If you follow the electric vehicle (EV) industry, by now you're aware the federal $7,500 tax incentive for EV purchases went the way of the dinosaurs on Sept. 30. While that created a nice pull-forward effect for demand during the third quarter, it's going to leave an equally strong slowdown during the fourth quarter.
On that note, there's a bit of good news for Lucid Group (LCID -3.27%) investors. Let's dig into the good news and see how Lucid's deliveries performed during the third quarter.
Image source: Lucid.
Brief recap
Lucid's deliveries jumped 47% during the third quarter compared to the prior year, as consumers flocked to take advantage of the tax incentive before it disappeared. At the same time consumers rushed to buy EVs from Lucid and other companies, the young EV maker was busy accelerating the production of its new Gravity crossover EV, which had been slower to ramp up than desired.
Sales of Lucid's Air sedan and Gravity crossover hit a record 4,078 vehicles during the third quarter, compared to the prior year's 2,781 (which only included deliveries of the Air sedan). Despite the surge in sales and welcomed volume from its newest vehicle launch, the numbers failed to meet Wall Street expectations that had forecast deliveries of nearly 4,300 vehicles, according to Reuters. Lucid's stock price closed 3% lower this past Monday after the news hit.
Deliveries for Lucid should continue to accelerate through the remainder of 2025. "We've made significant progress ramping production of Lucid Gravity through Q3, and made preparations, including the addition of a second manufacturing shift, to finish 2025 strong," Interim CEO Marc Winterhoff said, according to Automotive News.
Lucid also lowered its annual production forecast to a range between 18,000 and 20,000 vehicles in August, with the previous forecast calling for 20,000. This gives us an idea of how strong a fourth quarter the company needs. Through the first nine months of the year, production reached 9,966 vehicles and deliveries totaled just under 10,500 vehicles. Currently, reaching these targets looks like a fairly lofty goal.
A little good news
Investors wondering what happens next are in for a bit of a speed bump, as far as the EV industry goes. EV sales are expected to drop significantly during the fourth quarter as demand wanes and consumers grapple with the new pricing that won't include the federal tax credit unless under special circumstances -- more on this in a second.
"I think it's going to be a vibrant industry, but it's going to be smaller, way smaller than we thought, especially with the policy change in the tailpipe emissions, plus the $7,500 consumer incentive going away," Ford Motor Company CEO Jim Farley said during a Ford event in Detroit, according to CNBC. "We're going to find out in a month. I wouldn't be surprised that the EV sales in the U.S. go down to 5%."
For the good news, investors can at least expect Lucid to offset the tax credit's removal a little bit during the fourth quarter, as the automaker is still offering consumers a $7,500 lease credit on the Gravity crossover through the remainder of 2025.
What it all means
For Lucid, this is a bit of a mixed bag. On one hand, it continues Lucid's recent momentum, totaling seven straight quarters of rising deliveries. On the other hand, it's also a continuation of similar problems that have long plagued the company and its investors: delays and missing estimates.
Despite seven consecutive quarters of rising deliveries -- and that's good news to be sure -- investors have to remember that Lucid remains far, far away from reaching the scale it needs to turn a profit and return value to shareholders.
The young EV maker is a high-risk, high-reward company that is burning through cash rapidly and facing a slowdown in demand with the expiring tax credit. If you're bullish on the company's prospects to become a leader in the EV industry worldwide, it's still advisable to limit your risk by keeping companies like Lucid to a very small position in your portfolio.
