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Tesla vs. Lucid: Which EV Stock is Better?

The electric vehicle (EV) market has been rapidly growing in recent years, with Tesla emerging as the early leader and pioneer. However, Lucid Motors is an up-and-coming rival that is generating a lot of buzz with its impressive technology and promising growth potential. For investors looking to gain exposure to the EV revolution, the natural question is: which stock is the better buy – Tesla or Lucid?

To help answer this, let‘s take a deep dive to compare these two EV powerhouses across key factors like financials, market position, product lineup, technology, and future outlook. The goal is to provide an objective, comprehensive analysis so readers can decide which stock best fits their investment strategy and risk tolerance.

Tesla: The Current EV King

There‘s no doubt Tesla is currently the dominant force in the EV industry. Led by charismatic and visionary CEO Elon Musk, Tesla jump-started the EV revolution with the launch of the Roadster back in 2008. Since then, Tesla has expanded its lineup to include the popular Model S sedan, Model X SUV, Model 3 sedan, and Model Y crossover.

A few key stats highlight Tesla‘s pole position in the EV market:

  • Market cap of $708 billion (as of July 2023), making it one of the world‘s most valuable automakers
  • 1.31 million vehicles delivered in 2022, up 40% year-over-year
  • 16% global market share of EVs in Q1 2023, second only to China‘s BYD Auto
  • Projected revenue of $99 billion in 2023, which would be up 39% from 2022

In addition to selling EVs, Tesla also has a fast-growing energy generation and storage business, with products like solar panels and Powerwall batteries. Tesla‘s charging infrastructure is also a key competitive advantage, with over 40,000 Superchargers worldwide giving Tesla drivers unparalleled access and convenience.

However, Tesla stock is not without risks. The company is still burning cash as it invests heavily in growth, with consistent profits proving elusive. Elon Musk‘s acquisition of Twitter has also concerned some investors, viewing it as a potential distraction. Competition is also intensifying as incumbent automakers and startups alike jump into the EV fray.

Lucid: The Emerging Challenger

While it may not have the scale and brand recognition of Tesla (yet), Lucid Motors is a serious up-and-coming player in the luxury EV space. Founded in 2007, Lucid spent years operating in stealth mode while developing its EV technology. This included making battery packs for Formula E racing before pivoting to producing EVs.

Lucid made a splash in 2020 with the unveiling of its first model, the Air sedan. Deliveries began in late 2021, with the launch editions costing up to $169,000. The Air boasts eye-popping specs like up to 1,111 horsepower and a range of up to 520 miles. Lucid has made it clear it is going after the high-end of the market, positioning the Air as a true luxury vehicle to rival the Mercedes S-Class and Porsche Taycan.

While Lucid is just ramping up production, the company has big ambitions. A few key stats:

  • Market cap of $17 billion (as of July 2023)
  • 7,180 vehicles produced in 2022
  • $149 million in Q1 2023 revenue, up 159% year-over-year
  • Over $4 billion in cash on hand to fund operations into 2024
  • Factory in Casa Grande, Arizona with potential annual capacity of 365,000 vehicles

Lucid‘s management has laid out goals to achieve positive gross margin by 2024 and have $14 billion in revenue by 2025. The recently launched Air Pure base model at $87,400 will help make the Air more accessible to a wider market. Lucid also plans to launch its second model, the Gravity SUV, in 2024. More affordable models priced around $50,000 are also in the pipeline.

Like Tesla though, Lucid faces risks. The company is still very much in "startup mode" and will likely continue burning cash for the foreseeable future. Scaling up production is notoriously difficult, as Tesla knows well. Lucid will need to execute on its ambitious goals to prove the early hype is warranted.

Other Factors for Investors to Consider

Market potential – The global EV market is projected to grow at a 22% annual rate to reach $824 billion by 2030. Government support for EVs through subsidies and emissions regulations is a major driver. Whoever can capture a large share of this massive addressable market could deliver huge returns for shareholders.

Capital needs – Both Tesla and Lucid will likely need to raise additional funds from investors to make the large capital expenditures required to scale production. This could mean further dilution for shareholders. Tesla has the advantage of positive cash flow from operations and a higher credit rating to secure attractive debt financing.

Autonomous driving – Tesla has been a leader in autonomous driving with its Autopilot feature. Meanwhile, Lucid has developed its own DreamDrive Pro system and plans to eventually offer autonomous driving that is "hands-free, eyes-off." Cracking the autonomous driving challenge could transform the auto industry and create tremendous value. Investors should monitor the progress of both companies in this critical area.

Key technology – EVs are as much of a technology product as traditional cars. Tesla has established itself as the leading EV brand with cutting-edge battery and software technology. However, Lucid has developed its own impressive technology in-house, such as a 900V electrical architecture allowing the Air to add 300 miles of range in just 20 minutes. It remains to be seen if Lucid‘s technology can truly rival or surpass Tesla‘s industry-leading tech.

Based on our analysis, we believe both Tesla and Lucid offer attractive upside for long-term investors. Tesla‘s first-mover advantage and Elon Musk‘s bold leadership have positioned it to maintain a dominant market share. The company‘s profitability should also improve as it benefits from greater economies of scale.

Lucid is more of a high-risk, high-reward play. If the company can successfully scale up to mass production and bring costs down over time, we see potential for the stock price to appreciate multi-fold from current levels. The Air has received rave reviews, demonstrating Lucid can build a compelling product. However, Lucid remains a speculative investment until it can prove its business model.

Choosing between Tesla and Lucid ultimately depends on an investor‘s unique goals and risk tolerance. Those looking for a relatively safer way to invest in EVs may prefer the proven leader in Tesla. More aggressive investors with a longer time horizon may opt for the bigger potential payoff with Lucid.

Whichever EV stock you choose, be sure to diversify your overall portfolio to mitigate company-specific risk. The shift to EVs is a mega-trend that is still in its early innings – position your portfolio accordingly to ride this huge wave of disruption and growth.