American luxury electric automaker, Lucid Motors (NASDAQ:LCID) announced over the weekend, significant price reductions of their Air luxury sedans by as much as $12,400. The cuts come in response to the increasing competition within the U.S. electric vehicle (EV) industry, triggered by a price war initiated by Tesla (NASDAQ:TSLA).
Specifically, Lucid Motors reduced the price of the Air Pure variant by $5,000, bringing it down to $82,400 from its previous price of $87,400. Additionally, the more powerful Touring and Grand Touring versions saw price reductions of $12,400, with new prices set at $95,000 and $125,600, respectively. The company mentioned that these discounted prices would remain in effect while supplies last.
Over a year ago, Lucid, along with other companies in the automotive sector, were forced to raise prices on their vehicles as they faced rising raw material costs and supply chain disruptions caused by the COVID-19 pandemic. However, the situation has become more complicated with the recent rise in interest rates as a measure to control inflation and concerns about a possible economic recession. These factors have resulted in a decrease in consumer demand, leading the market leader Tesla to reduce its prices this year.
Consequently, the price reductions sent waves throughout the industry making it particularly challenging for startups like Lucid Motors, which were already operating at a loss, to secure a larger market share. Additionally, these startups are also facing stiff competition from traditional automakers that are entering the electric vehicle market with their own offerings.
Lucid is expected to show deepening losses in its 2Q earnings report on Monday after the company experienced a decline in production during the months of April to June, primarily attributed to supply-chain issues.
Shares of LCID are up 1.36% in premarket trading on Monday.