lucid air

Lucid Motors (NYSE: LCID) has announced a $7,500 credit on select models of its Air sedan. After Tesla lowered car prices towards the beginning of the year, several car companies have announced price cuts.

Lucid Motors said that it would offer a $7,500 EV credit to buyers of select versions of Lucid Air Touring and Lucid Grand Touring. The price and terminology for the discount are similar to the $7,500 federal EV tax credit that many eligible models get.

While Lucid cars qualify for the federal EV tax credit because of their localized production, none of its premium models qualify for the tax credits as the starting price of Lucid cars is above the maximum threshold of $55,000 for sedans.

While announcing the $7,500 credit, Zak Edson, Lucid’s Vice President of Sales and Service said, “We think our customers still deserve a $7,500 credit for choosing an EV.”

He added, “Lucid Air owners have told us how much they love this car, from the world-class driving experience to the elegant design and spacious interior. With this limited time offer, we hope to get Lucid Air into the hands of even more customers so they can experience the best for themselves.”

Meanwhile, regardless of the terminology that Lucid Motors used, markets see it as yet another sign of discounting and price cuts in the US EV market.

Lucid Motors Cuts Air Sedan Prices

Notably, late last year, Lucid Motors reportedly offered discounts of $18,000 to employees as well as those buyers who had canceled their orders. It managed to deliver 1,932 cars in Q4 2022 while the production in the quarter was 3,493. It produced a total of 7,180 cars in 2022.

While the company’s production was slightly ahead of its guidance, it was just about a third of the original guidance of 20,000 cars. Incidentally, last year, Lucid Motors slashed its production guidance twice.

While the company attributed lower production to supply chain issues, markets are also concerned about sagging demand.

During the Q3 2022 earnings call, it said that it has 34,000 orders for Lucid Air which was 3,000 less than what it had in the previous quarter. The company said that net orders dropped due to customer deliveries and cancelations.

Here it is worth noting that apart from these customer orders, Saudi Arabia has also placed an order for upto 100,000 vehicles from Lucid Motors. Saudi Arabia’s PIF (public investment fund) is the largest stockholder of Lucid Motors.

Lucid Motors Stock Soared on Reports of Takeover by Saudi Arabia

Last month, Lucid Motors soared on reports that Saudi Arabia was considering acquiring the company. PIF increased its stake in LCID in Q4 2022 when it invested over $900 million in the company’s equity offering. Overall, Lucid Motors raised $1.5 billion from the stock sale in a bid to shore up the balance sheet.

PIF also participated in Lucid Motors’ PIPE (private investment in public equity) transaction in 2021. LCID became the biggest SPAC merger and still remains among the most hyped reverse merger transactions of all time.

While we don’t have any official confirmation or denial of the reports, LCID stock is trading above the price levels when the reports first emerged.

EV Price War is For Real as Production Rises

The EV price war looks real as both legacy and pure-play EV companies ramp up their production. Tesla expects to produce 1.8 million cars in 2023 and said that the production can even reach 2 million if things go right. Tesla stock has almost doubled from its recent lows. There is a guide on buying Tesla stock.

Ford expects its monthly EV production run rate to reach 50,000 cars by the end of this year. To put that in perspective, the run rate was close t 12,000 in December last year.

After Tesla lowered the prices of its Model 3 sedan and Model Y SUV, Ford also announced a price cut for its Mach-E between $600-$5,900.

Ford also Lowered Mach-E Prices

In the release, Ford said, “With its new EV supply chain coming online, Ford is significantly increasing production of the Mustang Mach-E this year to help reduce customer wait times and to take advantage of streamlined costs to reduce prices across the board, making Mustang Mach-E even more accessible to customers and keeping it competitive in the marketplace.”

Ford meanwhile missed Q4 2022 earnings estimates which its CEO Jim Farley said was due to poor execution. It however announced a quarterly dividend of 15 cents along with a supplemental dividend of 65 cents. It said that in the future it wants to maintain shareholder payouts between 40-50% of its free cash flows.

Ford’s dividend yield is higher than that of General Motors. There is a list of companies that pay good dividend yields.

Coming back to Lucid Motors stock, it slumped over 10% yesterday and is down in US premarket price action today also as markets seem concerned over the EV price war.

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