As a result, there’s no guarantee that the company will be able to meet its deadlines and release its vehicles on time in the foreseeable future. On top of that, one of the biggest problems of Lucid is that it doesn’t have experience in scaling its production, since it hasn’t produced anything yet and only in December it completed its first factory in Arizona that currently has a capacity to produce only 30,000 cars per year. So making a Tesla-like rollout strategy might be a wrong move after all in the end. Once those credits disappear in the following decade and the competition increases, nobody knows whether Tesla will be able to perform as well as it does today. At this stage, it’s able to make money mostly thanks to regulatory credits, which legacy car manufacturers pay it to comply with various climate-related regulations. However, even if Lucid manages to successfully copy Tesla’s initial steps, we shouldn’t forget that even today after more than two decades in business Tesla is barely profitable even though it’s the biggest EV company in the world. Considering this, we believe that Lucid has no competitive advantages over others, especially since it hasn’t delivered a single vehicle yet. The market is already filled with companies that are aggressively expanding their presence and extending their footprints in major EV markets around the globe, as in China alone there are around 500 electric vehicle manufacturers.
Now that the competitive landscape has shifted and everyone wants to enter the EV market, there’s a high possibility that copying Tesla’s rollout strategy is not going to work in the current environment. At the time, its major competitors were legacy automotive behemoths that were focused solely on the production of ICE vehicles, as there was limited interest in electric vehicles. First of all, at its beginning, Tesla was competing in a significantly different environment.
However, we see several flaws in this plan. Lucid plans to begin establishing its presence by offering a premium version of the car at the beginning and only later start to produce vehicles for the mass market, just as Tesla did a few years back. The reason why Lucid is being compared to Tesla is due to the fact that the latter has a Tesla-like rollout strategy to capture market share in the ever-growing EV business. While there’s a high possibility that we’ll see the growth in the share price of the SPAC once again right before the merger, we believe that investing in Lucid itself for the long term is a risky endeavor due to the fact that the company has weak competitive advantages. After the announcement, shares of Churchill Capital Corp IV began to appreciate on heavy volume, but later the momentum faded. Lucid itself became well-known earlier this year after the news came out that the company will become public by merging with Churchill Capital SPAC later this year.
Once that happens, Lucid plans to start producing more affordable cars and release new models by 2030. Later in 2023, Lucid plans to release an electric SUV, which currently has a codename Project Gravity, to capture the luxury segment of the EV market. The company’s flagship car will be a luxury sedan, similar to Tesla’s Model S, called Lucid Air, which starts at ~$70,000 and goes all the way up to ~$170,000 for the most premium version of the car. Despite being in the business for more than a decade, Lucid still hasn’t entered a commercialization stage and it plans to begin selling its products only later this year. Lucid was founded back in 2007 as a battery company, which later pivoted to the creation of electric vehicles. Considering this, we believe that it’s not worth investing in Lucid at this stage, especially since the company already trades at a pro-forma market cap of over $30 billion, even though it hasn’t delivered a single car. On top of that, since Lucid doesn’t have any experience in scaling its production, there’s a risk that the company will not be able to meet its sales estimates in the following years. In addition to competing with hundreds of other EV startups for market share, Lucid will also be required to secure valuable materials such as lithium, nickel, cobalt, and others to prevent delayed deliveries.
#LUCID CCIV FREE#
Unlike Tesla ( TSLA), which had over a decade of free time to establish a strong presence in the EV market, Lucid Motors (CCIV)(LUCIDM) will face a different competitive landscape that will be much harder to penetrate.
Photo by deepblue4you/iStock via Getty Images
0 kommentar(er)
