According to a report, Lucid, a manufacturer of high-end electric vehicles, intends to market their automobiles in China, which is considered the largest market for automobiles.
According to an individual who is knowledgeable about the situation, Lucid plans to market foreign vehicles in China and explore the possibility of establishing manufacturing plants in the region, as reported by Reuters.
Lucid did not respond to Barron’s request for comment, but it was not unexpected as the company previously announced plans to enter the Chinese market in 2023. Despite this, shares increased by 2.5% in premarket trading, as investors view expansion into new markets as a potential growth opportunity. Lucid is not yet a threat to EV leaders BYD and Tesla in China, as they sell cars in a lower price range. Analysts do not anticipate positive free cash flow for the next few years, so Lucid may need to raise more capital in the future. The company plans to sell cars in China, but it is unclear if production will take place there. China is the largest market for new cars and EVs and 60% of global battery-electric EVs were sold there in 2022. Lucid entered the European market in late 2022. Sales difficulties have caused Lucid’s stock to decline by over 50% since last year.
As per a report, Lucid, a company specializing in high-end electric vehicles, intends to enter the largest automobile market, China, and sell its products there.
According to an anonymous source familiar with the issue, Reuters has reported that Lucid plans to market foreign cars in China and explore the possibility of creating manufacturing plants in the country.
Lucid did not respond to a request for comment from Barron’s, which is not surprising since their plan to enter the Chinese market in 2023 was already included in their 2022 cash flow guidance. Despite this, the company’s shares rose by 2.5% to $6.56 in premarket trading, as investors see entering a new market as a potential growth opportunity. However, with projected cash use of $4 billion this year, Lucid’s sales of 4,300 vehicles in 2022 and plans to produce just over 10,000 units in 2023 will not generate positive free cash flow. Lucid’s current models, priced over $100,000, do not pose a significant threat to China’s largest EV sellers, BYD and Tesla, who sell cars in the $30,000 to $60,000 range. Lucid is expected to raise more capital in the coming years, and has already secured $3 billion from Saudi Arabian investors to keep the company going until 2025. The company plans to sell cars in China and has opened design studios in Europe, but has struggled to ramp up sales, causing their shares to fall by 66% over the past year.
In November, Barron’s expressed some reservations about investing in Lucid stock, as they believed it would be challenging to increase sales. The stock has now fallen by over 50% since the publication of that article.
