Is Lucid Group Stock a Buy Now?

There was much hype when Lucid Group (NASDAQ: LCID) went public a few years ago. Investors viewed the luxury electric vehicle (EV) maker as a potentially bold new challenger to Tesla, poised to ride the wave of EV adoption. The company's ambitious vision, cutting-edge technology, and sleek designs had captured attention.

However, things haven't gone as planned. After an initial surge in 2021 that saw the stock reach impressive heights, momentum has faded, and Lucid's stock is now down 98% from its all-time high. The optimism that once surrounded the company has waned as investors focus on execution, competition, and evolving EV adoption rates.

As Lucid Group looks to regain its footing and get back on track, here's what investors should know about it before buying.

Image source: Lucid.

Lucid's growing vehicle lineup

Lucid Group manufactures luxury EVs, targeting an affluent customer base. The company aims to establish itself as a premium brand in the competitive automotive industry by committing to delivering a high-quality driving experience.

Its top-selling vehicle is the Lucid Air Sedan, the best-selling EV sedan in the U.S., outpacing the Tesla Model S. The automaker also offers the Lucid Gravity, an electric SUV with seating for up to seven adults and an EPA-estimated driving range of 450 miles.

Furthermore, management confirmed that the high-volume Midsize Platform, which aims to compete with popular models like the Tesla Model 3, remains on track to begin production in late 2026. This is Lucid's mass-market product and is a crucial step in enabling Lucid to scale production and improve gross margins.

Lucid is making moves in the robotaxi space

In other news, Lucid announced an initiative to accelerate its path to full autonomy in a collaboration with Nvidia. This partnership positions Lucid to deliver one of the world's first privately owned passenger vehicles with Level 4 autonomous driving capabilities, powered by the NVIDIA DRIVE AV platform.

Also, Uber Technologies announced a $300 million investment in Lucid Group. This investment is part of Uber's plan to launch driverless rides in the San Francisco Bay Area late next year, using Lucid Gravity SUVs equipped with Nuro's self-driving technology. This move puts Lucid's vehicles in direct competition with other robotaxi services. Uber plans to put 20,000 or more Lucid's self-driving SUVs on the road over six years.

Here's what Lucid investors need to watch

While this news is positive for Lucid Group, the company continues to burn cash as it scales up. The good news is that revenue is up 45% from last year. The bad news is that it continues to lose significant money. Through Sept. 30, the EV maker has an operating loss of $2.4 billion, up slightly from the prior year. This was against a total revenue of $834 million.

Data by YCharts.

Not only that, but the current regulatory environment isn't favorable to EV manufacturers, either. The Trump administration is resetting the Corporate Average Fuel Economy standards to levels achievable by conventional gasoline and diesel vehicles. This action reverses what the Trump administration said was the Biden administration's "unrealistic fuel economy targets that effectively resulted in an electric vehicle mandate," potentially reducing the regulatory push to shift consumers to EVs.

Morgan Stanley downgraded Lucid Group to Underweight from Equal Weight and sharply cut its price target. This decision was based on a more cautious industry outlook, with the analyst stating that the electric vehicle "winter" will remain through 2026.

More progress is needed

Lucid Group is making progress on its large-scale EV product and autonomous driving capabilities. However, the company continues to burn cash and could face headwinds in the near future. Changing regulations and shifting consumer preferences could lead to an "EV winter" according to Morgan Stanley, which would weigh on Lucid over the next year or so.

Lucid has earned praise for its vehicles, thanks to their industry-leading range, luxury design, and technology. That said, the company is still losing money, which should make investors hesitant. I'd like to see improvements in its efficiency and bottom line before purchasing the stock.

Courtney Carlsen has positions in Morgan Stanley and Nvidia. The Motley Fool has positions in and recommends Nvidia, Tesla, and Uber Technologies. The Motley Fool has a disclosure policy.