LCID Stock Warning: Lucid Motors Issues 2 New Recalls

Lucid Motors (NASDAQ:LCID) shares fell about 3% today, trending lower following two new recalls from the electric car maker. Specifically, the automaker is recalling about 5,250 of its Air sedans due to a software issue and another 7,500 Airs due to potential problems with their defrosters.

The news came after the company announced that its deliveries rose sharply last quarter, setting a record. The report sparked a nearly 8% rally in LCID shares.

A software error and a defective coolant heater

The software bug that prompted the recall of about 5,250 Lucid electric vehicles can cause the affected vehicles to lose power. The defrost system issues that prompted the recall of about 7,500 Lucid Air luxury sedans can cause their windshields to not defrost completely.

Lucid released an Over-The-Air (OTA) update to fix the previous software issue and warned Driver about the latter defroster problem. According to the recall notice:

“Failed high-voltage coolant heaters will be replaced. Software updates and repairs will be performed free of charge. Owner notification letters are expected to be sent out on August 9, 2024.”

Lucid’s delivery and production figures for the second quarter

Lucid delivered a record 2,394 of its electric vehicles last quarter, up 22% from the first quarter’s total of 1,967. In the first quarter of 2023, the automaker delivered just 1,406 electric vehicles.

The company’s decision to drastically reduce its prices in recent years has undoubtedly led to increased demand for its vehicles. In 2021, its Lucid Air EVs sold for nearly $100,000 apiece, while today they can be had for as little as $70,000.

On the production side, Lucid’s total increased from 1,727 in the first quarter to 2,110 in the second quarter.

The medium-term prospects of LCID shares

The automaker must produce 5,163 electric vehicles in the second half of the year to meet its production target of 9,000 vehicles for 2024.

Meanwhile, the automaker plans to begin production of its Gravity SUV in the second half of 2024. As I mentioned in a previous column, the Gravity, which seats up to seven people, received generally very positive reviews in automotive-related publications.

In addition, Peter Rawlinson, CEO of Lucid, reported that the total market for the electric vehicle (TAM) “will be six times the size of the sedans currently on the market.”

At the time of publication, Larry Ramer did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the author and are subject to InvestorPlace.com’s disclosure policies.

At the time of publication, the editor in charge did not hold any positions (either directly or indirectly) in the securities mentioned in this article.