The US luxury electric vehicle (EV) maker Lucid is preparing to enter the world’s largest auto market, its head of China operations Zhu Jiang said on Thursday. He added that the company would initially sell imported cars in the country while considering local production in China.
The Chinese market could be a lifeline for the EV start-up, which has lost about three-quarters of its value this year. The stock has dropped to below $3 a share, compared with its initial public offering price of $7. The EV maker has also cut jobs and production plans in the face of dwindling reservations and sluggish sales, prompting some buyers to cancel their orders.
Founded in 2007 to research and develop battery cells, motors, and electric control systems for traditional carmakers, Lucid has transformed into an automaker, launching its first mass-produced model in 2022, the $87,400 Air sedan that competes with Tesla’s Model S. The carmaker is also developing the upcoming Gravity SUV, which will rival high-end models from Mercedes like the EQS.
China is the biggest EV market in the world, with more than 30 million vehicles on the road, according to the auto association AAVC. It has a large base of consumers more open to new technologies than its counterparts in the West. The country also has a state-backed program to promote EVs.
While China is an important market, the country’s EV industry remains challenging, particularly for foreign players. Tesla faces fierce competition from local and venture-backed upstarts, including BYD, Xpeng, and Nio, which are taking advantage of the government’s subsidies and consumer demand. Rising interest rates have also affected these players, reducing EV prices.
EV makers have been offering generous financing offers and discounts to boost sales. But this strategy has sparked concerns over profitability and has even led some investors to question whether the EV business is sustainable.
Lucid will also face an intensely competitive landscape in the country, where its main competitors include BYD and Nio. BYD is the most significant player in the country, with a dominant presence in electric buses and cars, and has gained momentum with heavy discounting this year. Meanwhile, Nio has expanded into Europe to diversify its business and capture more of the luxury market. This is another reason why Lucid must break into the Chinese market, which it is doing by expanding its sales and marketing efforts. Earlier this week, the company started construction on phase one of its $700 million car plant in Casa Grande, Arizona. The factory, which the company calls AMP-1, will have an initial capacity to manufacture 15,000 to 20,000 cars annually. Initially, the company will manufacture Air sedans there. In a press release, the company said it had received around 100,000 reservation applications for its cars worldwide. Customers can reserve a Lucid Air by paying a refundable deposit online. Those who have reserved the car will receive deliveries beginning this fall.