Lucid Motors Overdelivers On EVs In 2022, But Can It Compete With Tesla, NIO And Other Automakers?

Key takeaways:

• Lucid Group, a luxury electric vehicle maker, announced that it over delivered for 2022 by producing 7,180 vehicles instead of the original guidance of between 6,000 and 7,000.
• While Lucid’s stock is down about 79% from one year ago, the share price is up over 30% in 2023 on the positive news of tamer inflation.
• With Tesla recently cutting its prices, there are worries that other EV makers will have to follow suit. Lucid investors are concerned about price reductions and delivery issues as the luxury EV maker struggles to get cars to customers.

It’s no secret that the electric vehicle space has been sensitive to rate hikes as consumers think twice about making big purchases. However, EV makers have been in the news lately for various reasons.

Lucid Group has been trying to compete with Tesla by offering luxury electric vehicles. The company recently announced that it exceeded expectations for vehicle production in 2022. We’ll look at what this means for the EV market moving forward, as well as for investors.

Lucid Group overdelivers on electric vehicles

The luxury electric vehicle maker known for the fastest-charging EV on the market recently announced that production was able to overdeliver based on previous guidance. Lucid produced 3,493 vehicles at the manufacturing plant in Arizona and delivered 1,932 vehicles during the fourth quarter.

On an annual basis, the luxury EV maker produced 7,180 vehicles, which exceeded the original guidance of 6,000 to 7,000. While the company exceeded guidance on cars produced, it only delivered 4,369 EVs during the year.

It’s worth noting that Lucid initially slashed its 2022 EV production target back in February due to supply chain and production issues. At the time, shares of the EV maker dropped significantly as investors weren’t happy with this news. Due to logistics issues, the company had to cut its delivery guidance in August of that year.

Lucid CEO Peter Rawlinson commented, “We remain confident in our ability to capture the tremendous opportunities ahead given our technology leadership and strong demand for our cars.”

Rawlinson also stated on the investor call that the supply chain issues weren’t related to the ongoing global shortage of semiconductor chips. Instead, the problems were due to commodity parts like glass and carpet.

How is Tesla performing?

Tesla recently announced its electric vehicle delivery stats for 2022. The company produced 439,701 vehicles and delivered over 405,278 cars in the fourth quarter. For the full year, vehicle production was up 47% on a year-over-year basis to 1,369,611, while vehicle deliveries went up 40% to 1,313,851.

Tesla will share the financial results for the fourth quarter and the full year on January 25, 2023, after the market closes. We will be monitoring the situation to see how the company performed.

The most important news coming from Tesla is the recent price cuts, with the Model 3 in China going for less than Nio’s ET5 mid-size sedan. Tesla’s version is priced at $33,000, while Nio’s product is at $45,000 for an equivalent model.

Furthermore, Tesla has begun production at two new factories this year, one in Austin, Texas, and the other in Brandenburg, Germany.

Can Lucid compete with Tesla, Nio and other automakers?

Whether or not Lucid can compete with Tesla and other automakers has been a major question over the last few years. Elon Musk went on record last month to state that he thought Lucid was about to die when he tweeted that it wasn’t long for the world.

We have already looked at how Tesla is performing, so we need to mention Nio, the Chinese EV maker. The company recently lowered the delivery outlook for the fourth quarter due to supply chain disruptions that were caused by COVID-related restrictions. It expects to deliver between 38,500 to 39,500 EVs in the final quarter of the year, which is down from the initial expectations of 43,000 to 48,000. Nio shares dropped about eight percent when this news came out.

The biggest issue for Lucid is delivering its vehicles to customers. It’s worth mentioning that EV makers have used the direct-sales model that Tesla originally introduced to allow customers to purchase vehicles from the source instead of going to a dealer’s lot.

Another big concern for Lucid is the overall economy and consumer spending habits. With an average price for luxury EVs landing around $140,000, there are worries that consumers will be limiting their spending on non-discretionary purchases.

What’s happening in the electric vehicle market?

While the economy is in a confusing state with soaring inflation and aggressive rate hikes, consumer spending has decreased in certain categories.

One thing worth mentioning about the electric vehicle market and the clean energy space overall is that global governments are allocating more funds towards this sector. The Biden Administration announced The Inflation Reduction Act last year, which was designed to encourage businesses to transition towards green energy.

This colossal investment in cleaner energy had the government allocate $369 billion towards investments in renewable energy sources and tax credits. It was created to incentivize companies to produce cleaner energy in the U.S., and many companies will want to take advantage of this opportunity.

The various tax credits should encourage people to transition toward electric vehicles. However, we can’t ignore the role of soaring inflation and rate hikes on consumer spending habits since there are still concerns about a possible recession in 2023.

Should you invest in Lucid Group?

Shares of Lucid Group Inc. are hovering around the $8 mark, and the stock is down about 79% from one year ago. The company will report its results for the fourth quarter on February 22, 2023, so we will be paying attention to see how the earnings worked out for them.

Investors will want to know what customers are paying for every Lucid sold and details about the delivery schedule. It was impressive that the company produced 3,493 cars during the quarter, but investors will wonder why only 1,932 vehicles were delivered. It’s unknown if the vehicle deliveries weren’t higher due to logistics issues or a lack of customers.

Lucid delivered just shy of 1,400 vehicles in the third quarter, with an average price of almost $140,000.

A major concern for EVs right now is the idea of price cuts due to the news that came out about Tesla lowering its price. We will have to wait and see if the company decides to cut the price of its luxury EVs.

In positive news, Lucid’s stock price has risen about 32% in 2023 as tamer inflation numbers have led to the return of investors to growth stocks. This was also in addition to the positive news of Lucid exceeding production expectations on electric vehicles in 2022.

What made the over delivery even more impressive was that the company increased production in the fourth quarter to the point that the one quarter reached almost half of the production for the entire year.

Another bit of positive news for Lucid was a cash injection of $1.5 billion last month due to an equity offering. About $915 million of that equity came from a private sale of almost 86 million shares to Saudi Arabia’s Public Investment Fund. During the last earnings report, Lucid revealed that it had about $3.85 billion in cash as of September 30.

How should you be investing?

If you’re a proponent of cleaner energy sources, you’re likely considering investing in the EV space. The challenging aspect of investing in electric vehicles is that this space is the most sensitive to rate hikes, as we’ve seen stocks in the industry significantly drop in 2022.

Renewable energy is often viewed as the way of the future, but there’s still some hesitancy with investing in green energy stocks. If you want to invest in green companies but don’t know where to start, look into Q.ai’s Clean Tech Kit. By investing this way, you’re leveraging the power of artificial intelligence (AI) to jump on the clean energy revolution.

The bottom line

With climate change becoming a greater concern globally, we’re going to see more governments investing in cleaner energy sources and companies that produce green energy alternatives.

While we can’t ignore the overall broader economic situation with soaring inflation and higher interest rates, there’s hope that the economy can bounce back in 2023. Either way, we will monitor the EV market to see how companies like Lucid and Tesla perform.

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