EV stocks moved another leg higher in market close as the sector hype and euphoria phase continues amid the backdrop of Elon Musk selling some Tesla stock for tax reasons.

Of the biggest movers, Lucid Motors (LCID:NASDAQ) was a massive gainer, up more than 25% on the day including after hours trading after its’ earnings call. Rivian (RIVN:NASDAQ) ended the day up another 15% on no news, as the Amazon backed automaker breached $172, more than double last weeks’ IPO price.

With the signing of the infrastructure bill from President Biden also giving the EV stocks sector a boost, are we in an EV bubble staring off into the future or is there any meat on the bone?

$LCID earnings outlines luxury EV demand build up

As one of the more recent EV stocks to IPO via a SPAC, Lucid Motors has had a couple of steps back, followed by some momentous leaps forward, up more than 450% from its’ SPAC price and more than 100% in the past 3 weeks. In part, this growth is being fuelled by by the EV sector demand, with investors not wanting to miss out on the ‘nest Tesla’. That demand is spilling over into almost all EV stocks, but some are definitely more fleshed out as businesses than others.

The earnings call for $LCID during Mondays’ after hours trading session was not so flashy when looking at the quarter in question, but the demand for the Lucid Air moving forward looks strong. Lucid has on its’ books 13,000 pre-orders for the Lucid Air in total up until the end of the quarter, but now finds itself with a 17,000 strong backlog at the time of the call just some few weeks later. This tells the story that demand for Lucids’ new award winning car is strong, and that supply will dictate success. So how does the supply capacity look?

Rapid expansion of production capabilities on the horizon for Lucid

According to the transcript, Lucid has capacity currently to manufacture more than 34,000 vehicles, with a target of 20,000 set for FY 2022. This should mean that without major chip supply or other supply chain issues that Lucid is able to reach its’ previously factored in sales numbers. That being said, it was also highlighted that production capacity will significantly expand to 90,000 once the ongoing development of its’ facilities is complete. The award winning Lucid Air and industry leading battery capacity are certainly building the way for Lucid to carve out a piece of the EV market and be one of the EV stocks to watch but where does it stop?

Longer term, Lucid is still less than 10% of the value of Tesla, and could still have upside potential. On the flip side, an automaker which has delivered just a very small number of vehicles and with a target of 20,000 for 2022 is considerably higher in market cap than Ford and GM, with each of those delivering millions of vehicles per year.

That being said, the Lucid story is about the future potential rather than the here and now and from a technical perspective has a ‘gap fill’ on the charts from the February peak which is very close to being filled. Once traders have stopped watching the gap, will this push to a new all time high, or settle back a bit lower is a question for sector sentiment but euphoria phases usually do not last forever. It is good news then that Lucid is building a more solid fundamental case by the day.