Well, people often consider Lucid the next Tesla. Although it shares some DNA with Tesla, is it in the race to join the 12 Zero Club?
From 2009 to 2012, Peter Rawlinson, the CEO and CTO of Lucid, was the chief car engineer at Tesla. With a single charge, the Lucid Dream, the company’s premiere car, can go up to 520 miles, surpassing the range of Tesla’s Model S Long Range by over 100 miles.
With even more expensive EVs, Lucid caters to a higher-end market than Tesla.
However, Lucid only began selling cars in October of last year, and it will probably take the startup company almost ten years to catch up to Tesla in terms of production capacity. In comparison to Tesla’s market capitalization, Lucid’s billions worth market value is minuscule.
But what the future holds for Lucid is yet to be discovered.
Let’s find out, shall we?
Lucid Motors: An Overview
Using its resources and facilities, the automotive company Lucid Group, Inc. is committed to designing, developing, manufacturing, and marketing electric vehicles, EV powertrains, and battery systems.
The company’s concentration on internal technology innovation, vertical integration, and a new beginning in engineering and design led to the creation of its revolutionary electric car, the Lucid Air.
Customers who are tired of luxury cars are the target market for the all-electric Lucid Air. Lucid Air is produced at the greenfield Advanced Manufacturing Plant-one, an electric vehicle manufacturing facility in Casa Grande, Arizona. It sells cars directly to consumers through retail locations and direct online sales.
Challenges Faced by Lucid Over the Years:
Lucid Motors has faced a range of challenges over the years. These challenges span technological, financial, operational, and market-related issues.
Here’s an overview of the critical difficulties Lucid has encountered:
1. Funding and Financial Stability
Lucid struggled with securing adequate funding in its early stages. The high capital requirements for EV development and production posed a significant hurdle.
Despite investments from sources like the Public Investment Fund of Saudi Arabia, maintaining financial stability and ensuring consistent cash flow have been ongoing concerns.
2. Production and Manufacturing Delays
The company’s construction of a manufacturing facility in Casa Grande, Arizona, encountered delays, affecting vehicle production timelines.
Ensuring quality while scaling up production has required significant investment in technology and processes.
3. Supply Chain Disruptions
The global semiconductor shortage and disruptions in the supply chain, especially during the COVID-19 pandemic, have impacted Lucid’s ability to source essential components.
4. Technological Challenges
Developing high-performance battery technology that offers extended range, efficiency, and safety has been critical but challenging.
Integrating advanced autonomous driving features and ensuring their reliability and safety has required significant R&D investment and technological breakthroughs.
5. Regulatory and Compliance Hurdles
Meeting stringent safety and emission standards across different markets has been a significant regulatory hurdle. Gaining necessary certifications for new vehicles, especially in international markets, can be lengthy and complex.
How will Lucid Stock Perform in 2024?
Lucid Stock Price prediction is highly dictated by its struggle to hold its ground in the growing EV market. Lucid attributed the slow delivery rates to issues with its supply chain, general economic conditions, and the postponed launch of its Gravity SUV, initially scheduled for late 2023 but now for late 2024.
Still, Lucid has slashed pricing several times in the last year, indicating that it may be difficult to differentiate itself in the competitive EV industry.
Compared to its pre-merger aim of 90,000 vehicles, Lucid only intends to deliver about 9,000 vehicles in 2024. It has been projected to bring in $9.93 billion this year but now expects only to make $896 million.
Is Lucid a long-term stock?
Lucid is just getting started in its activities. Even before accounting for overhead costs like executive pay, advertising, or research, the company spends much more to build and deliver its automobiles than it can recover by selling them, as evidenced by its fourth-quarter gross loss of $252.8 million. Sales are dropping, thus, rather than getting better, this issue is growing worse.
The company’s $4.3 billion in cash and short-term investments on its balance sheet will likely deplete in a few years. At that point, it would need to obtain new funds through debt or equity dilution, which entails issuing and selling more shares of its stock.
Considering its fragile financial state, Lucid stock price prediction hints that the stock is costly, with a price-to-sales (P/S) multiple of 8.6. Its cash position is diminishing, gross margins are negative, and revenue is dropping.
Lucid Stock Price Predictions for 2030
According to Lucid stock price predictions, it will probably make about $45 billion in revenue by the end of the year if its average selling prices between 2026 and 2030 stay about the same (at about $91,000 per vehicle).
Lucid’s market valuation of $35 billion puts it trading at a 27-fold multiple of this year’s sales. The market capitalization of $1.2 trillion is obtained by multiplying that price-to-sales ratio by $45 billion.
But as its sales growth slows down year over year, it’s highly improbable that Lucid will continue to trade at such a high price. Tesla is trading at 12 times this year’s sales because of this.
If Lucid meets its growth objectives and trades at a 12-to-1 ratio in 2030, its valuation would be roughly $540 billion, falling short of the trillion-dollar mark.
Will Lucid Stock be like Tesla?
Even if Lucid’s stock price prediction for 2030 is correct, it still appears inexpensive at two times the expected 2026 sales. In contrast, Tesla’s market value is four times its projected sales for 2026, which makes Tesla’s stocks a good investment.
As it increases the production of the Gravity SUV, Lucid anticipates that its $4.78 billion in liquidity at the end of 2023 will last through at least 2025. However, as per Lucid stock price predictions for 2030, it will continue to burn cash at an alarming rate, generating negative annual free cash flows (FCF) of $3.51 billion in 2024, $2.65 billion in 2025, and $2.23 billion in 2026.
Although Lucid has considerable room to raise capital due to its debt-to-equity ratio 0.8, its business strategy doesn’t appear viable now. And just like many other losing EV manufacturers, its shares will remain out of favor.
Bottom Line
The long-term outlook for Lucid Motors’ stock price by 2030 is optimistic, contingent on several key factors. If Lucid continues to innovate in EV technology, scale production efficiently, and expand its global market presence, its stock price could see substantial growth. Successfully executing its strategic initiatives and consistent financial performance will be pivotal for Lucid’s stock to flourish in the next decade.
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