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While U.S. electric vehicle market leader Tesla (TSLA) has recouped most of its 2025 losses and has rejoined the $1 trillion market cap club, things have been quite bleak for startup EV companies this year. The spate of bankruptcies has continued in 2025, with Nikola (NKLAQ) and Canoo (GOEVQ) joining the ever-growing list of startups going out of business.
Of this group, I find only Lucid Group (LCID) and Rivian (RIVN) as two names worth discussing. Not only do they have viable products with good value propositions, but they have also demonstrated their ability to raise cash to fund their cash burn.
Lucid Motors Was Labeled as The Next Tesla
Lucid Motors was once labeled a “Tesla-killer” by many on the Street. The company’s founder and former CEO, Peter Rawlinson, even predicted the EV industry to be a “two-horse race” – with Tesla (TSLA), of course, being the other horse running. A mere glance at its SPAC merger presentation would reveal how generously it benchmarked itself against Tesla, both in terms of car quality and valuations. However, the company has largely failed to live up to the hype.
Meanwhile, earlier this year, Lucid acquired some assets of bankrupt Nikola for around $17 million in cash and assumed two leases in Arizona as part of that deal.
In this article, we’ll discuss whether Lucid Motors can be as successful as Tesla, which, despite its shortcomings, is still the gold standard for many EV companies, or if the company will go out of business like Nikola.
Lucid Motors Is Posting Massive Losses
Lucid Motors has been posting massive losses, and while the company’s Q1 2025 gross margin came in better than expected, it was still -97.2%. That’s quite precarious and implies that the cost of revenues is almost twice what the company makes by selling a car on average. The gross margin does not even account for the research & development (R&D) and selling, general, and administrative (SG&A) expenses, which together were roughly 2x the company’s Q1 2025 revenues.
Lucid Motors Might Not Go the Nikola Way
The company had total liquidity of $5.76 billion at the end of March, which the company says provides it with a “runway into the second half of 2026." During the Q1 2025 earnings call, Lucid CFO Taoufiq Boussaid emphasized, “This does not include potential future Saudi Industrial Development Fund loans or Ministry of Industry of Saudi Arabia grants.”
While some more green energy companies might go bankrupt over the next couple of years, Lucid Group might not, given its backing from Saudi Arabia’s sovereign wealth fund, which has poured billions into the EV company already. The “Saudi backstop” has kept Lucid afloat over the years, and given the country’s efforts to diversify its economy from oil revenues, I believe it will keep backing the loss-making company.
Overall, I doubt that Lucid will go the Nikola way, at least anytime soon. In fact, Saudi Arabia might even consider taking the company private, a possibility that many have been speculating about for quite some time now.
What Would It Take for Lucid to Become the Next Tesla?
Meanwhile, while the possibility of Lucid going the Nikola way looks bleak, the road to becoming the next Tesla looks quite hard, too.
Lucid Motors offers a quality product, and U.S. News & World Report has named its Air sedan the Best Luxury Electric Car for four consecutive years.
The company’s second model, the Lucid Gravity SUV, has also received rave reviews, with MotorTrend saying the model is “Is as Good as EV SUVs Get.” While the publication said that the price for the model is “not a bargain,” it emphasized, “but when you consider the cutting-edge technology, impressive range, and sports-car-level performance, it’s hard to beat.”
That said, to even come remotely close to Tesla, Lucid needs to ramp up its deliveries significantly from the current levels. For context, its 2025 production guidance of 20,000 units is a tiny fraction of the almost 1.8 million cars that Tesla delivered last year.
So far, Lucid has targeted the top end of the market, which is similar to what Tesla did in its early days. Lucid is next coming up with a midsize platform, which interim CEO Marc Winterhoff said could be an “even bigger game changer” than the Gravity SUV.
Lucid Needs Its ‘Model 3 Moment’
In my view, for Lucid to come anywhere closer to Tesla, the company needs its “Model 3 moment,” which is easier said than done. Tesla CEO Elon Musk stressed multiple times how the company went through a “production hell” while ramping up Model 3 production. Musk has said that the Tesla factory was his “primary residence” for three years, where he even slept on the floor. However, what worked in Tesla's favor was the near cakewalk it had in the EV market, as not many automakers took electric cars seriously. Cut to 2025, and there is no dearth of EV models with the market now in an oversupply situation.
As for losses, even Tesla was profitable in only a handful of quarters before 2020, and that year was its first full profitable year. However, the company has since been profitable on a sustainable basis. Lucid Motors’ losses are still uncomfortably high, even as rival Rivian has posted positive gross margins for two consecutive quarters. Thanks to the EV price war and rising competition, startup EV companies face a tough task in churning out a profit.
Overall, while Lucid could still avoid Nikola’s fate, becoming the next Tesla looks increasingly difficult for the company.
On the date of publication, Mohit Oberoi had a position in: TSLA , RIVN , LCID . All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
