What happened
Electric car start-up Lucid Group (LCID 1.19%) stock stumbled in late-afternoon trading on Wednesday, closing the session down by 5.8%.
So what
Wednesday's sell-off appeared to be a response to two pieces of news. First, the Federal Reserve confirmed in a statement released this afternoon that, "with inflation well above 2% and a strong labor market," it is, in fact, likely to raise benchmark interest rates -- probably as soon as March. What's more, Fed Chairman Jerome Powell strongly hinted that we're talking about not just one, but multiple 25-basis-point hikes this year, commenting at a news conference after the Fed meeting that "there's quite a bit of room to raise interest rates without threatening the labor market."
Rising interest rates will cut into the value of any future profits that Lucid might (or might not) earn. Higher interest rates also tend to make bonds seem more attractive to investors -- a second strike against this speculatively priced electric car stock.
Image source: Getty Images.
Now what
Then there was that second piece of news. On Wednesday afternoon, Bloomberg reported that Rivian Automotive (RIVN -2.21%) is ramping up production of its electric trucks. Smoothing out some earlier manufacturing snags, Rivian is expected to soon be delivering as many as 200 electric R1T pickup trucks per week -- quadrupling its production rate from where it was just a few weeks ago, and putting it on track to surpass 10,000 pickups manufactured this year.
That would apparently be in addition to the company's plan to deliver its first batch of 10,000 electric delivery vans to Amazon this year (out of a total of 100,000 ordered for delivery by the end of 2030). Combined, then, we're probably looking at a 20,000 unit delivery year for Rivian already, as it takes steps to grow its annual production rate to 150,000 units or more by the end of 2023.
Granted, Rivian's electric pickups and vans may not compete directly with Lucid's luxury electric sedans. But Rivian is doing its darnedest to prove it's a contender in the electric vehicle market. If Lucid shareholders are feeling nervous, perhaps they should be.
