Mike Sakuraba graduated with double major of English and Economics. Part time writer, part time investor, full time dad. Mike loves writing about technology, sports, and investing.

2022-02-26 11:35

Lucid is Heading in the Wrong Direction
A bullish report released earlier this week showed that US EV sales hit an all-time high in the fourth quarter of 2021. An even more staggering indictment of where the automotive industry is headed came in the year over year growth of EV sales. Overall, there was a 21% decline in all car sales in the country, but a 72% increase in EV sales. That is bullish for most EV makers if you ask me.

But then you dive a little deeper and you see that 72% of the EVs sold were made by Tesla (NASDAQ:TSLA). So where does that leave Lucid? A luxury EV maker that competes with Tesla’s high-end offerings, but has nothing to compete with the best-selling Model 3 or Model Y? Lucid was supposed to be the Tesla-killer, but how much of a 28% market share can Lucid really claim.

On top of that, Lucid was hit with its first vehicle recall this week. It happens to every automaker, but the company recalled more than 40% of its vehicles that are on the road. The fact that this meant the recall was for just over 200 of its vehicles is more of an indictment on Lucid’s true market size than anything else. The mechanical issue will look worse than Tesla’s recent recalls since Tesla has been able to solve these with over the air software upgrades.

Finally, the straw that may break this camel’s back is the fact that Morgan Stanley analyst Adam Jonas believes Lucid is on track to severely miss-delivery expectations for 2022. In a year where EV sales nearly doubled, Lucid is going to miss on deliveries. Let that sink in. I understand that Lucid is still in an early phase and that it is expanding globally. But I still haven’t seen enough from the EV maker to consider it as a part of my portfolio. Perhaps that will change on Monday when it reports its earnings.

Rivian: the Hedge Funds Love it
Rivian made waves earlier this month as a long list of hedge funds reported that they had established positions in Rivan in the fourth quarter of 2021. The stock has tanked since then so most of these positions are under water for now. Unlike Lucid, I see the long-term path to viability for Rivian. Last-mile delivery trucks are going to be needed around the world and I think this market is much more important to Rivian than consumer pickup trucks.

But then there is the ongoing issue with the State of Georgia about the construction of its upcoming production facility. The locals are not happy that Lucid is building in a rural area of the state. It’s unclear if they have a case or if Lucid will reconsider, but it’s enough of a bump in the road to question whether or not Rivian’s production expansion will happen this year. State officials have started the process of pushing the job through but this could leave a bad taste in the mouths of locals if Rivian is to stay there for the long-term.

Rivian reports its quarterly earnings on March 10th, and I’ll be watching out for how the company handles the production facility fiasco. If there is any sort of doubt that the project will start construction this year, then that could delay Rivian’s ability to scale up its production. With legacy truck makers like Ford (NYSE:F) and General Motors (NYSE:GM) hot on its heels, Rivian may have no choice but to push forward with the plan, even if it means upsetting its new neighbors.