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Could This EV Stock Become More Valuable Than Tesla?

By Matthew Frankel, CFP® - May 14, 2021 at 6:17AM

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This company hasn't delivered a single vehicle, but could be worth hundreds of billions if it is successful.

Lucid Motors hasn't delivered a single car yet, with its first production models expected to reach customers later this year. However, the early glimpses we've seen indicate that its first product, the Lucid Air, will be an extremely impressive vehicle. In this Fool Live video clip, recorded on April 28, contributor Matt Frankel, CFP, and Chief Growth Officer Anand Chokkavelu discuss why Lucid, which is set to go public via SPAC merger with Churchill Capital Corp IV (CCIV), could potentially be worth hundreds of billions if it can execute on its vision.

Anand Chokkavelu: Lucid's private, but its SPAC is Churchill Capital Corp IV, CCIV. Matt's going to tell us more about it. It's a market cap of $37 billion, still pre-revenue. Again, Tesla 2.0, take it away, Matt.

Matt Frankel: I've referred to Lucid as the ultimate speculation play in the market. A $37 billion valuation for a company that hasn't delivered a car is pretty crazy. I mean, Tesla was publicly traded. They hadn't delivered a Model S yet but they were valued at like $1 billion. The market has huge expectations. As you said, Lucid is trying to be the better Tesla, I guess you'd call it. Their first model is due out later this year, it's called the Lucid Air, the dream edition, which is the high-end model, the introductory launch model, which sells for about $170,000, is already sold out. A lot of demand for this, they're making some lofty claims with this.

They're claiming that it has over 1,000 horsepower, which no Tesla can say, a range of over 500 miles, which would be very impressive. The ability to charge 300 miles' worth of charge in 20 minutes, that would be better than Tesla. The play here is that they might even have superior technology to Tesla in a lot of ways. For example, the Lucid Air is coming equipped with bi-directional charging, meaning that if your car runs out of charge, another Lucid owner can come and let you charge off of their battery. If your house electricity goes out, you can power your house off of your Lucid car battery. That's something that Teslas don't do right now. They're claiming better battery efficiency than Tesla or any of the other existing EV makers.

These are lofty claims, and like I said, they haven't delivered a car yet. They're planning to deliver 22,000 next year in 2022, and say that at scale they can deliver about 370,000. If their technology is as good as they say it is and their production capability ramps up as quickly as they say it will, they could have a Tesla-like valuation in a few years. That's a big if. So that's why I call this the ultimate speculation play. I've seen a video of people driving the Air, it looks phenomenally impressive, but we'll see once they're actually being delivered.

Anand Chokkavelu, CFA has no position in any of the stocks mentioned. Matthew Frankel, CFP owns shares of Churchill Capital Corp IV. The Motley Fool owns shares of and recommends Tesla. The Motley Fool has a disclosure policy.

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