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Investing.com-- Morgan Stanley (NYSE:MS) upgraded its rating on Lucid Group Inc (NASDAQ:LCID) on Monday, citing the potential for new management to lead the company into artificial intelligence and beyond its role as a standalone electric vehicle maker.
MS upgraded Lucid to Equal-Weight from Underweight, and maintained its price target on the stock at $3.0.
MS analysts said they believed Lucid has an opportunity to leverage strategic and sovereign partnerships to develop more manufacturing capacity for electric vehicles.
They said that risks for the stock- from soft quarterly earnings and an abrupt CEO departure- appeared played out, and that challenges to the company’s auto business were likely to persist.
But this drove the potential for a bullish thesis with new leadership, which could lead the automaker into the AI industry.
The company could benefit from the U.S. focusing further on domestic manufacturing of EVs, especially given that China is a dominant force in the sector.
In such a scenario, Lucid could benefit from further leveraging the software capabilities of its vehicles. MS said the Lucid Gravity SUV is a “far more significant as a
demonstration of the company’s 2nd generation software defined vehicle architecture which increases the opportunity for LCID to participate in AI-enabled
autonomy through strategic partnerships.”
This trend could also be furthered by Saudi Arabia- home of Lucid’s controlling shareholder and its second-largest production hub- increasing its development of critical AI infrastructure, which provides potential advantages to the EV maker.
Closer ties between Saudi Arabia and China could also offer Lucid some entry to Chinese markets, which have seen standout EV demand despite declining sales in the rest of the world. But MS analysts noted that the Chinese market was highly saturated, and that Lucid’s competitors- such as Tesla (NASDAQ:TSLA) and BYD (HK:1211)- were already developing their own AI driving features.
Lucid’s shares rose over 2% in aftermarket trade, following the MS note on Monday. They are trading down nearly 28% so far in 2025, hit by laggard EV sales, widening losses, and the unexpected departure of CEO Peter Rawlinson in late-February.