Lucid Group (LCID -4.33%) gets labeled as the "next Tesla" (TSLA -1.36%) for three reasons. First, Lucid's CEO and CTO Peter Rawlinson oversaw the development of Tesla's Model S sedan as its chief vehicle engineer from 2009 to 2012.

Second, Lucid's first EV, the Lucid Air sedan, can travel up to 520 miles on a single charge. That beats the maximum range of Tesla's longest-range vehicle, the Model S Long Range, by over 100 miles.

Lastly, Lucid has ambitious goals for the future. It only recently started to ship its first batch of 520 customized Dream Edition Lucid Air sedans, but it plans to produce 20,000 vehicles in 2022 and 500,000 vehicles annually by 2030.

A Lucid Air sedan.

Image source: Lucid.

Those strengths explain why the market now values Lucid at nearly $65 billion, even though it generated less than $1 million in revenue last quarter. But could this young EV company eventually grow into its valuation and generate massive multibagger returns over the next decade the way Tesla did?

How Lucid plans to become the "next Tesla"

Tesla manufactured 509,737 vehicles in 2020 and 624,582 vehicles in the first three quarters of 2021. It exceeded an annualized production rate of over a million vehicles at the end of the third quarter.

Lucid's new manufacturing plant in Arizona (AMP-1) has an annual production capacity of 34,000 vehicles. It just kicked off its Phase 2 expansion, which will increase its annual capacity to 90,000 vehicles.

Lucid will initially only manufacture Lucid Air sedans. But in the second half of 2023, it plans to launch its Lucid Gravity SUVs.

Lucid also plans to expand overseas, starting with Canada in the fourth quarter of 2021, followed by Europe, the Middle East, and Africa (EMEA) in 2022, and China in 2023. It expects that expansion to boost its annual production capacity past the half-million mark by the end of the decade.

But Lucid doesn't have Tesla's first-mover's advantage

Lucid has already secured more than 17,000 reservations, so its goal of increasing its annual production from 20,000 to 500,000 vehicles in just eight years might seem reasonable relative to Tesla's growth trajectory.

Tesla shipped just 22,477 vehicles back in 2013, but its total shipments hit 499,550 in 2020. However, Tesla also enjoyed a first-mover's advantage in the EV market and benefited from massive government subsidies.

Today, the EV market is much more saturated. In addition to competing against Tesla and other dedicated EV makers like NIO, Lucid will need to fend off traditional automakers like Ford, BMW, and Volkswagen. Apple could also disrupt the EV market within a few years. That saturation will make it tough for latecomers like Lucid and Rivian to replicate Tesla's growth over the past decade.

Tesla also didn't face the threat of unionized workers throughout most of its history. However, the Biden administration's "Build Back Better" plan aims to give union-made, domestically built EVs an additional $4,500 tax credit on top of the current tax credit of $7,500 for all EVs.

Workers at Tesla, Lucid, and other EV start-ups aren't unionized. Therefore, the new legislation could make EVs from unionized automakers like Ford and General Motors cheaper and more competitive.

As Lucid faces this changing market, it's selling its vehicles at higher prices than Tesla. In an investor presentation, Lucid claims Tesla's vehicles are "innovative but not luxury," while its own vehicles serve a "post-luxury" market that differentiates it from "established luxury" brands.

That vague explanation doesn't make much sense, since the Kelley Blue Book still consistently classifies Tesla as a top luxury brand. Lucid might have attracted some attention from high-end EV enthusiasts so far, but it still has a long way to go before becoming an internationally recognized rival to Tesla.

Lucid also plans to rely on third-party charging networks instead of building its own network of Supercharger stations like Tesla. That approach should help it reduce its operating expenses, but it could also represent a missed opportunity to promote its brand and lock more drivers into its ecosystem.

I wouldn't call Lucid the "next Tesla" yet

Lucid resembles a smaller version of Tesla, but the stock already trades at about 30 times its goal of generating $2.2 billion in sales in 2022. Tesla currently trades at just 14 times next year's sales.

Lucid also faces a lot of near-term challenges, including its staggering losses, a new $1.75 billion convertible debt offering, and a Securities and Exchange Commission (SEC) subpoena regarding its reverse merger with a special purpose acquisition company (SPAC) earlier this year. The ongoing component shortages could also throttle its shipments next year.

Lucid still has lots of growth potential, but I certainly wouldn't call it the next Tesla yet. It will face a lot more competition than Tesla did in its early days, and there's simply too much optimism baked into its high-flying stock.