Lucid Motors Stock Sinks to All-Time Lows on Tepid Q3 Deliveries

Lucid Motors stock (NYSE: LCID) fell to an all-time low in US price action today amid the broad-based sell-off in electric vehicle (EV) stocks. The company also missed Q3 delivery estimates which is also adding fuel to the fire.

Lucid Motors produced 1,550 vehicles in the third quarter which was less than the 2,173 that it produced in the second quarter. It delivered 1,457 vehicles in the quarter which was slightly higher than the 1,404 in the previous quarter. The third quarter production fell short of estimates and markets are now apprehensive that the company would be able to deliver on its toned-down 2023 production guidance of 10,000 vehicles as its production in the first nine months is only 6,737.

Lucid Motors stock sinks to all-time lows

Lucid Motors has acknowledged that it is currently constrained by demand and not production and said that it needs to increase its brand awareness. During the Q4 2022 earnings call, Lucid Motors’ CEO Peter Rawlinson said, “we need to amply focus now away from production to amplifying customer awareness that we’ve got this amazing car with unprecedented range technology efficiency, incredible driving machine, a great driver’s car.”

He added, “We need to amplify that message and broaden the awareness, which in turn will drive sales. And that is the focus right now.”

While he termed it an “entirely solvable problem” things are not that easy as the demand for electric vehicles is not as strong as many believed it would be.

Tesla also missed Q3 delivery estimates

Even EV giant Tesla is also struggling with deliveries. It delivered 435,059 cars in Q3 which trailed the 459,949 vehicles that analysts polled by LSEG (formerly Refinitiv) expected.

Notably, it was the first sequential fall in Tesla’s deliveries in over a year. In its release, Tesla said, “A sequential decline in volumes was caused by planned downtimes for factory upgrades, as discussed on the most recent earnings call. Our 2023 volume target of around 1.8 million vehicles remains unchanged.”

Meanwhile, Tesla has had to lower car prices multiple times in order to spur demand and the most recent price cut came earlier this month only shortly after it missed Q3 delivery estimates.

After this round of price cuts, Tesla’s website lists the starting price for the Model 3 at $38,990 while the Model Y at $45,990. After these price cuts, Tesla has lowered the prices of the Model 3 standard version by almost 17% in the US since the beginning of the year.

Notably, other EV companies including Lucid Motors have had to cut vehicle prices after Tesla’s price cuts.

EV price war is taking a toll on industry profits

The EV price war is taking a toll on the profits of automotive companies and companies are toning down their ambitious EV plans. Ford expects EV adoption to be slower than what it previously envisioned and said that its annual capacity would now hit 600,000 by the end of 2024 instead of this year which it previously expected. It also said that it might not hit the 2 million production capacity by 2026 as “we maintain flexibility on where we reach when we reach two million total EV global capacity because we are balancing growth, profitability, and returns.”

It blamed the EV price war and said, “While EV adoption is still growing, the paradigm has shifted. EV price premiums over internal combustion vehicles fell more than $3,000 in the second quarter and nearly $5,000 in first half. We expect the EV market to remain volatile until the winners and losers shake out.”

Earlier this week, General Motors also announced that it would delay the production of all-electric trucks at its Orion assembly plant to 2025. In its statement it said, “General Motors today confirmed it will retime the conversion of its Orion Assembly plant to EV truck production to late 2025, to better manage capital investment while aligning with evolving EV demand. In addition, we have identified engineering improvements that we will implement to increase the profitability of our products.”

Lucid Motors has raised cash to fund its cash burn

Startup EV companies continue to burn cash and Lucid Motors has raised $3 billion in 2023 which was preceded by a $1.5 billion capital raise in late 2022. The capital raise which was through the sale of fresh shares has helped Lucid Motors strengthen its balance sheet. However, it has also meant dilution for existing investors.

Earlier this month, Rivian announced a $1.5 billion convertible note offering, its second capital raise of the year. In a private placement to qualified institutional buyers, the company is issuing green convertible bonds maturing in October 2030 and the holders would have the option to either redeem these in cash or convert them into common stock. The offering is similar to the $1.3 billion capital raise that the company completed in March.

CFRA downgraded Lucid Motors stock after Q3 delivery miss

Meanwhile, CFRA turned bearish in Lucid Motors stock after its delivery report which it termed “extremely disappointing” and downgraded it from a hold to sell while lowering the target price from $7 to $4.

CFRA analyst Garrett Nelson said in a client note “The lack of detail regarding the company’s still-sluggish volumes makes this a difficult release to interpret.”

Nelson added, “While an equity offering and private placement completed in Q2 helped boost its liquidity position, we find [Lucid’s] cash-burn rate highly alarming and see the company facing daunting headwinds for the foreseeable future from a combination of weak demand and ongoing pricing pressures.”

Meanwhile, EV competition is set to intensify in the coming months which might only escalate the price war. Pricing pressure would meanwhile increase the troubles for startup EV companies like Lucid that are posting losses.

While the company boasts of a strong product and has the backing of Saudi Arabia’s sovereign wealth fund, it has disappointed markets with its production and delivery numbers even as some of the other startup EV companies have done much better.