lucid

It has been a rollercoaster year for Lucid Group (LCID 2.68%), with shares of the electric vehicle (EV) maker gyrating between $16 and $35. But one Wall Street analyst remains unfazed. He has a price target of $70 for Lucid stock. If you’re tracking electric car stocks, you’ll want to understand his thinking.

3 Reasons this Wall Street analyst loves Lucid Group stock

Mickey Legg is an analyst at Benchmark Company who has covered the EV space for several years. One of his top picks right now is Lucid Group. His $70 price target implies nearly 200% in potential upside. There are three factors right now that get him excited.

First, he believes electric vehicle sales in the U.S. will accelerate in 2025 and 2026. There are a few problems with this prediction. EV sales growth decelerated heavily from 2023 to 2024. In 2023, 1.2 million EVs were sold nationwide, a 46% increase versus the year before. But last year, just 1.3 million EVs were sold, a growth rate of only 7%. Additionally, the elimination of EV tax credits may hamper demand in the back half of 2025 through 2026 and beyond. Predicting an acceleration in EV sales, therefore, is a very bullish take.

But Legg’s thesis rests on more than just higher industrywide sales. He notes Lucid’s “advanced technology” as well as its “highly integrated manufacturing capabilities.” For years, Lucid has been pushing back against its positioning as a car manufacturer, instead pitching its capabilities as a technology provider. “I’d love it to be 20-80. Twenty percent doing cars, 80% licensing,” Lucid’s former CEO said earlier this year.

Lucid’s deal with Uber Technologies to supply it with 20,000 vehicles that will power its robotaxi division lends credence to this vision. Uber required high-tech vehicles to enable autonomous driving, and out of all the global manufacturers, it chose Lucid, investing $300 million directly into the company as well. So, while I don’t agree with Legg’s bullishness on EV sales, there is something to say about Lucid’s differentiated technology moving forward.

Another factor that Legg is excited about is Saudi Arabia’s huge stake in Lucid. The country’s sovereign wealth fund has repeatedly provided financing to keep Lucid afloat. The country also intends to take delivery of 100,000 Lucid vehicles from 2022 to 2032. This is a double-edged sword, however. As a majority investor, Saudi Arabia’s influence on Lucid is huge, and the country’s goals may not always align with what investors wish to see.

So, while the country has been a valuable partner thus far, there is structural risk in investing alongside an influential entity that may not have your priorities in mind.

Image source: Getty Images.

Don’t invest in Lucid Group before understanding this challenge

There is one final challenge Lucid Group faces that every investor should understand. And that is a lack of clarity when it comes to the introduction of affordable electric models.

Nearly 70% of U.S. buyers are looking to spend less than $50,000 on their next vehicle purchase. With zero models priced under $50,000, Lucid is missing out on tens of millions of potential buyers. The company believes it can get an affordable model to market by the end of 2026, but numerous questions remain about its ability to finance and scale the required infrastructure to do so. Competitors like Rivian Automotive and Tesla, meanwhile, will both have several affordable models on the market by the end of next year.

This is the challenge with Lucid right now. Even if EV sales accelerate like Legg predicts, the company simply doesn’t have the right models to take advantage of such growth. While its technology is exciting, it won’t see mass adoption until costs come down. So while some analysts remain bullish on Lucid stock, I’m remaining on the sidelines for now.

When a new president enters office, it’s not uncommon for changes to take place, either through the signing of bills into law or via executive orders. Since President Donald Trump was inaugurated a little over eight months ago, we’ve witnessed a slew of adjustments made to Social Security, as well as the passage of his flagship tax and spending law, the “Big, Beautiful Bill.”

While Trump’s big, beautiful bill introduced a number of tax breaks for select groups, including a higher standard tax deduction for eligible seniors from 2025 through 2028, and partial deductions for tips and overtime pay for eligible workers during the same four-year timeline, it also removed some important benefits.

President Trump delivering his State of the Union address. Image source: Official White House Photo.

Specifically, Donald Trump’s law changes the fortunes of the electric-vehicle (EV) industry and its leading pure-play manufacturers, which includes Tesla (TSLA 0.61%), Rivian Automotive (RIVN -2.15%), and Lucid Group (LCID 0.56%), as of today, Sept. 30.

