Lucid Motors (NASDAQ: LCID) is basically trying to ride the coattails of Tesla (NASDAQ: TSLA). Investors who buy Lucid stock are largely betting that it can, at least to some degree, achieve similar success. While Lucid is making progress toward the goal of becoming a more competitive automaker, it's a long way off from Tesla-level success.
To summarize a very complex story very quickly, Tesla was the first public company to build only-electric vehicles (EVs). At first, Wall Street and the automotive industry doubted it would ever be a formidable competitor to the established carmakers, but Tesla proved them wrong and, in the process, has seen its stock price rise more than 27,000%. A $10,000 investment in the stock at its initial public offering would now be worth about $2.7 million.
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Given Tesla's success, other companies have decided to try their hands at building electric vehicles. That list includes Lucid and just about every major automaker, as well. When Tesla started out, it was basically the only EV player, effectively proving to the world that electric vehicles were a real and viable choice. Competition is now much more intense, with Tesla having arguably staked out a position as the world's leading electric-vehicle maker.
This brings up an interesting number. In the third quarter of 2024, Tesla delivered 462,890 vehicles. That compares to the 2,781 vehicles that Lucid delivered. These two figures show the very large difference between Tesla and Lucid, which can be viewed either as an opportunity or a risk.
Although the number of cars Lucid delivered in the third quarter was pretty much a rounding error relative to Tesla's deliveries, it wouldn't be fair to suggest that the company isn't achieving good things. For example, the 2,781 vehicles that Lucid delivered were a 90%-plus improvement over the third quarter of 2023. That's important because it shows the company has managed to go from nothing more than a concept to a full-fledged product and, not only that, one that's being built and sold.
That success, however, brings up another worrying fact. Lucid is still trying to build its business, an effort that requires a material capital investment.
The spending on building a new business often leads to red ink on the bottom line. While Tesla earned $0.62 per share in the third quarter of 2024, Lucid lost $0.41 per share, up from a loss of $0.28 a year ago. This helps explain why management highlighted at the top of the third quarter 2024 earnings release that it "ended the quarter with approximately $5.16 billion in total liquidity."
The big takeaway is that Lucid is making progress toward its goal of being a profitable car company, but there's a lot more work to be done. The glass-half-full view is that the cash the company has available will allow it to reach that goal and, perhaps, be a millionaire-maker stock like Tesla. The glass-half-empty view is that there's a limited runway here for the company to build its business, which is facing much stiffer competition than Tesla had to deal with when building its business.
If you look at Lucid's story and see a glass half full, you might want to buy it. If you see it as half empty, you'll want to stay away.
It could very well succeed as a business, but there have already been some high-profile electric-vehicle companies that have ended up in bankruptcy court. Unless you're willing to take on that kind of risk, you should probably watch the Lucid story unfold from the sidelines.
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Reuben Gregg Brewer has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Tesla. The Motley Fool has a disclosure policy.