Lucid Motors () - a protracted vehicle that is more as real as promises.
The firm had a $78 billion market capitalization as of 2 p.m. Thursday, but only a handful of vehicles were provided (with more slated to close the year).
Instead, the Newark, Calif.-based business closed its third quarter with 13,000 automobile reservations, which it described as $1.3 billion in its most recent statement.
That number has since risen to more than 17,000, but reservations aren't the same as sales (as anyone who has followed the Tesla () - Cybertruck saga surely knows).
Lucid has a highly confident chief executive with a strong background: Peter Rawlinson, who formerly worked on the Tesla vice president and served as lead engineer for the Model S.
Rawlinson has been hesitant when it comes to lauding his firm's forthcoming product and its ability to be a leading EV producer.
According to its CEO, Lucid, which started at the battery firm Ativa, wants to produce the finest car in the world. Rawlinson said in the company's first since it went public earlier this year.
He described the company's efforts as "rethinking from the ground up every single element of the vehicle, from design, engineering, and manufacturing."
That's a bold ambition, but Rawlinson could never be accused of lack of confidence. It's fair to say that Lucid has very ambitious goals, and that if it does on them, the firm may grow in value.
What Are Lucid Motor's Goals?
Rawlinson wants more people driving electric cars, according to him, and he believes Lucid's first vehicle, the Lucid Air, will do so.
"Our efforts are the initial results of Lucid Air, which provides with it the objective of speeding up electrification while redefining luxury in the automotive industry," he added.
"As we continue to bring Lucid Air to market, it's obvious that the opportunity we have in front of us is enormous because the market opportunity isn't limited to electric vehicles; it's also limited to vehicles."
Lucid sales will be driven by not just EVs claiming a bigger piece of the market, but also by increased demand for luxury cars, he said.
Rawlinson expects that segment to grow by 5% per year, and he points out that Lucid is at the intersection of a number of factors that should drive the firm forward.
"We believe that the increased customer support for electric vehicles, coupled with the government mandates encouraging their adoption, provides significant support for the EV industry globally and Lucid's position within it," he added.
Rawlinson calls Tesla's technology a driving force behind the company's eventual success. He doesn't call out Tesla by name, but he's not straightforward about which company he's targeting at.
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"We believe that our technology is worlds apart from even the current market leaders," he added. "For example, no one expected Lucid to achieve even 400 miles of range. So we now have an [Environmental Protection Agency] certification of 520 miles of range for the Lucid Air Dream Edition R."
Lucid also stated that he has designed this technology with an aim at being able to produce it at a large, "which is where true innovation lies."
Lucid's Path Ahead is a Road Ahead for Lucid.
By the first three quarters of 2021, Lucid has not received sales of cars, but it does anticipate this to change in the fourth quarter.
"Due to customer deliveries beginning on Oct. 30, you will not see vehicle income until Q4, said Lucid Chief Financial Officer Sherry House during the earnings call.
According to her, the firm has $4.8 billion in cash on hand, thanks to the firm listing its shares on the Nasdaq through a reverse merger.
"This investment will increase the production capacity and vertical integration at our production facilities in Casa Grande, Ariz., as well as support the readiness of our worldwide supply chain," she added.
While $4.8 billion sounds like a lot, Lucid has to build more manufacturing facilities, establish a network of service centers, and form a studio base (its version of a car dealership).
Lucid also has to spend money on research and development as Rawlinson literally established the firm on the idea of having the finest technology.
Tesla spent roughly $1.4 billion on R&D per year in each full year since 2017, with the figure reaching $1.5 billion in 2020.
Comparing to conventional automakers, the EV leader, based in Austin, spends roughly twice as much money on R&D per vehicle, although its brand position allows it to spend approximately zero per vehicle on advertising.
Rawlinson is a visionary, but the market has priced in a large number of things right for Lucid.
"Investing in a publicly listed business makes little sense when future success and years of growth are already baked into a stock's price," Real Money contributor Brad Ginesin said in a recent piece.
"This is why Lucid Motors' buyers are taking on a lot of risks and are ready for a slew of adventure."
"As Wall Street's euphoria for electric vehicles grew, investors have reached for 'the next Tesla,' separateing Lucid's share price from a reasonable valuation."
That doesn't mean the business will not succeed, but there's a huge disconnect between being bigger than Tesla and making that happen.
Lucid's CEO has stated that he expects to build (and spend) vigorously, but that's not a guarantee of success.
And, as Denisen explained, a lot of factors have already been incorporated into the company's valuation.
