Shares of Lucid (NASDAQ:LCID) stock are in focus after the emerging electric vehicle (EV) company disclosed that defective electrically activated contact switches in the 2022 and 2023 versions of the Lucid Air could lead to a loss of power while driving. These switches transfer energy to the drive motor and could “unexpectedly open,” which would cause a loss of power to the electric motors.
“This may lead to a loss of propulsion without pre-warning and may increase the risk of a crash,” said Lucid in a filing with the National Highway Traffic Safety Administration (NHTSA). The recall will affect about 637 vehicles. Affected users can receive a switch replacement at no cost after Lucid updates its vehicle software.
Interestingly, LCID stock has been on the rise in afternoon trading and is up almost 1%.
LCID Stock: Lucid Recalls 637 Lucid Airs
Lucid first became aware of the issue last May after an Air was brought to its service center that had a loss of motive power. By September, the company had investigated 14 contact switch openings. In October, Lucid noted that “testing a vehicle for the spring force issue required manually observing the contactor closing signature during startup. A double-dip closing signature indicates a risk of contactor opening, though many contactors with double-dip signatures have no unexpected openings.”
Prior to the “clean point,” less than 1% of manufactured vehicles were affected by the issue. In November, Lucid informed the NHTSA of the problem and its software fix. The fix was pushed out to vehicle owners on Dec. 16. Lucid then analyzed the accompanying data through January of this year.
On Feb. 14, the Lucid Product Safety Executive Council (PSEC) concluded that some vehicles still exhibited a safety risk. As of Feb. 22, 533 cars were not updated with the new software. 27 of these were determined to require contactor replacement. Following discussions with the NHTSA, Lucid noted that 637 vehicles could be affected by the issue.
According to the NHTSA, there are a total of four recalls and nine complaints for the 2022 Lucid Air. The complaints involve problems related to the power train, seats, electrical system, etc. Overall, the current recall doesn’t seem to be a significant problem for the company due to the easy replacement. Still, it could affect consumer safety sentiment.
LCID stock is up about 34% year-to-date.
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.
