Luxury electric vehicle (EV) maker Lucid Group (NASDAQ:LCID) is facing increasing pressure to meet production and delivery goals, according to a Bank of America analyst.
Lucid delivered 1,404 vehicles during the second quarter, well short of the consensus estimate of 1,818, said John Murphy. Even before production ramps up, he called demand for the Lucid Air sedan “tepid.”
LCID stock fell almost 6% on July 14 but recovered by 2% over the weekend, opening at $6.78 per share in New York. The company’s market capitalization is about $14 billion.
Lucid of Arabia
I wrote over two months ago that the Saudi-backed EV company was “running out of road.” The Lucid Air was named luxury car of the year by the World Car Awards, but the high end of the market is now saturated.
Tesla (NASDAQ:TSLA) aimed at the luxury end in the last decade, and many companies have since followed it. Lucid was started by Peter Rawlinson, who was the chief engineer of the Tesla Model S. But most of the money to build the Lucid Air came from Saudi Arabia’s Public Investment Fund (PIF), which wants the company to build a factory in the desert kingdom.
Lucid stock rises and falls on the Saudis’ interest in buying the company. Its latest equity raise left the Saudis with 65% of the common.
Lucid isn’t the only EV company interesting to the Saudis. It has brought Lucid’s technology to Aston Martin (OTCMKTS:ARGGY) through a partnership with the British company. The Kingdom also has a big stake in Human Horizons, a Chinese EV company. This led to reports Lucid was about to enter the Chinese market.
LCID Stock: What Happens Next?
The Saudis have a plan to turn Lucid into the center of a global luxury EV brand centered in the desert kingdom. It might work, but I don’t see how small American investors will see a profit from it.
As of this writing, Dana Blankenhorn 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.
