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Many startup electric vehicle (EV) companies hit record lows during 2024. Lucid Motors (LCID), for instance, fell 28% last year even as it recovered from its record lows under $2 that it hit in November. EV stocks were simply out of favor with the market.
Now though, Lucid shares are recovering, with LCID up 50% from its lows. As the company commences deliveries of its widely awaited Gravity SUV, I will explore four reasons investors should buy LCID stock and two reasons they should stay away.
4 Reasons to Buy LCID Stock in 2025
Importantly, Lucid Motors is one of the rate “investment-worthy” names in the startup EV ecosystem – a space that has seen multiple bankruptcies over the last couple of years. There are four reasons for this:
- An impressive product: Lucid Motors has an impressive product proposition and its Lucid Air sedan won multiple accolades. Its cars boast an impressive range and are technologically superior to many competing models. A good, differentiated product is the starting point when considering an EV stock. The companies producing so-called “me too” vehicles are increasingly going out of business.
- Potential for technological partnerships: Luxury carmaker Aston Martin (ARGGY) has partnered with Lucid to buy electric motors and batteries, which provides validation to Lucid Motors’ claim that it offers a world-class product. During the third-quarter earnings call, CEO Peter Rawlinson said that the company is “actively engaged in discussions” with more players for licensing its technology and called upon markets to “watch this space” for more updates in the future.
- Launch of new products: Lucid has begun deliveries of its Gravity SUV, which will help it considerably increase its total addressable market (TAM). This will be followed by the midsize platform, production of which is expected to commence in late 2026.
- Backing from Saudi Arabia: Along with a compelling product, startup EV companies also need solid financial backing to fund their cash burn. On this front, no other startup EV company that I can think of comes closer to Lucid Motors. Saudi Arabia’s Public Investment Fund (PIF) - which is LCID’s largest shareholder - has kept its coffers wide open. LCID raised over $4 billion last year and has a cash runway “well into 2026.” On a similar note, there have been rumors that Saudi Arabia will acquire Lucid Motors. The company is building a manufacturing plant in the country and is key to the oil-rich kingdom’s strategy of diversifying its economy.
2 Reasons to Stay Away
On the other hand, analysts are not bullish on LCID. Only one of the 10 analysts actively covering the stock rates it as a “Strong Buy.” Eight analysts rate it as a “Hold” and one as a “Strong Sell.” Lucid Motors has also run ahead of its mean target price of $2.91, although the Street-high target price of $4 is almost 30% higher than its Jan. 16 closing price.
Brokerages’ pessimism toward Lucid shares is not hard to comprehend. President-elect Donald Trump has promised to end policies that are beneficial to EV companies, casting a shadow over companies like Lucid Motors. EV names were struggling even prior to Trump’s election amid slowing demand, production overcapacity, and a price war.
Lucid Motors has yet to achieve scale, and there is no clear timeline for profitability. Secondly, Lucid Motors still has a market capitalization of over $9 billion and trades at almost 7 times the expected sales over the next 12 months. The multiples are higher than those of its EV peers, including Rivian (RIVN), which went public the same year as Lucid.
The Bottom Line on LCID Stock
At this point, I am staying constructive on Lucid Motors thanks to the rollout of its Gravity SUV, which Edmunds termed “a new benchmark for electric SUVs.” The company now has to achieve scale as its current volumes of around 1,000 cars a month might not be able to justify its valuations.
