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Wednesday’s proving a tough day for most electric vehicle (EV) stocks. Lucid Group (NASDAQ: LCID) is no exception. Shares of the luxury EV maker are down 9.9% as of 1:39 p.m. ET following Tuesday’s post-close release of its third-quarter numbers and disappointing fourth-quarter production guidance.

The worst possible time for Lucid to raise a red flag

The good news is, Lucid lost less money last quarter than analysts has been anticipating. The consensus called for a per-share loss of $0.36, but the company only lost $0.28 per share. The bad news is, revenue of $137.8 million was not only down year over year, but also fell short of analysts’ estimates of $185.1 million.

The bulk of Wednesday’s big blow, however, is arguably provided by the company’s production outlook for the quarter now underway. Lucid now expects to only manufacture between 8,000 and 8,500 automobiles in 2023 versus a previous expectation of more than 10,000. It built 1,550 cars last quarter, delivering 1,457 of them. Although deliveries improved from the second quarter’s pace of 1,404, production slipped from Q2’s pace of 2,173 EVs. The company made and delivered 2,314 and 1,406 cars, respectively, during the first quarter of 2023.

Lucid’s diminished production largely stems from changes to its manufacturing operation in Arizona as well as efforts to build as many of its Lucid Air electric vehicles as previously promised. Even so, the lowered production outlook comes at a time when EV stocks are proving particularly vulnerable to industrywide woes.

In short, demand for electric vehicles is slowing down. Tesla‘s string of price cuts this year hasn’t seemed to meaningfully reignite demand. Ford Motor Company is delaying $12 billion worth of investments in its EV business, sensing it won’t bear enough fruit soon enough. General Motors is postponing its plans to begin manufacturing all-electric trucks in Michigan next year.

It seems the world isn’t quite as ready to embrace electric vehicles as much as it was expected to just a few years back.

While this dynamic doesn’t directly mean Lucid won’t find buyers for its higher-end EVs, it does leave investors suspicious of any development that could potentially point to trouble. Lucid’s lowered production guidance is such a development.

Worth a shot for risk-tolerant investors

Shares of any pre-profit company like Lucid are tough to own. That’s especially true when the company in question is in a young, fluctuating industry like electric vehicles. Such stocks are inherently speculative at this point of their underlying company’s existence, making them unsuitable holdings for many portfolios.

If you can stomach such risk, however, today’s big sell-off might be an opportunity for risk-tolerant investors to take a swing on Lucid stock. Although most analysts only rate it as a hold, their current consensus price target of $5.98 is more than 50% above the stock’s present price.

Just be sure you’re ready for continued volatility if you’re going to take that shot.

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James Brumley has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Tesla. The Motley Fool recommends General Motors and recommends the following options: long January 2025 $25 calls on General Motors. The Motley Fool has a disclosure policy.

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