Shares of Lucid Group (LCID 3.10%) are climbing on Wednesday. The luxury electric vehicle (EV) maker's stock gained 3.3% as of 2:47 p.m. ET and was up as much as 9.9% earlier in the day. The rise comes as the S&P 500 and Nasdaq Composite lost 0.5% and 0.2%, respectively.

It was reported today that the EV start-up is seeing increased interest from former Tesla owners as its second vehicle enters production.

Tesla owners are switching to Lucid

Lucid's interim CEO Marc Winterhoff revealed in an interview that Lucid is experiencing an "uptick of interest" from Tesla owners looking for alternatives. "Tesla buyers always were the source of our sales because they were already used to using electrical drivetrains, and they look for an opportunity to have something else, something better," Winterhoff said following an event for Gravity SUV -- the company's newest entry -- at the company's New York City showroom.

Lucid is spared

With President Trump's new wave of tariffs coming and those already placed on auto parts, many automakers have seen their stocks hit. Lucid, however, may avoid the brunt of the trade levies as the company manufactures its cars almost entirely in the U.S. This is largely true of Tesla as well, so the advantage is over a legacy manufacturer rather than its direct rival.

Challenges remain

Lucid still faces significant challenges despite the optimism. The Gravity SUV will start at $79,900. This means its market remains relatively niche. The company needs to figure out how to manufacture a vehicle that a broader chunk of the market can afford, or it will have a difficult time growing sales.

Furthermore, the company is still operating at a loss. I have my doubts that it can cut costs to a point where it can deliver the kind of earnings investors need to justify the stock's current price.