Lucid (LCID 1.47%) has been making electric vehicles for a few years and, like many EV start-ups, is working hard to build a brand, ramp up production, and carve out a niche in an increasingly competitive space.

Some things have gone well for the company, like its Air sedan earning top automotive awards and the company recently launching an impressive Gravity SUV model. But the past few years also haven't been easy for Lucid, as its losses have widened and its share price has dropped 72% from its 2021 IPO.

The next year could be difficult for EV stocks, and Lucid specifically, as the Trump administration creates a less hospitable electric vehicle market and Lucid deals with the high cost of making EVs. Here's what the next 12 months could look like.

Image source: Lucid.

An uncertain EV environment

Electric vehicle sales rose 7% in the U.S. last year, with automakers selling 1.3 million EVs. Lucid took a small sliver of the market, with the company producing just 9,029 vehicles in 2024 and delivering 10,241 vehicles.

Still, the company has made some progress on this front. Production was up 7% from the previous year, and deliveries jumped by 70%. Getting a new EV company off the ground is no easy feat, and during a year when other EV start-ups, including Rivian, saw their production fall, Lucid was able to make some gains.

But this year could be difficult for the general EV market as President Trump recently revoked a 2021 executive order that set a non-legally binding goal for half of all new vehicles sold in the U.S. to be electric by 2030. Trump also stopped the spending of $5 billion from a fund established to expand EV charging across the country.

Some of the gains EVs have made in the U.S. have come from the government incentivizing sales (with tax credits), making investments in charging infrastructure, and through government loans to some companies. While Lucid hasn't benefited directly from all of these (its vehicles are too expensive to receive tax credit incentives), all EV companies will likely feel the effects of an administration that's less hospitable toward electric vehicles over the next year and beyond.

Lucid will face more pressure to reduce costs and improve sales

Lucid's revenue in the fourth quarter was just $200 million, and its losses totaled $992 million. That disappointed its shareholders, considering losses widened from $631 million in the year-ago quarter.

It's not unusual for young EV companies to be unprofitable. But the company needs to improve production efficiencies or reduce costs in some other way to narrow its losses. It may achieve some production efficiencies through its new Gravity SUV, which will share some components with the Air while giving the company a way to increase its sales with a new model.

Lucid's management has indicated that it might need to partner with another automaker to truly improve production efficiencies. Lucid CEO Peter Rawlinson told Bloomberg in December, "It would be lovely if we could supply technology to a traditional car company to help them on their way to sustainability, and perhaps we can leverage economies of scale with their parts bin and other aspects of the business." Rawlinson has said that he's been in talks with a couple of automakers, but no partnerships have been announced.

Lucid has enough cash to keep things running "well into 2026," so there's no concern that the company will run into financial trouble over the next year. But I think Rawlinson's recent comments indicate that Lucid knows it needs to figure out a way to significantly lower its expenses.

Where does this leave Lucid stock?

I'm a long-term believer in the eventual transition of the automotive market to EVs, but I admit that it's taking a while for it to really take off. The Trump administration's position toward EVs could hamper progress, not to mention the higher-than-average cost of EVs compared to gas-powered vehicles, which could put downward pressure on vehicle sales.

With Lucid still trying to figure out how to lower costs amid an uncertain EV environment, I don't expect the company's stock to make significant gains over the next year. Plus, Lucid's shares have a price-to-sales ratio of 8.8, making it more expensive than Rivian, which has a P/S ratio of just 2.8.