Lucid or Tesla? What Are the Shares of Electric Car Manufacturers in the Comparison?
Electric car start-up Lucid is valued at $40 billion on the stock market. Compared to the Tesla model, that's very little. Which Stock Offers Which Potential? San Francisco Peter Rawlinson and Elon Musk share a long history: Musk brought Welsh to Tesla as chief engineer in 2009.
Rawlinson left the electric car pioneer three years later, which Musk later bitterly complained about. Since then, Musk and Rawlinson have had a deep discontent - which they've been expressing publicly.
Both CEOs are now listed as electric car manufacturers: Elon Musk's Tesla is now worth $700 billion since a share price rally that began in early 2020. At the end of July, Rawlinson's Lucid Motors was successful in its IPO, which was announced in February through a merger with Churchill Capital IV (CCIV). Lucid is currently valued at around $40 billion. The share has dropped a bit since the IPO and is currently trading around $23 instead of $27.
Both companies are more than bullish when you look at their fundamentals. Tesla is by far the world's most valuable automaker, but it delivered only 380,000 cars in the first half of the year - much less than German premium manufacturers like BMW, Mercedes, or Audi.
BMW alone delivered almost 1.3 million vehicles of the core brand, with Mercedes just behind with just under 1.2 million. Audi has yet to give any figures, but there are signs of a record. The latest record was a good 950,000 vehicles in the first half of 2016.
Lucid has yet to deliver a single model of its luxury-class "Air" sedan. The US launch has been delayed twice due to issues with suppliers. But Rawlinson promised in an interview with Handelsblatt that by the end of the year it should definitely be a long way off.
So far, the market has priced in two scenarios. Tesla and Lucid have made a bet that electrification and digitalization will completely turn the auto industry upside down in the coming years. New players would largely overthrow established companies like Toyota and VW in this scenario.
So far, the market has priced in two scenarios: the electric revolution of newcomers and the possibility of industry giants catching up with changing customer needs with their electric models. Because Volkswagen stock, or Daimler stock, is not far from its peaks in 2015, that is, before the diesel scandal and the Tesla shock.
Either the auto industry will increase sales and margins in the coming years, or one of the two theories will turn out to be wrong.
If you want to trust the electric revolution, Tesla will likely be a more stable but also much more expensive company: The Palo Alto company was founded in 2003, with more than $10 billion in revenue from car sales in the last quarter. , but also manifests itself in chip shortages and other times of Covid- Uncertainty. The target of increasing sales by 50 percent compared to 2020 to 750,000 cars will be exceeded by Tesla, but it is not a big deal.
The automaker also hit a milestone in the second quarter. While the company had been making steady profits for two years, Tesla was now profitable for the first time, even after deducting sales from CO2 certificates. The company buys them, for example, from California or Europe and only then sells them to automakers that can meet their climate targets.
Tesla Is Now Profitable Even Without Certification!
But this highly lucrative source of income for Tesla will sooner or later dry up, as all traditional automakers now rely on emission-free models as well. Investors must be reassured that the company can operate profitably without certifications.
In terms of share price, profits are still meager: While Tesla stock is currently priced at well over $700, it's about 20 percent below its January high, with a P/E ratio of 370 — and its traditionally thin profit margins in an industry. with. Analyst Adam Jonas of Morgan Stanley still sees potential up to $900, while Brian Johnson of Barclays sees the stock drop to $230.
And with that, Tesla bear Johnson had almost doubled his price target at $125. Still, "The company is overvalued," he said before Tesla's quarterly press conference. "But even pessimistic fund managers are starting to accept Tesla's high rating."
Optimists see Tesla more as software than an automaker. If the company manages to repeatedly sell paid software updates to car buyers over the life of their vehicle and download them over the internet without going to a workshop, its margins could be closer to Microsoft's mid-double-digit sales return than VW's.
To do this, car buyers need to be prepared to put thousands in their regularly aging cars. The most expensive update Tesla currently offers is also pretty dubious: For $10,000 or $199 in a monthly subscription, Tesla drivers can download a driver assistance system known as "Full Self-Driving" (FSD), but that's what Musk has said over and over for years. Despite promising promises, it does not leave the car autonomous. Even the forever optimistic founder recently had to admit that "it's debatable whether an FSD subscription is worthwhile right now."
Clear Boss Rely On Insufficient Expression!
Musk's flamboyant demeanor compares rival Rawlinson to British contempt. “We shouldn't be that valuable before we build a single car,” he says of the share price. Sudden Bitcoin investments or disputes with the stock market regulator SEC are hardly expected from a 60-year-old. In retrospect, Rawlinson is quite annoyed that shares of shell company CCIV came into the focus of Reddit investors in February and rose to $60: It was "vandalism" that had nothing to do with his company.
Facing a career spanning decades with Jaguar, Lotus, and Tesla, the engineer reiterates the advantages of "Air" over rival sedans like the EQS from Mercedes or the E-Tron from Audi. Emerging from battery developer Atieva, Lucid is promoting its “Air” with a longer range than the rest of the industry.
Lucid's management team must also express seriousness: like Rawlinson, three Vice Presidents are Tesla veterans. For example, German Peter Hochholdinger, who planned Lucid's factory in Arizona, had already put Tesla's Model 3 production on track.
Lucid wants to collect the car market from the upper class. The most expensive version of the Lucid Air costs more than $160,000, so Mercedes, Porsche, and Tesla should compete with the recently remodeled Model S. It's still a long way from the mass market Lucid, which Tesla has been trying to conquer with the Model 3 since 2018: even by 2026, the company expects only 250,000 cars to be sold. After the Lucid Air, an SUV is planned for 2023 and models after 2025.
Investors Need Risk Appetite for Both Stocks!
In the long run, Lucid expects higher margins and significantly faster profitability than Tesla, which was founded in 2003, could achieve: for 2025, the company projects $14 billion in sales and – for the first time – 632 profits. Million dollars. Before that, however, Lucid will consume far more than the $4.4 billion in the capital it raised from the IPO and will therefore have to recapitalize long before the profit threshold.
If things go well for Lucid, the company could repeat Tesla's success story in the stock market and become a BMW or Daimler of the electric age on the path the electric pioneer has painstakingly cleared. The management's experience, technological leadership in some areas, as well as a focus on the upper class, show that Lucid will not shine in the pan.
Tesla, on the other hand, has already proven this and has built a global network of brands, sales, and charging - factors that Lucid still lacks. By contrast, the dominance of the global auto market is already priced by share.
Both stocks are risky because the established auto industry is now bringing its electric models to market, which testers think is on par with the nascent competition.
In either case, investors need to be willing to be electrified with optimism and a good vision for the future.