Meet the EV Rival Gunning for Tesla’s market share

Tesla (NASDAQ: TSLA) achieved a significant pioneer advantage in electric vehicles – but as the demand for EVs grows, so does the competition. A rival EV that deserves further analysis is Lucid Motors, currently planning to go public through a merger with SPAC Churchill Capital IV (NYSE: CCIV). Lucid’s performance and price superiority over Tesla could reward early investors with multibagger returns in the next decade.

Face to face with the big dogs

Lucid Motors aims to redefine the luxury EV market, starting by competing directly 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 specifications of the two cars, with emphasis on the upper metric.

Source: Lucid Motors and Tesla websites.

As seen above, Lucid Air wins in five of the six categories; it drives farther, more efficiently and loads faster. The technology that drives this superior performance – protected by 403 registered patents, 80% of which have already been granted – could allow Lucid to gain market share in Model S.

Lucid Motors seems to be imitating Tesla’s early stage deployment strategy when it comes to the pre-production market, with a model and an expansion plan. Lucid still has some land to make up for in production, compared to the 500,000 cars Tesla produced in 2020. Lucid Motors is expected to start production in the spring of 2021, with a facility capable of producing 365,000 cars annually at full capacity. Meanwhile, demand for Lucid Air remains very real, with $ 650 million in pre-orders already shipped. This amounts to approximately 7,500 vehicles, much less than Tesla’s current annual production. However, Lucid is still finalizing its production unit. As production capacity increases, Lucid can fulfill more orders, more quickly.

In addition to its apparent performance and cost superiority, Lucid Motors currently has eight executives who worked at Tesla. Most importantly, this includes CEO Peter Rawlinson, who was vice president of vehicle engineering and chief engineer for the Model S during his time at Tesla, which ended in 2013. This provides an advantageous view of the other team’s manual and how does it work.

Comparing all of these numbers with the impressive market capitalization that Tesla achieved, it would be reasonable to estimate that with a market capitalization of approximately $ 50 billion, Lucid Motors has many opportunities to claim part of Tesla’s market.

A rugged journey with a luxury destination

These numbers paint an attractive picture, but there are a few items to remember. Lucid Motors maintains a high market valuation because it has not yet commercially produced any vehicles so far.

CCIV SPAC has dropped about 50% recently as part of a much larger reduction in technology stocks, with Nasdaq as a whole dropping double digits. This liquidation probably brought the valuation of the future combined company closer to reality. But even with the recent price reduction, Lucid Motors currently has no vehicle production revenue, which makes the assessment difficult.

In addition to vehicle pre-production, Lucid has not ruled out other potential growth markets, such as the supply of energy storage systems or the sale of internal technology for military, agricultural and heavy machinery purposes. This offers a way of potential stock optionality to further grow in the EV market. There may be a limited market for EVs today, but as environmental policy expands, so will potential market share with global implications.

Lucid Motors’ valuation is based only on potential, but it is worth a starting position if you can deal with volatility. Lucid may never become the $ 635 billion company that Tesla is, but that does not diminish its potential to be a multibaga that hits the market. Even with fierce competition in an increasingly crowded market, Lucid has the opportunity to interrupt the future of EVs through a combination of luxury and performance in the next decade for investors willing to move on.