Lucid Group’s Strategic Pivot Faces Market Skepticism

Lucid Group is undertaking a significant strategic shift to reduce its reliance on China, underscored by a key manufacturing partnership. However, these operational developments are being overshadowed by a starkly negative assessment from analysts, casting doubt on the electric vehicle maker's near-term financial trajectory.

The market received a jolt on January 23 when Zacks Investment Research downgraded Lucid shares to a "Strong Sell" rating. Analysts pointed to persistent concerns over missed earnings expectations, specifically highlighting a third-quarter loss per share of -$2.65, which fell short of the -$2.22 estimate. This bearish stance arrives even as the company reports substantial production growth.

A Dual-Pronged Strategic Redirection

Interim CEO Marc Winterhoff has confirmed the company's plan to fully eliminate China from its magnet supply chain by 2026. The new strategy involves sourcing rare earth materials processed in Saudi Arabia, which are expected to come from a planned facility operated by MP Materials and Maaden. This move carries clear financial incentives, as manufacturing in Saudi Arabia with local materials would circumvent high U.S. tariffs imposed on Chinese components. The supply chain transition coincides with the ramp-up of Lucid's plant in the King Abdullah Economic City (KAEC).

In a parallel development announced January 21, Lucid entered a comprehensive partnership with Rockwell Automation. The agreement will see Rockwell's manufacturing software, including its FactoryTalk® MES system, integrated across all areas of the Saudi Arabian facility. The collaboration is designed to enhance operational efficiency as the plant scales its production capacity.

Should investors sell immediately? Or is it worth buying Lucid Group?

Financial Performance and Future Reliance

Despite a year of impressive output growth, financial pressures remain acute. In 2025, Lucid manufactured 18,378 vehicles, a 104% year-over-year increase, and delivered 15,841 units, up 55%. The cost of this expansion, however, is significant. For the first three quarters of the last fiscal year, Lucid generated $831.1 million in revenue against production costs of approximately $1.67 billion, resulting in a substantial operating loss.

The company's strategic dependence on Saudi Arabia is deepening. The shift in magnet supply and the expansion of the KAEC plant further entrench Lucid's alignment with the kingdom's "Vision 2030" initiative. This is underpinned by the continued backing of the Saudi Public Investment Fund (PIF), which maintains a controlling stake of roughly 60%.

All eyes are now on the upcoming quarterly results scheduled for February 24, 2026. Analyst consensus estimates project a loss per share of -$2.49 on revenue of $461.5 million. The company's performance this year is widely seen as hinging on market demand for its new "Gravity" SUV and the timely late-2026 launch of its planned mid-class platform.