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LCID Title Positioned For New Highs In 2022 With Expansion Plan


Electric vehicles are likely to remain a key investment theme through 2022. However, as competition in the industry intensifies, investors need to be increasingly selective in choosing EV stocks. Lucid group (NASDAQ:LCID) is a stock that deserves a place in the portfolio. The LCID share price is up 8.83% so far in 2022.

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The past year has been very volatile for the LCID stock. From a euphoric rise before the SPAC business combination was announced to a steep drop below $ 20 levels.

However, the current rally in LCID stock is not speculative. As customer shipments begin, the uptrend is likely to be driven by fundamental news.

It should be noted that the company’s Lucid Air Dream edition is fully booked. In addition, the company has started reservations for the Air Pure, Air Touring and Air Grand Touring models.

An important point to note is that Lucid takes online reservations from 17 countries except the United States. The company is pursuing an aggressive international expansion plan.

Nio (NYSE:NIO) has been in business for a few years and began its international expansion with Norway in 2021. Additionally, Nio plans to expand to 25 countries by 2025.

This puts Lucid Motors’ aggressive expansion position into perspective.

Lucid is also likely to follow by Tesla (NASDAQ:TSLA) approach for international expansion. Tesla has a Gigafactory presence in the United States, Europe and China.

Lucid Motors CEO Peter Rawlinson is also planning to build factories outside of the United States. This will help the company to increase its capacity and reduce its logistics costs.

The start-up automaker is already planning to quadruple the size of its plant in Arizona. This will help meet the additional demand in 2022 and 2023.

Why is Lucid likely to be successful?

I think Lucid should receive a strong response until 2022. It should be noted that as of November 2021, the company already had over 13,000 bookings.

Lucid positioned the first model as a luxury car and the market response is clearly positive. The model has a technological advantage. As an example, Lucid Air Dream Edition is the first car certified by the EPA for a range of 520 miles.

Lucid Air was also named as MotorTrend’s car of the year for 2022. According to the automotive industry bible, the car is “a technological tour de force”.

One of the reasons Lucid opens bookings in multiple countries is the fact that Lucid Air caters to the high end of the market. Greater market reach is needed for robust shipment growth.

However, it is very likely that Lucid will produce mainstream cars in the next few years. This will significantly expand the company’s addressable market. The company intends to launch a rival for Tesla Model 3 by 2024 or 2025.

Additionally, Lucid is expected to partner with automakers for a $ 25,000 electric car over the next three to four years. Clearly, the company has ambitious plans and the electric vehicle market has positive winds over several years.

LCID stock supported by sustained growth

Lucid Motors will likely have a presence in all key electric vehicle markets by 2023 or 2024. With international expansion, new models and a focus on technology, the company is positioned for sustained growth, which will support the momentum of LCID action.

The company reported cash and cash equivalents of $ 4.8 billion for the third quarter of 2021. In December 2021, the company also raised more than $ 2.0 billion in funds through convertible notes. As a result, the company has a liquidity buffer of nearly $ 7.0 billion (unadjusted for fourth quarter 2021 cash consumption). This provides great financial flexibility for aggressive growth over the next 12-18 months.

It should be noted that for the third quarter of 2020, the company invested $ 342 million in research and development. Investments increased 72% in the third quarter of 2021 to reach $ 587 million. This is a clear indication of the company’s focus on creating differentiation through investment in technology.

Overall, LCID stock looks attractive even after rising 63% in the past six months. The bullish trend of the title should continue until 2022.

At the date of publication, Faisal Humayun did not hold (directly or indirectly) any position in any of the securities mentioned in this article. The opinions expressed in this article are those of the author, subject to the publication guidelines of InvestorPlace.com.

Faisal Humayun is a senior research analyst with 12 years of experience in credit research, equity research and financial modeling. Faisal is the author of over 1,500 stock-specific articles focusing on the technology, energy and raw materials industry.


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