Lucid Group (LCID -2.78%) is growing its electric vehicle (EV) sales rapidly right now. In 2025, analysts expect its revenues to jump by 73%, and in 2026, they anticipate an even faster growth rate approaching 100%.
There's just one problem: Included in Trump's "One Big Beautiful Bill" is a provision that would eliminate the federal tax credits for electric vehicles. That would effectively raise the prices of EVs by $4,000 to $7,500 -- a huge potential blow to demand. When you look at the numbers, things could quickly get ugly for Lucid. But there's also some reason for hope.
Lucid Group's major flaw
Lucid's sales growth over the next couple of years will primarily be driven by its recently introduced Gravity SUV. Previously, the company only offered its Air sedan, which ranged in price between $70,000 and around $100,000 depending on the configuration. SUVs, however, are much more popular than sedans in the U.S. right now.
Long term, however, it will be critical for Lucid to develop some mass-market vehicles, which are typically priced under $50,000. Tesla's two mass-market models -- the Model 3 and Model Y -- currently account for more than 90% of its unit sales. Such vehicles bring scale to sales growth, but also to operational leverage, which is immensely beneficial to profitability. If the U.S. eliminates federal EV tax incentives, having more affordable vehicles in its lineup will be crucial to Lucid's growth and stability.
While the company has previously teased plans to launch several new mass-market models in 2026, details about those potential EVs have been scarce. Plus, it takes billions of dollars to get a new EV model to market. With less than $2 billion in cash on its books, Lucid will likely need to tap the credit and equity markets again before these vehicles launch. Over the past 12 months, it booked a net loss of $3.8 billion.
This all puts Lucid in a tight spot. It needs to get mass-market vehicles on the road to boost sales, scale, and profitability. But it will need more capital to do that, and if Trump and the Republicans in control of Congress end the federal EV tax credit, that could lead investors to pull back from the space, limiting Lucid's ability to easily raise capital. That would not be a good position for an early stage, capital-intensive business to find itself in.
But could the elimination of EV tax credits actually end up helping Lucid in the long term?
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Who has the advantage in a less EV-friendly marketplace?
There's a case to be made that ending the EV tax credit could eventually benefit Lucid. Demand for EVs would likely take a hit over the short term as the real costs to consumers rise, but if Lucid can get its affordable models to market on schedule, that could mitigate some of the impact. Meanwhile, competitors that fail to introduce mass-market EVs could struggle to maintain market share, giving Lucid more room to grow.
I'm skeptical of this optimistic view. Lucid is far behind competitors like Rivian and Tesla in terms of both financing and the ability to launch additional affordable vehicles. The recent departure of its longtime CEO may put even more strain on its ability to raise capital. In terms of publicly traded EV companies, Lucid arguably has the most to lose due to its diminutive size and limited lineup.
Will Trump's bill cause Lucid to go bankrupt? Not immediately. But the company has been relatively quiet about its plans for new mass-market EVs, and it could be years before its production scales meaningfully. That leaves it with a limited lineup of high-priced vehicles -- not an ideal situation when achieving scale will require it to provide affordable options.
