The wider automotive sector is facing headwinds amid uncertain macroeconomic conditions. In addition, the fact that tariffs seem to be back in vague is adding quite a bit of uncertainty to an already precarious condition.
Unexpectedly, this isn’t just a matter that’s affecting traditional carmakers who focus on internal combustion engine vehicles — battery-electric carmakers aren’t faring much better, with the exception of Tesla (NASDAQ: TSLA).
Once hailed as a ‘Tesla-killer’, luxury EV producer Lucid (NASDAQ: LCID) has been one of the harder-hit companies. It’s been quite the volatile year for Lucid stock — in July, it reached prices as high as $4.25 on promising delivery numbers and fuel efficiency — only to lose all of those gains on account of price cuts for its flagship models.
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In August, the price of LCID stock once again reached $4.25 — since then, it has been on a steady decline on account of high cash burn, share dilution, and investor skepticism. The company’s Q3 2024 earnings call, held on November 7, didn’t help — although the results did exceed Wall Street’s expectations, the venture’s losses widened.
At press time, one LCID share was trading at $2.12 — year-to-date (YTD) losses stood at 49.04%. However, there is some good news on the horizon, which could see the luxury automaker begin to consistently meet its production and delivery targets.
Strategic move to prove to be a lifeline for Lucid stock
Back in September of 2023, Lucid opened its first manufacturing facility outside of the United States in Jeddah, Saudi Arabia. It’s an ambitious move — the venture expects to see production gradually ramp up to 150,000 vehicles annually. When it was unveiled, it had a production capacity of 5,000 vehicles per year.
Projects like these take time to hit their stride, however. The company has prioritized training its Saudi workforce in Arizona thus far — but it seems like the project is beginning to pay off. Lucid is apparently on track to double its initial Saudi production capability to 10,000 cars per year, per a Gulf News interview with Vice-President and Managing Director of Lucid Middle East, Faisal Sultan.
In it, Sultan stated:
“We are on track to produce more than 10,000 cars annually. If need be, it can go above that, but we monitor the demand, in different global regions, and based on that can change our production schedules.”
Managing to consistently meet production targets would go a long way in restoring investor confidence in 2025.
At present, the stock is trading just 10% above its all-time low price of $1.93 — it’s quite affordable, and although it isn’t the most resounding endorsement, it’s quite likely that Lucid’s Saudi funding is more than sufficient to keep it afloat until operations improve.
The Saudi Public Investment Fund (PIF) owns a roughly 64% stake in the company — and the transition away from oil is a matter of critical interest for the kingdom. Simply put, Lucid stock has been oversold for quite a while now — it could prove to be a decent investment for those with a long enough time horizon.
Featured image via Shutterstock
