Could EV stocks like Lucid Group (LCID -0.65%) have a dreadful year in 2026? One expert thinks so. "Next year could be a pretty dreadful year for EVs in this country," warns Adam Jonas, who covers the auto industry at Morgan Stanley.
The chief culprit is the elimination of federal tax credits, a change that effectively raises the price of many electric vehicles by up to $7,500. But as we'll see, there's an even bigger challenge EV makers will face in 2026 and beyond.
These 2 changes will create problems for Lucid Group
Why is Adam Jonas so bearish on EVs next year? There's one culprit to blame: a lack of federal tax credits. For years, EV demand has been stoked by federal subsidies. Many EV buyers qualified for these subsidies, effectively lowering their total purchase cost by thousands of dollars. In a world where consumers are increasingly cost conscious, this is a big deal.
While Lucid's luxury models -- the Lucid Air and Lucid Gravity -- weren't eligible for the $7,500 tax credit for outright purchases, buyers were able to access these incentives via a lease loophole. So while Lucid's demand may not take as big of a hit as other EV makers, expect sales to be somewhat lower than previously expected in 2026.
Lucid has, however, teased lower-priced models, with production potentially beginning in late 2026. If this timeline is accurate, the company may introduce vehicles next year that would have qualified for federal subsidies. Without these tax credits, demand in 2027 may also be lower than anticipated.
Image source: Getty Images.
The bigger issue for Lucid over the near term may be related to federal automotive regulatory credits. These credits were earned by automakers like Lucid, which produce low-emissions vehicles. At one point, Lucid was sitting on $200 million of these credits. With fees for noncompliance eliminated, Lucid has essentially lost this meaningful profit driver. Expect a rocky 2026 for EV makers like Lucid.
