What happened
Shares of EV maker Lucid Group (LCID 5.88%) charged higher today, and it might be thanks to two companies more associated with the traditional automotive sector. Lucid shares rose as much as 5.3% and held on to a 2.6% gain as of about 3:30 p.m. ET.
So what
Lucid shares may be riding on the back of Ford Motor Company today, after that stock crashed yesterday but was recovering today. Yesterday, Ford told investors it expects inflation-related costs to increase by another $1 billion in the third quarter. But perhaps more importantly for Lucid, it also said it would have lower vehicle sales due to a lack of parts. That may have soothed investors in Lucid to know that when the company cut its production volume estimates due to supply chain challenges, it wasn't alone.
Image source: Lucid Group.
Now what
Lucid cut its projections for 2022 production volume last month when it reported its second-quarter results. At that time, Peter Rawlinson, Lucid's CEO and chief technology officer, stated: "Our revised production guidance reflects the extraordinary supply chain and logistics challenges we encountered. We've identified the primary bottlenecks, and we are taking appropriate measures."
Investors hammered the stock after the report, but hearing that Ford is having similar issues may have some rethinking that reaction.
These two automakers are in very different positions, of course. Lucid is a start-up that now expects to produce no more than 7,000 of its high-end electric sedans this year. Ford said yesterday that it will have between 40,000 to 45,000 vehicles sitting in inventory unfinished in this quarterly period.
Lucid also was mentioned in an article from automotive publication Kelley Blue Book today that was shared by MarketWatch. Including Lucid vehicles in a small group of luxury EVs, the author said the company's "vehicles also have impressive performance stats to shame many of the best sports cars."
With $4.6 billion on its balance sheet at the end of the second quarter, Lucid has some breathing room if more macro issues can be overcome. Investors may be betting today that it will eventually succeed.
