Lucid (LCID 0.64%) and Nikola (NKLA 4.57%) are both electric vehicle makers that went public by merging with SPACs (special purpose acquisition companies). Both EV makers initially painted rosy long-term forecasts during their initial investor presentations, but quietly walked back those estimates after their public debuts. As a result, Nikola and Lucid now both trade below their initial post-merger prices. Should investors consider buying either stock right now?

Can Lucid resolve its production issues?

Lucid's debut luxury sedan, the Lucid Air, can travel up to 520 mileson a single charge, which beats Tesla's (TSLA 0.17%) Model S Long Range by more than 100 miles. It's led by Peter Rawlinson, who previously served as Tesla's chief vehicle engineer from 2009 to 2012. Lucid notably targets more affluent customers than Tesla: The Lucid Air starts at $87,400, while the top-tier Grand Touring model starts at $154,000.

The Lucid Air sedan.

Image source: Lucid.

Prior to its merger, Lucid claimed it could ship 20,000 vehicles in 2022. But this February it reduced that target to 12,000-14,000 vehicles. In August it cut that forecast in half to just 6,000-7,000 vehicles as it faced "extraordinary supply chain and logistics challenges".

Lucid ended its latest quarter with 37,000 reservations, which could potentially generate up to $3.5 billion in revenue, but it's only delivered 125 vehicles in 2021 and 1,039 vehicles in the first half of 2022. Therefore, Lucid could still struggle to delivery 6,000 vehicles this year unless it significantly ramps up its production in the second half.

Lucid's AMP-1 plant in Arizona has an annual production capacity of 34,000 vehicles, and it expects its Phase 2 expansion to boost its annual capacity to 90,000 vehicles next year. However, that increased capacity will be meaningless if it can't resolve its supply chain problems.

Can Nikola regain the trust of its investors?

Nikola produces BEV (battery-powered) and FCEV (hydrogen-powered fuel cell) freight trucks. Prior to its public debut, it claimed it could deliver 600 BEVs in 2021, followed by 1,200 BEVs in 2022. It also planned to start delivering its FCEVs in 2023. But in reality, Nikola only shipped its first two BEVs for a pilot program at the end of 2021.

Nikola's founder and former CEO Trevor Milton also stepped down last year after being personally targeted in securities and wire fraud investigations. Nikola's current CEO Mark Russell has tried to distance himself from Milton, and the company also reached its own settlement with the SEC last December, but those allegations could still tarnish its reputation. General Motors, which previously took an 11% stake in Nikola and had planned to co-produce a consumer-facing Badger pickup truck with the company, also liquidated its entire position and abandoned that project in Nov. 2020.

Nikola delivered 52 BEVs in the first half of 2022, and it says it remains "on track" to ship 300 to 500 BEVs for the full year. It's received more than 500 orders for its BEVs so far, and its Arizona plant currently has an annual production capacity of 2,500 trucks. It expects its Phase 2 expansion to increase that capacity to 20,000 vehicles (in two shifts) by early 2023.

How steep are their losses?

Lucid only generated $27 million in revenue in 2021, yet it posted a staggering net loss of $4.75 billion. In the first half of 2022, it generated $155 million in revenue, but still posted a net loss of $1.16 billion.

Assuming Lucid can hit its target of 6,000-7,000 shipments, analysts expect it to generate $758 million in revenue, with a net loss of $1.63 billion this year. Lucid still held $3.16 billion in cash and equivalents, along with $1.14 billion in short-term investments, at the end of the second quarter -- but it could burn through that cash quickly as it expands. That's why it recently announced it would raise an additional $8 billion in a mixed shelf offering to strengthen its balance sheet.

Nikola didn't generate any meaningful revenue in 2021, but it racked up a net loss of $690 million. It generated $17 million in revenue in the first half of 2022, but that still trickled down to a net loss of $326 million. It ended the second quarter with just $529 million in cash and equivalents.

If Nikola can achieve its delivery goals this year, analysts expect it to generate $111 million in revenue but still rack up a net loss of $816 million. That outlook seems bleak, but Nikola plans to keep the lights on by raising up to $400 milion in an upcoming stock sale.

The valuations and verdict

Both stocks still look pricey after their post-merger declines: Lucid trades at 37 times this year's sales, while Nikola trades at 21 times this year's sales. Those price-to-sales ratios could cool off as they ramp up their production -- but their ongoing delays indicate that investors should temper their long-term expectations and forget about their pre-merger estimates.

I wouldn't touch either of these EV stocks right now. But if I had to pick one over the other, I'd stick with Lucid because it's attract more reservations and its production rates are higher.