Why Lucid Stock Soared Today

Shares of Lucid Group (NASDAQ: LCID) surged on Wednesday, hitting a hit of 8.9% in the early morning. The stock was trading 4.5% higher as of 12:30 p.m. ET.

Investors in the electric vehicle (EV) stock seem to be shrugging off their disappointment with President-elect Donald Trump's choice of new Environmental Protection Agency (EPA) leader and shifting focus to things that could give Lucid a new lease of life.

Lucid is hoping the police uses its Air sedan

Lucid stock fell yesterday as investors reacted to Trump's selection of former Congressman Lee Zeldin as the EPA leader. Going by Trump's stance during his first tenure as president, environmentalists and investors in clean energy and EV stocks fear Trump may cut the EPA's budget and repeal the Inflation Reduction Act, which committed billions of dollars to clean energy, including tax credits on EVs. Zeldin voted against the law as a member of Congress.

Lucid stock, however, rebounded today after inflation numbers for October were in line with expectations. High inflation and interest rates dent demand for cars in general.

Meanwhile, in its latest post on social media platform X (formerly Twitter), Lucid revealed pictures of how its modified sedan would look when equipped as a police car and announced that the Air sedan was recently tested by the California Highway Patrol (CHP). While not much is known about vehicle testing, Lucid's announcement signals the possibility that its flagship sedan could make its way into the fleets of law enforcement agencies, many of which are gradually trying to include more EVs in their fleets.

Lucid stock also just got a rating upgrade from Jaime Perez of R.F. Lafferty. The analyst upgraded the EV stock's rating to buy from hold with a price target of $4 per share, following Lucid's third-quarter earnings report.

Although Lucid reported a big net loss of over $990 million on revenue of $200 million in the quarter, its costs fell, and deliveries jumped 91% year over year and 16% sequentially. Perez likes Lucid's volume growth, cost improvement, and liquidity -- the company ended Q3 with nearly $5.2 billion in liquidity, having raised more funds during the quarter.

Can Lucid stock rally further?

Lucid is laser focused on its Gravity SUV now. It began taking orders for the SUV this month and is all set to start production later this year. While it's taking orders for the Gravity Grand Touring starting at $94,900 now, it expects to launch the Grand Touring trim with prices starting at $79,900 in late 2025.

Demand for Gravity and the effect of Lucid's ongoing cost reduction efforts on its margins are the two biggest triggers that could help Lucid stock rally, especially after it recently crashed to its 52-week low.

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Neha Chamaria has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.