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Meet EV Rival Gunning for Tesla’s market share



Tesla (NASDAQ: TSLA) has achieved a significant first-time advantage in electric cars – but as the demand for electric cars increases, so does competition. An EV rival that deserves closer analysis is Lucid Motors, which is currently planning to go public via a merger with SPAC Churchill Capital IV (NYSE: CCIV). Lucid’s performance and price superiority over Tesla could reward early investors with returns over the next decade.

A woman walks past the Lucid Air electric car on a beach at sunset.

Lucid Motors Air EV aims to host Tesla. Source: Lucid Motors.

Head-to-head with the big dogs

Lucid Motors aims to redefine the luxury EV market, starting with competing directly with the Tesla Model S. And when you compare the newcomer with the current leader, Lucid’s calculations are impressive. The table below shows the specifications of the two cars, with superior calculation.

Spec

Lucid Air

Tesla Model S

Range (miles)

517

412

Efficiency (miles / kWh)

> 4.5

> 4.0

Charging time (miles / minute)

15

13.33

Max horsepower

1080

1020

0-60 mph (seconds)

2.5

1.99

Base cost

$ 69,900

$ 79,990

Source: Lucid Motors and Tesla sites.

As shown above, Lucid Air wins in five of the six categories; it runs longer, more efficiently, with faster charging. The technology that leads to outperformance – protected by 403 filed patents, of which 80% have already been granted – can allow Lucid to gain market share on the less performing Model S.

Lucid Motors looks set to emulate Tesla’s early-stage distribution strategy by entering the manufacturing market, with a model and a plan to expand. Lucid still has some reason to compensate for the production, compared to the 500,000 cars Tesla produced in 2020. Lucid Motors is expected to start production in the spring of 2021, with a plant that can eventually show 365,000 cars annually at full capacity. Meanwhile, demand for Lucid Air is still very real, with $ 650 million pre-orders already shipped. That equates to about 7,500 cars, much less than Tesla’s current annual output. However, Lucid is still completing the production facility. As production capacity increases, Lucid can fulfill multiple orders faster.

In addition to the apparent performance and cost superiority, Lucid Motors currently has eight executives who previously worked at Tesla. Most importantly, this includes CEO Peter Rawlinson, who was vice president of vehicle engineering and chief engineer of the Model S during his time at Tesla, which ended in 2013. It provides beneficial insights into the other team’s gamebook and how it works.

Comparing all these figures with the staggering market value Tesla has achieved, it would be reasonable to estimate that Lucid Motors with a market value of approximately $ 50 billion has many opportunities to claim some market share from Tesla.

A bumpy journey with a luxurious destination

These numbers paint a compelling picture, but there are some things to keep in mind. Lucid Motors maintains a high market value, because they have not yet produced any cars commercially to date.

CCIV SPAC recently fell by about 50% as part of a much larger pullback in technology, with Nasdaq as a whole dropping in double digits. That sale probably brought the combined future company’s valuation closer to reality. But even with the recent price reduction, Lucid Motors currently has no vehicle production, which makes valuation difficult.

Apart from the vehicle’s pre-production, Lucid has not ruled out other potential growth markets, such as offering energy storage systems or selling proprietary technology to military, agricultural and heavy machinery. This provides a form of potential option in the stock to grow further in the EV market. There may be a limited market for electric cars at the moment, but as environmental policy expands, potential market share with global implications will also increase.

Lucid Motor’s valuation is only based on potential, but it’s worth a starting position if you can handle volatility. Lucid may not be the company that Tesla is worth $ 635 billion, but that does not diminish the potential for being a market-beating multibagger. Even with strong competition in an increasingly crowded market, Lucid has the potential to disrupt the future of electric cars through a combination of both luxury and performance over the next decade for investors willing to take the plunge.

This article represents the point of view of the author, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We are motley! Asking questions about an investment dissertation – even one of our own – helps us all to think critically about investing and make decisions that help us become smarter, happier and richer.




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