Is Lucid's Explosive Growth About to Hit a Speed Bump?

It's no secret that Lucid Group (NASDAQ: LCID) has faced its fair share of speed bumps already. The automaker has driven through increased competition, price wars, supply chain issues, recalls, and software issues -- just to name a few.

But the young electric vehicle (EV) manufacturer finally broke through the noise and turned in a solid 2024. Already, however, it seems that 2025 could bring yet another speed bump. Should investors worry?

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Total deliveries are up

Investors received a breath of fresh air in 2024 as the company finally achieved explosive sales growth. The EV maker ended the year with a bang, delivering 3,099 vehicles during the fourth quarter, which marked the fourth consecutive quarter with record EV deliveries. It ended the year with 10,241 total deliveries, which was up 70% from the prior year.

As far as sales go, this was growth that investors needed to see from the automaker. The hope was that with the new Gravity SUV hitting the streets in 2025, it would give the company's delivery figures another serious boost.

Currently, Lucid is ramping up production, but we did see Gravity deliveries trickle in during January. The company delivered 665 vehicles in January, up 51% from the prior year, and 50 were the Gravity. That should increase as the months go on.

With the Gravity, investors are likely to see sales increases regardless, but there is still a little bad news for its prospects in 2025.

A speed bump

EV sales in the U.S. jumped 15.2% during the fourth quarter, setting a new volume record for any quarter -- and increasing 7.3% for the full year. But 2025 might not bring the same fortune. At least not according to J.D. Power, which has projected EV sales to retain the same market share of U.S. retail sales as last year.

Electric vehicles appeared to have much momentum exiting 2024, but that's likely because consumers on the fence about purchasing one were motivated to buy before the current administration pulled back on EV incentives. J.D. Power posted in November that 64% of premium-brand EV owners said tax credits and incentives were primary factors in purchasing decisions.

Between the pullback on EV support and uncertainty with tariffs, J.D. Power expects EVs to hold steady at a 9.1% share of the U.S. retail auto market. The problems don't stop there, with the third quarter of 2024 seeing the largest quarterly decline in customer satisfaction with EV charging infrastructure since 2021, according to Power.

It wasn't all bad news, however.

Silver lining

In the longer term, J.D. Power predicts the EV market will jump to 26% of retail market share by the end of this decade. That would do wonders for young EV start-ups over the next few years, but it would still fall far short of former President Joe Biden's 50% market-share target.

And, if investors want more than a silver lining, you can have a golden vision, courtesy of Lucid CEO Peter Rawlinson. He announced that his goal is to produce 1 million EVs a year. His plans to achieve this are based around its advanced EV technology, but also its upcoming midsize platform that will be the base for a sedan and crossover, both starting around $50,000.

Lucid will need more than that to reach 1 million EVs a year, and 2025 might present another year of slow gains in the EV market, if any. Investors should keep an eye on the production ramp-up of the Gravity and the ensuing sales boost. That alone could make it a solid 2025 for Lucid.

But investors must keep in mind that Lucid is a young start-up EV maker burning through cash, and its stock will be volatile and risky. It should remain a small position in any portfolio.

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Daniel Miller has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.