Lucid’s (LCID) shares rose about 1% on Wednesday afternoon despite the U.S. electric vehicle maker recalling 4,476 of its Gravity SUVs over a seat belt issue.
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According to the U.S. National Highway Traffic Safety Administration, the Newark, California-based car automaker is conducting the pullback to prevent the risk of a crash due to the problem. Specifically, the auto safety watchdog said Lucid found an insufficient weld in the lap belt anchor brackets on the second-row seats that could fail to restrain passengers during a crash.
The recall is for certain models of the SUV with 2025 and 2026 manufacturing dates. The automaker will inspect the problem and resolve the issue free of charge, the regulator noted.
Lucid introduced the three-row electric SUV in November 2022 and recently hailed the sales and production of the vehicle as a key anchor for its fourth quarter that ended on December 31.
Lucid Races to Challenge Tesla
Meanwhile, the recall comes as Lucid continues to set its eye on challenging Tesla (TSLA) in the EV market. The automaker plans to launch a lower-priced electric crossover later this year to compete with Tesla’s Model Y.
This comes even as Lucid has continued to grow its vehicle delivery. At the end of December, the automaker marked its eighth consecutive quarter of record vehicle delivery, with units delivered for the full-year rising by 55% year-over-year to 15,841.
However, profitability remains a challenge for the company, which has been reporting wider than expected losses per share. The automaker recently trimmed its U.S. workforce by 12% to improve its operating margin.
Is Lucid a Buy, Sell, or Hold?
On Wall Street, analysts currently have a Hold consensus rating on Lucid’s shares. This is based on one Buy, six Holds, and two Sells issued over the past three months.
However, the average LCID price target of $13.38 implies about 39% upside.
