Lucid Group Inc. (LCID 3.82%) announced two new, lower-cost versions of its first EV, the Lucid Air Dream, with 1,111 horsepower and up to 520 miles of range.

The new trim levels, the $87,400 Air Pure and $107,400 Air Touring, wear lower price tags but deliver lower levels of performance as well. They offer 410 and 425 miles of range, respectively, which is not shabby, all things considered. They join the $154,500 Air Grand Touring with 516 miles of range and the forthcoming $249,000 Air Sapphire. 

An expanding market reach

By bringing the starting price of a Lucid Air below six figures while keeping performance at the top of its class, Lucid makes its products far more attainable for most luxury car buyers. Consumers paid an average of $66,645 for a luxury vehicle in October 2022, according to Cox Automotive. And Lucid's expanding model line comes as the luxury vehicle market's share grew to 17.3% of U.S. vehicle sales in the first half of 2022, up from 15.8% a year ago. Better yet, it grew to 17.9% in September 2022, a historic high. 

A second model line

Even more noteworthy is the recent unveiling of its second all-electric luxury vehicle, the Gravity SUV.

Described by company officials as a "supercar in disguise," the initial model, dubbed the Gravity Dream, will employ the Lucid Air's vehicle architecture, which should minimize production costs and allow both the Air sedan and Gravity SUV to share production lines at the company's plant in Casa Grande, Arizona.

While details of the new vehicle weren't revealed, Lucid said the Gravity has already garnered 30,000 advance orders, not bad for an SUV expected to start at $169,000. Lucid intends to start taking orders for its new SUV in early 2023, with deliveries expected about a year later, in the first quarter of 2024.

But concerns linger

But it remains to be seen if Lucid will be able to achieve that goal.

Company officials acknowledged during their third-quarter conference call that the company hadn't met its production targets so far this year, but chief executive officer and chief technology officer Peter Rawlinson expects to fix the problem in the coming months. Supply chain disruptions and quality issues have dogged the California EV start-up, causing the company to reduce its 2022 production volume of the Lucid Air to 6,500 cars, nearly one-third of its original stated volume of 20,000 vehicles.

But production is rising, a good sign for the neophyte automaker. Production reached 2,282 vehicles in the third quarter, up from 1,405 units in the second quarter and generating $195 million in revenue. And the company expects to reach its forecast production by year's end.

As we previously reported, reservation momentum is a concern. Reservations declined from 37,000 in Q2 to 34,000 in Q3, an 8% drop in three months. And Lucid's operating loss increased 38% year over year in Q3 to $687.5 million. To bolster its financial footing, Lucid plans to raise $1.5 billion by selling $600 million in new shares through Bank of America, Barclay's Capital, and Citi, and $915 million in stock to an affiliate of Saudi Arabia's Public Investment Fund, a majority shareholder in Lucid.

The outlook

Lucid is a long way from profitability; it's no surprise given the company's balance sheet, which declined by $750 million in the past quarter. That, along with a forthcoming dilution in stock and diminishing reservations, are concerning and enough to cause some to sell. Certainly, it gives non-shareholders little reason to buy.

But for those already invested, the start of the forthcoming SUV should provide the company a shot at growing production and sales, although that's more than a year away. So current investors with a longer time frame should watch reservation and production numbers. Given that the stock is down 72% in a year, now is not the time to sell, given the chance of appreciation, albeit a long-term one. And Lucid's novelty should give them a selling advantage over older, more established rivals. But with legacy automakers entering this space with luxury electric SUVs of their own, it's not the time to buy Lucid stock, either.