Why Lucid Stock Is Soaring Today

What happened

Shares of Lucid Group (LCID 0.41%) are making big gains in Monday's daily trading session. The electric vehicle (EV) specialist's share price was up roughly 12.1% as of 2:30 p.m. ET, according to data from S&P Global Market Intelligence.

Lucid published a press release this morning announcing that it will be providing Aston Martin with EV powertrain, battery, and charging systems. Lucid will be paid in cash and Aston Martin stock for access to its proprietary technologies, with the long-term deal being worth more than $450 million over an unspecified period of time. 

So what

Per the recently announced deal, Aston Martin is on track to begin integrating Lucid's powertrain, battery system, and Wunderbox charging technologies into its own vehicles. The tech is being used to support the development of Aston Martin's first fully electric vehicle, which is on track to debut in 2025. 

While licensing its technologies to a competitor could potentially diminish the appeal of its own Air EVs, the new partnership is probably good news for shareholders overall. Licensing its tech will provide a substantial source of high-margin revenue, and it's possible that the partnership with Aston Martin will continue to develop.

Now what

Lucid is a high-risk, high-reward stock with a speculative outlook. Competition will continue to heat up in the EV market, and Lucid needs to prove it can stand out from its rivals and manage the growth of its business in a cost-effective fashion. With that in mind, the deal with Aston Martin represents a meaningful vote of confidence in the upstart automaker's tech from an established, highly regarded player in the luxury automotives space. 

If Lucid can establish a lasting foothold in the luxury EV market and continue scaling its operations until it reaches profitability, the stock would likely wind up delivering huge wins for investors who take a buy-and-hold approach at today's prices. On the other hand, investors should keep in mind that the business still has a long way to go on its road to profitability.