Why Lucid Group Stock Lost 26% in October

Lucid Group ( LCID 1.76%), the high-end electrical lorry (EV) maker, was amongst the losers in the stock exchange last month due to indications of damaging EV need and the business’s own frustrating production report for the 3rd quarter.

As an outcome, the stock completed the month down 26%, according to information from S&P Global Market Intelligence As you can see from the chart below, the stock had its sharpest dip in the middle of the month, throughout the week when the business launched underwhelming third-quarter production numbers and Tesla put out its own frustrating incomes report.

LCID information by YCharts.

Lucid is spinning its wheels

The huge news out of the business throughout the month was its third-quarter production report. The business stated it made 1,550 cars in the 3rd quarter and sent out another 700 cars to Saudi Arabia for last assembly.

The business has a close relationship with the Saudi federal government, whose Public Mutual fund (PIF) is a significant financier in the business, and the Saudis have actually accepted purchase least 50,000 of its EVs over the next years. Lucid likewise just recently opened a factory in Saudi Arabia.

However the stock fell 9.4% on the news as it reveals that Lucid is not likely to satisfy its objective of making 10,000 cars this year. And the business provided even less cars than it produced, delivering 1,457 vehicles, an indication that it may be having need weak point like much of the remainder of the vehicle market is experiencing.

The following day, the stock fell another 4% after Tesla CEO Elon Musk provided downbeat commentary on the state of the EV market, blaming rates of interest for cost pressures and stating the business would slow-walk the opening of its brand-new factory in Mexico due to financial unpredictability.

There were other indications that EV need appeared to be plateauing. Ford laid off a shift at its Lightning F-150 EV factory and stated it would stop briefly $12 billion in organized financial investments in electrical cars due to magnifying cost competitors and concerns about need. Likewise, GM stated it would postpone production of a number of brand-new EVs.

Is the EV celebration over for Lucid?

Lucid has only simply began making EVs, and currently it looks like the market is too congested and need is thinning. That might be an outcome of cyclical concerns like rates of interest, or it might be for more-secular factors, consisting of that early adopters have actually mostly currently bought EVs, and the market needs to now persuade the more-skeptical mainstream to make the switch.

Whatever the factor, Lucid financiers need to hope those headwinds are short lived. The business is still far from success, and slowing need in the market will just make it harder for business to reveal it can be feasible.