Lucid Group, an electric vehicle (EV) company, remains categorized as a car stock, similar to many others in the automotive industry. Car stocks, unlike Tesla which is an exception, typically do not yield significant wealth for investors.
Competition is a major factor impeding EV makers like Lucid from drastically increasing shareholder value. In addition to Tesla, traditional automakers such as General Motors and Ford also produce electric vehicles, and their offerings are competitive. Pure EV companies do not monopolize this business area, and it is unlikely that established automakers will ease their competitive stance.
Lucid’s Sales and Financials
Lucid’s annual sales have grown significantly, from $4 million in 2020 to over $807 million in 2024. However, the company faces substantial losses each year, leading to an increase in share issuance to generate operating capital. The total shares outstanding rose nearly 32% year over year in the first quarter of 2025, during which Lucid reported a net loss of $366 million, with overall losses reaching $731 million when considering accretion of redeemable convertible preferred stock.
Image source: Lucid Group.
Lucid’s stock has decreased over 70% in the last five years, although its product quality remains high, as evidenced by a five-star rating from Car and Driver for the 2025 Lucid Air. The challenges stem from the costs associated with starting a car company and competing with established industry giants, who produce both electric and internal combustion engine vehicles.
In 2024, Lucid produced 9,024 vehicles, a small number compared to General Motors, which sold over 2 million vehicles. The company plans to produce approximately 20,000 vehicles in 2025, which is still modest relative to the broader car market.
Too Much Competition
The strength of the auto sector is not particularly promising from an investment standpoint, with Tesla being a notable exception due to its diverse operations. There is concern that Tesla’s stock could also stabilize in the future.
Market saturation limits the number of cars people will purchase, regardless of whether they are EVs or combustion engines. With increasing EV options, Lucid’s focus on luxury vehicles remains its differentiating factor, but other brands like Cadillac, Mercedes, and Volvo are also in this segment with greater production capabilities.
Typically, car stocks trade at 10 to 13 times earnings, and it is anticipated that electric start-ups will eventually fit this valuation range as market excitement subsides. Mercedes, which operates in the luxury space, has offered a 56% gain over five years, which is less than the S&P 500’s 94% return during the same period. Given the capital-intensive nature of the auto business and its sensitivity to economic conditions, substantial outperformance by car stocks appears unlikely. While Lucid might prove to be a satisfactory investment if it scales successfully, it is not expected to deliver life-changing returns.
David Butler holds no positions in the stocks mentioned. The Motley Fool has interests in Tesla and recommends it, as well as General Motors. For more information, refer to The Motley Fool’s disclosure policy.
