What happened
With electric vehicle (EV) stocks getting hammered on Friday, Lucid Group (LCID 9.62%) couldn't escape the market's wrath either -- shares of the EV start-up were trading down 5.8% as of 1:30 p.m. ET.
Lucid announced some growth plans, but the market was paying greater attention to a rival's just-released earnings report and some of the things it said.
So what
Earlier in March, Lucid announced it'll produce only 12,000 to 14,000 cars in 2022 versus its previous projection of 20,000 units, given the supply chain and logistics challenges. Today, at least two automakers confirmed that the supply concerns aren't going away anytime soon.
Image source: Getty Images.
China-based Nio, which is also targeting the luxury EV market like Lucid, just announced weak guidance for deliveries in the first quarter due to supply chain challenges and other headwinds. Nio also didn't rule out the possibility of price increases in the near future if costs continue to rise. This echoes Lucid's sentiment -- barely days ago, Lucid cited inflationary pressure and said it's looking into increasing prices of its EVs in the near future, according to Reuters.
Meanwhile, legacy automaker General Motors is shutting down a factory in Indiana for two weeks because it's running out of semiconductor chips.
These updates seem to have made investors in Lucid apprehensive about whether the company will even be able to produce up to 14,000 vehicles given the ongoing crunch in the supply of raw material that could worsen if the Russia-Ukraine conflict escalates.
Now what
For now, Lucid is focused on growth. Following Tesla's playbook, Lucid is targeting direct sales to end consumers through studios in prime retail locations and will open its second showroom in Canada in March. The studio is located in Canada's premier shopping center, Yorkdale, in Toronto.
Importantly, Lucid confirmed it will begin deliveries in Canada this spring, its first market outside the U.S. Lucid has also come up with a compelling offer to lure customers in Canada -- those who reserve a Lucid Air by June 30 will get two years of complimentary charging across Electrify Canada's public EV charging network thanks to Lucid's tie-up with the company. Electrify Canada currently has 30 stations with 120 chargers and is targeting more than 100 stations by 2026.
NASDAQ: LCID
Key Data Points
On the flip side, while Lucid is still trying to build a customer base in North America, rivals Tesla and Nio are already expanding rapidly into Europe. With Tesla also opening a Gigafactory in Berlin this week, Lucid will have to work harder to grow while keeping a check on costs. Investors aren't sure if that's possible right now, and their fears are reflected in Lucid stock's fall today.
