What happened
Shares of Lucid Group (LCID -4.71%) crumbled this first day of March, plummeting as much as 19% within minutes of the market's opening. As of 11:40 a.m. ET today, the electric vehicle (EV) stock was trading down 16.5%. The jarring reaction was in response to Lucid's fourth-quarter numbers and 2022 outlook released on Monday, which evidently didn't just fall short of investors' expectations but came as a rude shock.
So what
Lucid reported $26.4 million of revenue for the fourth quarter, its first such reported revenue as the company started deliveries of its first EVs only in late October.
More important than revenue was Lucid's progress on production and delivery. Unfortunately, the EV start-up seems to be missing its own estimates by a big margin.
A Lucid Air. Image source: Lucid Group.
In October, when Lucid started deliveries of its Air Dream Edition sedan, it said it would produce and deliver 520 customer-configured Dream Editions before starting deliveries of the Air Grand Touring, followed by delivery of other trim selections in 2022. Investors have since waited with bated breath for updates.
Yesterday, Lucid said it delivered only 125 Dream Editions in 2021 and over 300 units as of yesterday, and had manufactured over 400 cars as of that date. In short, Lucid is far behind its own projected production and delivery timeline for its first electric sedan.
Worse yet, in the third quarter, Lucid said it was ramping up production aggressively and was confident of manufacturing 20,000 vehicles in 2022. The company has now slashed its 2022 production estimate to only 12,000 to 14,000 vehicles, citing "extraordinary supply chain and logistics challenges."
Lucid shares have been under a lot of pressure lately, so this cut was the last thing investors wanted to hear about.
Now what
Lucid also just confirmed it'll start manufacturing in Saudi Arabia and begin construction of the first factory this year with a maximum annual capacity of 150,000 vehicles. The stock market, though, is taking Lucid's forecast with a grain of salt now that the company has cut its production target so sharply.
For any company starting out in EV manufacturing, it's one thing to launch a model and another to manufacture at scale. Critics argued that Lucid, which managed to gain a lot of attention in recent months, might fail to scale as rapidly as it expected. The company proved the critics right today, to at least some extent, and that hasn't gone down well with the market.
