Lucid (LCID 2.26%) isn't exactly a cheap stock by any definition, as it has a market cap of more than $75 billion despite just recently shipping its first vehicles. In this Fool Live video clip, recorded on Nov. 22, Fool.com contributor Matt Frankel explains why Lucid could potentially grow to many times its current valuation if it can execute on its vision.
Matt Frankel: This is Lucid, ticker symbol LCID, and this is me. This is one of the two stocks on this list that I actually own. A lot of people, because I'm a real estate and slow and steady type guy, are surprised to find out I'm a Lucid investor. But I think this one could be, I don't want to say the next Tesla (TSLA +3.14%) because that phrase is overused and is not accurate here. This is a Rivian-like valuation, but I think it's more justified in this case.
Lucid has about an $85 billion market cap as I'm talking. They just started deliveries. They are really ramping up production unlike Rivian (RIVN 2.00%) that's delivered a few dozen vehicles. They're actually rolling the cars off the assembly line, getting them to customers. They started production in September, deliveries started the end of October. The Lucid Air was just named Motor Trend's "Car Of The Year." John trolled me on Twitter (TWTR +0.00%) a little bit the other day when I said, when Tesla was named the Motor Trend "Car Of The Year" in 2013, the stock ended up rallying something like 2,000%, and I sold it unfortunately in 2013 to pay for my wedding. I'm a little salty on Tesla for that.
But MotorTrend doesn't give the award after start-ups too often, as John can tell you. It really has to be an impressive car, and this one really is, they have technology advantages, which is a big differentiator. I've said many times on these shows that the biggest limitation I see with all these EV start-ups is range and charging infrastructure capabilities. They have six different trim levels of the Air with 450 miles of range or more, the longest one is 520 miles. That's the longest in the industry by far. They've 17,000 reservations on the books right now. They estimate that's about $1.3 billion in sales.
They have a few big advantages. Their manufacturing capabilities are coming along nicely. The battery in powertrain technology in their vehicles is produced in-house, which is a big differentiator. They are more of a luxury focused brand. Tesla claims to be luxury cars, but they're really not in a lot of ways. You don't sit there and feel like you're in an electrified Mercedes, is the way I would describe it. I don't know if you saw the thing where Tesla is now shipping cars without USB ports because they can't get the parts for it or things like that.
Lucid, they're very nicely put together. They're beautiful cars. It's like the performance in range of Tesla with like the style of a Mercedes or BMW is the idea there. They just started Phase II of their construction on their manufacturing facility that will bring their production capability up to about 90,000 vehicles a year when it's done. They plan to expand internationally pretty quickly. Saudi Arabia is their number two reservation market. They plan on expanding there next year. China in 2023. The founder and CEO of Lucid was a former Tesla executive. I believe he was the designer of the Model S, if that's correct, John. But they really have a path for not becoming the next Tesla, but to becoming a true mass-market electric vehicle player, and that's why I chose to buy some shares shortly after they went public.
