Lucid Motors stock plunges over 40% on bankruptcy rumors; company denies report

A Lucid Air electric vehicle (EV) at the company's showroom in Tysons, Virginia, US, on Saturday, Feb. 17, 2024. Samuel Corum | Bloomberg | Getty Images

Lucid Motors stock fell more than 40% at one point on Tuesday, with trading halted multiple times for volatility, following a report that the electric vehicle maker is considering new strategic options, including a potential bankruptcy filing.

Key Developments

• Stock plunge: Shares dropped sharply, triggering repeated trading halts.
• Bankruptcy speculation: A report from EV-focused site EV claimed Lucid is weighing going private or filing for Chapter 11 bankruptcy protection.
• Company denial: Lucid issued a statement calling the rumors "completely false."
• Market challenges: The company continues to face headwinds from slower-than-expected EV adoption and regulatory changes under the Trump administration.

Report Details

According to EV, Lucid has engaged AlixPartners to review options including going private or Chapter 11 bankruptcy, and to deliver findings to Lucid's board before its next meeting. The report also stated that AlixPartners encouraged the board to further restructure operations in the U.S. and Europe and to focus on the Gravity SUV.

AlixPartners declined to comment on the report.

Lucid's Response

In a statement, Lucid said:

"The rumors are completely false. The company has sufficient liquidity to carry its operations well into next year, as recently published in its last quarterly filings, and it has not formed any special Board committee to explore the scenarios reported today. Our focus is on improving execution, strengthening operations, and positioning Lucid to realize the full potential of its technology, products, and innovation. AlixPartners is assisting us in that and nothing else and has not recommended bankruptcy to management or the Board."

Broader Challenges

Lucid has been navigating a difficult market environment, including:

• Regulatory headwinds: The elimination of a $7,500 federal EV purchase incentive under the Trump administration.
• Workforce reduction: Last month, the company announced layoffs of 18% of its U.S. workforce as part of a cost-savings plan.
• Missed delivery targets: Earlier this month, Lucid fell short of Wall Street expectations for second-quarter deliveries.
• Leadership changes: New CEO Silvio Napoli announced a leadership shake-up in April to "simplify the company's structure."
• Production guidance suspended: In May, Lucid paused its production guidance as Napoli said he would evaluate business decisions and address "elevated inventory" of vehicles.

Lucid is heavily backed by Saudi Arabia's Public Investment Fund.

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