Shareholders of Lucid Group (LCID 1.63%) haven't had much to cheer about over the past year. The stock of the luxury electric vehicle (EV) maker has plunged 65% in the last 12 months. But shares got a bump today after the company reported its first-quarter production and delivery results.
Those figures appear to be more than what investors expected. Lucid stock jumped more than 6% on the news. As of 11:10 a.m. ET, shares were still trading up by 3% on the day. There's one good reason for why investors liked the data released by the company.
Luxury EV market size concerns
Lucid didn't blow away its own production estimates in the first quarter. Management previously predicted it would produce about 9,000 vehicles in 2024. First-quarter production of 1,728 EVs doesn't give them any reason to boost that full-year estimate.
But importantly, the company delivered nearly 2,000 EVs in the quarterly period. That allays fears that Lucid had been producing vehicles that weren't yet sold, building up inventory. In the fourth quarter, Lucid produced about 650 more units than it delivered. So it was encouraging to see that discrepancy reverse in the first quarter.
But sales volume is still much lower than the company had predicted more than a year ago. That has resulted in Lucid burning more cash than it had planned. Financial backing by the Saudi Arabian Public Investment Fund (PIF) and its affiliates may be the only reason Lucid hasn't discussed filing for bankruptcy already.
Ultimately, Lucid will need sales of its Air luxury sedan to pick up and for the Gravity SUV to be a hit when shipments begin by the end of this year. For now, news that Air sedan sales aren't declining is good enough for investors to give shares a boost.
