Lucid (LCID 1.61%) stock has disappointed a lot of investors since its public debut in July 2021. The maker of luxury electric sedans went public by merging with a special purpose acquisition company (SPAC), and its stock started trading at $25.24 before more than doubling to its all-time high of $55.52 four months later.
Before it went public, Lucid claimed it could produce 20,000 vehicles in 2022 and 49,000 vehicles in 2023. But in reality, it only produced 7,180 vehicles in 2022 and 8,428 vehicles in 2023 — and it only expects to produce 9,000 vehicles in 2024 as it racks up more losses. It mainly blamed that slowdown on supply chain constraints, but the recent price cuts for its Air sedan suggest it’s struggling to lock in new buyers as the EV market cools off.
Image source: Lucid.
That’s why Lucid’s stock now trades at about $3 — but it still doesn’t seem like a screaming bargain at nearly 5 times this year’s sales. So instead of sticking with this struggling electric vehicle (EV) maker, investors should check out these two other EV stocks that arguably have a better shot at a long-term turnaround.
1. Nio
Nio (NIO -0.65%) is a Chinese EV maker that produces a wide range of sedans and SUVs. It differentiates itself from its competitors with its removable batteries, which can be quickly swapped out for fully charged batteries across its network of battery-swapping stations. That approach addresses the lengthy charging times for traditional EVs.
Nio’s stock has plunged more than 90% from its all-time high and currently trades about 7% below its initial public offering price. Its stock tumbled as its growth slowed down and its margins were compressed by the pricing war across the EV market as well as the ongoing expansion of its battery-swapping networks.
However, it currently trades at just 1 time this year’s sales — and it could be a bargain for three reasons. First, Nio is still producing plenty of vehicles. Its total deliveries more than doubled in 2021, rose 34% in 2022, and grew 31% to 160,038 units in 2023. Second, its vehicle margin expanded sequentially over the past three quarters — which suggests it’s overcoming the pricing headwinds in China. Lastly, analysts expect its revenue to rise at a compound annual growth rate (CAGR) of 34% from 2023 to 2025. It’s also expected to narrow its net losses as it scales up its battery-swapping networks.
Nio’s stock could remain out of favor as long as the tensions between the U.S. and China drive investors away from Chinese stocks. But over the long term, it could bounce back a lot faster than Lucid if it overcomes its near-term challenges.
2. Polestar
Polestar (PSNY 2.40%) was spun off from Volvo in 2022 as a dedicated EV maker. It currently sells three vehicles — the Polestar 2 fastback, the Polestar 3 SUV, and the Polestar 4 SUV coupe in select markets. It plans to launch its Polestar 5 grand tourer and Polestar 6 electric roadster over the next few years.
However, Polestar’s stock still trades nearly 90% below its opening price of $12.98 after its SPAC-backed debut in June 2022. But like Nio, Polestar’s stock looks like a bargain at less than 2 times next year’s sales.
Polestar’s total vehicles produced rose 80% in 2022, but grew just 6% to 54,600 vehicles in 2023 as it grappled with supply chain constraints and its postponed launch of the Polestar 3 — which was delayed from 2023 to early 2024 to resolve some unexpected software issues. Nevertheless, analysts expect its revenue to rise at a CAGR of 89% from 2023 to 2025 as it overcomes those challenges and ramps up the production of its next few vehicles.
Polestar is still bleeding a lot of red ink, and analysts expect it to stay unprofitable through 2025. But during its latest conference call in February, CEO Thomas Ingenlath claimed it could achieve “cash flow breakeven” levels by 2025.
Polestar is a speculative EV play, but it’s firmly backed by Volvo (which owns nearly half the company) and has a clearer turnaround plan than Lucid. Its stock should command much higher valuations once its production rates accelerate again.
Leo Sun has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Nio. The Motley Fool has a disclosure policy.