Tesla (NASDAQ: TSLA) is the number one electric vehicle (EV) company in the U.S., holding an intimidating 80% market share; it is also the fourth-largest luxury vehicle manufacturer. Enter Lucid Motors (NASDAQ: LCID), a newly public EV player that plans on taking a bite out of both markets. Tailwinds from tax credits for the EV sector have been substantial thus far and will be even greater with the passage of a new infrastructure bill in the U.S., but fierce competition is also mounting in the industry. So which is the better investment today: Lucid or Tesla?
Walking through the mall in town the other day, I happened upon a Lucid store and ventured inside. I saw a sleek, aerodynamic, luxury vehicle unlike any available on the EV market. Upon further inspection, I learned that this vehicle, the Lucid Air, will have the longest-range battery on the market (517 miles) with the fastest charge time (20 mins for 300 miles) as well. Performance-wise, the vehicle can go from 0 to 60 in 2.5 seconds and has a top speed of 168 miles per hour.
Impressive specs to be sure and not available with any other EV on the market. Consumers flocked and the company quickly sold out of its 11,000 reservations for the model, securing roughly $1 billion in future sales. With $4.4 billion in cash, Lucid is still on track to commence production by year's end in its Arizona factory, which is capable of producing 30,000 cars annually and is steadily being upgraded to handle 400,000. The factory will also be producing the company's SUV offering, currently dubbed 'Project Gravity' in 2023.
But as it currently stands, Lucid has yet to deliver a working vehicle and is even further away from profitability, which it expects to achieve by 2023. And as mentioned previously, there are many new entrants in the EV space, not to mention legacy automakers pivoting to the new tech so Lucid will need to contend with that as well as meet its first important goal of delivering vehicles.
Tesla is still firing on all cylinders and increasing its delivery numbers every quarter; in fact, vehicle deliveries are up over 2,000% since the start of last year and there's no sign of winding down. Working with four enormous factories, the company projects deliverables to reach nearly a million units this year, an all-time high. All those vehicles on the road will help contribute to the company's autonomous vehicle (AV) and ride-hailing ambitions; as of 2020, Tesla has amassed over 3 billion miles of data, 150 times more than Alphabet's Waymo.
Tesla also makes solar panels for consumers and businesses, not to mention energy storage, all growing industries. The goal of making a more affordable EV is highly dependent on the price of the battery and Tesla has plans to start manufacturing its own cells in time for its launch of the highly anticipated Semi truck in 2022.
Even though Tesla has a first-mover advantage in the EV realm, competitors are sprouting up left and right, and some, like Volkswagen and Ford, have decades more experience in automobile manufacturing and sales, not to mention plenty more in their coffers. In the AV world, competitors like Honda and Mercedes Benz are launching level 3 autonomous tech by the end of this year, while Tesla remains stuck certified at level 2. With its current price of over $700, the company is trading at over 20x sales compared to established companies like GM, which are trading at less than one times sales.
I feel that Lucid is the safer investment as Tesla is so highly overvalued that it will probably face correction, whereas Lucid still has plenty of room for growth. Additionally, the company has an impressive roster of leaders, including CEO/CTO Peter Rawlinson, who was the chief engineer on Tesla's Model S.
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