Why Lucid Motors Stock Dropped Today

Lucid Group (NASDAQ: LCID) is about to start taking orders for its second electric vehicle (EV) model and it might not be a stretch to say the company's entire future is at stake. Customer orders for the Lucid Gravity SUV open next week on Nov. 7.

After hearing what Lucid CEO Peter Rawlinson just said in an interview with CNBC, though, investors may think the new EV won't live up to expectations. That's helped lead to a nearly 5% drop in Lucid shares today. As of 2:35 p.m. ET, Lucid stock was still lower by 2.5%.

Another almost $100,000 EV

Thus far Lucid has only been selling different trims of its luxury Air electric sedan. It has remained low volume as the price range begins at about $70,000 and goes up to $250,000. Lucid needs sales volumes to increase substantially to have any chance at long-term success. Rawlinson told CNBC that he's confident that demand will increase meaningfully with the Gravity's launch. He stated, "We believe there's about a 6-to-1 ratio ... for the SUV over sedan [demand], and that's going to put us in a very strong position."

Investors will only boost Lucid's stock if it does see a dramatic increase in sales. Except the company said its first Gravity model available will be the Grand Touring trim, with pricing starting at $94,900. It won't be until the end of 2025 that Lucid begins offering a lower priced trim starting at under $80,000.

To expect demand will be 6 times larger for its new SUV seems extremely optimistic. Even the followup model beginning production late next year may not have mass market appeal.

That might not be as big of an issue for investors if it weren't for the current status of Lucid's business. It only expects to produce about 9,000 vehicles this year after delivering 7,142 through September. Investors won't likely give the company credit for a big volume boost until it sees actual demand at those levels. Until then, the stock may not move higher.

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Howard Smith has positions in Lucid Group. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.