It's been an incredibly turbulent week for stocks in the electric vehicle (EV) sector and for markets in general. As of early Friday morning, the Nasdaq Composite index was 5.4% higher for the week mainly thanks to Wednesday's historic rally.
Shares of EV maker Lucid Group (NASDAQ: LCID) were doing even better, surging by 10.5%, according to data provided by S&P Global Market Intelligence. Those gains have come partly because of struggles at EV leader Tesla. Investors should be aware of something that could cause issues for Lucid in the near future, though.
Lucid moves into SUVs
Lucid recently began selling its Gravity SUV and reports say that orders have picked up recently. Interest may have increased thanks to consumers' displeasure with Tesla CEO Elon Musk and his political activity. "We see a clear uptick of interest in Lucid from Tesla buyers, because they're looking for another option," Lucid's interim CEO, Marc Winterhoff, recently told Yahoo! Finance.
The company is planning to expand production, too. It just announced plans to acquire additional manufacturing facilities from bankrupt electric heavy truck maker Nikola, subject to bankruptcy court approval.
Competition moving into one market
Lucid also has been actively working to be the EV leader in the Saudi Arabian market. The Saudi government is the largest Lucid shareholder via its sovereign wealth fund, the Public Investment Fund (PIF). Lucid ships vehicles to that country for final assembly and sale. In the first quarter, that amounted to over 600 vehicles.
Now, rival Tesla is moving into the Saudi market, too. Tesla held a launch event in Saudi Arabia with the opening of its first showroom and service center in Riyadh this week. That could mean Lucid's growth plans there will take a hit.
The future is still uncertain for Lucid. It continues to lose money, and is counting on its Gravity SUV to spur higher sales volumes. Investors should keep that in mind, as it likely will mean volatility in the stock will continue, and possibly erase this week's big gain.
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Howard Smith has positions in Lucid Group, Nikola, and Tesla. The Motley Fool has positions in and recommends Tesla. The Motley Fool has a disclosure policy.
