Signs of Tesla's (TSLA 2.07%) brand crisis are almost everywhere you look.
Over the weekend, more than 200 "Tesla Takedown" protests were held across the country as Americans expressed their ire about CEO Elon Musk's project to downsize federal agencies -- which President Donald Trump refers to as the Department of Government Efficiency (DOGE) -- by targeting his company.
Sales in Europe appear to be plunging; registration data showed Tesla sales were down 42% across most of Europe in the first two months of the year. And the U.S. National Highway Traffic Safety Administration just issued a recall for nearly every Cybertruck, due to the risk of a panel near the windshield flying off on the road.
Now one company appears to be capitalizing on Tesla's missteps.
Sales for Lucid Group (LCID 0.56%), a maker of luxury electric vehicles (EVs), are reportedly soaring as both prospective Tesla buyers and current Tesla owners look to switch to an alternative EV maker.
Lucid is having a moment
According to Electrek, a website that tracks the EV industry, Lucid has seen a "dramatic uptick" in demand from former Tesla owners -- who are accounting for 50% of orders for its vehicles.
In an interview with Fox Business, Lucid CEO Mark Winterhoff said that the "negative feeling about Elon," as well as a lack of new vehicles from Tesla, have driven demand to Lucid.
Lucid is in a good position to benefit from Tesla defections because it's much smaller than the leading U.S. EV company. While Tesla sold 1.8 million vehicles in 2024, Lucid sold roughly 10,000.
Based on those numbers, you can see how a slight change in demand for Tesla could create a deluge for Lucid. If Tesla lost just 1% of its 1.8 million in vehicles sold, that would mean 18,000 prospective EV buyers are looking for an alternative.
Lucid would only need to capture a modest percentage of those to experience a surge in demand.
Several Lucid Air vehicles. Image source: Lucid Group.
A historical comparison
Tesla's current situation isn't unlike one Uber Technologies experienced, when a political event early in the first Trump administration triggered a backlash against Uber and a meaningful shift in market share to its rival, Lyft.
At that time, Uber was seen as trying to break a taxi-driver strike that was a part of a protest against Trump's "Muslim travel ban" at New York's JFK airport. Following a tweet from Uber about surge pricing being turned off -- which would encourage rides -- a "#DeleteUber" campaign ensued on the social media platform then called Twitter.
That allowed Lyft to capture market share by doing little other than being an acceptable alternative without the same toxic brand association. Uber didn't even intentionally weigh in on the political issue of the protests; the tweet that inspired the backlash was misinterpreted. But the campaign shows how a brand's seemingly politics-related move can suddenly spark widespread defections, especially in volatile times.
Uber survived that, but it helped lead to the ouster of then-CEO Travis Kalanick, and the company never seemed to regain its lost market share from Lyft.
By comparison, Musk has involved himself much more deeply in partisan politics than anyone from Uber ever did, and possibly more than any prominent CEO in modern history.
The political backlash only appears to be gaining steam, and that trend should continue to favor Lucid and other EV alternatives.
NASDAQ: LCID
Key Data Points
Is Lucid a buy?
It makes sense that Lucid would be at least one of the brands that disgruntled Tesla customers would switch to. Its vehicles, like the Air sedan and Gravity SUV, are luxury vehicles in terms of both price and performance.
They start at $69,900, and are known for their long ranges. The Air has won a number of awards, including World Luxury Car of the Year in 2023 and Best Luxury Electric Car for three years in a row.
However, the company has struggled thus far to ramp up production and stoke demand, as 10,000 vehicles don't provide nearly the scale necessary for the company to turn profitable.
In 2024, Lucid reported revenue of $807.8 million, with a negative gross profit of $923.1 million. That means it's losing more money on individual car sales than it's bringing in in revenue, even before accounting for overhead expenses.
On the bottom line, it had a generally accepted accounting principles (GAAP) net loss of $2.7 billion.
In other words, Lucid will need some help to turn profitable, and it also needs to significantly ramp up production. It's targeting 20,000 vehicles in 2025, roughly doubling from 2024, a bold target for the company.
The Tesla debacle alone isn't a reason to buy Lucid Group stock, but it's an issue worth watching, if you own Lucid shares or are interested in doing so: The longer the backlash goes on, the more it should favor Lucid.
Still, Lucid will need to continue to ramp up production and work toward profitability. If Tesla's brand crisis continues, Lucid can benefit on the demand side, but it's on its own as far as production.
Barring an upside surprise, investors will have to continue to be patient with Lucid as it scales up its business. Profitability will likely take years, if it gets there.
