This fast-growing player and well-rounded value stock deserve pole-position in a long-term EV portfolio.
- Lucid confirmed it is on track to deliver cars to Europe this year.
- Saudi Arabia could be a massive market for Lucid.
- Ford is ramping EV production faster than expected.
Just one week into the new year, and the share prices of EV newcomer Lucid Group (NASDAQ:LCID) and Ford (NYSE:F) both surged over 10% despite simultaneous losses from the S&P 500, Nasdaq, and other EV companies like Tesla (NASDAQ:TSLA), Rivian (NASDAQ:RIVN), and Nio.
Favorable short-term price action isn’t grounds for a long-term investment thesis. But there are excellent reasons why Lucid and Ford are set up nicely to grow in 2022 and beyond. Here’s the latest on each company and what makes both electric car stocks great buys now.
Lucid’s global expansion
On Tuesday, Lucid responded to a Twitter user who inquired about Lucid’s European deliveries. “Expansion to European markets will begin this year. Stay tuned for country-specific delivery information,” said Lucid Motors’ official Twitter. The information isn’t new per se, but it does validate what Lucid mentioned late last year.
In its Q3 2021 conference call, CEO and CTO Peter Rawlinson said the following:
We’re looking to expand our footprint in Europe and the Middle East, and we expect to enter these markets in 2022. There has been continued expansion of the team in both regions with key additions to leadership and the employee base, and we’re excited by the prospects of these key regions. We believe this will help establish Lucid as a global brand and address untapped market demand in these regions on an entirely new level, while also taking action to address climate change through sustainable mobility.
Lucid views Saudi Arabia as its second-largest market outside the U.S. On that same conference call, Rawlinson said that it is “really heartening that the country which gained its wealth based upon its carbon economy is so forward-looking and sees the efforts in corrective product.”
Lucid has a unique relationship with Saudi Arabia that extends beyond demand from Saudi consumers. Saudi Arabia’s Public Investment Fund is the largest shareholder of Lucid Group, with a position of more than 1 billion shares as of Sept. 30, 2021. At the time, its holdings represented 62% ownership of Lucid. Today, a 62% stake in Lucid would be worth nearly $43 billion.
Lucid’s announcement that it’s on track for European deliveries adds to the thesis that the company expects to be delivering cars in at least three key markets before year’s end. Financial backing from Saudi Arabia means that Lucid could very well become the market-leading luxury EV automaker in Saudi Arabia.
Lucid’s recent senior note offering gives the company over $6 billion in cash that should be able to fund its operations well into 2023. The company plans to produce and deliver 20,000 vehicles this year, including all four trims of the Lucid Air luxury sedan with price tags ranging from $77,400 to $169,000.
America’s second-largest EV automaker is getting even bigger
On Jan. 2, Tesla reported its record high quarterly and full-year production and delivery numbers for 2021. It delivered 936,172 vehicles last year, including 308,600 EVs in the fourth quarter. On Jan. 5, Ford reported 508,451 total Q4 vehicle sales and 2.04 million total 2021 vehicle sales, including 27,140 Mustang Mach-E sales for the year.
Ford is now the second-largest EV automaker behind Tesla, a position it should retain in the coming years as it ramps production of the Mach-E, its F-150 Lightning pickup, and its E-Transit electric van.
On Jan. 4, Ford announced it was doubling its F-150 Lightning production to 150,000 units per year after reservations topped 200,000 vehicles. Ford plans to raise global battery electric production to 600,000 vehicles per year by 2023.
By comparison, Lucid plans to increase production to 53,000 vehicles in 2022and 500,000 units by 2030. It had just 17,000 reservations as of its November update. Rivian is expanding its manufacturing capacity to 200,000 units per year at its Illinois plant, up from a current capacity of 150,000 units. It’s also building a 400,000-unit facility in Georgia. However, Rivian has just 71,000 reservations for its R1T pickup as of Dec. 15. Mentioning Lucid and Rivian’s production capacity and reservation numbers are meant to illustrate just how far these EV newcomers need to advance if they want to catch up to Tesla and Ford.
In October, Ford announced it was reinstating a $0.10 quarterly dividend, giving Ford stock a 1.6% annual dividend yield. Ford also has a price-to-earnings (P/E) ratio of 34.3, which is reasonable given its stock price has increased over 175% in the past year, it’s spending a lot of money, and is becoming a real player in the EV space with long-term growth potential. By comparison, Lucid probably won’t have a positive P/E ratio for years given it will need time to grow its sales to the volume needed to start turning a profit.
A dynamic duo that’s built to last
Lucid is one of the few young EV companies that continue to deliver on promises. It’s also on track to deliver on its 2022 goals, has an industry-leading range, and expects to debut an electric SUV in early 2023. Ford combines an existing brand, large workforce, and experience in mass production with impressive new EV technology, capital commitment to EVs, and an accelerated ramp-up that is taking form faster than many expected.
Lucid is a worthwhile high-risk, high-reward option in the space, while Ford arguably has the best all-around value and growth profile of any EV stock. Both companies are viable additions to a diversified EV basket for investors that are looking for future leaders in an auto industry that could one day be dominated by EVs.
Should you invest $1,000 in Lucid Group, Inc. right now?
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