Lucid Faces Bearish Outlook as Analyst Cuts Price Target to $1.13
Lucid Group Inc. (NASDAQ:LCID), the luxury electric vehicle manufacturer, saw its stock tumble 7.2% on Monday after Redburn-Atlantic downgraded its rating from Neutral to Sell and slashed its price target from $3.50 to $1.13. The downgrade by analyst Tobias Beith signals increasing concerns about Lucid’s long-term financial health and production capabilities.
Analyst Cites Cash Flow Concerns and Scaling Challenges
Beith highlighted Lucid’s engineering efficiency edge, which currently sets it apart from competitors. However, he projected that this advantage may diminish by 2030 as other automakers close the gap. Despite expectations that Lucid’s upcoming mid-sized platform launch in the second half of 2026 (2H26E) could drive volume growth, Beith warned that cash outflows could significantly exceed market expectations.
According to the analyst, the cumulative free cash flow gap between Redburn-Atlantic’s projections and consensus estimates for FY25-30E stands at approximately $11 billion. If these projections hold, Lucid may need substantial additional capital to sustain operations and scale production.
Key Risks: Manufacturing Scale, High Costs, and Funding Access
Beith also pointed to Lucid’s lack of scale and high vehicle production costs as primary risk factors impacting its financial trajectory. Without a significant increase in production efficiency and cost reductions, Lucid’s ability to compete in the growing EV market remains uncertain.
“We are more mindful of the relationship between manufacturing capacity utilization and profits; we are less optimistic about the gross margin rate of the Gravity SUV; and funding is harder to access,” Beith stated. “Management should act in a way that pulls profits forward and minimizes capital intensity.”
Market Impact and Investor Sentiment
Following the downgrade, Lucid’s stock took a hit as investors reacted to the bearish outlook. The EV sector remains highly competitive, with major players like Tesla (NASDAQ:TSLA) and Rivian (NASDAQ:RIVN) aggressively expanding production and improving cost efficiencies. Lucid’s ability to secure funding and ramp up production will be critical in determining its future position in the industry.
As the company prepares for the launch of the Gravity SUV and aims to scale production, investors will be closely monitoring its cash flow, manufacturing efficiency, and ability to secure additional capital in the coming years.
