Electric vehicles (EVs) are in rough terrain. Although U.S. electric vehicle sales rose 7% last year to 1.3 million in the U.S., the Trump administration’s unkind attitude towards electric vehicles shocked some investors and attracted attention to growth among electric vehicle manufacturers.
So, what are the investors in electric vehicle stocks? As someone who believes in the long-term potential of this market, I think the current difficulties faced by some electric vehicle manufacturers may be temporary. Let's take a closer look at the startup wide awake(NASDAQ: LCID) and established a leader Tesla(NASDAQ: TSLA) See which one is better to buy.
Image source: Sober.
Tesla came from an impressive quarter where auto sales fell 8% to $19.8 billion, with revenue and earnings missing analyst consensus estimates. The lower average selling price of many of its models is the main culprit for the decline, but it makes some investors wonder if Tesla's best days are lagging behind.
Coupled with Tesla’s difficulties, vehicle delivery in the quarter was about 1.8 million, representing the company’s first annual decline. Tesla's management said that “the vehicle business will resume growth in 2025”, but it is still uncertain how it will happen.
This is not all bad news for Tesla. The company still owns 18% of the global electric car market, and long-time cheap Tesla cars could spur new sales. Tesla CEO Elon Musk said affordability remains a problem for potential buyers, and cheaper models may make their debut immediately this year.
Musk said that in the fourth quarter's earnings call, autonomous vehicle technology and robotics will be the key to Tesla's future growth. While his view of Tesla may be too optimistic that it will eventually become the most valuable company in the world, he may not be wrong with robots and self-driving cars.
The robotics industry will be valued at $73 billion by 2029, and the self-driving car market is estimated to reach $2.3 trillion by 2030. Tesla has made progress in both segments, with its full self-driving (supervised), the proposed Robotaxi service, the proposed Robotaxi Service and Optimus AI AI Robot.
The point here is that any eulogy from Tesla is too early. Even if the EV ground is lost, automakers continue to enter new areas of growth.
Lucid has been on the radar of investors since its public debut in 2021. Its stock fell 66% after the initial stock price surge. The good news is that Lucid makes great electric cars. The bad news is that it costs them a huge price.
The young automaker currently sells multiple versions of the aerospace sedan and has recently started producing gravity SUVs. All Lucid's vehicles target high-end customers, with the cheapest air starting at around $70,000. For most buyers, the high prices make Lucid's vehicles unreachable, and luxury vehicles are expensive to manufacture.
Lucid's net loss in 2024 was $2.7 billion, up slightly from $2.8 billion in the previous year. While all new EV startups will lose money, Lucid's heading towards more expensive vehicles (Gratility SUVs start at about $80,000) could be a mistake.
To be sure, Lucid will be able to save money and possibly increase productivity by repeating some of its components in gravity. But the fact remains that Lucid is further improving its pricing scale, as many EV manufacturers are releasing cheaper vehicles to attract more customers. EV companion RivianFor example, a smaller crossover SUV will be launched early next year for $45,000.
Lucid is also looking for the company's CEO Peter Rawlinson recently announced that he is withdrawing from the next iteration of the position. Lucid's chief operating officer Marc Winterhoff was appointed interim CEO. This may be a step in the right direction of sobering, but it is too early. At present, the company's significant losses remain its biggest obstacle.
I think Lucid has potential, but the company is losing too much money right now. A difficult electric vehicle environment and rising costs exacerbate its problems. Tesla is not without its problems, but the company remains a major player in the global electric vehicle market and has room to inspire its current lineup with redesigns and cheaper models.
Given the value of its forward price of 119, it is undeniable that Tesla's stock is expensive. But at least the company is profitable, producing millions of cars and having a large portion of the electric car market. Lucid can't say the same thing. That said, if you start a position at Tesla, it's better to start shrinking and adding stocks if the stock goes down.
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Chris Neiger has a position in Rivian Automotive. Motley fool has a place and recommends Tesla. Motley Fool has a disclosure policy.
Better EV Stocks: Lucid vs. Tesla Originally published by Motley Fool
