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Why Lucid Stock Fell 9% This Week
Shares of the electric vehicle start-up Lucid Group (NASDAQ: LCID) fell 9.4% this week, according to data from S&P Global Market Intelligence, as President Trump rescinded mandates for electric vehicle (EV) production in the U.S. and indicated he might eliminate tax incentives for electric vehicles.
A less hospitable EV environment
Earlier this week, President Trump revoked a 2021 executive order signed by former President Biden, which set a non-legally-binding goal for 50% of all new vehicles sold in the U.S. to be electric.
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Additionally, Trump halted the spending of $5 billion from a fund set up to expand electric vehicle charging in the U.S. and has indicated that he wants to roll back EV tax credits worth up to $7,500.
The Trump administration's stance toward EVs has caused fear among some investors, including Lucid shareholders, that the U.S. government's inhospitable approach to electric vehicles will stall the EV market.
An uncertain future
While many companies will be affected by Trump's recent decisions, EV start-ups like Lucid are feeling the pressure even more as they try to get their businesses off the ground.
Lucid's largest investor, Saudi Arabia's sovereign public investment fund, injected more cash into the company recently, and Lucid issued new shares back in October, garnering an additional $1.67 billion.
Lucid's management recently said that it has enough cash on hand to keep the business running "well into 2026," but the company's losses widened in the most recent quarter to $992 million, with sales of just $200 million.
The EV market was already experiencing speed bumps before Trump became president, and his latest moves could slow things down further. With Lucid spending money hand over fist and still trying to find its footing in the electric vehicle space, investors should be cautious about buying this EV stock right now.
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Chris Neiger has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
