Lucid Is Testing 100 Robotaxis With Uber and Nuro While Executing a $1.4 Billion Cash Overhaul. Here's Whether It's Enough to Turn the Stock Around.

Lucid Group (NASDAQ:LCID) is finally waving the white flag. After years of consistent financial losses and a struggling stock price, management formally announced an “operational reset” during an investor call on Aug. 4.

According to a press release, the operational reset will focus on executing “four must-win projects.” Lucid investors, as well as investors of other EV stocks, should pay close attention to Lucid’s four areas of focus.

Lucid will focus on these four key opportunities

The first priority for Lucid is getting its finances in order. The company’s market cap currently hovers around $2.5 billion. That’s significantly smaller than peers including Rivian (NASDAQ:RIVN) and Tesla (NASDAQ:TSLA).

Tesla, meanwhile, is profitable, while Rivian has been able to generate consistent positive gross margins in recent quarters. Lucid posted a $1.03 billion loss this quarter on just $405 million in revenue. And while the company ended the quarter with $3 billion in total liquidity, it finished with just $733 million in cash and cash equivalents, far short of the $1.86 billion analysts expected.

Given its financial reality, Lucid plans to execute a $1.4 billion plan to shore up cash flows. It expects to realize $600 million to $800 million in cash flow by liquidating inventory, $500 million by cutting capital expenditures, and $200 million through various cuts to operating expenses.

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The other three areas of focus include: ramping its robotaxi efforts, finalizing its new manufacturing plant in Saudi Arabia, and releasing more mid-sized vehicles with affordable price points.

On a call with investors, management stressed that its robotaxi efforts are “a top priority and indeed a must-win project for Lucid.”

“Independent estimates project that 2.5 million robotaxis will be operating globally in 2035,” Lucid’s management claims. “That is less than 10 years from now, and the total addressable market for robotaxi vehicles will grow to $600 billion by 2040.”

Other experts agree. “We think $8 trillion to $10 trillion for the entire autonomous taxi opportunity throughout the world, from almost nothing,” is possible, says Cathie Wood, CEO of Ark Invest. “That’s how quickly AI is going to cause these things to happen.”

On paper, Lucid’s restructuring plan is very reasonable. Its financials are in disarray despite reliable funding from its Saudi Arabian partners. Uber Technologies (NYSE:UBER) has also directly backed the company in the hopes that Lucid can supply it with the vehicles necessary to expand its robotaxi fleet. Shoring up its cash flows is a must if it wants to execute on its many growth opportunities spanning from robotaxis to releasing affordable vehicles manufactured at its new production facility.

But here’s the problem: all of Lucid’s growth opportunities are capital intensive. And yet financial constraints are forcing the company to pull back on capital expenditures. So while the company has plenty of growth catalysts ahead, it’s not clear that it will be able to afford pursuing all three.

Additionally, there’s the problem of misaligned incentives. Most of Lucid’s voting power is now controlled by Saudi Arabian interest groups and Uber Technologies. The Saudi Arabian sovereign wealth fund is invested, assumedly, for national interests. Uber, meanwhile, mostly cares about Lucid’s ability to produce physical vehicles for its robotaxi platform.

In short, while Lucid’s controlling investors care about the company’s fate, they aren’t necessarily as aligned with minority investors about creating long-term value through a rising stock price. Put simply, I’ll be remaining on the sideline when it comes to investing in Lucid shares.

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