Lucid is currently facing challenges, with the company in the process of being delisted from the Nasdaq-100 Index. The Nasdaq-100 Index made up of 100 of the world’s foremost large-cap growth indexes, meaning companies with high growth rates. However, Lucid Motors has demonstrated anything but high growth. Despite having produced over 7,000 cars to date and delivered more than 4,000 to customers, it finds itself in a challenging position.

With a total of $5 billion invested into the company since its incorporation in 2019, the company is dedicated to crafting luxury electric vehicles (EVs). Majority ownership rests with the Public Investment Fund, the sovereign wealth fund of Saudi Arabia. The challenge faced by Lucid lies in its production quantity and a lower-than-expected demand. This is a common trend in the luxury car market, given its exclusivity and high retail price, often resulting in lower demand.

Consider the Mercedes S Class, which usually achieves sales of around 70,000 units per year, constituting a small percentage of Mercedes’s annual global sales of 2 million units. In a different comparison, Tesla managed to sell over 127,000 Model S units in 2022. Therefore, for Lucid to maintain its viability as a company, it should be targeting a minimum of 50,000 annual sales for its cars, with 100,000 annual sales as the benchmark.

However, Lucid is grappling with production issues. In November, it adjusted its production forecast for the year, revising the guidance from 10,000 units to 8,000-8,500 cars. This adjustment aims to prudently align with deliveries and address the challenge of not generating enough demand, despite having a product that is compelling and, in many aspects, on par with, if not better than, the Tesla Model S.

In a troubling sign, Lucid’s Chief Financial Officer (CFO), Sherry House, resigned as of today, resulting in a decline in the company’s share price. Stock markets are easily spooked, and traders are not solely data-driven; they are influenced by fear and a lack of confidence. The real question is, for how long will Lucid’s investors continue to support the company?