Lucid Gravity: Can Lucid Motors Shift Gears and Accelerate toward Profitability?

Electric vehicle (EV) maker Lucid Group (NASDAQ:LCID) has finally started deliveries of its much-anticipated premium SUV, the Gravity. The move is part of the company’s broader strategy to expand its lineup and ramp up production in a bid to reach profitability.

Priced starting at $79,900 for the Touring model and going up to $94,900 for the Grand Touring variant, the Gravity is positioned as a luxury EV SUV. As Lucid aims to broaden its customer base, the SUV’s appeal could help drive up production volumes, which are expected to reach approximately 18,000 units annually by 2025.

This marks an improvement over the estimated 9,000 Lucid Air sedans that were produced in 2024. However, the volumes are still a fraction of what’s needed to achieve profitability. For context, Tesla’s (NASDAQ:TSLA) Model Y and Model 3—which cater to the mainstream market—accounted for 95% of the 1.77 million Tesla vehicles produced in 2024.

Now, let’s unpack some of the key challenges that Lucid faces as it attempts to shift gears and accelerate towards profitability.

1. Premium Market Focus:

Lucid is doubling down on the premium EV segment, which poses a unique challenge. While the Gravity is sure to appeal to SUV enthusiasts, its price point means it competes in a small segment where rivals like Tesla and Mercedes-Benz (OTC:DDAIF) already have a strong presence.

The company’s heavy reliance on high-end consumers limits its ability to scale quickly. Mainstream EV makers, on the other hand, are able to rapidly increase volumes and drive down costs through economies of scale. As a result, despite being a younger company, Tesla is already generating significantly higher revenue and profits than Lucid.

2. Slow Growth Trajectory:

Analysts expect Lucid’s revenue to double in 2025, reaching $1.5 billion. While this may seem like a substantial increase, it’s important to note that the company is still burning through cash at a rapid pace, with an expected $2.8 billion cash burn and nearly $1 billion in gross losses.

To put things in perspective, Tesla is expected to generate revenue of over $100 billion in 2025, while mainstream automakers like General Motors (NYSE:GM) and Ford (NYSE:F) are also projected to achieve multi-billion dollar profits by that year.

3. Future Hopes in a Mid-Size SUV:

Lucid’s long-term strategy does involve diversifying into the broader market. A mid-size SUV priced under $50,000 is set to be released in late 2026, marking the company’s first attempt at capturing mainstream EV buyers.

However, this launch is still years away, leaving Lucid largely dependent on its premium offerings and ongoing financial support from key investors, such as Saudi Arabia’s Public Investment Fund.

4. Valuation Concerns:

Lucid’s stock performance has been a point of interest for investors, especially given the company’s premium valuation. The stock has risen over the past year as anticipation for the Gravity builds.

However, despite the recent gains, Lucid’s valuation remains a concern. The company trades at over five times its projected 2025 revenue, a premium that’s significantly higher than rivals like Rivian (three times revenue) and traditional automakers like Toyota (1.4 times revenue).

Moreover, the increasing share count—nearly double since 2021—dilutes future earnings potential, further impacting investor sentiment.

The Bottom Line

The premium SUV marks a pivotal moment for Lucid, but significant obstacles remain. Until the company can demonstrate robust volume growth, improved profitability, and a broader market appeal, its stock may continue to face headwinds. For investors, patience may be the key to navigating this high-stakes EV story.