Where Will Lucid Be in 3 Years?

Lucid (NASDAQ: LCID) investors have no doubt been disappointed with the stock lately. Despite the company's impressive vehicles -- its Air Sapphire sedan just won German Car of the Year in the performance category -- its share price has plummeted 81% over the past three years.

Lucid isn't alone in its struggles. The electric vehicle (EV) industry is reeling from the loss of federal tax credits and a shift toward hybrids. Fellow EV start-up Rivian is feeling the pinch too, with its stock falling about 60% over the same period.

So, where does Lucid go from here? I think there are a couple of likely outcomes for the company over the next several years, both good and bad, based on its current trajectory.

Image source: Lucid.

1. Vehicle production could continue climbing

Lucid's second-quarter results showed some significant improvements for the company's revenue, production, and deliveries -- all of which could continue rising over the next several years. Here's a snapshot of those results:

Data source: Lucid.

It's worth noting that these second-quarter results occurred just before the U.S. federal EV tax credits were about to expire, which spurred many EV buyers to take advantage of the deals. Lucid's vehicles are too expensive to qualify directly, but a leasing loophole allowed customers to apply credits to their lease.

Still, it's clear that Lucid was able to significantly increase its production and deliveries, both of which are fundamental to the company's future. Things could get better on this front, because Lucid just started producing its Gravity SUV this year and has plans to launch new models over the next few years.

The first will be the Lucid Earth, a mid-size SUV with a base price around $48,000. Lucid is also rumored to be using the Earth platform for two other future models, though their launch dates are more uncertain. As the Gravity ramps up production and other models launch, Lucid investors should hopefully see the company's vehicle production -- and sales -- continue rising over the next few years.

2. The company will be far from profitable

While vehicle production and sales could increase over the next several years, I don't think investors should expect that to translate into profit any time soon. Lucid reported a loss of $0.24 per share in Q2, up from a loss of $0.34 in the year-ago quarter.

While that was an improvement, the company is still far from profitable, and investments for its upcoming vehicle models mean the company likely has many more years of increased spending. Additionally, Lucid has had to receive several cash injections from its largest shareholder, the Saudi Arabia Public Investment Fund (PIF), to keep it going.

It's unclear whether or not Lucid will need more cash from the PIF, or if it would get it even if it needed it. But investors should know that Lucid is far from standing on its own two feet, financially speaking. Some of Lucid's moves to raise capital have already resulted in some share dilution for investors, and it's possible it could happen again if Lucid needs to raise more money over the next three years.

Lucid's stock will likely continue to disappoint

I think potential investors and current Lucid shareholders shouldn't expect much from the stock in the near future. The company is still trying to expand its model lineup, and its losses are significant. At the same time, the EV industry is suffering from a loss of federal tax credits, and consumers are showing an increasing focus on hybrids and less on electric vehicles. A recent AAA survey found that just 16% of car buyers say they're "likely" or "very likely" to buy an EV as their next purchase, the lowest percentage since 2019.

Additionally, the company may need to raise more capital. This has been bad for its share price in the past, both because of dilution and because it doesn't give investors much confidence that Lucid is on the right path.

I think EVs will eventually regain their momentum, but it's already looking like it's going to take many more years before the industry is out of the woods. With Lucid already reeling, the company could feel the brunt of these difficult times.

Chris Neiger has positions in Rivian Automotive. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.