Lucid Group (NASDAQ:LCID) is one of the top EV stocks to watch.

Indeed, this sector has been on fire lately. However, a two-year chart shows a rather precarious position many companies find themselves in, with LCID stock well off its peak.

That said, there are reasons many investors are looking at Lucid right now. This is an EV company that’s not focused on competing on price but aims to build premium-quality electric vehicles for affluent customers.

While it’s important to be aware of the risks, holding a small share position in Lucid Group could be a reasonable option for investors. However, if you prefer stability and lower risk, investing in lower-volatility traditional automakers may be a better choice.

Lucid Group targets a specific segment of buyers who desire luxury EVs, which could either lead to great success or failure.

By distinguishing itself in the high-priced new-energy vehicle market, Lucid Group has the potential to become a leader in the industry. If you’re interested in investing in an intriguing EV startup, let’s explore what sets Lucid Group apart from its competitors.

EV Stocks and China

Lucid stock gained ground as the company plans to enter the Chinese market, confirmed by its Head of China Operations. Lucid intends to import its electric vehicles into China while considering local production options.

China’s status as the largest automotive market presents a significant opportunity, with 4.6 million BEVs sold last year, accounting for 60% of global sales. While entry into the Chinese market will require capital, Lucid appears ready to tackle this challenge.

Lucid recently revealed a public offering and private placement of common stock, with Saudi Arabia’s PIF subsidiary Ayar Third Investment Company investing $3 billion.

The public offering was closed on June 5, while the private placement is contingent upon it and expected to conclude on June 26. The offering likely aligns with their plans for expansion into China. Since the announcement, LCID stock has declined approximately 15%.

Lucid conducted a public offering for 173.54 million shares, raising $1.2 billion, and a private placement for 265.69 million shares, generating $1.8 billion. Ayar, Lucid’s major shareholder, will maintain a 60.5% ownership stake through the private placement.

The company intends to allocate the $3 billion in gross proceeds for general corporate purposes, such as capital expenditures and working capital.

Lucid’s Focus

Investing in Lucid stock can be seen as an indirect bet on economic improvement. In a better economy, car buyers prioritize quality and aesthetics over price.

Lucid’s Air, particularly the Air Dream Edition Range sedan, is considered by some car enthusiasts as a top offering in the U.S. EV industry. Notably stylish, the Air Dream Edition Range boasts an impressive EPA-rated range of 520 miles on a single charge.

Lucid Group has more than just the Air models in its lineup. The company is preparing to launch its highly anticipated electric SUV, the Gravity.

Although the Gravity is still undergoing testing on U.S. roads and not yet available for purchase, it holds significant potential for Lucid and its stock investors.

Lucid claims that the Gravity will offer the driving dynamics of a sports car and an unmatched electric range among SUVs.

Similar to the Air’s impact on electric sedans, the Gravity has the potential to make a significant impact in the electric SUV market. Lucid hopes that the Gravity will be a successful revenue generator, but only time will tell.

Why Buy LCID Stock?

Lucid Group possesses immense potential, particularly in its technology and renewable energy division, which is often overlooked by analysts.

The low number of ratings and price targets indicate that Lucid’s true value is underestimated, as it should trade at around $38 compared to its current price of $22.

With a team consisting of former employees from prestigious companies like Apple, Tesla, and Intel, Lucid has the expertise to become a leading automaker and achieve remarkable success.

I think Lucid has what it takes to compete with its peers, particularly in the high-end segment. And while the market may turn sour again on EV stocks this is one I think may be worth a speculative position at these levels. 

On the date of publication, Chris MacDonald did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.