Lucid Group (NASDAQ:LCID) stock hit a 52-week low as UBS (NYSE:UBS) predicted falling car prices ahead.
The stock was trading early this morning at $5.66 per share, a market capitalization of $12 billion.
Lucid, a luxury electric vehicle (EV) maker backed by the Saudi government, produced 2,314 cars at its Arizona plant during the first quarter. It hopes to produce 10,000 cars in 2023 and add an SUV to its line-up called the Gravity.
The company is going full speed ahead despite predictions that the EV market is softening, especially for new players.
Blame Tesla?
Analysts are blaming Lucid CEO Peter Rawlinson’s reluctance to switch to a Tesla (NASDAQ:TSLA) “standard” charging plug, previously accepted by North American rivals General Motors (NYSE:GM), Ford Motor (NYSE:F) and Rivian (NASDAQ:RIVN), for the stock’s fall.
The plug gives cars easy access to Tesla’s network of charging stations. But Rawlinson says he’s focused on getting chargers that can deliver 1,000 volts, double what Tesla offers. Rawlinson notes that his cars can charge faster with rival CCS plugs.
Demand is a bigger question. Lucid is preparing a move into the mature Chinese market, which could include local production. The Chinese EV market is already going through a price war. The luxury space is filled with products from Li Auto (NASDAQ:LI), Xpeng (NASDAQ:XPEV), and Nio (NYSE:NIO), as well as Tesla. Lucid’s new operations manager in China was recruited from Nio.
Lucid also plans to build a factory in Saudi Arabia. It recently raised another $3 billion, most of it coming from Saudi Arabia’s sovereign wealth fund. The Saudis already have a majority stake in the American company.
The company began deliveries of its Lucid Air sedan in Saudi Arabia earlier this month. Demand for EVs there is said to be strong.
LCID Stock: What Happens Now?
Lucid’s moves would seem to make little economic sense. Defy Tesla charging in the U.S.? Enter China in the face of local price cuts?
It’s Saudi money that lets Lucid make these moves, and they will call the tune. American investors are just along for the ride.
As of this writing, Dana Blankenhorn did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
