Will CCIV and Lucid Motors’s Impressive Roadmap Greatly Reward Patience?
It may take some time but the EV company has grand plans and resources that make them a force to be reckoned with
Much like a child and Christmas morning, many investors anxiously awaited for a confirmation that hot new EV company Lucid Motors would agree to merge with SPAC CCIV. The hype was so great that the share price of CCIV exceeded $60 at one point. So, when official news came that the merger was happening and CCIV stock dropped by about half, it shocked many who believed it was about to head to the moon. While there may not be an immediate payoff, what we know about the combining companies indicates patience could lead to a big pay day.
Lucid’s Vehicle Testing Better Than Tesla: Tesla leapt out to the forefront of the EV market with their quality vehicles and cutting-edge technology. However, Lucid’s initial prototype, the Lucid Air, which they first announced and started planning back in 2016, is coming in very strong with initial testing. The luxury electric sedan will have a range of 517 miles, which is almost 30% better than Tesla’s EPA-Rated range of 402 miles. Additionally, its horsepower reaches 1,080 and can go from 0 to 60 MPH in 2.5 seconds. Their DC fast charge provides an impressive 300 miles of charge in just 20 minutes.
In short, Lucid may lack a track record but their design and measurables should draw significant interest because instead of being just another vehicle, it may actually be better. That takes competition from simply being a buyer’s preference to being able to point out what advantages one product has over another — a crucial potential advantage in a blossoming market.
Finalizing the Merger: Now that CCIV and Lucid Motors have agreed to merge, the only thing that remains is to finalize the coupling. That is expected to happen during Quarter 2 of 2021 and will be incumbent on approval by a majority of shareholders, which is typically procedural. The completed merger will provide approximately $4.4 billion in cash, which is a generous cushion for the company working to establish its car line on the market.
When will Lucid Motors Start Selling Cars?: Originally, it was anticipated that the company would start rolling out its Lucid Air car line in late spring of 2021. However, that was recently pushed back to later in the year. Lucid plans to deliver 6,000 vehicles (their figure all along for the year) by the end of 2021 and then sell an additional 20,000 in 2022.
CCIV’s Michael Klein also recently indicated that the Dream Edition (Lucid’s luxury model) is essentially sold out for the year. The fact that this is a $169,000 vehicle and requires a $7,500 down payment for an advanced order is a nice way to start the vehicle’s commercialization.
Their Attention to Factories Indicate They Mean Business: A company looking to make a large splash in a sector as explosive as EV needs production facilities worthy of their aspirations. Lucid began by having completed construction on a $700 million factory in Arizona late this past year. A state-of-the-art facility, they hope it will ultimately have the capacity to produce approximately 400,000 vehicles a year. It is right around one-million square feet and there are plans for future expansions that will increase the facility to 5.1 million square feet by 2028.
Before a single Lucid car has hit the road, the company is already reportedly interested in building another factory in Saudi Arabia, which would put them near their significant investor, Saudi Arabia’s Public Investment Fund (Royal Family). They have also expressed an interest in establishing yet another factory in China, which would firmly give them an international presence.
The Company is Heavily Invested in by Institutions (Still): Ever since the rumors started flying about Lucid partnering with CCIV, institutions have been flocking to buy CCIV stock. Even with the precipitous drop in share price since the merger announcement, it doesn’t appear that this was caused by these whales bailing out and taking profits. Even now, there are 137 institutions holding 114,776,615 shares, which represents a combined 55.45% ownership stake. While it may take longer to get there, institutions generally know that they’re doing. If they still believe in this company, perhaps so should smaller investors who can afford to wait for the end of the rainbow.
The Gravity, Their High-Performance SUV, is on the Horizon: In addition to the Lucid Air, the company is also going full throttle on their electric high-performance SUV, the Gravity. They plan for this to fit up to seven passengers by miniaturizing the drivetrain. It will have much of the same performance as the Air and could be available by 2023. Developing another class of vehicle only expands the possible reach of the company. If their sedan takes off as hoped, the accolades and hype should only spread to the SUV when it’s ready to be sold. The aggressiveness of this growth plan should be an exciting sign to investors about what the future may hold.
Investing has a number of similarities as assembling a puzzle. The greatest success comes from seeing what pieces seem to fit together best and working from there — a long-term plan. Lucid Motors and now CCIV seem to have some great pieces that look like they will fit together great. Adding some time to the mix, these have the potential to come together and make an incredible picture. Investors who like what they see and are willing to have some patience could be rewarded greatly once the company fully hits their stride.
DISCLAIMER: The author is not a financial advisor or expert. The opinions expressed in this article are intended for general entertainment purposes only. They are not intended in any way to provide specific advice or recommendations for any individual or on any specific security or investment product. Individual investors are responsible for their own money and investment decisions and should always do their own due diligence before investing. The author holds a small position in the holding(s) discussed in the article.
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