EV Company Selling More Cars Than Ever, But The Company Could Collapse Within a Year

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Lucid Motors’ recent delivery report offers a window into the volatile world of electric vehicle (EV) startups.

The California-based company announced a 22% increase in deliveries for Q2 2024, with 2,394 units reaching customers.

While this marks a 70% year-over-year jump, the numbers warrant closer scrutiny.

At first glance, Lucid’s stock reacted positively, climbing 5% on the news. However, this uptick masks deeper issues plaguing not just Lucid, but many EV newcomers.

The company’s strategy revolves around price cuts to drive sales.

In February, Lucid slashed prices on its Air Pure model by 10%, bringing the starting price to $71,000.

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This marks their third price reduction in just seven months. It’s a tactic mirrored by bigger players like Tesla and Ford, who’ve seen sales boost after similar moves.

But Lucid’s financial runway is far shorter than its established rivals. The company recently admitted its $5 billion in cash might only last until Q2 2025.

This comes after a $1 billion injection from Saudi Arabia’s Public Investment Fund in March – a move that raises eyebrows about Lucid’s long-term prospects.

The cash crunch is already biting.

Lucid laid off 6% of its workforce in May, expecting to take a hit of up to $25 million in restructuring charges.

Lucid CEO Peter Rawlinson’s optimism seems unfounded. He claimed, “I’m confident Lucid will deliver the world’s best SUV and dramatically expand our total addressable market, but we aren’t generating revenue from the program yet.”

The company plans on building 9,000 EVs in 2024, up from 8,500 last year.

They’re banking on the upcoming Gravity SUV to turn things around after losing 75% of their market value in 2023. It’s a big bet given that consumers are slow to embrace electric vehicles.

Lucid’s story mirrors a troubling trend in the EV world.

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Fueled by government mandates and hefty subsidies, these companies rake in billions from investors and taxpayers. They sell a limited number of cars at a loss, then often face collapse.