Like most electric vehicle plays, Lucid Group, Inc. (NASDAQ: LCID) has had its share of ups and downs. The luxury EV maker’s stock has made two trips to the $60 level only to reverse towards its early pre-SPAC days.
MarketBeat.com - MarketBeat There is a larger picture here, that is the long road ahead for EV manufacturers. In the second half of the decade, electric-powered cars and trucks are expected to play a big role.
The International Energy Agency's (IEA) current Global EV Outlook shows a growing list of subsidies and incentives that has consumers flocking towards EV in record numbers. The list of EV models for purchase at dealerships or online has swelled to 450 compared to less than 100 in 2015.
With demand and supply looking favorable, the EV industry is bound to produce multiple winners in the future. What happened to the driver of the car?
Lucid is in a better financial position than most players. In the second quarter, it had $4.7 billion in cash and equivalents. If you compare this to the company's market cap, you'll see that cash is a small part of it. Given the growth prospects, that is some pretty cheap cash to sell.
The production of the flagship product is off to a slow start. More than 1,400 vehicles rolled off the assembly line in the first half of the year and less than 700 were delivered to customers in the second quarter. The impact of recent supply chain and logistical issues is clear. The stock has been stuck in neutral all summer because management has reduced its full year production guidance.
The demand and financial strength are there, so the near-term challenges should not matter in the long run. Liquidity will keep it running for a long time. It's a good situation to be in at a time when competitors are fighting for their lives.
The good news is that the core EV technology is developed and manufactured in-house by the company. This is where the auto racing-inspired battery packs are made. The components are shipped to the company's car factory.
Help is on the way. The Casa Grande facility is currently undergoing a Phase 2 expansion that will triple its installed capacity. A ramp in production can't come soon enough when you're sitting on 37,000 vehicles worth over $3 billion in sales.
There is a new production facility in Saudi Arabia. The Saudi Arabia facility is expected to boost annual capacity by 155,000 vehicles once it is completed. If you build it, they will come.
Expanding in-house parts production and vehicle assembly should make securing key materials and parts less of a problem, as well as improve Lucid's ability to meet demand over time.
The efficiency of Lucid's EV technology is a differentiating factor. There are a number of ways in which efficiency can be defined in the EV space. All of the above are accomplished by the technology set out by the company.
The company says that the 4-door Lucid Air sedan has what they call "unprecedented efficiency". The low battery cost component of the cost of goods sold is related to this. The use of less battery cells per vehicle gives a leading range.
The luxury features and 13-hour battery charge time make the base model worth the sticker price to some car buyers. As expansion projects ramp production, Lucid will roll out its second offering, the Gravity SUV. If consumer interest in the Lucid Air is any indication, the wait time for Gravity is likely to be very long.
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