Lucid Group (LCID 5.15%) has been on a hot streak of late with five consecutive quarters of record deliveries, and it might have an overlooked catalyst that came to the surface recently: tariffs. Unless you found a rock to hide under, however tempting that may be, you couldn't miss the wave after wave of tariffs, updates, retaliatory measures, deals, and truces that have recently taken place.
While Trump administration tariffs may negatively impact Lucid, potential tariffs elsewhere could be a huge win. Here's why.
NASDAQ: LCID
Key Data Points
What's going on
What you probably already know is that Lucid is massively backed up by Saudi Arabia's Public Investment Fund (PIF), which holds a more than 60% stake in the electric vehicle (EV) maker. In fact, the PIF is Lucid's top shareholder. What you might not know is that Saudi Arabia imports nearly every car, because only one automaker selling vehicles in the country assembles them there -- and that automaker is Lucid.
Lucid would stand to benefit if tariffs were slapped on automotive imports in Saudi Arabia. The prices on every competing vehicle would rise, giving Lucid an advantage in an area where it could sell more vehicles. And the idea might not be as far-fetched as you think. Of course, Lucid certainly welcomes the idea.
Not implementing tariffs on foreign cars would "run the risk that you kill the industry in its infancy," said Interim Lucid CEO Marc Winterhoff, in an interview, according to Bloomberg News. "It doesn't mean that this has to go on forever, but in order to have that kind of change in the market, you need to support local players in the beginning," he continued.
Also per Winterhoff, Lucid has already held talks with the Saudi government about these potential tariffs to boost domestic auto manufacturing and cut dependence on imports -- and, you know, give Lucid a huge leg up on the domestic market.
Lucid's Gravity SUV. Source: Lucid.
Will it happen?
Here's where things get trickier than Lucid simply suggesting to the government that auto import tariffs are a good idea. If Saudi Arabia were to go through with the strategy, it could risk butting heads with the U.S. at a time when the latter is aggressively trying to use tariffs on imports as a negotiating tactic. Saudi Arabia slapping tariffs on auto imports could cause retaliatory measures from the U.S. as Ford Motor Company and General Motors are popular import brands in the country.
On the flip side, Saudi Arabia has strategic reason to defend its home automotive turf sooner rather than later. That's because it plans to reduce dependence on foreign imports and then begin exporting cars via an automotive manufacturing hub on the Red Sea Coast with companies such as Lucid helping lead the charge.
While Lucid is currently burning money like it's a cash furnace, the business has momentum with sales rising and Gravity deliveries set to accelerate. It also plans to expand into new countries in Europe and the Middle East. Potential tariffs in Saudi Arabia on auto imports would just be another small catalyst for the company -- it's worth keeping your eye on.
