There is a lot of buzz surrounded the electric vehicle market right now. Tesla’s third-quarter numbers went past expectations, catapulting Tesla to a new record. With a market cap over $1 trillion, it is now the fifth-most-valuable stock on any U.S. exchange. Also, high Ford Lightning reservations have pushed Ford to a fresh 52-week high.
Then there is up-and-coming electric vehicle company Lucid Group, which revealed its first cars last weekend after starting production in Sept.. With a market cap of more than $55 billion, Lucid might look ridiculously overpriced for a firm that has barely started making cars. But if it has a shot at being the next Tesla, then its share price is very cheap. Let’s look at where Lucid is today and where it could be headed to see if it could become the next Tesla.
Why Lucid is showing itself as a great company
Lucid is following in Tesla’s path by releasing its own high-margin vehicles in low production before then expanding to greater production amounts and cheaper vehicles. It’s also copying Tesla’s strategy of limiting its advertising, focusing instead on creating a network of service centers and showrooms and allowing its customers to build its brand at a low cost.
Unlike Tesla, Lucid is not investing in its very own fast-charging network, thinking it will save a lot of money by leaning on the trend of third-party charging stations. But this is around the only thing Lucid is not doing. Executives have made it certain that it is very protective of its IP, which is why Lucid decided to manufacture its vehicles in-house at its Arizona plant.
Lucid’s competitive edge is the technology it owns the rights to. The company went beyond Tesla in the electric vehicle range wars by getting an EPA-rated range of 520 miles for its Lucid Air Dream Edition vehicles, which is the top rating ever recorded by an EV.
Aside from this impressive range, horsepower, and fast charging time, Lucid should get credit for meeting expectations over and over again. In its younger days, Tesla was known for not delivering on its high promises. Its share price reflected the frustration that investors had with the company that tried to micromanage its processes and expand new ideas before getting ahold of the Model 3 production. In this situation, investor sentiment was right. Once Tesla fixed its Model 3 problems, the rest was history.
It’s early right now as a publicly traded company, but Lucid is already showing consistency. That could all change next year if it fails to deliver on its expected 20,000 Lucid Air sedan deliveries. But so far, the company has done a great job of delivering on its promises, something even Tesla couldn’t do when it was young.
Author: Steven Sinclaire