Emerging electric vehicle (EV) company Lucid (NASDAQ:LCID) has announced the recall of 637 Air sedans from the 2022–2023 model year. The vehicles are criticized for abruptly losing power while being driven, which raises the possibility of collisions. The company’s disappointing 2023 production targets and the declining order backlog clearly indicate that the company’s flagship model is witnessing weak demand. As a result, the recall might have an even greater impact on product demand.
According to a filing with the National Highway Traffic Safety Administration, the shutdown of electric motors is triggered by the sudden opening of electrically activated contact switches, which transfer energy to the motor. Interestingly, Lucid first came across this issue in May 2022.
The EV manufacturer will fix it for free by replacing the contactor switches and updating the vehicle’s software. It is important to note that as of February 21, Lucid reported a backlog of 28,000 orders, down from 34,000 in November. The company reported this drop in backlog despite offering large discounts on its $150,000 sedan in December.
Furthermore, Lucid plans to build vehicles in the range of 10,000 to 14,000 in 2023, which is lower than the roughly 27,000 expected by the analysts. Also, the figures are much below the company’s production capacity of 34,000 vehicles per year.
Is LCID Stock a Good Buy?
Analysts are currently sidelined on the LCID stock. It has a Hold consensus rating based on three Buys, four Holds, and one Sell. The average price target of $9.64 suggests a nearly 18% upside. Lucid shares have gained 32% since the start of this year.
