Investors made good money with Tesla (TSLA) stock in 2020 after it gained about 700 percent. They're now piling onto SPAC Churchill Capital Corp IV (CCIV) stock in hopes it will give them a stake in Lucid Motors. Is Lucid the next Tesla?
Lucid is an EV (electric vehicle) startup seeking to go public. Its top investor is Saudi Arabia’s sovereign wealth fund. The Churchill SPAC is rumored to be in talks to merge with Lucid and take it public. The Michael Klein-led blank-check company raised about $2 billion in 2020 through its IPO. If a deal with Lucid goes through, CCIV stock investors could end up owning about 17 percent of the Tesla rival.
How the LucidAir compares with the Tesla Model S
The LucidAir and Tesla Model S both target the luxury EV market. However, the cars, launched eight years apart, have different prices and driving ranges. The Model S starts at about $70,000, while the LucidAir is set to start at about $170,000. The LucidAir will be able to drive 517 miles on a single charge, and the Model S can drive up to 412 miles.
Lucid may try to woo customers with faster charging—LucidAir drivers can get more than 300 miles of driving from a 20-minute charge. EV companies count on rapid charging to encourage more drivers to adopt EVs. It currently takes hours to fully recharge an EV, much longer than the five minutes it takes to refill a car’s tank at the gas station. A startup called StoreDot has developed technology that can charge EVs in five minutes, but its mass rollout hasn’t begun.
Can Lucid Motors take on Tesla?
Lucid’s focus on the luxury EV market pits it against industry giant Tesla. Of the many companies seeking to become the next Tesla, Lucid has a unique advantage. Its CEO, Peter Rawlinson, was a top engineer at Tesla and worked on Tesla's Model S, which went on to become a bestseller for the Elon Musk-led company.
Lucid looks set to take on Tesla by first picking the low-hanging fruit. Model S sales have been slowing, and Tesla has tried to prop up demand for the car with price cuts—it lowered the car’s price by about $8,000 in 2020. Lucid's strategy seems to be working, too. In a Feb. 2021 interview with CNBC, CEO Rawlinson revealed that demand for the LucidAir has been overwhelming.
Is FOMO driving interest Lucid Motors stock?
Tesla and other EV stocks have been soaring on FOMO (fear of missing out) trades, boosting their valuation multiples. Lucid Motors is also attracting huge investor interest, as evidenced by the CCIV SPAC's stock rally after news it may be taking Lucid public.
Investors who missed out on Tesla’s stock rally may be hoping Lucid will offer them another chance in the red-hot EV space. Also, with Tesla shares going for $800 apiece, investors with limited funds are turning to cheaper alternatives.
Is it risky to buy CCIV stock now?
CCIV stock jumped more than 30 percent on Feb. 16 after Reuters reported that the Churchill SPAC was closing in on a deal to take Lucid public. The stock has gained more than 420 percent in 2021, outperforming hot SPAC stocks IPOD and IPOF and EV rivals Tesla and NIO. Considering CCIV's big climb, there may be little upside left for the stock if the Lucid deal is confirmed. However, the stock could crash if it turns out Churchill isn’t taking Lucid public.