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Sunday's Bonus News Why Lucid's 36% Rally on Uber Deal Could Be a Game-ChangerWritten by Leo Miller 
Key Points - Lucid Group shares just saw their largest single-day gain since Jan. 2023.
- Uber will buy thousands of Lucid cars to support its robotaxi ambitions.
- The deal could boost Lucid’s deliveries by approximately 29%, which would help lift its gross margin from a deeply negative 97% in Q1 2025 and improve brand awareness.
Electric vehicle (EV) stock Lucid Group (NASDAQ: LCID) just had its best day in two and a half years. On July 17, Lucid shares rose more than 36%, putting the stock’s total return in 2025 at just under 1%. This comes after the company made a joint announcement with the world’s largest ride-sharing company, Uber Technologies (NYSE: UBER). The two are forging a significant partnership in autonomous vehicles (AVs). Let's break down the deal below and what it means for both firms. Lucid: A Volume Boost, Margin Recovery Potential, and Increased Brand Awareness Uber is aiming to deploy 20,000 or more Lucid cars for its next-gen robotaxi program. While Lucid will supply its Gravity SUV, Nuro will provide the program's autonomous capabilities. The company’s AI-first self-driving system, Nuro Driver, will give the vehicles Level 4 autonomy. This means that, in most circumstances, human intervention is not required. Lucid, Uber, and Nuro hope to deploy these 20,000 vehicles over the next six years, with the first launch in a major U.S. city in 2026. That would allow for a fairly substantial increase in Lucid’s delivery volume. Over the last 12 months, Lucid delivered approximately 11,400 cars. If Lucid adds one-sixth of the 20,000 vehicles to its deliveries over the next 12 months, this could create a 29% increase in its deliveries, all else being equal. While this would help increase the company’s revenues, that’s far from the only benefit to Lucid. This added volume also has the potential to aid Lucid’s margins significantly. Up-and-coming EV companies typically suffer from profoundly negative margins, and Lucid is no exception. In Q1, Lucid posted a gross margin of negative 97%. This means that the cost of just the materials and labor needed to make the vehicles they delivered was nearly twice the revenue they generated. Thus, the company lost thousands of dollars on each car it sold. Higher delivery volume should move Lucid’s gross margins closer to zero, the first key step in achieving profitability.
With tens of thousands of riders set to experience Lucid vehicles via Uber, the brand will receive a marketing boost. If even a small percentage of those robotaxi users decide to purchase a Lucid car for personal use, the company's sales would increase. As part of the agreement, Uber is investing $300 million directly into Lucid, giving the ride-hailing giant a stake in the company’s success—and Lucid a much-needed capital infusion to support production scaling. But there are still some unknowns. For example, the financial specifics of the full contract haven’t been disclosed. Once this happens, markets could view the deal in a less favorable light. Still, the partnership is a solidly positive development for this small EV company’s future if it executes properly on production and deliveries. Uber: High Stakes, High Risk in a Fast-Moving Autonomy Race From Uber's perspective, the new partnership represents a significant new cost, likely in the multi-billion dollar range. This is the main reason shares were down slightly on the day of the announcement. Still, it is important for the company to stay competitive in the AV market. Given that Uber sees this as becoming a “multi-trillion dollar market," sitting on the sidelines isn’t an option if it wants to capitalize. Still, Alphabet’s (NASDAQ: GOOG) Waymo and Tesla (NASDAQ: TSLA) are currently the leaders in this space, while Uber is playing catch-up. Uber lacks proprietary self-driving technology and relies instead on a network of partnerships, including not just Lucid and Nuro, but also Waymo and Aurora. This puts the company’s eggs in many different baskets, allowing it to shift more demand to the best partnership over time. However, it also demonstrates how Uber generally lacks a true technological advantage. With Lucid, Uber is betting on a relatively small EV player that has faced production issues, introducing risk that the ambitious ramp timeline will face setbacks. Still, the vast scale Uber has reached with its traditional ride-hailing service remains a reason to be optimistic about its AV strategy. Lucid Emerges as the Clear Winner... For Now In the short term, Lucid is the bigger beneficiary of the partnership, as demonstrated by both stocks' price action. LCID’s surge shows investors believe this deal could finally jumpstart the company’s slow climb toward profitability and scale. For Uber, the upside is less certain. The investment seems more of a strategic necessity than a growth catalyst, keeping Uber in the game despite the high risk. Still, both names stand to benefit significantly if the partnership proves to be fruitful.
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