Founded in 2007, Lucid Group Inc. is an American electric vehicle (EV) manufacturer. It is headquartered in Newark, California. Currently, the company has two models available, the Lucid e2 and the Lucid e3. The Lucid e2 is scheduled to deliver on October 30, 2021, while the e3 is currently under development.
Established by Bernard Tse, a former Tesla VP, Lucid is an upmarket luxury electric vehicle manufacturer focusing on delivering high-end features. Lucid Airhas already set the bar for the EV market. The Lucid Air sedan is the most extended-range EV available. The EPA estimates that the Air Dream Edition ranges 520 miles.
Lucid is also working on an energy storage system for home and utility use. In addition, the company plans to launch a luxury SUV in 2023.
Lucid’s direct-to-consumer sales model allows them to generate higher margins. They have a production capacity of 12,000 to 14,000 vehicles per year. The company has $4.3 billion in cash and long-term debt.
Lucid has received about 13,000 reservations for Lucid Air and expects to enter the Chinese market in 2023. The company has also been approved to start EV production in Saudi Arabia in 2024.
The Lucid Air has received tremendous attention since it was unveiled last year. It is the MotorTrend 2022 Car of the Year. Its features include a long-distance Lidar, autonomous driving technology, and a high-end trim. The company also offers a Grand Touring Performance version with higher horsepower and faster acceleration.
Despite the positive impact of Tesla’s direct-to-consumer strategy on the company’s profit margins, there are still risks involved. The company’s recalls of vehicles have shown that the EV maker is vulnerable to problems when it is in its early growth stage.
The company is facing a recall of more than 200 luxury sedans for safety concerns. The issue is believed to be related to faulty front strut dampers, which may lead to loss of vehicle control and damage to the front brake line. Lucid says that about 1% of the vehicles may need to be replaced.
It isn’t clear how many cars have a faulty part, though. The 203 vehicles affected by the recall include a range of high-end sedans, including the Air and Dream Edition. The affected vehicles were manufactured between October 2021 and January 2022.
According to the National Highway Traffic Safety Administration (NHTSA), the recalled vehicles are equipped with a strut damper, which helps reduce springs’ oscillations. If it fails, it can cause the front of the car to vibrate, causing a sudden loss of ground clearance.
IPO access options
IPO Access allows investors to acquire Lucid stock at the initial offering price. In this process, a corporation agrees to promote shares at the IPO at a particular time in the future, and then customers can select their share allocations. This is a more cost-effective way of buying shares than buying them directly from the company. However, the portions are random, and customers have the same chance of receiving all of the claims they request.
IPO Access is available for both equity and debt securities. It enables customers to purchase shares in Lucid at the IPO price, even if the corporation is selling other types of protection in one or more separate offerings.
The company recently filed for a new offering of up to $8 billion, which could be used to fund the production of electric vehicles. It is expected to close on or about October 18, 2021. The offering will be led by Cantor and Canaccord Genuity, with BTIG and Needham & Company acting as co-lead managers.
Motley Fool recommendation
Among the many automakers on the market, Lucid Group has potential. Although its stock is currently trading at a discount, this is an excellent time to consider investing in Lucid stock. Despite recent struggles, this is a promising opportunity to bet on the growth of the luxury electric vehicle market.
Lucid is a start-up company that plans to build high-end electric sedans. Its production targets were reduced twice this year. However, the company still expects to meet its 2022 production target. In addition, it plans to open a second factory in Saudi Arabia. This will help increase its production capacity and may drive the company’s growth in the future.
Lucid has been struggling with supply chain issues and production ramp-up. This has led to a 40% increase in its operational loss year-over-year. This was partially due to falling reservations.
Lucid is also facing various macroeconomic headwinds, including rising interest rates, which will force it to raise more capital to stay afloat. Lucid’s debt-to-equity ratio is currently manageable, but this will likely change in the near term.