Should I Invest in Lucid Motors' SPAC?

After the largest SPAC deal involving an electric vehicle company, is the soon-to-be publicly traded luxury automaker a good investment?
Oct. 5, 2021
Unlock Free Stock Insights + 50% Off Discount Code!
Join thousands of savvy investors and get:
  • Weekly Stock Picks: Handpicked from 60,000 global options.
  • Ten Must-Have Stocks: Essential picks to hold until 2034.
  • Exclusive Stock Library: In-depth analysis of 60 top stocks.
  • Proven Success: 10-year track record of outperforming the market.
Sign up to our mailing list now and enjoy a 50% discount on premium services!
By submitting your email address, you consent to us keeping you informed about updates to our website and about other products and services that we think might interest you. You can unsubscribe at any time. Please read our Privacy Policy and Terms of Use.

Michael Klein's fourth SPAC, Churchill Capital Corp IV, finally merged with Lucid Motors (NASDAQ: LCID) in mid-July in what was arguably the most hotly anticipated SPAC deal of 2021. It's been a rocky start for the electric vehicle (EV) maker, with shares remaining relatively flat since the deal.

Lucid Motors was founded in 2007 as Atieva, focusing on producing electrical batteries and powertrains for other vehicle manufacturers. In 2016, it was rebranded as Lucid Motors to become a luxury electric vehicle (EV) manufacturer and is headquartered in Newark, California. Lucid is yet to produce a car, and after the hype of the SPAC deal, is it a good investment?

The bull case for Lucid Motors: 

The company is targeting the luxury market with price tags for its models ranging from $69,000 to $161,500. Lucid Motors also claims to have a competitive advantage due to its technology which is developed in-house. The Lucid Air's battery has a range of over 500 miles and is the first EV with such distance, along with a charge time of 20 minutes for 300 miles. In addition, it has an impressive acceleration time of 0-60 miles per hour in under 2.5 seconds, rivaling the Tesla Model S. 

Lucid Motors has several luxury models, with its first, the Lucid Air, set for production and delivery in the second half of 2021. It is also scaling its Advanced Manufacturing Plant in Arizona from a capacity of 34,000 in 2021 with a long-term view of producing 400,000 vehicles per year, which would enable it to challenge any automotive company. Lucid is attempting to go direct to consumers and has six existing retail stores and two more opening throughout 2021. Its goal is to establish the brand as a luxury automaker before launching overseas in 2022. 

In February 2021, Lucid had 7,500 reservations, rising to 9,000 by May for its Lucid Air, and as of last week, this has risen to 13,000, representing well over $1 billion in future sales if Lucid can execute. It is forecasting revenue of $2.2 billion in 2022 and that it will reach $22 billion in 2026 and be profitable. Lucid Motors has also made some lofty projections which, if achieved, would reward shareholders. It anticipates run-rate production of greater than 500,000 units per annum in 2030 and a 4% market share. Similar to Tesla, it plans to build luxury cars initially before manufacturing cheaper vehicles at a higher volume and branching into energy storage.

Lucid Motors also has an experienced management team in the automotive industry and none more than CEO Peter Rawlinson, a former Vice President of Vehicle Engineering at Tesla and Chief Engineer of the Model S. 

The bear case for Lucid Motors:

The company is yet to produce a car and has been beset with delays since its initial launch plan for Spring 2021. Further delays may prove costly for investors as they may adversely affect the share price. 

The EV industry is highly competitive, with both traditional automakers and newcomers vying for market share. Legacy automakers such as General Motors, Volkswagen, and Ford are pivoting and investing heavily while pure-play Tesla currently dominates. There are also other newcomers such as Fisker, Rivian, and many more that provide stiff competition. Lucid will face an uphill battle to gain market share. 

The company's valuation of roughly $39 billion, as of October 5, without having delivered a single car is high and may cause concern for some investors. It also plans to scale up from less than 1,000 deliveries in 2021 to 251,000 by 2026, and this mass-market production will be a challenge.

So, should I buy Lucid Motors?

Lucid Motors stock has much promise, but there is little to no concrete evidence that the company can execute its vision just yet. This is a speculative play in the early days of the EV industry, where there is serious competition. This is undoubtedly a high-risk, high-reward investment and should only be a small addition as part of a diversified portfolio.

Learn more about great investments by starting your free access with MyWallSt right now. Subscribe here to start generating long-term wealth.


Unlock Free Stock Insights +50% Off Discount Code!
Join thousands of savvy investors and get:
  • Weekly Stock Picks: Handpicked from 60,000 global options.
  • Ten Must-Have Stocks: Essential picks to hold until 2034.
  • Exclusive Stock Library: In-depth analysis of 60 top stocks.
  • Proven Success: 10-year track record of outperforming the market.
Sign up to our mailing list now and enjoy a 50% discount on premium services!
By submitting your email address, you consent to us keeping you informed about updates to our website and about other products and services that we think might interest you. You can unsubscribe at any time. Please read our Privacy Policy and Terms of Use.

The Home of Successful Investing.

© 2024 MyWallSt Ltd. All rights reserved.

Services

Content

Social

Company

Support

Resources

This website is operated by MyWallSt Ltd (“MyWallSt”). MyWallSt is a publisher and a technology platform, not a registered broker-dealer or registered investment adviser, and does not provide investment advice. All information provided by MyWallSt Limited is of a general nature for information and education purposes, and you should not construe any such information as investment advice. MyWallSt Limited does not take your specific needs, investment objectives or financial situation into consideration, and any investments mentioned may not be suitable for you. You should always carry out your own independent verification of facts and data before making any investment decisions, as we cannot guarantee the accuracy or completeness of any information we publish and any opinions that we publish may be wrong and may change at any time without notice. If you are unsure of any investment decision you should seek a professional financial advisor. MyWallSt Limited is not a registered investment adviser and we do not provide regulated investment advice or recommendations. MyWallSt Limited is not regulated by the Central Bank of Ireland. MyWallSt Limited may provide hyperlinks to web sites operated by third parties. Your use of third party web sites and content, including without limitation, your use of any information, data, advertising, products, or other materials on or available through such web sites, is at your own risk and is subject to the third parties' terms of use.