Regardless of its status as an electric vehicle (EV) player, Lucid Group (LCID -7.68%) is still just a car stock, and car stocks do not make investors fortunes. Tesla has been a rare exception, but we’re talking about the rarest of the rare.
Competition is one thing keeping EV makers like Lucid from rocketing shareholders to incredible wealth. In addition to Tesla, traditional automakers like General Motors and Ford also make electric vehicles, which, from personal experience, I can say are quite nice. The pure EV players don’t have any sort of monopoly on that space of the business, and it seems very unlikely that the more established players within autos are going to let up the pressure.
Lucid’s sales and financials
Lucid’s annual sales are definitely growing, increasing from a mere $4 million in 2020 to over $807 million in 2024. The problem is that the business is losing billions annually, which explains why the company’s share count continues to climb as it raises capital to cover operations by issuing shares. Total shares outstanding increased nearly 32% year over year in the first quarter of 2025, all while Lucid reported a net loss of $366 million, excluding accretion of redeemable convertible preferred stock, which took losses to $731 million.
Image source: Lucid Group.
To me, the euphoria has worn off this stock, as it is down over 70% in the last five years. This isn’t to say that it makes a bad product. Quite the opposite. Car and Driver gives the 2025 Lucid Air a five-star rating. The problem is the cost of building up a car company from scratch and competing against the established giants in the industry that are all making their own electric cars along with internal combustion engine vehicles.
Lucid’s car production came in at 9,024 vehicles in 2024, which is minuscule compared to competitors like General Motors, which sold well over 2 million vehicles. Guidance calls for around 20,000 vehicles to be produced in 2025, which is still pretty minuscule relative to the broader car market.
Too much competition
I’ve been watching auto stocks for a long time, and I don’t see the strength of the sector in terms of investment. The exception is, of course, Tesla, but its operations span across more than just cars, and I think its stock will also come back to earth at some point.
People can only buy so many cars. Whether it’s EVs or regular combustion engines, people aren’t going to buy more cars than needed. With an increasing number of options within EVs, Lucid doesn’t seem to particularly stand out from the pack, aside from the fact that it focuses on luxury vehicles. But competitors like Cadillac, Mercedes, and Volvo are all doing the same thing, and they have more of the infrastructure required to produce at scale.
Most car stocks trade at around 10 to 13 times earnings. I think these electric start-ups will end up with similar valuations once the fervor has worn off. Mercedes operates in the luxury space and has delivered gains of over 56% over the last five years. That pales in comparison to the S&P 500 return of 94% over that same time frame, and I see very little reason for car stocks to start outperforming the market. It’s a capital-intensive business and very susceptible to weak economic conditions. Back to my headline, I don’t think Lucid stock will set anyone up for life, but it could make for an OK investment if the company can continue to scale.
David Butler has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Tesla. The Motley Fool recommends General Motors. The Motley Fool has a disclosure policy.
