SPECIAL REPORT The Top 7 Stocks for 2024

Lucid Motors Just Showed It’s Time to Bet on EV Stocks With Lower-Cost Cars


  • Lucid Motors (LCID) just failed to meet expectations on Q3 deliveries.
  • This news confirms arguments that demand for high-end electric vehicles (EVs) is falling.
  • Instead, investors should be focused on companies that build cheaper cars.
EV stocks - Lucid Motors Just Showed It’s Time to Bet on EV Stocks With Lower-Cost Cars

Source: Virrage Images / Shutterstock.com

One of today’s biggest stories is the news from Lucid Motors (NASDAQ:LCID). The trendy electric vehicle (EV) producer has announced its third-quarter delivery statistics, and they are not encouraging. As InvestorPlace‘s Eddie Pan reports, “Lucid produced 1,550 vehicles and has an additional 700 vehicles on the way to Saudi Arabia for final assembly. Deliveries for the quarter totaled 1,457 vehicles, much lower than the analyst estimate for 2,000 vehicles.” With that in mind, it comes as no surprise that LCID stock is down today, a clear reaction to the delivery report. Missing Wall Street estimates is never a promising development, especially when a company has been struggling for weeks. EV stocks have been volatile, but Lucid’s performance has been highly discouraging.

As LCID stock has struggled throughout the past two quarters, experts have questioned its once-bright future. While focus today has been on this company, investors should be careful to see the big picture when it comes to Lucid’s Q3 deliveries. This is clearly the time to focus on lower-cost EVs rather than the luxury vehicles for which Lucid is known.

Focus on Better EV Stocks

Despite a quick surge as markets opened this morning, LCID stock quickly proved unable to sustain this momentum. As of this writing, it is down 6% for the day and isn’t showing signs of a rebound. This race to the bottom comes after a turbulent week and an even more volatile month. As other prominent EV stocks are rising today, this performance clearly isn’t due to market momentum.

That said, there is a key lesson that investors should take from Lucid’s recent report. EV demand has been slumping recently as consumers opt against buying expensive new cars. This trend seems to have been primarily sparked by the rising cost of EVs, as rising economic anxieties compel buyers to opt for less expensive options. This demand slump isn’t good for companies like Lucid, which produce visually appealing but expensive cars. However, it creates a key opportunity for companies producing lower-cost EVs and hybrids to expand their market share.

This group includes companies like Toyota Motors (NYSE:TM) and Nissan (OTCMKTS:NSANY), two well-known automakers with decades of experience producing low to mid-cost vehicles. Toyota is well-suited to take advantage of this trend. It produces many hybrid vehicles and has invested in EV battery production. Another company that could see EV sales rise is Fisker (NYSE:FSR). While this EV startup has struggled lately, it has been working hard to provide features that will let it compete with higher-end automakers.

In normal times, this list would include stocks like Ford (NYSE:F) and General Motors (NYSE:GM). But right now, Detroit’s Big Three automakers are dealing with a large-scale workers strike. Until the companies can reach an agreement with the United Auto Workers (UAW) union, placing them on a list of EV stocks to buy is difficult.

What Comes Next

All this isn’t to suggest that Lucid can’t recover. LCID stock will probably rebound when market conditions shift back in its favor. But for now, it makes more sense to bet on the EV stocks that benefit from a spike in demand for lower-cost vehicles. Investors will likely be seeking to hedge their bets as economic conditions remain uncertain.

Until they do, it will probably make the most sense to avoid higher-end EV stocks.

On the date of publication, Samuel O’Brient 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.

Article printed from InvestorPlace Media, https://investorplace.com/2023/10/lucid-motors-just-showed-its-time-to-bet-on-ev-stocks-with-lower-cost-cars/.

©2024 InvestorPlace Media, LLC