Despite Lucid's (LCID 8.58%) optimistic tone as it reported plans to double production of its Lucid Air sedan in 2023, forecasts for 2023 suggest there are plenty of potholes ahead for the stock, which has lost more than 60% of its value in the past year.
The company expects to make as many as 14,000 vehicles in 2023, far less is less than analysts' projections of more than 20,000 vehicles. And, when it comes to existing orders, as of Feb. 21, bookings totaled 28,000 units, down from the 34,000 units as of Nov. 8, 2022, proving that plunging reservations are a problem.
Fourth-quarter revenue also failed to meet expectations. Although revenue rose to $258 million from $26.4 million a year earlier, it fell short of the expected $303 million. But there was some good news, as Lucid's fourth-quarter net loss dropped year over year to $473 million from $1.05 billion.
Lucid reported it ended 2022 with $500 million in available credit and $4.4 billion in cash, thanks to The Public Investment Fund of Saudi Arabia contributing $1.5 billion to the company, giving it a 62% ownership stake in the automaker. Speculation is rife that the fund plans to buy the remaining shares it doesn't own.
In 2023, Lucid plans to spend between $1.5 billion and $1.75 billion on capital projects. That represents a 40% increase from 2022, but it falls far short of the $2.24 billion analysts had predicted.
Still, Lucid's declining order book is worrisome, as the company is offering a $7,500 discount as of Feb. 9 on certain Air sedan models purchased before March 31.
While the Saudi Arabian government plans to purchase 100,000 vehicles from Lucid over the following decade, that doesn't help Lucid in the short term, as rising production and a falling order book suggest trouble ahead. And reports suggest the company may not become profitable until 2027.
Add in lingering supply chain issues, a possible recession, rising interest rates and Tesla's recent price cuts, which could ignite an EV segment price war, and the chances of profitability seem increasingly dim.
And the increased competition isn't helping. The Lucid Air Pure starts at $87,400, as opposed to the $74,900 Mercedes-Benz EQE or $86,700 Porsche Taycan.
With orders dwindling, and earnings not meeting expectations, the best shareholders can hope for is better news in upcoming quarters, a possible buyout by Saudi Arabia, and surviving long enough to launch its new Gravity SUV in 2024. But stockholders may not know the true picture, as the company plans to stop publicizing its orders going forward, as if obfuscation will somehow help their case with investors.
Nevertheless, SUVs are far more popular than sedans, and the Lucid's forthcoming SUV may prove to be the lifeline that the automaker needs to become viable in the long term, as long as it can survive until then.
