Sometimes, people who missed out on the astronomical multi-year returns on Tesla (NASDAQ:TSLA) stock will go on a quest to find the “next Tesla.” Could it be electric vehicle (EV) manufacturer Lucid Group (NASDAQ:LCID)? Probably not, as Lucid Group’s pricing strategy is questionable and LCID stock looks like a non-starter in 2023.
Lucid Group CEO Peter Rawlinson might have grand ambitions like Tesla CEO Elon Musk does. However, Lucid Group’s results have been less than stellar. All in all, Lucid’s long-term shareholders are taking a big risk and should look elsewhere for strong returns in the clean energy market.
LCID Stock Goes Nowhere, But the CEO Is Well-Compensated
Not long ago, InvestorPlace contributor Will Ashworth observed that Musk made fun of Rawlinson “for hauling in $379 million in 2022.” Consequently, in terms of CEO pay for that year, Rawlinson only trailed behind Nvidia (NASDAQ:NVDA) CEO and co-founder Jen-Hsun Huang.
Meanwhile, LCID stock declined sharply in 2022 and has basically gone nowhere in 2023 so far. Furthermore, Lucid Group’s s second-quarter 2023 financial results were subpar. Unfortunately, the company posted another quarter without profits.
In addition, Lucid Group reported roughly $151 million in sales and an earnings loss of 40 cents per share in Q2 of 2023. These results missed Wall Street’s consensus calls for $182 million in sales and an earnings loss of 34 cents per share.
Moreover, Lucid is now “on track to manufacture more than 10,000 vehicles in 2023.” This is disappointing because earlier in the year, analysts had predicted that the automaker would produce a number closer to 20,000 vehicles.
Lucid Group Might Sell Affordable Vehicles… Eventually
Rawlinson recently bragged about Lucid Group’s price-reduction strategy, declaring, “We reverted to our original pricing, which I think we got about right.” However, skeptical investors might question whether Rawlinson really ought to congratulate himself.
Even after the price cuts, Lucid Group’s vehicles are prohibitively expensive for many consumers. during these challenging economic times. After the price reductions, the starting prices reportedly are $82,400 for the Air Pure sedan, $95,000 for the Air Touring and an eye-watering $125,600 for the Grand Touring model.
It seems as if Lucid Group only reduced its EV prices in response to Tesla’s price cuts. Yet, Lucid’s vehicles still remain unaffordable for many people. Remember, it’s not unusual for customers to end up paying substantially more than the listed starting prices of vehicles.
Rawlinson seemed to acknowledge that EVs are pricey, as he reportedly said that a “$25,000 electric car” is needed. Yet, Lucid Group has no known plans to launch a $25,000 EV.
Rawlinson teased the possibility of Lucid EV models selling for “around $50,000,” but don’t get too excited. The CEO provided no timeline for this to happen. Also, Rawlinson hedged his bets by saying, “[D]on’t hold me to this.” This suggests that Lucid Group might never actually produce a $50,000 car.
Stay in Your Lane and Avoid LCID Stock
If you’re looking for the “next Tesla,” don’t assume that it will be Lucid Group. The company has less brand-name recognition than Tesla and remains unprofitable.
It’s also worrisome that Rawlinson won’t commit to having Lucid Group produce a $50,000 EV. He thinks that Lucid’s current pricing strategy is “about right.” Yet, the company’s vehicles are prohibitively expensive for many customers.
Ultimately, Lucid Group’s subpar results suggest that the company’s investors will have to accept substantial risk. Therefore, LCID stock is a no-go and financial traders shouldn’t give in to the temptation to buy it in 2023.
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.
