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Lucid Motors: This EV Inventory Is A Purchase On Future Potential Progress (NASDAQ:LCID)

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Although Lucid Motors (LCID) inventory is already considerably overvalued in my inventory appreciation portfolio, I proceed to purchase the EV firm by the truckload. My optimism for the Arizona-based EV firm stems from the truth that reservations for the Lucid Air sedan and its numerous particular editions seemingly elevated in 4Q21.

Moreover, hints of European enlargement add a fantasy aspect to the inventory when it comes to gross sales development. Aside from Tesla (NASDAQ:TSLA), Lucid Motors has probably the most favorable threat/reward trade-off within the electric-vehicle sector, and the corporate may scale deliveries quicker than some other agency within the sector.

Lucid Air Worth Proposition: An Unbeatable Mixture Of Worth, Vary And Efficiency

No different EV firm available in the market has the identical potential as Lucid Motors. The electrical-vehicle firm presently provides some of the interesting worth propositions available in the market, owing to Lucid Motors’ skill to supply patrons with a luxurious electric-vehicle that’s unmatched when it comes to vary and efficiency.

With the Lucid Air, the electric-vehicle that acquired an official 520-mile score from the EPA in September, Lucid Motors actually upped its design and engineering recreation. The Lucid Air’s vary places it forward of different electric-vehicles available on the market, together with Tesla’s Mannequin S. This effectivity benefit over competitor electric-vehicles is a powerful promoting level for the Lucid Air, indicating important upside in reservations and, in the end, gross sales.

LUCID - Battery Efficiency

Supply: Lucid Motors Company

Lucid Motors is coming into two extremely aggressive fashions into the race when it comes to precise efficiency, prime pace, and acceleration. The Lucid Air Dream Version and Lucid Air Grand Touring, particular editions of the Lucid Air commonplace mannequin with distinctive configuration packages, have prime speeds of round 168 mph and outperform rivals such because the Tesla Mannequin S Vary and the Porsche Taycan Turbo S. The Lucid Air Dream Version and Lucid Air Grand Touring additionally present aggressive acceleration that may compete with rivals’ top-of-the-line fashions.

The largest differentiator for Lucid Motors, nonetheless, is its competitor-crushing journey vary of greater than 500 miles. Consumers of electric-vehicles are primarily involved with upkeep prices and journey vary, and Lucid Motors clearly has the higher hand on this regard.

LUCID - Advantage over Competitors

Supply: Lucid Motors Firm

Reservation Standing

We have no idea the standing of reservations for the Lucid Air fashions. The newest recognized reservation determine was 17K, which was from November. Lucid Motors acquired roughly 3000 new reservations between September and November. So far as I can inform, the tempo of reservations will solely decide up within the the rest of the fourth quarter, just because the beginning of buyer deliveries has resulted in loads of publicity and, most definitely, a rise in reservations.

Lucid Motors will report earnings in late February, at which level the EV firm will most definitely reveal the present state of reservations. I would not be stunned if Lucid Motors added 2K reservations to its backlog every month till February, implying that whole reservations for the Lucid Air can be between 23K and 24K by the point earnings are resulting from be reported. Within the first section of its enlargement, Lucid Motors intends to extend capability to 34K. With 24K reservations, Lucid Motors may fill roughly 70% of its annual manufacturing capability by February.

Entry Into The European Market

Lucid Motors confirmed final week, in response to a Twitter question, that the corporate was getting ready to enter markets exterior of america. Europe would be the first market to be focused. Although the EV maker has not but confirmed specifics, a market entry into Europe represents a daring transfer for an organization that has solely lately begun to ship its electric-vehicles. It additionally opens up the potential for gathering extra reservations and, finally, gross sales of the Lucid Air. I would not be stunned if Lucid Motors acquired 10K-15K reservations in Europe alone within the fiscal yr 2022.

Gross sales Upside

The announcement to enter the European EV market was surprising and nonchalant, however it can have important implications for the corporate’s mid-term gross sales forecast. To this point, I’ve calculated that 100K electric-vehicle gross sales per yr by 2025 translate right into a $12.3 billion income potential. The projections are based mostly on Lucid Motors’ said annual manufacturing goal and a $123K common gross sales worth, assuming a gross sales mixture of 40% Lucid Air, 30% Air Grand Touring, and 30% Air Dream Version. With Europe added to the combo and doubtlessly including as much as 15K reservations per yr, Lucid Motors may generate an extra $1.8 billion in annual gross sales by 2025.

Potential For Disappointment

Lucid Air supply expectations are excessive, and disappointing them could be a serious setback for Lucid Motors and buyers. Nonetheless, as a result of Lucid Motors aggressively invests in its manufacturing capability and plans to increase into new markets in 2022, the EV firm is more likely to accumulate a large manufacturing backlog this yr. The largest threat for Lucid Motors is that it fails to ship on time. The EV {industry} is not any stranger to nerve-racking supply delays, and plenty of corporations’ inventory costs have suffered in consequence. If Lucid Motors can keep away from these industry-standard hindrances, it has the potential to thrill buyers.

My Conclusion

Lucid Motors now accounts for over half of my portfolio, and I consider I’ve discovered an actual gem right here. Reservations are more likely to outpace Lucid Motors’ skill to ship in 2022. This demand overhang shouldn’t be a foul factor as a result of it has the potential to considerably enhance income for the EV firm. The outlook for Lucid Motors is particularly interesting after the corporate hinted at a market entry into the European EV market, the place I estimate an extra $1.8 billion in gross sales potential by 2025.

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