MW At Lucid, key-person risk is a 'reality' investors have yet to understand

By Claudia Assis

Lucid is hunting for a new CEO

At Tesla, Chief Executive Elon Musk personifies the electric-vehicle maker to many people, for better or worse. But at competitor Lucid Group Inc., key-person risk "becomes a reality."

That assessment is from John Murphy at BofA Securities, who argued in a note Wednesday that the departure of Peter Rawlinson, Lucid's (LCID) founder and chief executive, who led the EV maker for more than a decade, is "much more consequential than understood by the market."

Rawlinson's departure comes as several once-highflying EV makers have filed for bankruptcy, including Fisker Inc. and more recently Nikola Corp., and as Tesla $(TSLA)$ investors remain concerned that Musk is too focused on the so-called Department of Government Efficiency, or DOGE. Rivian Automotive Inc. $(RIVN)$ also sent off alarm bells last week.

Rawlinson, who also served as Lucid's chief technology officer, "was instrumental in developing the current and future vehicles along with much of the proprietary powertrain technology," Murphy said.

"We now expect product development to stall, consumer demand to be dampened, and anticipate additional funding opportunities could be put at risk," the analyst said. He cut his rating on Lucid shares to the equivalent of sell from the equivalent of hold.

Rawlinson also was largely responsible for assembling the Lucid team, which could increase the chances of more departures.

Indeed, in previous filings with U.S. securities regulators, Lucid identified Rawlinson as a key member and one whose services the company was highly dependent on.

Lucid's stock on Wednesday hovered at its lowest level since Dec. 5, when it closed at $2.09, and it was also on track for its largest one-day percentage drop since Oct. 17, when it fell 18%. It has stretched its losing streak to a sixth consecutive loss, down around 35% in the period.

The EV maker, which is backed by Saudi Arabia's sovereign wealth fund, named Chief Operating Officer Marc Winterhoff as its interim CEO, and it also has a new chief financial officer. It reported a narrower quarterly loss late Tuesday, when it also announced the CEO change. Rawlinson will serve as a technical adviser to the board chair, but other details about the transition were sparse.

Lucid said it aims to produce about 20,000 vehicles this year. The EV maker ended the fourth quarter with about $6.13 billion in liquidity.

Lucid said it has enough money to fund operations through the second half of next year, which analyst Stephen Gengaro at Stifel viewed as "a subtle positive update" compared with a more vague previous expectation for "well into 2026." Gengaro kept his hold rating on the stock.

Andres Sheppard at Cantor Fitzgerald had his eyes on Lucid starting production of its Air Gravity SUV last last year. First sales are slated for this year, which will boost Lucid's demand, he said.

"We continue to believe that Lucid's vehicles are able to provide higher battery efficiency, longer battery range, better performance, and faster charging relative to other EVs," Sheppard said. Lucid enters the SUV market at a starting price of $94,900, "which, given the vehicle performance, we expect will be competitive," he said.

Sheppard kept his hold rating on the stock, however, pointing to "high negative gross margin, additional capital needs, a new management team, and worsening macro conditions" as some of the reasons to remain sidelined.

-Claudia Assis

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February 26, 2025 12:13 ET (17:13 GMT)

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