Wall Street's Pessimism Toward Lucid Group Stems from a Single Fundamental Factor.
In the world of electric vehicle (EV) stocks, the near-term outlook is proving to be a challenging one. This is particularly true for Lucid Group, as the upcoming expiration of the federal $7,500 EV tax credit on September 30, 2025, and changes to federal automotive regulatory credits are expected to have a significant impact on the company.
The impending expiration of the tax incentive effectively makes new EV purchases $7,500 more expensive, likely suppressing near-term demand growth for EVs. To counter this, Lucid Group is offering a proprietary $7,500 "Lucid Advantage Credit" for qualifying customers leasing its Gravity SUV between October 1 and December 31, 2025. This incentive aims to offset the loss of the federal credit, and applies to new orders placed by September 30 and existing qualifying customers delayed in delivery, requiring no additional steps to receive it.
However, this move may not be enough to alleviate the concerns of analysts, who are worried about reduced sales and profit growth for Lucid in the next year or two due to these regulatory changes. The loss of federal automotive regulatory credit revenues, which were previously a significant source of revenue for EV makers like Lucid (earning more than $200 million), is expected to have a sudden and meaningful financial impact on the company. The recent removal of penalties for noncompliance has effectively ended this credit market, causing billions in revenue among several EV makers to disappear.
The expiration of the federal tax credits for EVs is expected to significantly lower demand growth over the next 12 to 24 months. This trend is not unique to Lucid, as the regulatory shifts will affect all EV makers, including Rivian, Tesla, and Lucid. Tesla, for instance, has already launched its robotaxi pilot program in Austin, Texas, last month.
Despite the long-term optimism on the robotaxi potential, as predicted by Cathie Wood, CEO of Ark Invest, who predicts that the robotaxi industry could be worth $10 trillion long term, Lucid's stock has already experienced a 26% decline so far in 2025. Wall Street expects near-term pressure on Lucid's stock price due to these combined factors.
The ongoing skepticism about the value of Lucid's deal with Uber, as expressed by Jim Cramer, adds to the concerns. Lucid Group recently partnered with Uber Technologies to deliver 20,000 self-driving vehicles. The partnership includes a $300 million cash infusion associated with the deal.
In summary, the impending expiration of tax incentives and regulatory credit changes pose significant challenges to Lucid’s financial performance and stock valuation in the near term. Lucid’s shares are expected to fall in value over the next 12 months according to seven major Wall Street analysts. The decline in EV sales, the loss of federal automotive regulatory credit revenues, and the skepticism about Lucid's deal with Uber are all contributing factors to this expected downward trend.
- The near-term outlook for electric vehicle (EV) makers, including Lucid Group, Rivian, and Tesla, is expected to be affected by the impending expiration of federal tax credits for EVs, which could lower demand growth over the next 12 to 24 months.
- Despite the long-term optimism on the potential of the robotaxi industry, Lucid's stock has already experienced a 26% decline so far in 2025, due in part to concerns about the value of its deal with Uber.
- As the upcoming expiration of the federal $7,500 EV tax credit on September 30, 2025, and changes to federal automotive regulatory credits are expected to have a significant impact on Lucid Group, the company is offering a proprietary "Lucid Advantage Credit" to offset the loss of the federal credit for qualifying customers.
- Wall Street expects near-term pressure on Lucid's stock price due to the combined factors of the decline in EV sales, the loss of federal automotive regulatory credit revenues, and the skepticism about Lucid's deal with Uber, leading to a decline in Lucid’s shares being predicted by seven major Wall Street analysts over the next 12 months.
