Lucid Stock Continues to Rise

Shares of Lucid Group (LCID 2.74%) have seen impressive gains in recent weeks, and this upward trend persisted in today’s trading session, which was shortened due to the holiday. After an initial surge of over 10%, Lucid's shares were up by 4.2% as of 11:55 a.m. ET.

Over the last month, the company’s stock has skyrocketed by nearly 60%. One factor contributing to this increase was Lucid opening its order book for the new Gravity SUV. However, today's stock movement appears to be influenced more by other developments within the company and the broader automotive sector.

Potential Partnerships

Earlier this month, Lucid’s CEO, Peter Rawlinson, expressed interest in forming a partnership with a traditional automaker to help reduce capital expenses, as reported by Bloomberg. Rawlinson commented, "It would be lovely if we could supply technology to a traditional car company to help them on their way to sustainability, and perhaps we can leverage economies of scale with their parts bin and other aspects of the business."

Currently, discussions are underway about a potential merger between Honda and Nissan, which has some investors buzzing about the possibility of Lucid's plans becoming reality. If the merger proceeds, it could result in the creation of the world's third-largest automaker, with Honda and Nissan aiming to finalize a deal by the end of next year.

Looking Ahead

Despite Lucid's recent stock surge, it is important to note that shares are still down more than 20% year-to-date. As the company prepares to launch its new SUV next year, it faces significant challenges on the path to achieving profitability. This year, Lucid anticipates producing about 9,000 vehicles, which is crucial for managing its high fixed manufacturing costs.

A collaboration with another automotive manufacturer could enhance Lucid’s financial stability. In a similar vein, fellow electric vehicle maker Rivian Automotive recently announced a partnership with Volkswagen Group, enabling it to lessen its capital requirements.

Investors seem to believe that Lucid may need to pursue a similar strategy. With the CEO’s openness to forming partnerships and the news of a potential new merger in the automotive industry, Lucid's stock is receiving a boost today.

Howard Smith holds positions in Lucid Group and Rivian Automotive. The Motley Fool has a recommendation for Volkswagen Ag.

Lucid, Stock, Automaker