The luxury EV maker, Lucid Group Inc. (LCID) announced a sales deal with the government of Saudi Arabia for up to 100,000 EVs, on April 26. Consequently, the stock rebounded and became bullish in the after-hours to add 5.95%. Thus, the stock was then trading at a value of $18.69 after its lost 8.74% in the prior session. The earlier session had the stock valued at $17.64 a share at the close.
LCID’s Sales Deal
As per the deal, the Saudi Arabian government will buy up to 100,000 vehicles from the company over a decade. The agreement covers an initial commitment for buying 50,000 vehicles and an option for an additional 50,000 in the same period.
Furthermore, the vehicles would be purchased from LCID’s existing Arizona factory and its future international facility in Saudi Arabia. In addition to Lucid Air, the government will also buy other future models of the company over the given period. While the initial order quantity would be between 1,000 and 2,000 vehicles a year, it will be increased to 4,000-7,000 in 2025. Moreover, the vehicle delivery is due to be commenced no later than Q2 2023.
Will LCID be able to keep up with the EV Boom?
The world has ushered into an EV boom with luxury EVs definitely on the trend and rising. While EVs are being adapted increasingly, LCID has investors worried due to its recent production cut by 35%. Initially, the company said it will produce 577 EVs in 2021, 20,000 in 2022, and 49,000 in 2023 (including Project Gravity SUV). But at the end of February, the company admitted to having produced only 400 EVs in the past 14 months. Not only this, but the company also revised its production estimates for 2022 to now be at 12,000-14,000 EVs. While nothing was said about the 49,000 in 2023, the 2023 SUV launch is now pushed back to 2024.
Given such a big cut, the company is not only facing a class action lawsuit but investors are worried about another production cut as well.
LCID has been striving to keep up with production amid the global supply chain constraints and hiking raw material costs. But the company has made some noticeable moves to ramp up production with expansion into the Canadian market and a facility plan for Saudi Arabia. Added to this, the company has also been expanding its U.S. presence with Boston, MA, and NY studio locations.
The latest unveiling of its faster and more efficient Grand Touring with unmatched performance numbers has also been a major plus for the company.