Lucid Stock Sinks In 2025: What's Driving The Decline?

Lucid Group LCID stock has faced significant headwinds, plunging over 24% year-to-date. This decline is largely attributed to a confluence of factors impacting the broader electric vehicle (EV) market, compounded by specific concerns related to the Trump administration’s potential tariff policies and the revocation of EV subsidies.

As a U.S. EV maker, Lucid primarily generates revenue through direct sales of its luxury electric vehicles, including the Lucid Air sedan and the Gravity SUV, sold online and through its Lucid Studios.

The company operates in a highly competitive landscape, directly vying for market share with established players like Tesla TSLA, as well as other EV startups such as Rivian RIVN, NIO NIO, and XPeng XPEV, all of whom are focused on the high-performance luxury EV segment.

Also Read: Lucid Strikes Deal To Use US-Sourced Graphite In Future EVs Starting 2028

The overall EV market has experienced a slowdown in sales growth, particularly in key markets like the U.S. and China, where economic uncertainty and rising prices have dampened consumer demand.

This has led many automakers, especially in China, to resort to price cuts to boost sales, intensifying competition and subsequently squeezing profit margins across the industry.

Even market leader Tesla has not been immune, with its stock down over 22% year-to-date, grappling with production delays, further price cuts, and lingering questions surrounding its self-driving technology.

Moreover, Elon Musk’s reported plan to launch a new U.S. political party has raised concerns among investors about his undivided focus on Tesla’s future amidst falling sales.

Adding to the pressure, investors have become more cautious, shifting away from high-growth sectors like EVs due to rising interest rates and market volatility, now perceiving them as riskier investments.

Meanwhile, traditional automakers are rapidly scaling up their EV production, further heightening competition and putting immense pressure on smaller, newer players like Lucid.

The challenges are amplified by rising raw material costs, persistent supply chain issues, and inadequate charging infrastructure, all of which contribute to making EVs less affordable and hindering widespread adoption.

In response to these market dynamics and specifically, concerns over the potential re-imposition of tariffs under the Trump administration, Lucid is offering discounts of up to $20,000 on its Air sedan this May.

The company anticipates that such Trump-era tariffs could significantly impact its margins, potentially reducing them by 8–15%.

Looking ahead, Lucid has strategic plans for expansion, including entering the midsize EV market in 2026. The company aims to produce 20,000 vehicles by the end of the year and has raised over $1 billion through convertible senior notes to support its ambitious expansion initiatives.

In a notable move, Lucid acquired assets and hired over 300 former employees from the bankrupt EV trucking startup Nikola Corp through an auction in April.

Further demonstrating its future product roadmap, Lucid announced on February 26 its intention to unveil three midsize EVs later this year or early next year, with production slated to commence in 2026.

These new models, with starting prices around $48,000, are strategically positioned to directly compete with Tesla’s popular Model Y and Model 3.

Lucid has already completed advanced engineering on two of these midsize vehicles and is progressing into their development and industrialization phases, seeing this new lineup as crucial for boosting deliveries, expanding its market reach, and fulfilling a portion of its significant fleet deal with Saudi Arabia.

Latest Key Metrics and Quarterly Results

Lucid’s production increased to 3,863 vehicles in the second quarter, up from 2,212 in the first quarter of 2025. Deliveries also saw a rise to 3,309 vehicles from 3,109 in the previous quarter, although this figure fell short of Reuters’ analyst estimate of 3,611.

Earlier, on May 7, Lucid reported its first-quarter results, posting $235.05 million in revenue, which missed analysts’ $250 million estimate.

Despite the revenue shortfall, Lucid showed an improvement in its gross margin, reporting a negative 97.2% on a GAAP basis, a notable improvement compared to negative 134.3% a year earlier.

During the first quarter, Lucid produced 2,212 vehicles and delivered 3,109, with over 600 additional vehicles in transit to Saudi Arabia for factory gating. The company reaffirmed its full-year 2025 production target of approximately 20,000 vehicles.

Analyst Perspectives

Industry experts and analysts offer mixed views on Lucid’s prospects. On May 22, Jim Cramer of CNBC’s “Mad Money Lightning Round” stated a preference for Rivian over Lucid.

However, on July 4, BNP Paribas analysts suggested that Lucid could potentially benefit from reduced EV competition if President Donald Trump’s proposed tax bill leads traditional automakers like General Motors Co. GM and Ford Motor Co. F to scale back their EV plans.

These analysts believe that, similar to Rivian, Lucid might gain market share as legacy automakers shift focus. They also anticipate a surge in third-quarter deliveries as buyers rush to claim the $7,500 EV tax credit before its potential expiration on September 30.

Lucid’s stock had previously plunged over 11% after reporting its fourth-quarter results on February 26. Cantor Fitzgerald’s Andrew Sheppard acknowledged improvements in fourth-quarter gross margins and the meeting of the 20,000 vehicle production target, but he highlighted ongoing significant challenges.

While optimistic about the Lucid Gravity SUV and upcoming midsize EVs for boosting demand and scale, he cautioned about persistent risks including negative margins, capital requirements, and leadership changes, notably the departure of CEO Peter Rawlinson.

Needham’s Chris Pierce recognized strong delivery momentum and growing interest in the Gravity SUV but flagged uncertainty tied to Rawlinson’s departure and emphasized that profitability remains a distant goal given Lucid’s current scale.

In a broader market analysis, on July 11, JP Morgan analyst Ryan Brinkman named Tesla and Rivian as top short ideas for the second half of 2025.

He cited overvaluation, shrinking subsidies, and a widening gap between market expectations and actual performance for Tesla, predicting a third consecutive year of declining profits and questioning the viability of its robotaxi plans.

For Rivian, Brinkman pointed to high cash burn, mounting EBITDA losses, and the threat of reduced subsidies and rising tariffs as major hurdles to scaling. Rivian stock is currently down over 4% year-to-date.

Price Action: Lucid stock is trading lower by 0.22% to $2.29 at last check Monday.

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