When Elon Musk tweets, people listen.
The billionaire Tesla (TSLA) – Get a free report The CEO and recent owner of Twitter tends to shake things up whenever he lets his fingers do the talking.
His takeover of Twitter has seemingly sparked endless controversy with mass layoffs, the reinstatement of former President Donald Trump’s account and the elimination of his policy against covid-19 misinformation.
The changes led many advertisers to slow down their spending on Twitter and quit the microblogging website altogether.
On Dec. 9, he used the platform he bought for $44 billion to offer a starkly negative prognosis to an upstart producer of electric vehicles, a direct competitor to Tesla.
Lucid would have a hard time
Lucid, the Newark, Calif.-based electric vehicle maker, was the subject of a Business Insider article that cited internal emails outlining an aggressive approach to stem cancellations of the Lucid Air electric sedan.
“Every cancellation is a failure,” read an email sent to Lucid Retail employees and outlined a process to “rescue” those failures.
The process included the ability to block customers with phone calls from employees for two weeks before cancellations were finalized.
Lucid faced some serious challenges. Supply chain and logistics issues forced the company to lower its production targets twice.
The company said it built 2,282 cars in the third quarter, while delivering 1,393 of them to customers. From January to September, it delivered two-thirds (66%) of the 3,687 cars it produced.
Lucid’s Twitter page carries the tagline, “Here for luxury. Here for performance. Here for good.”
But Chief Twit, as Musk calls himself, had his doubts.
Lucid “Not long for this world,” Musk tweets
“They are not long for this world”, Musk tweeted in response to the story.
Lucid, which released new details about Gravity, its first luxury electric SUV, on November 15, did not immediately respond to a request for comment.
This isn’t the first time Musk has commented on Lucid’s future.
Earlier this year, Musk said during a podcast interview with the Tesla Owners Silicon Valley Club that Lucid and electric truck startup Rivian (SHORE) – Get a free report were “on their way to bankruptcy”.
He warned that unless companies “can significantly reduce costs, they are in big trouble and will end up in the car graveyard like everyone else (US automakers) except Tesla and Ford.” (F) – Get a free report
Rivian has its own issues dealing with surges and supply chain disruptions.
For the third quarter, the company, which counts Amazon (AMZN) – Get a free report as one of its shareholders, recorded a net loss of $1.72 billion, compared to $1.23 billion the previous year.
Soros and analysts weigh in on Tesla’s rivals
Billionaire investor George Soros has walked away from both automakers. He has cut his Rivian shares and holds put options for 400,000 Lucid shares, indicating he believes the stock price will drop in the near term.
On Wall Street, Evercore ISI analyst Chris McNally launched Lucid Group coverage on Nov. 29 with an online rating and $12 price target.
He said Lucid has both extensive vertical integration and a class-leading electronic powertrain aimed at the ultra-premium electric vehicle segment. Lucid embodies an “ambitious EV,” the analyst said.
McNally said its online rating was “with a slight negative bias” as Lucid has “a long way to go at a time” to expand its addressable market and meet its funding needs.
Seth Leitman, author and electric vehicle industry analyst, said he doesn’t think “Lucid is dead yet.”
“However, if things don’t improve in a year or so, they will need some serious help,” he said. “It’s partly because their stock needs to improve, as do deliveries.”
EV Upstarts face big hurdles: Duke Professor
Timothy Johnson, a professor of energy and environmental practice at Duke University, noted that starting an automaker is a complicated and risky business. Tesla itself faced significant challenges to get to where it is today, he said.
“You need a lot of capital to get started and cover the long period between start-up and volume production,” he said.
“If Lucid’s investors remain patient, and if the company can cover its cash flow, and if it can fix the inevitable early production issues, I think the EV market is big enough to support another brand of luxury.”
“That’s a lot of ifs, of course,” he said.
Johnson, his biggest concern “affects not only Lucid but all electric vehicle manufacturers and involves battery mineral supply and processing capacity.”
“As light and freight vehicle manufacturers attempt to increase their electric offerings at the same time as fixed grid electricity storage increases, we are likely to see supply chain constraints that will slow production and increase costs during the rest of this decade,” he said. said.
Johnson said “more established companies that have supply deals will fare better than startups that may fall victim to supply constraints, should the associated delays turn out to be significant.”
Importantly, Musk also praised his competitors.
Ford (F) – Get a free report CEO Jim Farley has made it very clear that his company plans “to challenge Tesla and all newcomers to become the world’s leading electric vehicle maker.”
Still, when the company said Nov. 30 that it had produced its 150,000th Mustang Mach-E since production began nearly two years ago, Musk tweeted his congratulations to Farley.
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