Meet rival EV Gunning for Tesla’s market share

You’re here (NASDAQ: TSLA) has gained a significant advantage as a first mover in electric vehicles – but as the demand for electric vehicles increases, so does the competition. One EV rival that deserves further analysis is Lucid Motors, which is currently considering going public through a merger with SPAC. Churchill Capital IV (NYSE: CCIV). Lucid’s performance and price superiority over Tesla could reward early investors with multi-ring returns over the next decade.

Lucid Motors’ Air EV aims to take on Tesla. Source: Lucid Motors.

Face to face with the big dogs

Lucid Motors aims to redefine the luxury electric vehicle market, starting with directly competing with the Tesla Model S. And when you compare the newcomer to the current leader, Lucid’s metrics are impressive. The table below shows the specs for both cars, with the top metric highlighted.

Source: Lucid Motors and Tesla websites.

As seen above, the Lucid Air wins in five of the six categories; it drives farther, more efficiently, with a faster charge. The technology behind this outperformance – protected by 403 patents filed, 80% of which have already been granted – could allow Lucid to gain market share on the less efficient Model S.

Lucid Motors appears to be mimicking Tesla’s early phase rollout strategy by entering the market in pre-production, with a model and an expansion plan. Lucid still has some way to go on production, compared to 500,000 cars produced by Tesla in 2020. Lucid Motors is expected to start production in spring 2021, with a facility capable of eventually producing 365,000 cars per year at full capacity. Meanwhile, demand for the Lucid Air remains very real, with $ 650 million in pre-orders already submitted. This equates to around 7,500 vehicles, far less than Tesla’s current annual production. However, Lucid is still in the process of finalizing its production plant. As production capacity increases, Lucid could process more orders, faster.

In addition to its apparent performance and cost superiority, Lucid Motors currently has eight executives who previously worked at Tesla. More importantly, this includes CEO Peter Rawlinson, who was Vice President of Vehicle Engineering and Chief Model S Engineer during his time at Tesla, which ended in 2013. It gives a beneficial insight into the playbook of the other team and how it works.

Comparing all of these numbers with Tesla’s staggering market cap, it would be reasonable to estimate that with a market cap of around $ 50 billion, Lucid Motors has plenty of opportunities to claim market share away from Tesla.

A bumpy trip with a luxury destination

These numbers paint an attractive picture, but there are some things to keep in mind. Lucid Motors maintains a high market valuation as it has not yet commercially produced vehicles to date.

The CCIV SPAC recently fell around 50% as part of a much larger pullback in tech stock, with the Nasdaq as a whole dropping double digits, and this sell off likely brought the valuation of the future combined company closer to reality. . But even with the recent price drop, Lucid Motors currently has no vehicle production income, making valuation difficult.

Besides pre-production of vehicles, Lucid has not ruled out other potential growth markets, such as the supply of energy storage systems or the sale of in-house technology for military, agricultural and heavy machinery purposes. This provides a form of potential options in the stock to expand further into the electric vehicle market. There may be a limited market for electric vehicles currently, but as environmental policy develops the potential market share will increase with global implications.

Lucid Motors valuation is based purely on potential, but it is worth a starting position if you can handle the volatility. Lucid may never become the $ 635 billion company Tesla is, but that doesn’t take away from its potential to become a multibagger in the market. Even with fierce competition in an increasingly crowded market, Lucid has the potential to disrupt the future of electric vehicles by combining both luxury and performance over the next decade for investors keen to shop around.