What happened
The stock of special-purpose acquisition company (SPAC) Churchill Capital Corp. IV (CCIV) has had a wild 2021. Investor excitement over rumors of plans to merge with luxury electric vehicle (EV) start-up Lucid Motors helped shares spike more than 450% earlier this year. But the stock crashed once the actual merger transaction was announced.
Now that the details of the agreement have been digested, however, the stock has held on to some of those gains. With a planned closing date set for the business combination, shares of Churchill Capital IV jumped 46.1% in June, according to data provided by S&P Global Market Intelligence.
So what
Churchill Capital said the meeting to close the merger will take place on July 22. The new company will be renamed Lucid Group, and will trade on the Nasdaq under the symbol LCID. The announcement came on June 25, just three days after the EV maker said that due to strong demand, it is accelerating plans to invest in its manufacturing capacity. The company also said it has exceeded 10,000 paid reservations for the Lucid Air, its initial EV model.
The Lucid Air luxury electric sedan. Image source: Lucid Motors.
Now what
Much of the positive investor energy surrounding Lucid is based on the potential for it to be serious competition for EV leader Tesla (TSLA 6.05%). Lucid says its Air sedan will be the first EV to offer a battery range of 500 miles. It will also accelerate from zero to 60 mph in 2.5 seconds, the company says, rivaling the quickest Tesla Model S sedans.
The first Lucid vehicles are expected to be available in the second half of this year, beginning with the $161,500 Air Dream Edition, which the company says is sold out. It now says that it will move $350 million of planned future capital expenditures into the next two years, and that it will expand overall capital investments by 6% to 7% over the next five years.
Investors who seemed to be prematurely excited about Lucid's prospects earlier in the year have moved the stock up in June as concrete plans get closer to reality. The company also plans to launch a luxury SUV model named the Gravity in the second half of 2023. Investors will keenly watch to see if it can succeed and indeed challenge Tesla in the long run.
