After failing to meet its delivery targets and seeing its shares drop so much that they were removed from the Nasdaq 100 index – and index of the 101 largest non-financial stocks listed on the exchange – in 2023, February appeared to have brought a reprieve to the beleaguered electric vehicle (EV) maker, Lucid Motors (NASDAQ: LCID).
Indeed, the Saudi-owned company achieved several victories starting in late January, including several major deals with aluminum producers in Saudi Arabia and luxury commerce platforms in the U.S. that enabled its stock to rise as much as 12% in mere days.
Despite the agreements and the short-term rise, Lucid’s long-term weakness and the hotter-than-expected January CPI, paired with a worrying report by the National Highway Traffic Safety Administration (NHTSA), proved enough to send the EV maker’s stock 7.52% into the red on Tuesday, February 13.
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Why U.S. authorities might force a major Lucid recall
A major point of concern for Lucid investors and drivers alike has been a recent report by the NHTSA, which discusses a safety issue with Lucid Air vehicles manufactured prior to July 2022.
According to the document, the High Voltage Coolant Heater (HVCH) in these cars is defective and may not be able to achieve its primary safety goal – to provide adequate windshield defrost capability.
While Lucid already implemented a solution – a notification system that warns drivers they should contact the company for an HVCH replacement – the NHTSA argues that it likely isn’t sufficient.
As a result, the watchdog’s Office of Defects Investigation (ODI) has opened a Recall Query (RQ) for said vehicles.
Lucid stock and the ‘EV winter’
Notwithstanding the stock market rally Lucid experienced starting at the tail-end of January, its shares have been on a near-constant decline for months. In total, in the last 52 weeks, they fell 67.86%.
Similarly, they declined 20% year-to-date and, in addition to ending the latest full trading session 7.52% in the red at $3.32, they are also 6.21% down in the last week.
Despite the overall downtrend and the Tuesday decline, Lucid’s 30-day gains haven’t been entirely wiped, and the firm’s stock is still 15.28% in the green. There is also some hope that Wednesday will be a stronger day for the EV maker as its shares are up 2.71% at press time in the pre-market.
Finally, Lucid’s woes don’t entirely fall on the company’s head as recent months have seen a broad downturn in the entire EV industry – largely due to the combination of rising competition and declining demand – and many of the firm’s competitors, including Tesla (NASDAQ: TSLA), Nio (NYSE: NIO), and Rivian (NASDAQ: RIVN), have all been offering a similar performance since January 1.
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