Lucid’s take care of Uber is promising. However a Rivian partnership appears superior.
Lucid Group (LCID -2.34%) soared in worth following the announcement of its partnership with Uber Applied sciences. In accordance with the deal’s phrases, Uber will make investments $300 million within the electrical car (EV) maker. Uber additionally dedicated to buy 20,000 autos from Lucid to kick-start its robotaxi division.
Wall Road veteran Jim Cramer lately weighted in on the deal, and his take was stunning to many. He in contrast Lucid’s take care of Uber to a partnership Rivian Automotive (RIVN 1.30%), one other EV inventory, made earlier this yr.
When you’re invested in both Lucid or Rivian, you may need to give Cramer’s feedback some consideration.
How huge is the Uber and Lucid partnership in actuality?
The small print of Lucid’s partnership with Uber are pretty easy. The latter says it’s anticipating to launch a robotaxi service later subsequent yr in a significant U.S. metropolis.
To energy this launch, Uber plans to order 20,000 Lucid Gravity SUVs over the following six years. In accordance with a press launch, the autos might be owned and operated by Uber or its third-party fleet companions and made accessible to riders solely through the Uber platform.
To assist Lucid scale up sufficient to supply this many autos, Uber additionally agreed to take a position $300 million into the enterprise. Across the similar time, Lucid introduced a 1-for-10 reverse inventory cut up, nevertheless it’s not clear how related these two occasions are.
Whereas all of this appears promising on paper, there are two apparent issues. First, Uber’s robotaxi division stays in its infancy. Whether or not it might really develop large enough to amass 20,000 Lucid autos stays an enormous open query.
Second, $300 million will not do a lot to maintain Lucid financially viable over the following six years. Whereas it ended 2024 with greater than $6 billion in liquidity, the corporate additionally posted a web lack of $2.7 billion, roughly the identical web loss it posted in 2023. A $300 million money infusion is useful, however it’s going to hardly treatment its ongoing monetary challenges.
Lucid goals to offer the autos for Uber’s new service. Picture supply: Getty Pictures.
Jim Cramer thinks Rivian’s take care of Volkswagen is superior
When Jim Cramer was requested about Lucid’s partnership with Uber final week, he referred to as the deal a “dalliance.” In different phrases, he views it extra as a short-term association than a bona fide long-term partnership. “I feel that you just want a dedication, just like the Volkswagen dedication to Rivian is extraordinary,” Cramer mentioned. “That is an open-ended test from one of many greatest automotive corporations.”
He’s referring to a three way partnership between Volkswagen and Rivian that was introduced in November 2024. The German automaker will obtain essential entry to Rivian’s software program working platform and technological again finish. In change, Rivian receives as much as $5.8 billion in funding.
It is not arduous to see the distinction in commitments right here. Uber is investing simply $300 million into Lucid, with the promise of shopping for autos over the following six years. Rivian, in the meantime, is receiving as much as $5.8 billion in funding by the top of 2027, beginning with a direct $1 billion convertible be aware.
To be clear, Lucid’s take care of Uber remains to be very thrilling. ARK Funding CEO Cathie Wooden finally sees the robotaxi market being price as much as $10 trillion by 2030. However Rivian’s take care of Volkswagen provides extra credence to Rivian’s tech stack and differentiation.
When you’re excited concerning the Uber-Lucid tie-up, you’ll want to dive into Rivian’s and Volkswagen’s partnership, as Cramer appropriately factors out.
Ryan Vanzo has no place in any of the shares talked about. The Motley Idiot has positions in and recommends Uber Applied sciences. The Motley Idiot recommends Volkswagen Ag. The Motley Idiot has a disclosure coverage.
