What happened

Lucid Group (LCID 2.18%) stock dropped this morning and was trading down 5.4% as of 1 p.m. ET. Blame Elon Musk, at least partly, for the electric vehicle (EV) stock's fall today.

So what

Lucid stock has dropped rapidly since November, and much of its fall has to do with the company's falling reservations.

In its third quarter, although Lucid produced a record number of vehicles, it reported reservations of only around 34,000 cars as of Nov. 7. That's an almost 8% drop from its last order backlog reported on Aug. 3.

Customers are clearly canceling their Lucid car orders, perhaps because of the long wait times for delivery even as competition in the industry heats up. Lately, there have also been reports about Lucid luring customers with big discounts to complete their orders, especially after the company hiked the prices of some cars.

In short, with Lucid's reservation backlog in reverse gear last quarter, speculation is ripe that the EV maker is now doing whatever it can to prevent further cancellations.

While this turn of events hasn't gone down well with investors in Lucid as reflected in the falling stock price, Tesla's CEO believes the situation is even more grave. Here's what Elon Musk said today in response to a tweet by a Tesla-focused news website highlighting Lucid's latest moves to prevent cancellations: 

Yes, Musk believes Lucid will not survive for long as a company. 

Now what

Musk has done it before: Sound alarm bells for not just Lucid but also another EV start-up: Rivian Automotive. 

It's true that Lucid is facing several challenges. While its reservations fell last quarter, the company also incurred a huge amount of loss, is burning through cash rapidly, and is issuing stock to raise funds. Lucid expects to produce only 6,000 to 7,000 vehicles this year, so it's critical for the company to scale up production right now to not only gain customers but also pacify its investors. In fact, Lucid recently launched three trim lines and will also start taking reservations for its first electric SUV, Gravity, in early 2023. If the company fails to win over customers now, it could face a hard time selling its new EVs. 

Yet, even if you want to be cautious about Lucid stock, selling it just because a rival's CEO thinks the company will go under makes no sense.