The Lucid stock price has rebounded in the past few weeks as investors bet on the upcoming Gravity launch. This week, it rose to $3, up over 67% from its highest level in 2023. This article explores a key risk facing Lucid and other EV stocks.
Lucid vehicles are depreciating
Lucid Group stock has risen recently as the company reports strong delivery numbers for the fourth quarter. In a statement, the firm said it produced 3,386 vehicles and delivered 3,099.
Lucid Group produced 9,029 vehicles in 2024 and delivered 10,240 of them. These are relatively good numbers for a company whose business is showing signs of slowing down,
However, the reality is that Lucid Group is facing a big risk that will be hard to navigate in the near term: depreciation.
A closer look at its used vehicles shows owners are losing substantial sums of money through depreciation. A good example of this is the Lucid Air Grand Touring, which starts at $111,000. It is a great car with a 512 mile range on a single charge. One can also charge for 12 minutes to drive for 200 miles.
The Grand Touring can move 0-60 miles per hour in just 3 seconds, thanks to its 819 horsepower. A closer look at used car marketplaces show that these vehicles are losing their value almost immediately. For example, this 2023 Grand Touring vehicle costs about $59,896 ,and prices are falling. That means a car just one-year-old has lost over $50,000 in value.
Lucid Air Pure starts at $70,000, but it is common to see these vehicles sell for less than $40,000, less than two years after being bought.
This is not a Lucid-only problem, as other EV companies are experiencing similar problems. For example, 2023 models of Tesla Model Y are selling for less than $25,000m a big bargain for a vehicle that goes for over $40,000. Rivian and Hummer EV have also dropped prices in the past few months.
Read more: Despite Lucid’s stock plunge, here’s why I see a bright future for the company
Lucid is still losing a lot of money
The implication of all this is that many potential customers of Lucid vehicles will feel jittery about buying the vehicle. Many others will just go to the used market instead of buying brand new. Additionally, many people are opting to lease Lucid vehicles instead of buying them outright.
The most recent results showed that Lucid Group made $200 million in revenue in the third quarter, an increase from $137 million in the same period last year. It continued with its loss-making trajectory as its net loss jumped to over $992 million.
Lucid Group lost over $2.3 billion in the first nine months of the year, a trend that will continue in the near term.
The company ended the quarter with $4.24 billion in current assets and $3.37 billion in cash and short-term investments. While this is a lot of money, there is a risk that the company will need to raise more cash as soon as this year.
Lucid stock price analysis
The daily chart shows that the LCID share price has rebounded in the past few days. It bottomed at $1.94 on November 15 and has now moved above the 50-day and 100-day Exponential Moving Averages (EMA).
The stock has found substantial resistance, which connects the highest swings since August 2 last year. On the positive side, the 50-day and 100-day moving averages are about to form a golden crossover pattern.
Therefore, the stock will likely remain under pressure in the near term as the depreciation crisis continues. More gains will only happen if the stock rises above the descending trendline shown in green. The upcoming Gravity launch will be a key catalyst for the Lucid stock price.
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