Shares of Lucid Group (LCID -4.18%) slipped 5.1% on Thursday morning and hit its 52-week lows of $4.30 per share. At a time when the electric vehicle (EV) maker is struggling to boost production and deliveries, Tesla's (TSLA -3.94%) warning about the economy and EV industry came as a double blow for investors in Lucid.
Tesla's word of caution is terrible news for Lucid
As the leader in the EV industry, Tesla's opinions and moves carry a lot of weight.
NASDAQ: LCID
Key Data Points
Tesla just reported its third-quarter numbers, but two things, in particular, are relevant to Lucid. First, Tesla confirmed that building EVs is a costly affair and that it's not easy to scale production. When referring to its Cybertruck, CEO Elon Musk cautioned investors to temper their expectations, stating that it requires a lot of hard work to produce volumes and reach positive cash flow. Although Lucid doesn't build trucks and is a luxury electric carmaker, Musk's words hold true for any EV start-up -- producing at scale requires a lot of money, effort, and time.
Lucid is, indeed, struggling to ramp up production. It produced only 1,550 EVs and delivered 1,457 units in its third quarter. For perspective, the company produced more than 2,100 cars and delivered roughly 1,400 units in the second quarter. Lucid also used $1 billion of cash in operating activities in just the six months that ended June 30.
The second update from Tesla that has spooked Lucid's investors even more involves Musk reminding investors how cyclical the auto industry is. Amid the ongoing global wars and economic uncertainty, car buying is not a priority right now. Higher interest rates have further hit consumer sentiment, and these macroeconomic challenges can hit EV start-ups even harder.
Why Lucid stock may not recover soon
Lucid is getting hit from all sides, from cost pressures and low demand to cash crunch. With its numbers dwindling, the company even refrained from revealing how many car reservations it had last quarter. Lucid shares were already in a freefall, but Tesla's warning about industry growth today created the perfect storm and sent the EV stock sinking to 52-week lows.
