What analysts are saying about Uber and Lucid’s big autonomous vehicle deal

The autonomous vehicle sector got a jolt on Thursday when Lucid Group (NASDAQ:LCID) announced a three-way partnership with Uber Technologies (NYSE:UBER) and privately held Nuro to deploy at least 20,000 Lucid Gravity SUVs equipped with Nuro’s L4 autonomous technology on the Uber (NYSE:UBER) network over the next six years. Shares of Lucid (NASDAQ:LCID) soared 36% off the news.

Notably, prototypes of the vehicle are currently undergoing testing at Nuro’s Las Vegas proving grounds, with the official launch expected later next year in a major U.S. city. Uber (UBER) will license Nuro Driver technology and will own and operate the vehicles, along with its third-party fleet partners. Uber (UBER) also plans to fire off a $300 million investment in Lucid Group (LCID) as well as an additional investment in Nuro.

Bank of America analyst Justin Post said the firm would expect Uber (UBER) to finance the vehicles early to start the deal, but spend less than 0.1% of its market cap on them. “As the deal meets financial milestones, we expect third-party fleet managers and/or financial partners to own the cars,” he added. Once Uber establishes AV economics, BofA expects new financial partners to emerge, which is seen as another potential tailwind for competitors to Waymo (GOOG) and Tesla (TSLA). “We think other potential benefits of this deal for Uber is that it could encourage other OEMs to accelerate L4 development,” highlighted Post.

Morgan Stanley analyst Adam Jonas said the Nuro-Uber partnership is a demonstration of Lucid Group (LCID) recognizing the key strategic position it holds in the broader autonomy ecosystem. “We see a number of other strategic opportunities for Lucid, including, but not limited to: licensing EV technology to legacy OEMs and/or using unused EV capacity and assets; leveraging the company’s role in EV manufacturing to enable the rise in embodied AI outside of just autos; and acting as an ‘on-ramp’ for China EV’s in the US,” wrote Jonas.

Julian Lin, Investing Group Leader for Best Of Breed Growth Stocks.

“Lucid appears to be the biggest winner of this partnership (for reference they are guiding to produce roughly 20,000 vehicles in 2025). This partnership adds visibility to growth as well as financing, given Uber’s commitment to provide investment financing. As I have noted in my prior reports, I view these to be defensive measures by Uber as AVs continue to be a long-term secular threat to the business.”

Seeking Alpha analyst Bill Maurer

“Lucid’s deal with Uber sounds nice upfront, but 20,000 vehicles over 6 years is not a gamechanger in my opinion. Lucid shares were heavily shorted, so the pop may have been a bit of a squeeze more than a fundamental change in investor interest. Perhaps the bigger news was the reverse stock split that’s coming, which may prove to be a negative catalyst once it occurs.”

Seeking Alpha analyst Kenio Fontes

As an Uber analyst and shareholder, I looked at the news with a positive perspective, It’s something not very tangible for now, but it already reinforces that management is really making an effort in this autonomous driving niche, both an effort to realize new projects and partnerships but also a financial effort. For Lucid, it’s more relevant news since the endorsement of Uber’s product is very valuable, increasing the company’s visibility and validating it.”