If you have read my previous articles you will remember how bullish I am on the electric vehicle sector. Not only are the vehicles and driving experience superior, but in the long run our environment also stands to benefit. I chose these two companies because I didn’t really think a full on comparison to Tesla ($759.8|0.37%) would be fair.
Truthfully, even Lucid and Nio are at different stages of their life cycles. Lucid is pre-revenue, and has yet to actually deliver a vehicle. Nio is established in its domestic market of China, and continues to break its own delivery records in each subsequent quarter. But in terms of their stocks, each company has a loyal following as well as a strong bearish contingent as well. Let’s take a look at which company I like as a long-term investment.
Lucid (NASDAQ:LCID): Lucid made its Wall Street debut after merging with the SPAC Churchill Capital Corporation IV back on July 26th. Before its merger, CCIV ran up as high as $64.86 during the SPAC frenzy back in February. Shares have come back down to Earth, and are trading lower following the merger. Lucid is targeting an exclusive socioeconomic class with its Air Sedans starting at $77,400 USD. The top of the line Air Dream sedan has three editions, ranging in price from $95,000 to $169,000 USD. Surprisingly, Lucid has already seen all of its vehicles made for 2021 reserved.
Lucid has already announced plans to expand its production facility in Arizona to accommodate its SUV the Lucid Gravity which is set to begin production in 2022 or 2023. The company is also planning expansion to the Middle East in the near future. Many are bullish on Lucid simply because it has targeted Tesla as its chief rival. That doesn’t necessarily mean it will offer Tesla much competition though. We’ve seen former EV SPAC stocks like Nikola (NASDAQ:NKLA) and Lordston (NASDAQ:RIDE) fail miserably. Before it can be considered a rival for Tesla, the company has a lot to prove, and that begins with showing significant growth for its 2022 production.
Nio ($37.51|1.13%): I’ve written about Nio before, and for the most part I have been quite bullish on the company. I believe its battery swap technology is unique and sets the company apart from its domestic competitors like XPeng (NYSE:XPEV) and Li Auto (NASDAQ:LI). Nio also targets the upper class in China, although its vehicles are not quite in the same price range as Lucid’s. Unlike other EV companies, Nio doesn’t own their own production facilities, but rather outsources it to various Chinese companies. The company is in the midst of building another production facility which would raise its capacity to 240,000 vehicles per year.
Nio also has several new vehicle models being launched in 2021 and 2022, with rumors of a new SUV and minivan coming as well. While its growth is slowing compared to its rivals, I still believe Nio’s technology will help set it apart from its competition. One other factor to consider is geopolitical uncertainty between China and the US, and even within China itself. The CCP has issued a crackdown on Chinese tech companies lately. Nio’s stock has suffered, but luckily none of these new regulations have hit the EV industry just yet. Nio is a leading name in China, and with fresh expansion into Europe, the company is moving towards becoming a global brand.
Final Verdict: My choice is Nio: It is further along in its life cycle as a business, but the Chinese EV market is just too lucrative compared to the US. I don’t love Lucid targeting wealthier customers, although the company could do what Tesla did and introduce a more economic model later on. Still, comparing Lucid to Tesla right now is ridiculous in my mind, and even compared to a company like Nio, I feel Lucid has a lot to prove. I need to see a few quarters of growth from Lucid, so given the recent sell off of Chinese stocks, I feel better buying Nio at its current discounted price.
Disclaimer: I have no positions in any of the stocks mentioned. I wrote this article myself, and it expresses my own opinions. I have no business relationship with any company whose stock is mentioned in this article. All information should be independently verified and should not be relied upon for purposes of transacting securities or other investments. See terms for more info.