Lucid Motors Stock Jumps as US EV Tax Credit Rumors Emerge

Lucid Motors (NASDAQ: LCID) stock experienced a significant surge on December 9, 2024, rising by 10% to close at $2.30. The surge came amidst rumors that President-elect Donald Trump might revise his position on U.S. electric vehicle (EV) tax credits. Speculation about policy changes and news of Lucid’s Gravity SUV production drove trading activity, with volume reaching 150.3 million shares—nearly double the daily average.

There have been market rumors spreading around suggesting that the new President-elect might reverse his earlier stance on eliminating EV tax credits. While American EV manufacturers’ luxury vehicles are priced above the current eligibility limits, this news brought optimism to the market. Investors are hopeful that any policy changes could benefit the EV industry overall, even if Lucid’s models are not directly eligible.

However, the Newark-based manufacturer was not the only EV company that saw gains. Other EV makers also benefited from the market optimism.  Rivian’s stock price rose 11% on the same day, boosted by optimism around the EV market and a new Buy rating from Benchmark analyst Mickey Legg. Legg set a price target of $18 for Rivian, further improving investor sentiment.

Lucid announced it has begun production of the Gravity SUV, its second vehicle after the Air sedan. CEO Peter Rawlinson highlighted this milestone as a critical step in diversifying the company’s offerings and enhancing its market appeal.

The market capitalization of Lucid is currently $7.7 billion, roughly half of Rivian’s $15 billion valuation. Despite recent gains, Lucid’s stock has faced pressure in recent months, with its 50-day moving average at $2.54 and its 200-day moving average at $3.00.

Institutional investors continue to show interest in Lucid. Public Investment Fund, the largest institutional investor in Lucid Motors, recently purchased 374.7 million shares at $2.59 per share, demonstrating confidence in the company’s long-term potential. Its ownership stake in the company now stands at 60%.

Lucid remains financially strong, with liquidity ratios of 3.71 (current) and 3.26 (quick). Its debt-to-equity ratio is manageable at 0.77. Analysts have varying views, with one recommending a Buy, seven suggesting a Hold, and one advising a Sell. The mean target price is currently projected at $3.16 per share.

Lucid provided additional updates during its fireside chat at the just-ended Nasdaq Investor Conference in London on December 11. With its direct-to-consumer sales model and focus on innovation in EV technology, Lucid aims to maintain momentum in a competitive market.

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