This isn't going to be easy.
Depending upon whom you ask, there are anywhere from 200 to 300 electric vehicle companies in China and they run the gamut from discount offerings below $5,000 to high-end models.
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China is the world's largest auto market and more than 80% of the electric cars sold there last year were made by domestic automakers, the New York Times reported in April.
Electric cars were almost a quarter of China’s market in 2022 compared with less than 6% in the United States. EVs are expected to be over a third of the Chinese auto market by the end of this year.
The market share of China’s domestic car companies rose to 52% in the last quarter of 2022, from 47% the year before, largely on a huge rise in electric vehicle sales.
Into this highly competitive market comes Lucid Motors (LCID), the Newark, Calif.-based electric vehicle company.
The startup is preparing to enter the Chinese auto market, according to its head of China operations Zhu Jiang, a former vice president at Nio (NIO), an EV company headquartered in Shanghai, who has also worked for BMW (BMWYY) and Ford (F).
Considering Local Production
Lucid will sell imported cars in China while also considering local production in the country, according to Reuters, which cited a person familiar with the matter who was not authorized to speak with media.
The company has confirmed that it plans to launch its Lucid Air models in China soon, but it refused to comment on rumors that it was looking into production sites across the country.
Tesla (TSLA), the largest EV manufacturer in the world, opened its first factory outside the US in Shanghai in 2019 and the plant currently produces 22,000 vehicles a week.
Lucid, which had been seen as a serious rival to Tesla in the luxury segment, has been struggling.
Last month, the company reported a sharply wider first-quarter loss.
First-quarter revenue more than doubled to $149.4 million from $57.7 million a year earlier, but fell short of Wall Street’s expectations of around $209.9 million.
The carmaker said that it delivered 1,406 Air sedans to customers in the first quarter and produced 2,314 units.
Deliveries Begin in Saudi Arabia
In addition, Lucid's Air sedans no longer qualify for a $7,500 federal tax credit that is available to EV purchasers, following recent rule changes that added new price ceilings for eligible models. The 2023 Lucid Air starts at $87,400.
Needham analyst Chris Pierce slashed his price target on Lucid to $10 from $16 but kept his buy rating on the shares, telling investors that the first-quarter results were "modestly worse" relative to the already low expectations.
Pierce noted the importance of the company’s Dream Ahead Tour, which began in April and will visit more than 40 cities over the next seven months.
The tour will be key as Lucid looks to drive higher brand awareness and vehicle deliveries for their flagship Lucid Air Sedan while stoking interest in the brand ahead of the company's Gravity SUV launch next year, the analyst said.
Meanwhile, Lucid recently said that it is raising about $3 billion through a public stock sale and new investment from Saudi Arabia’s Public Investment Fund (PIF), its majority stockholder.
The company has begun deliveries of its Air sedan to customers in Saudi Arabia, according to Teslarati, and is poised to start delivering hundreds of Air sedans to customers in the upcoming months.
Lucid’s Saudi factory is expected to start operations in the third or fourth quarter.
