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With former Congressman Lee Zeldin getting the nod from President-elect Trump to lead the Environmental Protection Agency (EPA), the future is looking uncertain for electric vehicle (EV) stocks under the incoming administration. Investors are increasingly concerned about potential rollbacks of green energy policies that currently support EV demand, including the EV tax credit that's rumored to be on the chopping block. Zeldin, a vocal critic of the Inflation Reduction Act (IRA), may ease emissions regulations and reduce clean energy funding, potentially dampening EV adoption and favoring competition from gas-powered vehicles, which could further slow EV adoption domestically.
Amid this rising uncertainty surrounding potential regulatory changes, California-based Lucid Group (LCID), a luxury electric vehicle manufacturer, is making notable strides in the EV industry. Like many non-Tesla (TSLA) names in the space, LCID stock trades below $5 - which is considered a penny stock, meaning investors will want to consider not just the outsized rewards, but also the higher-than-average risk that comes along with the shares.
The company just began accepting orders for its highly anticipated Gravity SUV, and is attracting bullish attention in the form of an upgrade from R.F. Lafferty to a “Buy” from “Hold.”
However, LCID stock has underwhelmed this year. With a market cap of $6.3 billion, the stock is down 51.8% year-to-date, and hit new lows below $2 per share earlier this month. Now down 96% from all-time highs, the stock's decline has prompted speculation about whether this could present a buying opportunity for long-term investors with a sufficiently high risk appetite.
Lucid Has High Hopes for Air Sedan, Gravity
Recently, Lucid revealed on X (formerly known as Twitter) that its Air sedan participated in test drives with the California Highway Patrol. This suggests that law enforcement agencies may soon adopt the Air sedan as a patrol vehicle. Moreover, Lucid has high hopes for international partnerships, including the Dubai Police and the Saudi Arabian government, which has already signed an agreement to purchase 100,000 Air sedans.
Meanwhile, Gravity, Lucid’s new SUV, is now available for preorders and is scheduled to begin production in 2025. The Gravity SUV’s price range is set between $80,000 and $95,000, closely aligning with Tesla’s Model X, its key competitor in the luxury EV market.
Peter Rawlinson, Lucid’s CEO and a former Tesla engineer, expressed enthusiasm during the Q3 earnings call, stating: “Today we are delighted to open the order book for the much-anticipated Lucid Gravity SUV, a landmark product, which remains on track for the start of production this year.”
As Lucid continues to expand its lineup and explore new markets, the company aims to solidify its position as a premium EV manufacturer, leveraging innovations like the Air and Gravity to compete in an increasingly competitive market.
Lucid Delivers Q3 Results
On Nov. 8, Lucid Group reported its Q3 earnings, reporting a loss of $992.5 million, or $0.41 cents per share. On an adjusted basis, the per-share loss of $0.28 surpassed the consensus forecast of $0.32. Revenue reached $200 million, reflecting an impressive 45% year-over-year increase and edging out expectations by more than $2 million.
The quarter saw Lucid achieving record deliveries of 2,781 vehicles, keeping the company on track to meet its full-year target of 9,000 vehicle deliveries. CEO Rawlinson hailed the quarter as a "landmark" achievement, stating, “Our momentum continues with our third consecutive quarter of record deliveries.” He also emphasized the company’s alignment with its financial and production goals.
Despite these impressive numbers, Lucid continues to face challenges in terms of profitability. The company reported an EBITDA loss and a significantly widened net loss compared to the previous year, driven by elevated operational expenses. Lucid is also burning cash rapidly, with negative free cash flow of $622.5 million in Q3.
The company secured a $1.75 billion cash infusion via a recent capital raise, and Lucid ended Q3 with $5.16 billion in total liquidity, which it expects to support operations “well into 2026.”
What Do Analysts Say About Lucid Stock?
Following Lucid Group's earnings report, R.F. Lafferty analyst Jaime Perez upgraded the stock from “Hold” to “Buy,” and set a price target of $4 - the new Street-high. Perez highlighted Lucid's notable volume growth, improved cost structure, and robust liquidity as key factors supporting the upgrade.
The upgrade is an extremely rare bullish note for LCID, which now has exactly one “Buy” rating from the 11 analysts in coverage. Overall, Lucid stock is a “ Hold” on Wall Street, with an average price target of $3.09 - implying expected upside of 51.5% from current levels.
The Bottom Line on LCID Stock
Lucid remains an early-stage EV company with significant potential. The upcoming Gravity SUV could be a game-changer, but its success will depend on how strong the demand proves to be, and whether Lucid can efficiently scale production to meet delivery timelines. This has been a challenge for the company in the past, particularly with the Lucid Air sedan - and new questions about policy support for EVs add a fresh layer of uncertainty heading into 2025 and beyond.
Additionally, as a penny stock, Lucid is highly volatile, as evidenced by its recent price swings. Investors should be mindful of the associated risks before considering this speculative stock. While the company has promising products, its ability to navigate operational challenges and meet market expectations will be crucial to its long-term growth.
