Lucid Group Inc. (LCID), the luxury electric vehicle manufacturer once hailed as a potential rival to Tesla, finds itself navigating increasingly turbulent waters. Despite launching production of its anticipated Gravity luxury electric SUV late last year and significant financial backing from Saudi Arabia’s Public Investment Fund (PIF), the company faces mounting challenges reflected in its plummeting stock price and substantial operating losses.
The initial public offering of Lucid in 2021, achieved through a reverse merger with a special purpose acquisition company (SPAC), was met with immense investor enthusiasm. Bank of America famously dubbed it the next “Tesla/Ferrari,” fueling expectations for a new era of ultra-luxurious electric vehicles. Bolstered by a $4.5 billion capital injection largely from the PIF, Lucid’s stock soared, briefly giving it a market capitalization exceeding that of industry stalwart Ford Motor Company. At its peak in November 2021, Lucid’s market value touched $90 billion.
However, the subsequent three years have painted a starkly different picture. Lucid shares now trade near $2.50, representing a staggering 96 percent decline from their highs. This dramatic fall stems from a confluence of persistent production difficulties, weakening overall demand for electric vehicles, especially at premium price points, and initial pricing strategies that proved too high for the market.
Lucid’s ambitious production targets have consistently remained out of reach. Grandiose plans to manufacture 49,000 EVs by 2023 and half a million by 2025 have failed to materialize. To date, the company has delivered just over 20,700 vehicles to customers since its inception. Production figures show struggles to significantly ramp up output, and delivery numbers, while occasionally exceeding quarterly production through selling existing inventory, highlight the ongoing challenge of matching manufacturing capacity with actual sales. Unsold inventory has remained a persistent issue, fluctuating over quarters but underscoring the difficulty in moving its high-priced vehicles.
The financial strain on Lucid is severe. Operating losses have ballooned year after year, reaching over $3 billion in 2023 and remaining at a similar pace in 2024 based on early figures. Analysis of quarterly performance reveals a startling reality: in the third quarter of 2024, Lucid lost an estimated $27,707 for every single vehicle it sold, resulting from operating losses exceeding $770 million for the period. Put another way, during the first three quarters of 2024, the company was burning through cash at a rate of nearly $8.5 million every single day. This unsustainable cash burn raises serious questions about the company’s long-term financial viability.
Despite introducing the Gravity SUV, which was intended to drive significant sales growth in 2025, the company’s near-term outlook remains clouded. Even with technology often considered superior to competitors, Lucid has been forced to cut prices to stimulate demand, further pressuring margins. Adding to the uncertainty, the company announced management changes earlier this year, with the chief executive stepping down and the chief operating officer taking over as interim CEO.
The stock market has reacted warily to these developments. Lucid shares were already declining before the management transition and have fallen more than 16 percent year to date. The stock exhibits significant volatility, trading within a wide range of $1.93 to $4.43 over the past year.
Looking ahead, the path for Lucid is fraught with challenges. Industry watchers, including analysts at 24/7 Wall St., foresee a difficult road, suggesting the company might either exhaust its funding or be taken private, likely by its majority stakeholder, the Saudi PIF, before the end of the decade. While the promise of luxury and advanced EV technology remains, Lucid must urgently address its production inefficiencies, align pricing with market realities, and drastically curtail its operational losses to convince investors it can navigate out of its current precarious position.
