Lucid Motors Denies Bankruptcy Rumors, Shares Plunge 50%
Lucid Motors has denied bankruptcy rumors that surfaced this week, but not before its stock price plummeted by up to 50%, dragging down rivals Rivian and Polestar. The EV maker, which lost over $1 billion in Q1 and conducted two rounds of layoffs, is facing investor skepticism about the future of pure-play electric vehicle companies.
Lucid Motors found itself in a difficult position this week, fending off bankruptcy rumors that caused its stock to freefall. The company quickly denied the report, calling it “completely false” and pointing to its available free cash flow as evidence of sufficient runway into next year.
The trouble began on Tuesday when EV trade publication EV (eletric-vehicle.com) reported that restructuring firm AlixPartners had advised Lucid’s board to consider Chapter 11 bankruptcy or a take-private deal. The report also claimed AlixPartners encouraged further restructuring in the US and Europe and a focus on the Gravity SUV. Lucid confirmed it had hired AlixPartners but denied the firm made any such recommendations. Instead, AlixPartners would advise on “improving execution, strengthening operations and positioning Lucid to realize the full potential of its technology, products and innovation,” according to chief communications officer Nick Twork.
Lucid went a step further, filing a cease and desist order against EV, alleging the report directly caused the stock crash. “In short, your actions caused serious injury to a number of investors. And they injured, and continue to injure, Lucid directly,” wrote Lucid’s chief legal officer Brian Tomkiel.
Despite the denial, Lucid’s financial health is genuinely troubled. The company lost over $1 billion in the first quarter of 2026 and has undergone two rounds of layoffs this year—12% in February and 18% in June. Production at its Arizona factory was reduced to counter high inventory and save costs. Additionally, COO Marc Winterhoff departed and his position was eliminated.
The rumors sent Lucid’s stock down as much as 50% in one of its worst single-day drops. The panic spread to Rivian and Polestar, whose shares also fell amid investor concerns over the viability of EV-only automakers facing slowing demand and policy shifts. EV sales are stabilizing, but recovery remains distant.
These companies are increasingly reliant on major stakeholders—Lucid on Saudi Arabia’s Public Investment Fund, Polestar on Geely, and Rivian on Volkswagen. If any of these backers lose confidence, the future could turn bleak quickly.
