Lucid (LCID -5.04%) stock is losing ground again in Thursday’s trading. The electric vehicle (EV) company’s share price was down 7.2% as of 2:30 p.m. ET, according to data from S&P Global Market Intelligence.
News hit yesterday that Tesla had cut Model Y prices again in Germany and other European countries — a move that is being interpreted as a negative sign for demand in the overall EV market. As a result, Lucid stock is participating in a pullback that’s affecting multiple players in the industry. The sell-offs have pushed the stock to another record low.
Tesla sends warnings signs to the EV industry
Tesla has cut the price on its Model Y vehicles by 5,000 euros (roughly $5,430) in Germany and enacted sizable price cuts in other European countries. The move comes roughly a week after rolling out substantial price cuts on its Model 3 and the Model Y vehicles in China.
Facing weaker demand, Tesla has been leaning into price cuts in order to boost vehicle sales. While a competitor’s struggles can be good news in some instances, that’s unlikely to be the case here. Growth for EV sales has been slowing nearly across the board, and there are some clear signs that demand is weakening. That’s a troubling development for Lucid because the company is posting big losses and needs to scale production and deliveries in order to move closer to profitability.
What comes next for Lucid?
Lucid is concentrated on the ultra-luxury corner of the EV market. Accordingly, its vehicles are priced above most other offerings in the broader category. But with demand for EVs weakening, the company may be forced to cut prices on its vehicles or accept lower sales volumes. Each of these potential outcomes could push a potential shift into profitability much further out for the company.
On the heels of recent production shortfalls and a major recall for its 2022 and 2023 model Lucid Air vehicles, new signs of weakening EV demand threaten Lucid’s outlook. The company is already facing some business-specific challenges, and the overall industry now appears to be moving in unfavorable directions.
Keith Noonan has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Tesla. The Motley Fool has a disclosure policy.
