EV maker Lucid’s $338,000 loss per car turns investors off
Lucid Air, an American electric vehicle manufacturer once seen as a significant rival to Tesla, is encountering difficulties.
The company's stock has plummeted by almost 25% this year, hitting an all-time low. Analysts have significantly reduced their positive recommendations, with only about a quarter of their endorsements now favoring the company, as reported by Bloomberg.
Lucid has released production data showing that in the third quarter of this year, they manufactured 1,550 vehicles, of which 1,457 were delivered to customers. This marks a minor increase from the 1,404 vehicles delivered in the previous quarter but a substantial decrease in production compared to the 2,173 units produced in the second quarter of 2023.
Lucid has not provided an explanation for this production slowdown, and it appears increasingly unlikely that the company will meet its target of producing 10,000 vehicles annually.
The problem extends beyond reduced production; it's also the significant losses Lucid incurs on each vehicle produced. Bloomberg estimates that Lucid loses $338,000 (€318,000) for every model it manufactures. Consequently, some analysts are concerned that Lucid may be at risk of defaulting on its debt.
"Lucid is falling far behind the pace needed to reach even 10,000 cars this year, which is why they continue to spend money”, said Jerry Braakman, Chief Investment Officer of First American Trust.
The big question now is how these financial results will affect the compensation of Lucid's CEO, Peter Rawlinson, whose income was a staggering $379 million last year.
Hope for improvement in 2024
While Lucid's current financial outlook appears challenging, there is hope for improvement in 2024. The introduction of the new Lucid SUV, named "Gravity," is expected next month, and the company established a partnership with Aston Martin earlier this year.
Moreover, with the backing of the Saudi Arabian Public Investment Fund, which supports Lucid, it seems unlikely that the company will face immediate financial constraints.
Nonetheless, investors have their limits, and Lucid's low production numbers are hard to ignore. We anticipate that the automaker will provide a compelling explanation for its performance decline when it reports its third-quarter earnings next month.
It's also important to note that the Lucid Air is not an inexpensive sedan, with a starting price of $77,400 in the United States, and fully equipped models can reach up to $249,000.
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