What happened

Lucid Group (LCID -1.97%) stock is ending the week with a whimper, trading down 15.7% as of 11 a.m. ET on Friday, according to data provided by S&P Global Market Intelligence.

Lucid signed a meaningful deal this week, and an analyst has even called it "one of the most attractive" start-up electric vehicle (EV) stocks out there with huge upside potential. Yet, investors can't seem to shrug off some fears.

So what

The stock surged momentarily earlier this week after Lucid announced a deal with Panasonic Energy for a multiyear supply of lithium-ion batteries. The deal is meant to help Lucid meet growing demand as it ramps up production of its models in 2023 and starts manufacturing the Gravity SUV in 2024.

Batteries and key parts have been in short supply for several quarters now, forcing major EV makers across the globe to rethink their production and growth plans. In May 2022, Lucid said it would produce 12,000 to 14,000 EVs this year. Barely three months later, the company halved its 2022 production guidance, citing "extraordinary supply chain and logistics challenges." 

Its deal with Panasonic Energy, therefore, is a step in the right direction, and investors cheered the announcement and sent Lucid shares flying.

The euphoria didn't last long, though, as major U.S. indexes slipped after surging on cooling inflation. The Federal Reserve still increased interest rates by half a percentage point and warned about sluggish economic growth in 2023, fueling fears of a recession ahead. EV stocks, including Lucid, felt the heat as investors typically dump growth stocks amid economic uncertainty.

Now what

Lucid has a lot of detractors, including its archrival Tesla's CEO -- just days ago, Elon Musk even went to the extent of saying Lucid won't survive for long after reports surfaced about the EV start-up offering hefty discounts so customers would complete reserved orders.

But many are bullish about Lucid. Bank of America analyst John Murphy gave the EV stock a buy rating with a price target of $21 per share. That's a huge upside from the stock's current price of just over $7 a share. The analyst believes Lucid is a threat to incumbent automakers, calling it "one of the most attractive among the universe of start-up electric vehicle automakers", according to The Fly.

Lucid's order book isn't growing fast and its reservations fell last quarter, but the EV maker also has a lot lined up for 2023. So although its stock will likely remain volatile, it could be an interesting one to watch from here.