Watch Out: This EV Maker Is Still on a Cash-Crunch Collision Course

Lucid Group (NASDAQ: LCID) has continued to have a rough go of it. Negative developments have affected the stock's performance in recent weeks.

For one, investors were not happy when the luxury electric vehicle (EV) company reported lower-than-expected deliveries during the third quarter of 2025.

Another factor, Lucid's decision to complete a reverse stock split, has had a negative impact on its shares. Investors typically react negatively to a reverse stock split, as it can be both a sign that a company is struggling and that it plans to raise capital in a dilutive way: through the sale of newly issued shares.

Worse yet, beyond just the perception that Lucid Group has and will continue to dilute its investors is that some other recent developments suggest that this shareholder dilution is happening in the immediate future.

While not for certain, if share dilution persists, it could counter a key upcoming catalyst for the stock.

Image source: Getty Images.

Lackluster deliveries and a steady cash burn

Back in 2021 when Lucid Group went public, there were high expectations that the company could give EV market leader Tesla a run for its money in the U.S. EV market. Fast-forward five years later, and Tesla, despite its own challenges, continues to dominate domestically, with 43.1%, above beyond the market share of market incumbents and EV start-ups alike.

Not only has Lucid failed to become a Tesla killer, it has continued to struggle to scale up production and deliveries. Last quarter, Lucid delivered a total of 4,078 vehicles. That may have represented a nearly 47% increase in deliveries compared to the prior year's quarter, but there's a reason this figure wasn't cause for celebration.

Besides falling short of investor expectations, there's also the concern that EV buyers rushed to make purchases ahead of the Sept. 30, 2025, expiration of the U.S. EV tax credit. This may lead to fewer EV sales during this quarter and in the coming quarters.

Worse yet, with these growth challenges, profitability has remained elusive for Lucid. Cash burn is still very high. The company has yet to reveal Q3 2025 financials, but during the first six months of 2025 alone, net cash used in operating activities totaled $1.25 billion. With billions still flying out the door, Lucid remains in a constant need for additional cash.

The dilution cycle continues unabated

While cash burn remains a big problem for Lucid, the company has so far leaned on its deep-pocketed majority owner to keep the lights on. The Public Investment Fund (PIF) is a Saudi Arabian sovereign wealth fund. PIF currently owns more than 60% of Lucid, with the fund consistently increasing its position by being the purchaser of newly issued equity and debt from this company.

As Lucid's cash burn continues, you may expect PIF to soon cut another check, but here's where it gets interesting. While PIF was the lead participant in Lucid's convertible bond offering earlier this year, Lucid's latest funding has come from a different investor. In September, Uber Technologies invested $300 million in the company.

While this funding is ostensibly for the development of Lucid-made robotaxis, perhaps it is a sign that PIF is walking back from making further significant investments in the company, requiring Lucid to seek out new funding sources.

Whatever the reason, don't expect this latest funding deal to be the last. On Sept. 26, Marc Winterhoff, Lucid's interim CEO, noted in an interview with the Financial Times that the company's cash position will only last until the second half of 2026. To extend its operational runway, Lucid will likely need to raise even more cash.

Should you buy Lucid stock?

For all its trouble, Lucid Group does have a major upcoming catalyst. Next year, it is slated to begin delivering its much-awaited Gravity SUV. Targeting a wider addressable market, if this model is a hit, it may get Lucid toward the scale it needs to attain consistent profitability.

However, while catalysts like the Gravity launch could increase Lucid's total value, further dilution could water it down on a per share basis. In other words, the impact of shareholder dilution could outweigh the upside from success or a possible route to profitability with the Gravity.

With this in mind, I would take heed of the market's current bearish sentiment on Lucid stock by skipping it completely.

Thomas Niel has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Tesla. The Motley Fool has a disclosure policy.