Why I Wouldn't Touch Lucid Stock With a 10-Foot Pole

On paper, Lucid Group (NASDAQ: LCID) stock has a lot of potential. The company has a solid financial backer in the form of Saudi Arabia's Public Investment Fund. It recently signed global movie star Timothée Chalamet as a brand ambassador to champion its new Gravity SUV platform. And its current market cap of just $3.2 billion pales in comparison to other EV stocks like Rivian and Tesla, which sport valuations of $19 billion and $1.3 trillion, respectively.

But even with their higher valuations, both Rivian and Tesla are superior investments right now. That's due to one growth catalyst that Lucid lacks. It's one that, at least at first glance, has nothing to do with making and selling electric vehicles.

AI will dominate the future of EVs

For decades, self-driving cars have been "just around the corner." In 2026, the world is still waiting for a fully autonomous vehicle transportation network.

The difficulties have been multivariate. Sensors are costly to integrate into the manufacturing process. Regulations have slowed the pace of experimentation. And consumers have repeatedly shown a fear of trusting fully autonomous vehicles.

But arguably, the biggest hurdle has been a car's ability to process huge amounts of data in real time to make high-stakes decisions. This is why the explosion of artificial intelligence (AI) innovation in recent years has been so important for the advancement of self-driving capabilities. Over the past few years, some experts believe AI has created more advancement in self-driving potential than previous decades combined.

Image source: Lucid Group.

When it comes to selling EVs in the next decades, styling, speed, and comfort may take a back seat to autonomous capabilities. If a Tesla or a Rivian vehicle can handle 100% of your driving needs and a Lucid vehicle can't, the choice for many consumers will be clear. That means, in many ways, the EV stocks of tomorrow will really be AI stocks.

Where Lucid stands on AI

Unfortunately, Rivian and Tesla arguably have a much more defined path for competing on AI than Lucid. Tesla, of course, owns part of xAI, Elon Musk's AI start-up. The EV maker's CFO recently highlighted that much of the company's $20 billion capex budget this year will focus on advancing its AI agenda.

As a smaller competitor, Rivian is further behind Tesla in many categories. But during its first "AI Day" late last year, the company outlined a clear plan to advance toward full autonomy and even produce its own AI chips in-house.

Lucid also plans to pursue AI and full self-driving capabilities. But the company has released far fewer details than Tesla or Rivian. Its spending power is relatively limited as well, which means that it has been forced to partner more closely with other companies like Nvidia instead of developing its own platform. More importantly, the company doesn't have a clear plan for getting lower-cost models to market, meaning its ability to generate real-world data will be limited versus Tesla's or Rivian's.

A bet on EV stocks today should be a bet on who you think will win the AI race. Right now, Tesla is the clear winner, with Rivian emerging as a potential rival. Lucid, however, remains in last place for AI domination among this trio, eliminating it from consideration for my portfolio.

Ryan Vanzo has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Nvidia and Tesla. The Motley Fool has a disclosure policy.