On the surface, Lucid Group (LCID -2.02%) has all the ingredients of a potential millionaire-maker stock. The company is tiny (with a market cap of just $6.5 billion), its products are compelling, and it enjoys a vast total addressable market as the world shifts toward clean energy and electric vehicles (EVs). That said, Lucid has struggled to live up to its potential, with shares down by a blistering 78% since hitting the market in 2021.
Business performance is a mixed bag
In the first quarter, Lucid saw its revenue jump by 36% year over year to $235 million after a 58% increase in vehicle deliveries (to 3,109). However, while this sounds good on the surface, sales are still significantly down from their peak of $257.7 million, reached in the fourth quarter of 2022. The company has been stuck in idle for almost two-and-a-half years.
LCID Revenue (Quarterly) data by YCharts
It is not totally clear why Lucid went from super growth to stagnation. Its cars have historically won their fair share of industry awards and accolades for their quality. But despite offering a good product, Lucid's large, expensive vehicles (the flagship Air Sedan starts at $71,400) were battered by a combination of higher interest rates, increasing competition, and perhaps consumer exhaustion with the EV sector as a whole.
To be fair, few automakers have escaped this crisis. Ford and General Motors are both burning billions on their EV businesses. And while Tesla managed to eke out a profit in the first quarter, its net income dropped 71% to $409 million. However, the industry leaders' weakness might be an opportunity for upstarts like Lucid to capture market share.
Could Tesla's weakness be Lucid's strength?
2025 has been a tough year so far for Tesla after its CEO, Elon Musk, made an foray into politics. Getting involved in partisan chaos is usually a bad business strategy because it will always alienate potential customers.
Tesla quickly began losing market share, especially in the E.U., where sales collapsed 37% year over year to 54,020 units. So far, the U.S. market has remained comparatively level-headed, with sales down by just 8.6% to 128,100 units. That may soon change as the Trump administration rolls back EV incentives.
Image source: Getty Images.
CNN reports that the Republicans' "Big Beautiful Bill" will end the $7,500 tax credit for EV buyers, which could hurt demand just as consumer fatigue and tariffs batter the industry. Bank of America's auto analyst, John Murphy, claims that the bill's current language may create a carve-out for smaller EV makers like Lucid and Rivian while removing support for their larger rivals (Tesla, Ford, General Motors, etc.).
The legislation is still weaving its way through Congress, and changes are expected. However, the retention of buyer incentives could give Lucid a tremendous edge over rivals, especially as it focuses on mass-market consumers through new low-cost SUVs like the Lucid Earth, expected to start at $50,000 when it launches in late 2026.
Is Lucid a millionaire-maker stock?
Lucid stock clearly has multibagger potential if it can break out of its current slump and start generating sustainable revenue and profit growth. Tesla's missteps and the possibility of retaining government support could ease the journey in the near term. That said, the future remains highly uncertain. And investors should probably wait for more information before considering a position in the stock.
