Silicon Valley-based Lucid Motors (NASDAQ:LCID) stock is among the top EV plays many investors are watching closely right now. The company’s focus on specializing in high-performance electric vehicles is what enticed me to look at this company initially. And in most respects, the company’s models are certainly impressive from this standpoint.

The company has transitioned toward producing more of its more affordable Lucid Air models, starting at a more attractive price of around $69,000 each. And with a new production line focused on the company’s Gravity SUVs in its Arizona factory, some investors are looking forward to higher growth over the long-term.

That said, the company has certainly seen significant production issues as well as some relatively high cash burn in making its dreams become a reality. Let’s dive into the balance of risks around Lucid, and whether LCID stock is a buy in this current environment.

Impressive Recent Deliveries Report

Lucid’s second quarter deliveries report was much better than its Q1 numbers, with the company producing 2,110 vehicles and delivering 2,394 units.

These numbers were up significantly from the January to March period, in which the company produced 1,728 EVs and delivered 1,967 units, representing strong sequential growth. These numbers were driven by a reduction of inventory and a backlog reduction, through significant price reductions were required to see the sales number increase.

Moving forward, Lucid will need to produce a little more than 5,000 vehicles in the second half the year to hit its overall target.

While this is achievable, given the overall trajectory of production improvements at Lucid, the question remains: at what cost? After all, the price cuts the company has put forward have hurt margins, and cash burn remains a significant concern.

Investors will continue to watch the company’s deliveries and production figures closely, as these will dictate the company’s potential growth rate over the long-term.

The Key Partnership to Watch

Lucid CEO Peter Rawlinson told Bloomberg TV that the company’s promising partnership between Lucid Motors and Saudi Arabia’s Public Investment Fund is ongoing.

He called PIF the “perfect long-term partner” for scaling production, indicating ongoing positive momentum for the company. This partnership has provided Lucid with growth capital in the past, though much of this financing has been dilutive for existing investors.

Notably, LCID stock has risen significantly over the past month, surging from less than $2.50 per share to around $3.70 per share at the time of writing. That said, this stock is down considerably from its previous peak, and has a very bearish long-term trajectory.

Bulls on Lucid appear to be pointing to this partnership as a key reason to stay invested. The Saudi government will not want to lose on their investment, and if this company has the capital it needs to grow, there is a shot at more global market share growth over time.

LCID Stock Still Looks Risky

In my view, Lucid’s recent production and deliveries increase in combination with its Saudi backing certainly provide the company with some catalysts investors have to price in. Many of these catalysts are currently priced into LCID stock, given its recent bump higher.

But over the long-term, I think it’s more likely than not that the company’s downward trajectory remains intact. The company requires scale to reduce its production costs and at least turn cash flow positive.

So long as this company is bleeding cash, further price cuts and any production bumps could lead to significant balance sheet deterioration. And in the meantime, investors can expect more dilution ahead.

So, even if the company’s valuation increases, on a per-share basis, investors may be worse off.

Putting that picture together, overall, LCID stock appears to be too risky for my blood right now.

On the date of publication, Chris MacDonald 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.

On the date of publication, the responsible editor did not have (either directly or indirectly) and positions in the securities mentioned in this article.