday as management revealed revenue results that slipped beneath expectations. Broadly, other EV players like Rivian Automotive (NASDAQ:RIVN) and Lordstown Motors (NASDAQ:RIDE) fell on manufacturing headwinds and economic concerns.
Notably, all eyes focused on Lucid during the midweek session when it released its fourth-quarter earnings report. As a manufacturer of top-tier consumer vehicles, LCID arguably ranks as the closest competitor among EV stocks to sector king Tesla (NASDAQ:TSLA). Unfortunately, while Lucid’s loss per share of 28 cents represented an improvement from the 64-cent loss in Q4 2021, revenue came in at $257.7 million, missing the consensus target of $303 million.
Per CNBC, management revealed in January that Lucid only produced 7,180 vehicles last year. This tally ranked well below the original expectation of 20,000 for the year. However, it did beat the company’s lowered guidance it provided in August. However, Lucid delivered only 4,369 vehicles to customers before year-end.
“Our goal in 2023 is to amplify our sales and marketing efforts to get this amazing product into the hands of even more customers around the world,” Lucid CEO Peter Rawlinson said.
As of Feb. 21, management revealed that it had more than 28,000 reservations for its vehicles. However, CNBC noted that this figure declined from the over 34,000 reservations it disclosed in November. The Wall Street Journal also reported that Lucid was being cautious due to concerns about excessively expensive EVs.
EV Stocks Stumble on Other Obstacles
On Thursday’s afternoon session, LCID dropped nearly 16% in equity value. Unfortunately, negative headlines impacted many other EV stocks, particularly Lordstown Motors (NASDAQ:RIDE). Specializing in light-duty commercial fleet vehicles, Lordstown endured a difficult period following speculative interest in late 2020 to early 2021.
Recently, Lordstown announced that it had to stop production of its Endurance electric truck. A local report from Youngstown, Ohio, noted that Lordstown “…experienced performance and quality issues with certain Endurance components that have led the company to temporarily stop production and customer deliveries” since its last production update in January.
Lordstown also filed paperwork with the National Highway Traffic Safety Administration (NHTSA) to recall the Endurance. The recall — due to an electrical connection issue — will impact only 19 vehicles. While it might not be a full-scale disaster, EV stocks didn’t need such distractions. RIDE tumbled 14% in the afternoon hours.
Turning to Rivian, the Wall Street Journal mentioned that the startup enterprise struggled due to manufacturing challenges and rising interest rates. With inflation being stubbornly high, it’s possible that the Federal Reserve could raise rates even more. If so, that poses significant challenges for EV stocks and the automobile market in general.
Higher interest rates mean higher borrowing costs. And according to data compiled by Statista, nearly 84% of new cars had financing in 2022.
RIVN dropped nearly 6% on Thursday.
Why It Matters
The latest news and recent leadership disclosures paint a worrying picture for even premium-level EV stocks.
Theoretically, Lucid should be more insulated from consumer economy pressures as it’s targeting the upper-income bracket. However, if the wealthy are tightening their belts, this dynamic could pose challenges for every other EV player.
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 InvestorPlace.com Publishing Guidelines.
