Rivian (RIVN) and Lucid Group (LCID) stock prices have staged a strong comeback in the past few months. Lucid has led this growth, rising by almost 50% in the last three months while Rivian has jumped by almost 20% in the same period. Tesla, the OG of the EV industry, has risen by about 35% in the same period.
EV challenges remain
EV stocks like Rivian, Lucid, and Tesla have risen even as the industry continues going through major challenges.
The key challenge is that the industry is now transitioning from early adopters to the mass market, a difficult place to be. Early adopters tend to be more affluent while the mass market is usually more selective.
The best example of this is data from Cox Automotive, which has shown that the share of US EV transactions that were leases has been in a strong uptrend. These leases have jumped to 32% this year, up from just 9% in 2022. The share of Rivian transactions that are leases is 15.2%, much lower than companies like Tesla, BMW, and Audi.
The rise in leasing is a sign that many mass mass market customers are afraid of spending substantial sums of money on a new EV. It is also a sign that leases have become significantly cheaper and affordable to most people.
In a recent article, Bloomberg noted that some dealers were offering leases of as low as $20 for some Nissan Leaf models.
The other big challenge for Rivian and Lucid is that many Americans are now opting for hybrid vehicles. Companies like Toyota and Ford have become earlier gainers in the hybrid vehicle industry.
The biggest challenge for the two companies, however, is that the Chinese have become really good at building EVs, which explains why the Biden administration has announced plans to place a 100% tariff on vehicles from the country.
These tariffs, at least for now, are just cosmetic since Chinese EV companies are not selling vehicles in the US. Nonetheless, with these companies pumping thousands of vehicles each month, there is a chance that many of them will attempt to enter the US market.
Depreciation is another big reason why many customers are afraid of buying these EVs. Data shows that a new Lucid vehicle depreciates about 65.6% after five years while its luxury segment’s average is 65.8%.
Endless money pits?
Meanwhile, Rivian and Lucid Group are still cash incinerators, years after they started shipping their vehicles.
The most recent financial results showed that Rivian delivered 13,790 vehicles in the second quarter and made over $1.15 billion in revenues. It made a negative gross profit of over $412 million and a net loss of over $1.45 billion. By dividing the loss and the units sold, it means that the company lost $83,393 for each vehicle it delivered.
Lucid Group, on the other hand, delivered 2,394 vehicles in the second quarter, bringing in over $200 million in revenue. Its net loss stood at over $643 million or $268k per vehicle.
These companies have therefore survived because of the recent investments by some of their biggest investors. Lucid Group ended the last quarter with over $4.28 billion in liquidity and a commitment of $1.5 billion from the Public Investment Fund (PIF).
Rivian, on the other hand, which raised over $11.9 billion when it went public, has also been burning cash. It raised cash in 2023, and most recently, the company secured a $5 billion investment from Volkswagen Group.
Rivian shareholders have gone through substantial dilution in the past few years. The company’s outstanding shares have risen from over 892 million in 2022 to over 1 billion today. Lucid’s shares have also moved from 1.64 billion to over 2.3 billion.
Lucid stock price analysis
Lucid Group stock has risen as investors wait for the upcoming Gravity launch. Gravity will be a relatively affordable EV SUV, which will be compatible with Tesla’s chargers.
Turning to the daily chart, we see that the LCID share price formed a double-top pattern at $4.32. In price action analysis, a double-top pattern is one of the most bearish sign in the market.
This is a sign that the stock may suffer a harsh reversal in the coming days. This view will become invalid if the stock crosses the double-top level at $4.32 and if it constantly remains above the 50-day and 100-day moving averages.
Rivian stock price analysis
The daily chart shows that the RIVN stock bottomed at $8.25 in May this year and has bounced back to $14. It is consolidating at the 50-day and 100-day moving averages. It has also moved above the ascending trendline that connects the lowest swing since May.
Therefore, the outlook for the stock is moderately bearish, with the next point to watch being at $10, which is about 30% below the current level. This bearish view will become invalid if the stock rises above $16.
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