Luxury electric vehicle (EV) maker Lucid Group has been facing challenges with its pricing strategy, according to Future Fund Managing Partner Gary Black. Black believes that advertising alone cannot help Lucid overcome its pricing issues, and that a bad product/pricing strategy cannot be compensated for with marketing efforts.
Black’s comments came in response to a post on X, where a user pointed out that despite Lucid’s advertisements, the company’s shares have been declining. Black revealed that his fund has been shorting Lucid’s stock as it continues to slump.
The post that sparked Black’s response showcased a sponsored tweet about Lucid winning the “2023 World Luxury Car Of The Year” award, accompanied by a sarcastic comment highlighting the disparity between the accolade and the struggling stock price.
While Black is a strong advocate for advertising, particularly for EV giant Tesla Inc, he believes that Lucid’s pricing strategy is a major hindrance to its success. He has previously emphasized the importance of advertising for Tesla, suggesting that the company should focus on increasing deliveries through marketing efforts rather than cutting prices, which could impact profit margins.
However, Black acknowledges that Tesla, unlike Lucid, is more comparable to an Apple iPhone. Tesla has established itself as a dominant player in the EV market and has a strong brand presence, making it less reliant on traditional advertising methods.
In terms of pricing, Lucid’s Air sedan starts at $77,400 for the base Pure version, while the higher-end Sapphire edition is priced at a staggering $249,000. Similarly, the Gravity SUV is also priced at a similar level. In contrast, Tesla’s cheapest vehicle, the Model 3 rear-wheel drive, starts at $38,990, with the highest-end version of the Cybertruck priced at $99,990.
Despite the challenges, Lucid’s stock saw a 3.9% increase, closing at $3.51 on Thursday. However, it has experienced a significant decrease of 15.4% year-to-date and nearly 66% over the past year.
In conclusion, while advertising plays a crucial role in promoting EV brands, Lucid’s pricing strategy seems to be a major obstacle to its success. The company will need to reconsider its pricing approach to compete effectively in the luxury EV market.