EV makers bid adieu to an important dangling carrot

Among the laundry list of tax and credit adjustments in the president’s big, beautiful bill is a newly shortened timeline that ends the $7,500 tax credit consumers received when purchasing a qualifying new EV or plug-in hybrid, as well as the $4,000 credit when buying a used EV. This EV credit was available to new vans, SUVs, and trucks priced below a manufacturer’s suggested retail price (MSRP) of $80,000, as well as new sedans with an MSRP of no more than $55,000.

Though this credit (officially known as the Clean Vehicle Credit) was initially slated to end in 2032, based on the Inflation Reduction Act, Donald Trump’s big, beautiful bill brings this new EV purchase credit to an end today, Sept. 30. Qualifying new vehicles purchased after today will no longer be eligible for the $7,500 credit.

This EV credit applied to a significant percentage of the vehicles Tesla sells, including its Model 3 Sedan, all-wheel drive Model X SUV, single and dual motor Cybertruck, and multiple variants of the Model Y SUV. While Rivian’s and Lucid’s EVs are generally priced above the MSRP range where tax credits end, both companies had been angling leases of upcoming models as a way to take advantage of the $7,500 EV credit.

This EV credit was akin to a dangling carrot that allowed pure-play electric-vehicle manufacturers to be more price-competitive with internal combustion engine (ICE) vehicles. Undercutting traditional ICE vehicles on price is viewed as a borderline necessity with EV charging infrastructure still somewhat lacking on a nationwide basis.

Without this upfront cost advantage, it’s likely that future buyers will opt for traditional gas- and diesel-powered vehicles due to the availability of ICE fueling infrastructure and opportunity cost. Whereas it takes just a few minutes to refuel an ICE vehicle, it can take an hour to a full day, depending on the type of charger used, to juice up an EV.

Image source: Tesla.

But wait — there’s more bad news

However, ending this lucrative tax credit that incentivized the purchase of EVs isn’t the only way Donald Trump’s big, beautiful bill is disrupting pure-play EV manufacturers.

When the president signed his flagship tax and spending bill into law on July 4, 2025, it put an end to corporate average fuel economy (CAFE) fines, as well as retroactively eliminated fines for 2022 model years and all subsequent years.

CAFE regulations represent the standard of how far vehicles must travel on a gallon of fuel. These figures, which are set by the National Highway Traffic and Safety Administration, are designed to promote more fuel-efficient vehicles over time and lessen the reliance on fossil fuels. Automakers that failed to meet these standards were subject to fines. With CAFE civil penalties removed, courtesy of Trump’s law, there’s no longer any financial incentive for automakers to meet sky-high mile-per-gallon targets.

This is almost certain to have an adverse impact on the ability of Tesla, Rivian Automotive, and Lucid Group to generate profits.

Government agencies provide automotive regulatory credits to these pure-play EV manufacturers, which sell these tax credits to legacy automakers that are short of compliance targets. For Tesla especially, selling these tax credits plays a key role in its profitability. Without regulatory credits, Elon Musk’s company would have reported a pre-tax loss during the first quarter of 2025.

With the teeth behind CAFE regulations removed by the big, beautiful bill, the market for automotive regulatory credits in the U.S. is going to be severely depressed. It has the potential to expose the fact that Wall Street’s EV darling, Tesla, has been consistently generating more than half of its pre-tax income from unsustainable and/or non-innovative sources, such as selling automotive regulatory credits and earning interest income on its cash.

It’ll also minimize regulatory tax credit revenue for Rivian and Lucid. Whereas Tesla has at least been profitable on a recurring basis for five consecutive years (with the help of automotive regulatory credits), Rivian and Lucid continue to lose money hand over fist as they ramp up operations and attempt to carve out their own unique niches in the automotive marketplace. Despite substantial cash piles for both companies and brand-name financial backing, long-term success is far from a guarantee.

Though I wouldn’t go so far as to say Donald Trump drove a dagger through the heart of the EV industry, his actions are almost certain to thin the herd and make it considerably more difficult for pure-play electric-vehicle makers to compete with traditional ICE vehicles.