The EV sector is really heating up with Lucid Motors' stock up over 40% in a week as it begins rolling out deliveries of its luxury sedan
Nov. 1, 2021
Lucid Group, Inc. (NASDAQ: LCID) is challenging in the EV space with the rollout of its 13,000 reservations. The company stated that it plans to up monthly production to 20,000 units by 2022, and up to 50,000 units monthly in 2023. All I can say is, best of luck with that.
What makes Lucid special?
Lucid was founded in 2007 by Peter Rawlinson, the ex-Chief Engineer working on Tesla's (NASDAQ: TSLA) Model S. A seasoned management team overall, several key members come from Tesla and other traditional auto-manufacturers, as well as prominent tech companies. The overall strategy for Lucid though is going down the luxury route. Just like Rolls Royce, BMW, and Mercedez Benz have done with traditional autos, Lucid is creating the new luxury brand for the EV revolution. The price certainly reflects that too.
Pricing
Its saloon, the Lucid Air, has four models, starting at $77,400 for the 'Pure', $95,000 for the 'Touring', $139,000 for the 'Grand Touring', and $169,000 for the 'Dream' addition. This is considerably more expensive than competitors; Mercedes-Benz EQS at $103,360, BMW's i4 at $56,395, and even the Tesla Model S at $150,190. These competitors have stronger brand resilience and recognition too, with longstanding histories, so it won't be an easy feat to take market share.
That being said, Lucid looks to be positioning itself quite well as a "new" luxury brand, and it's attempting to steer towards wellbeing, experience, and sustainability in contrast with materialism and snobbery. Luxury brands leverage every element it can to add to perceived luxury too. You'll see Lucid doesn't come in white, black, red, or gold; it comes in "Stellar White, Infinite Black, Xenith Red, or even Eureka Gold".
Lucid describes the interior of the car as such:
"A calming tone is set with Nappa full-grain leather in Graphite Gray and Ceramic with sophisticated Alcantara inserts, complemented by Silvered Eucalyptus wood and bright Platinum metal trim."
Maybe scratch what I said on snobbery.
But EVs are the future, RIGHT?
Yes, the acceleration towards electric vehicles in recent years has been significant; new owners are up 168% from 2020 to 2021 alone, and with government initiatives and a push towards clean energy, it's likely to continue.
I'm all for new entrants when it comes to disruptive technologies particularly where sustainability and the environment are concerned. Unfortunately, that doesn't make all EV manufacturers good investments. Especially when revenue isn't being generated. And definitely not when a company has overly optimistic forward projections.
So is it a good pick?
Lucid certainly has a unique value proposition compared to some competitors. If it can cement itself as the go-to luxury brand for EV's, it will certainly be able to expand its product offerings from there. The struggle is that it is brand new to making deliveries; once we have a better idea of the performance capabilities, and how happy customers are with their new motors, we will have a better idea of where the company is going in the future.
One major stepping stone will be securing positive reviews and word of mouth as Lucid grows, given the price range. As it stands, Tesla's are the industry standard it needs to beat, for battery life in particular. Battery technology is developing rapidly, but as new models come out with double that of the last generation, the first model could lose significant value if the owner decided to resell and upgrade. Until then, it may be difficult for customers to commit upwards of $77,000 for a product new to market versus others that have proven reliable for years now.
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