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What Should Investors Know Ahead Of The Potential Lucid Motors SPAC Merger?

Churchill Capital Corp IV Pops On Lucid Motors Rumor

Another day, another special purpose acquisition company (SPAC) grabs the headlines in the stock market. This time, it is Churchill Capital Corp IV (NYSE: CCIV), a blank-check company under the leadership of Michael Klein, a former Citigroup banker, and Wall Street veteran. The target? Lucid Motors. For those who are new to Klein, he has played a prominent role in various mega deals. Amongst them, he advised on the Saudi Aramco initial public offering (IPO). The SPAC saw its stock price surged nearly 40% on Monday amid the potential merger news.

For the uninitiated, Lucid Motors is an electric vehicle company (EV) with a premium focus. According to Bloomberg, such a deal could give a valuation of $15 billion for the EV maker. It is also worth mentioning that Lucid has strong backing from the Saudi Arabian sovereign wealth fund. If anything, it is not very common for EV start-ups to be funded by deep-pocketed sovereign funds.

CCIV Stock, A New Opportunity Amid The EV SPAC Rush

Lucid, led by Tesla’s (NASDAQ: TSLA) former chief engineer, expects its EV to go into production at a new Arizona factory late this year. They will be the top-of-the-line Dream Edition, which goes for $169,000 and boasts a driving range of about 503 miles between charges. The other models, from the entry-level $69,900 Lucid Air to the $87,500 Touring model and the $131,500 Grand Touring edition, are expected later in 2021 and in 2022.

Nikola (NASDAQ: NKLA) and Fisker (NYSE: FSR) were some of the notable names that went public through the SPAC route last year. CIIG Merger Corp. (NASDAQ: CIIC) is still working on finalizing its deal with Arrival. If we were to compare, none of them has stood out like Lucid Motors.

Apart from the company having some strong institutional backings, Lucid is already preparing to start deliveries, unlike some of the SPACs which are still working on the design. In December 2020, Lucid completed the initial phase of its manufacturing facility in Arizona. The initial annual capacity is 30,000 units. It expects to begin production of the Lucid Air this spring. The facility will eventually expand to a capacity of 400,000 vehicles.

Lucid Motors Aims To Offer The Fastest Charging In The Space

The company claimed that it will offer the fastest charging EV in the space through Lucid Air. According to the company, it could charge as fast as 20 minutes for 300 miles. That’s staggering when you think of it. EVs often take a while to charge, and the industry has been working hard to bring that charge time down. That’s to broaden the appeal for EV adoption. If Lucid can indeed deliver on its claims, could that be a game-changer?

Lucid is also working on one of the first home charging stations to offer bidirectional charging. Now, most chargers only allow electricity to flow in one direction from the power grid to the vehicle. But with Lucid’s chargers, electricity can flow in both directions. According to the company, this means that a Lucid vehicle can be “a temporary energy reserve to power your homes, including off-grid vacation properties”.

Can Lucid Set Itself Apart In The Sea Of EV Stocks?

The multi-trillion-dollar automotive business is going through a significant transformation, enabled by falling battery costs. No one knows how the top EV stocks would perform in the stock market this year considering a massive run in 2020. But one thing we can be relatively sure of is that the landscape is likely to look very different a decade from now. Even traditional automakers like General Motors (NYSE: GM) and Ford (NYSE: F) are marching to space with their EV offerings.

But as the space gets increasingly crowded. It’s becoming more prominent to have technology that could set them apart from the rest. While the EV space may be filled with a lot of EV SPACs, the chances of them succeeding in the increasingly competitive space are far from certain. “What I see is a bunch of SPACs with no technology,” according to Lucid CEO Peter Rawlinson.

Rawlinson, who engineered the Model S during his time at Tesla, isn’t calling out any name. His point is that any EV manufacturer can buy EV batteries from suppliers including Panasonic and LG Chem. He added, “How far can we go per unit of energy is as important as the battery itself.” It appears that the integration of the battery with a vehicle’s electric motor and other components is no less important.

Bottom Line For CCIV Stock & Lucid Motors SPAC Merger

The company plans to start deliveries of its vehicles to U.S. customers in the second quarter of this year. With that in mind, this signal to CCIV stock investors that it could be a less risky bet than some of the other offerings. We are talking about an EV that’s going into production this quarter and will start delivering the next quarter. And most importantly, the company is still a private company.

Now, as there are rumors going on about Lucid merging with CCIV stock, it may be wise to keep the stock on your radar. Of course, buying any stock on rumors is particularly risky. But if it turns out to be true, investors would be getting a payday. The question is, are you willing to stomach the volatility?

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