Shares of Lucid Group (LCID 0.41%) are dropping again today as investors digested what the company's production and delivery update from yesterday means going forward. Shares of the luxury electric vehicle (EV) maker dropped more than 5% yesterday, and that decline is accelerating today.
As of 12:05 p.m. ET, shares had bounced slightly off an all-time low but still traded down by 7.8%. That's likely because investors have had time to read between the lines in yesterday's update.
Results could have been even worse
Lucid said it produced 1,550 EVs during the third quarter and delivered 1,457 of its luxury Air sedans. It also added that it had "over 700 additional vehicles in transit to Saudi Arabia for final assembly." Last year, the company announced that it had an agreement for the government of Saudi Arabia to purchase up to 100,000 Lucid EVs over a 10-year period.
Lucid plans to build a manufacturing facility in that country. But it will send vehicles made at its Arizona factory there for final assembly until that plant is up and running. Including those 700 vehicles en route to Saudi Arabia, third-quarter production was 2,250. That's only 3.5% more than it produced in the second quarter. That's not much of a production ramp-up and signals a lack of overall demand.
A lesson for investors
As a shareholder, that data is disappointing. It seems that demand for its high-end, niche vehicles isn't rising without the Saudi order. There have been plenty of successful niche automotive brands. They include luxurious sedans or powerful performance sports cars. Lucid has attempted to tap that market in the EV luxury sedan category.
But with production and deliveries holding basically flat over the last two quarterly periods, demand for its product is becoming questionable. As part of a basket of speculative EV start-up stocks I own, I plan to wait until the company provides more commentary when it reports full third-quarter results on Nov. 7.
As this stock hovers near its all-time low, a lesson for investors is to diversify and allocate only what can be lost to speculative names like Lucid held in a portfolio.
