Lucid Group (NASDAQ:LCID) is stuck in more ways than one. Investors in LCID stock certainly feel stuck. In recent months, shares in the fledgling electric vehicle (or EV) startup have traded sideways.

However, that’s not all. As I put it previously, Lucid is also stuck in the mud, in terms of operating performance. As seen in Lucid’s most recently-released fiscal results, production and demand headwinds continue to affect results negatively.

To make matters worse, even if this EV contender starts taking off performance-wise, the resultant improvements may not be enough to justify its current valuation.

This comes despite one factor that many believe keeps it in the running to become an EV market leader similar to Tesla (NASDAQ:TSLA).

All of this creates a situation with this stock, where, irrespective of whether things improve or deteriorate, risk/return remains unfavorable for investors. Here’s why.

LCID Stock: Yet Another Challenge to the Bull Case

If you’ve been following my coverage of Lucid Group, you know full well my varied critiques about the company. Again, these include Lucid’s underwhelming production progress, as well as its inability to build up a customer base.

Yet alongside these key negatives, there may be another one at play that challenges the LCID stock bull case. As a Barron’s commentator opined last month, Lucid’s business model may all but guarantee that it’s on a one-way trip to nowhere.

By focusing on producing vehicles selling for around $100,000, the company is limiting itself to a very small market.

In the commentator’s view, Lucid needs to either “go big” (start selling ultra-premium cars priced in the mid six-figures), or go mass market, just as Tesla has done in recent years. Yes, the early-stage EV maker has lowered prices, suggesting that this “stuck in the middle” take is now out of date.

Still, with Lucid’s basic EV sedan model, the Air Pure, retailing for $83,900, the company has a ways to go before it has truly pivoted into a mass affluent automotive brand. This may limit the potential for a supercharging of growth.

Saudi Backing isn’t a Silver Bullet

LCID stock bulls aren’t ignorant of the aforementioned challenges. They simply provide a counter argument supporting their continued optimism about Lucid’s future prospects.

Namely, they cite the company’s backing from the Government of Saudi Arabia as something that leaves it well-positioned to grow into an EV powerhouse eventually.

While this support (from both the Saudi Government itself and from the Gulf oil state’s PIF sovereign wealth fund) differentiates Lucid, it is not a silver bullet.

PIF could continue to invest billions into newly-issued LCID shares, enabling the company to shore up its cash position. However, throwing billions more into the company will not single-handedly change the situation. Solving the demand problem is a top priority.

Even if a large purchase order from the Saudi Government (up to 100,000 vehicles for 10 years) is nothing to sneeze at, for this company to become profitable, it’s going to need to sell a volume of EVs annually that vastly exceed this order.

It’s going to need to achieve some level of success in the U.S. automotive market.

Bottom Line

Lucid has its work cut out for it, but I’ll admit that it’s not an impossible task. Perhaps through stronger marketing or pricing strategies, or even from the upcoming rollout of its first SUV model (the Gravity), the company can finally emerge out of its slump.

The question, though, is whether Lucid has enough of a growth surge to drive a comeback for the stock. LCID’s market cap of $14.5 billion already prices-in much of this potential upside.

Also, keep in mind that if the company continues to dilute shareholders in future capital raises, this too raises the bar for the level of growth needed.

For now, however, it’s best to assume LCID stock has yet to exit the cul-de-sac. With this, there’s still little reason to enter a position today.

LCID stock earns a D rating in Portfolio Grader.

On the date of publication, neither Louis Navellier nor the InvestorPlace Research Staff member primarily responsible for this article held (either directly or indirectly) any positions in the securities mentioned in this article.