Could Lucid Motors be a millionaire electric vehicle stock?
There has been a lot of buzz around electric vehicle (EV) companies lately. In April, Toyota unveiled plans for 15 new battery-electric vehicles. In May, Ford launched the Lightning, an all-electric version of its famous F-150.
Whether it is a historic automobile manufacturer diversifying its product line or a pure start-up, several players are now aiming for a share of the growing market for electric vehicles. Despite all the competition, few companies seem to compare to Lucid Motors, which plans to raise $ 4.6 billion in cash through a merger with a PSPC called Churchill Capital IV (NYSE: CCIV). Here’s why Lucid Motors might be a millionaire growth stock worth buying right now.
The game plan
Lucid Motors is expected to begin production of its luxury sedan, the Lucid Air, at its manufacturing facility in Casa Grande, Ariz., From the second half of 2021. The Air is expected to be available in four different versions. Lucid plans to roll out the versions in order of price, with the most expensive offering (the Dream Edition) coming first and the cheapest version (the Lucid Air Pure) coming out sometime in 2023. The Dream Edition is comes with an EPA- rated range of 503 miles, 1,080 horsepower, 0-60 mph in under 2.5 seconds, and a sticker price of $ 169,000 before federal tax credits while the Air Pure is expected to have a range of over 400 miles, 480 horsepower and cost $ 77,400 before federal tax credits.
In February, Lucid recorded approximately 7,500 reservations on its Air product line. It increased that number to over 9,000 in May 2021, which represents more than $ 800 million in anticipated sales. With reservations for the Dream Edition now closed, investors should focus on production times and delivery volumes.
Lucid’s overall goal is to have three divisions: Lucid Motors (Cars), Energy Storage Systems (ESS), and Technology. For cars, the plan is to start with Air luxury sedans, add Project Gravity (an SUV) in 2023, and then gradually expand production and model offerings to bring down the sticker price.
ESS is the sale of battery packs and battery management systems to residential, commercial and large-scale customers.
Lucid sees an opportunity to provide their batteries and software to EV racing teams. Beyond that, there could be potential for providing technology to the industrial sector, with applications such as aviation, military, heavy machinery, agriculture and marine.
By 2022, Lucid’s goal is to produce at least 20,000 vehicles, generate sales of $ 2.22 billion and make a small profit. It then expects to grow its revenue at a compound annual growth rate of nearly 60%, reaching over $ 22 billion in 2026, gross profit of over $ 5.2 billion, and output of 250. 000 vehicles.
These first projections should be taken with a grain of salt, as Lucid has not yet sold a single vehicle. Management recognizes that its brand and reputation depend on the prompt delivery, performance and positive reviews of the Lucid Air Dream Edition.
Speaking of management, Lucid’s C suite is packed with talent. Eighteen of his 20-person team worked for rival automakers and various Fortune 100 tech companies. And eight of the 20 worked at You’re here (NASDAQ: TSLA). Lucid CEO Peter Rawlinson was the chief vehicle engineer for the Tesla Model S and is the lead engineer behind the Lucid Air
Of course, none of Lucid’s short or long term goals matter if his vehicles can’t compete with the competition. Given its current price point, Lucid sees itself primarily competing with the Mercedes-Benz S-Class and then with Tesla when it rolls out its under $ 100,000 versions. Despite the fierce competition, Lucid believes he is the “clear winner” when it comes to EV technology due to its faster charge time and longer run time with a smaller, cheaper battery.
The main advantage of Lucid Air is that it combines long range and performance. The Lucid Air Grand Touring, which is the company’s second most expensive version, boasts a battery efficiency of over 4.5 miles per kilowatt hour (mi / kWh) of stored energy. According to Lucid, it’s higher than the Tesla Model S, Jaguar I-Pace, Porsche Taycan and other competitors. “It is my belief that [battery efficiency] is the most relevant measure of an electric vehicle company’s prowess and provenance. If you had to boil it down to one number, this is it, ”Rawlinson said during the company’s presentation in February.
Lucid is able to achieve a high efficiency rating primarily because it designs its own technology and plans to do its own manufacturing. The battery, motor and transmission, inverter, charging system and software are all developed in-house, giving the Air an integrated powertrain that does not rely on components and parts from independent suppliers.
It’s worth mentioning that if the Air Dream Edition hits its specs, it would be the first electric vehicle to have a range of over 500 miles and one of two EVs to deliver over 1,000 horsepower (the other being the new model Tesla S Plaid). High price or not, this would be an incredible engineering achievement that could help elevate the Lucid brand and expand its customer base.
The bottom line
Lucid Motors has spent the past five years developing competitive technology. Today, it is a legitimate business that now has the necessary funding to grow. The early interest in the Air Dream Edition, Lucid’s 2022 delivery target of 20,000 vehicles, and the goal of making a small profit starting next year are encouraging. Investors should keep in mind that Lucid’s timing and projections can vary wildly, and the company’s shares are sure to be volatile for some time. However, given the long-term potential of electric vehicles and Lucid’s competitive advantages, the company appears to offer the highest growth potential of any auto inventory on the market today.
This article represents the opinion of the author, who may disagree with the “official” recommendation position of a premium Motley Fool consulting service. We are motley! Challenging an investment thesis – even one of our own – helps us all to think critically about investing and make decisions that help us become smarter, happier, and richer.