Why Lucid Stock Plunged 20% in Q1 as the Nasdaq Fell 10%

The stock market struggled in the first quarter of 2025, but investors in Lucid Group (NASDAQ: LCID) had it much worse. The electric vehicle (EV) stock plunged 19.9% in Q1, according to data provided by S&P Global Market Intelligence, versus the Nasdaq Composite's (NASDAQINDEX: ^IXIC) 10.4% drop. The S&P 500 (SNPINDEX: ^GSPC), comparatively, fared much better, falling only 4.6% in Q1 2025.

While President Donald Trump's first day in office rattled EV stocks, Lucid gave its investors several reasons one after the other throughout the first quarter to dump shares.

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Trump, CEO transition weigh on Lucid stock

In Q1. Lucid launched its Gravity SUV in Canada after a U.S. launch last year. The EV maker also said it expects to more than double production in 2025 to 20,000 units. That was a hugely encouraging update coming from a company that had struggled to scale up production and deliveries for at least three years in a row.

Yet Lucid stock plunged by double digits in February as fears about the company's prospects mounted after a top management rejiggering amid challenging business conditions. Lucid's CEO Peter Rawlinson abruptly quit, and the company replaced him with Marc Winterhoff. Winterhoff, however, is serving as the interim CEO until Lucid finds a new leader. Just days prior to Rawlinson's departure, Lucid appointed a new chief financial officer, Taoufiq Boussaid, who previously served as the CFO of a Belgium-based industrial steel and coatings technology.

Meanwhile, Trump's orders to freeze the release of funds under the previous administration's clean energy program, including EVs, spooked investors in EV stocks. Companies like Lucid that are already struggling to boost sales amid internal challenges, price wars, and rising competition are also more vulnerable to slowdowns.

Should you buy or avoid Lucid stock?

Lucid's preliminary numbers for the first quarter don't look good. Although Lucid delivered a record number of 3,109 vehicles in Q1 2025, it expects revenue to range between $232 million to $236 million. Although that would mean 35% year-over-year growth at the midpoint, it falls short of analysts' estimates.

Also, Lucid produced only 2,212 vehicles in Q1, aside from 600 vehicles in transit to Saudi Arabia for final assembly. That number means the company will have to ramp up production much faster through the rest of the year to hits its goal of 20,000 units.

In between, although Lucid has billions of dollars in cash, it just announced a $1 billion convertible debt offering, which could mean further dilution of existing shareholders' wealth in the coming years. Lucid also reported a massive net loss of $3.1 billion for 2024.

Oh, and how could I forget tariffs, which are expected to drive costs for U.S. automakers higher?

With all the uncertainty surrounding Lucid stock, I'd sit on the sidelines for now and put my money to better use.

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Neha Chamaria has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.