These are certainly not the best of times for the EV industry. Against a backdrop of global economic uncertainty and a high interest rate environment, the story this year revolves around waning demand.
The impact has been felt by EV makers across the board but some of the new incumbents vying for consumers’ attention have been hit particularly hard. Lucid Group (NASDAQ:LCID) readily comes to mind here with the company regularly lowering expectations around sales of its luxury electric sedans.
As with several other Street analysts, Needham analyst Chris Pierce has good things to say about Lucid but it’s just not falling into place right now for the company and that requires a rethink to his Lucid model.
“We downgrade LCID to Hold (from Buy),” says Pierce, “ultimately not having enough faith in near-term demand to drive unit volumes despite being bullish on the potential for LCID’s recently unveiled Gravity SUV, and struggling to make a compelling case for LCID to monetize their industry leading EV efficiency technology to a mass market OEM given our attempt at the math around the Aston Martin deal.” Along with the rating downgrade, the analyst has also taken the price target off the table. (To watch Pierce’s track record, click here)
As Pierce notes, the Gravity SUV’s unveiling recently took place and while he is “quite enthusiastic” about the car and its technical specs and says it compares well to Tesla’s Model X and Rivian’s Max Pack R1S, it is unlikely to result in much investor enthusiasm over the near-term, on account of the fact production is only scheduled to begin at the end of next year.
As for the Aston Martin deal, Pierce does not see it as a potential game changer. Back in June, the two formed a long-term strategic partnership that stipulates Lucid will receive upwards of $457 million for integrating its powertrain and battery tech into the luxury British sports car manufacturer’s eventual EV lineup. However, according to Pierce’s calculations, the “dollars per vehicle” Aston Martin is potentially paying reduces his confidence Lucid will be “striking a deal” with a legacy OEM to license their EV technology.
So, that’s Needham’s view, but what does the rest of the Street make of Lucid’s prospects? About the same, really. Based on 7 Holds and 1 Sell, the analyst consensus rates the stock a Hold. That said, the $5.24 average target suggests shares will climb 28% higher over the coming months. (See Lucid stock forecast)
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Disclaimer: The opinions expressed in this article are solely those of the featured analysts. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.
