The new year isn’t looking any better than last year for Lucid Group (NASDAQ:LCID) stock. The electric vehicle maker is down over 7% in just the first three days of trading. It lost 38% of its value last year and was off over 60% from peak to trough.
While that’s an inauspicious start for Lucid, can investors hope things improve in 2024? There are several catalysts for growth this year and beyond. Let’s look more closely to see whether they can save the luxury EV maker and boost LCID stock.
A grand vision
Because Lucid manufactures luxury EVs they will not be for everyone and you will not see the same production numbers as you do with Tesla (NASDAQ:TSLA). But because many of Lucid’s vehicles are destined for Saudi Arabia, it’s likely to find a more receptive audience there.
The Saudi government is a big investor in Lucid, providing billions of dollars in support as the country attempts to jumpstart its auto industry. Saudi Arabia wants to diversify away from its dependency on oil and is ramping up the business in a big way. It’s estimated car sales will grow 24% annually over the next few years.
Lucid will be a major part of that. The company builds its vehicles in Arizona, then breaks them down and ships them overseas for reassembly. Lucid opened its first assembly plant in September. That’s not an uncommon way for manufacturers to export, but it’s more expensive. Yet it fits with Saudi Arabia’s plans to develop a substantial manufacturing sector.
The initial run of Lucid EVs will be around 5,000 per year, with plans for up to 155,000 EVs annually. Lucid will supply the government with 100,000 vehicles over 10 years. The EV maker intends to expand into Europe and China, the world’s biggest EV market.
With its Air model in production, Lucid will introduce its Gravity SUV later this year. Priced at under $80,000, the carmaker hopes a lower-priced vehicle will jumpstart sales.
Same song and dance
Unfortunately, investors heard such grandiose plans all too often, only to see them fall far short of expectations. Lucid promised back in 2022 it would produce half a million EVs out of Arizona by the middle of the decade. As we all know now, it couldn’t even produce 10,000 vehicles this year and we’ll have to see if it actually hits its new target of 8,000 to 8,500 EVs.
It fired hundreds of factory workers last year to contain costs and has accumulated $9.5 billion in losses. It’s never been profitable since it started and doesn’t look like it will be anytime soon. Analysts think it will be two to four years at best before Lucid can build EVs at scale.
The EV market is also slowing. Manufacturers are halting production of certain models or delaying plans as the rate of growth declines. Instead, buyers looking for alternatives to fossil fuel-powered cars are increasingly turning to hybrid vehicles.
Over 1 million were sold in 2023, a 76% increase from the previous year. That makes Toyota (NYSE:TM) the carmaker to watch. It hedged its bets on EVs and went headlong into the hybrid market.
Don’t bet on Lucid stock in 2024
So Lucid possesses catalysts that could drive the EV maker’s growth in 2024 and beyond. However, the company also faces significant risks and uncertainties, including supply chain disruptions, regulatory hurdles, competitive pressures, and customer satisfaction issues.
Lucid is still a relatively new and unproven player in the EV industry. It will need to perfectly execute its strategy well to achieve its ambitious goals. It hasn’t done that so far. The company instead has a history of broken promises made to investors.
The unfortunate truth is LCID stock is not one to buy. It’s likely to go out of business or be taken over by its foreign investors before it ever turns a profit or produces a satisfactory return for shareholders.
On the date of publication, Rich Duprey 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.
