What happened
Many electric vehicle (EV) stocks have taken hits in 2022 as some analysts and investors question whether hopes for massive growth are just pie in the sky. Lucid Group (LCID 0.18%) shares have dropped nearly 30% year to date as the company itself has lowered its near-term production guidance. But a recent development seems to have helped ease some investor concerns. That has helped Lucid shares jump almost 9% at today's highs. As of 12:07 p.m. ET, the stock remains up 6.2%.
So what
Lucid's plan for growth was supported by a recent announcement that EV battery supplier LG Energy Solutions will invest $1.4 billion to build a battery manufacturing facility near Lucid's Arizona factory.
Image source: Getty Images.
Now what
The LG Energy Solutions (LGES) facility is to be located in Queen Creek, Arizona, within an hour's drive of Lucid's manufacturing plant in Casa Grande. Construction is scheduled to start in the second quarter of this year, and mass production is targeted for the second half of 2024. LGES said the facility is meant to support a "stable supply to major customers such as electric vehicle start-ups and power tool companies."
LGES is already a supplier to U.S. EV companies including Lucid and Tesla. Lucid reduced its 2022 production outlook from 20,000 vehicles to a range of 12,000 to 14,000 when it reported its fourth-quarter financial update last month. The company said that was due to supply chain and logistics constraints. But Lucid said it still plans to quadruple the size of its Arizona facility, and it has previously said it expects to be making electric vehicles at a run rate of more than 500,000 annually by 2030.
Plans for a large battery plant in the area helps support Lucid's long-term growth plans, and investors believe the company could have a very bright future.
