Just like that, with the 2024 Presidential election in the books, electric vehicle (EV) investors are left to wonder if the U.S. is about to hit a major industry speed bump. President-elect Donald Trump has occasionally spoken out against EVs, and the transition team is rumored to be heavily considering ending the $7,500 federal tax credit, which could soften EV demand.
But if Lucid Group (LCID 1.94%) CEO Peter Rawlinson is to be believed, Lucid’s investors might not have much to worry about. Here’s why.
Transition time
Lucid has recently rewarded patient investors, some of whom have hung around through multiple delivery disappointments and production snags, with three consecutive quarters of deliveries in 2024. In fact, the young EV maker has already outsold its 6,001-delivery mark set in 2023 by over 1,100 vehicles through the first nine months of 2024.
This delivery momentum, if you want to call it that, could hit a speed bump with Reuters reporting that Trump’s transition team is “planning to kill” the industry’s $7,500 federal tax credit. According to the report, Tesla representatives supported the plans to end the tax credit. Tesla CEO Elon Musk fully endorsed Trump and is reported to believe that losing the tax credit will hurt the rest of its competitors far more than it will hurt Tesla.
One person disagrees. Rawlinson spoke on Bloomberg Television and, to paraphrase, he essentially said that Lucid had taken the mantle of technology leadership from Tesla and believes it’s in a strong position regardless of the incoming administration and that “Lucid, among all the EV makers, is really the most immune from that [ending tax credit].”
It’s true that Lucid would be somewhat insulated from the impact of losing the tax credit, as its Air sedan doesn’t qualify for the $7,500 credit anyway, and Rawlinson noted that many of its consumers make over the income threshold allowed to qualify for the tax credit.
Falling behind
If the tax credit is abolished, Lucid may not feel as much of an impact as some rivals, but make no mistake: Losing the tax credit is a blow to the U.S. EV industry’s early progress. The industry has already fallen behind countries such as China in EV technology, development, and infrastructure.
In fact, an example of China’s explosive EV growth can be seen in the delivery growth of EV maker BYD. As recently as 2021, BYD recorded fewer than 750,000 global deliveries, but it is expected to reach 4 million global deliveries in 2024.
Is Lucid a buy?
Lucid isn’t a buy for any single reason, such as being more insulated from losing the federal tax credit or that its deliveries have surged in 2024. However, Lucid could be a buy for some investors who believe in the company’s high-end EV technology and vehicles despite their equally high prices.
Lucid’s Gravity will boost deliveries through 2025 as the production ramps up and the more affordable trims hit production; Lucid will begin production of a more expensive trim initially. Lucid also has a more affordable midsize electric SUV that will start under $50,000, not including shipping, and it will be the first of at least three midsize EVs, with production expected in late 2026.
Lucid has some delivery momentum, a product pipeline, and a wealthy backer in Saudi Arabia’s PIF, and it shouldn’t hit a massive speed bump if the new administration ends the tax credit. For those combined reasons, Lucid could be an intriguing option for investors willing to accept heavy risk on a young, unprofitable company in an industry with a bright future.
Daniel Miller has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Tesla. The Motley Fool recommends BYD Company. The Motley Fool has a disclosure policy.
