Over the past year, it has become difficult to argue the bull case for Lucid Motors (NASDAQ:LCID). Sure, market conditions have been a big reason why LCID stock has fallen from $25 to under $10 per share during this time.

However, a much larger factor has been the electric vehicle (or EV) maker’s inability to gain traction in the luxury EV market. Between production issues, falling reservation numbers, and, as I discussed recently, a vehicle price cut that reeked of desperation, this company, once considered a possible Tesla (NASDAQ:TSLA) competitor in the making, has become merely the largest of what I like to call the EV also-rans.

With all of this, the bear case has become fairly easy to argue. With the latest news suggesting that the situation is worsening, the chances of this bear case (detailed further below) plays out continues to climb.

LCID Stock: Poor Execution Likely to Continue

Back in 2021 and early 2022, the hype surrounding Lucid may have been a bit overdone, but at least it seemed somewhat rational. At the time, it seemed as if the company had it all in place to become a leading name in the luxury EV market.

Mostly, because of advantages such as having a former Tesla executive at the helm, as well as the backing of a deep-pocketed investor (Saudi Arabia’s Public Investment Fund, or PIF). Yet since last year, this aura of inevitable dominance has fully faded. Management talked up a good game in the initial LCID stock investor presentation.

But when it came time to execute, Lucid failed to do so in a big way. Lucid initially expected to sell 20,000 of its Air luxury EV sedans in 2022. Instead, it produced 7,180 vehicles, and delivered only 4,369 vehicles. The company’s original forecast called for it to sell 49,000 vehicles in 2023.

Per the latest production guidance, Lucid will produce just 10,000-14,000 vehicles this year. While that may sound like a big improvement from 2022 results, don’t be fooled. Another key metric signals that this would-be Tesla killer’s execution challenges will persist.

Reservation Numbers Keep Dropping

After releasing its latest earnings results on Feb. 22, LCID stock dropped by double-digits. These results included the aforementioned updated production guidance, but that may not be the main reason why shares experienced such a sharp price decline.

Along with disclosing this subpar production outlook, Lucid also quickly disclosed in its quarterly earnings release that, as of Feb. 21, the company had total vehicle reservations of around 28,000. Compared to last quarter’s reservation figure (34,000), that means around a 17.7% drop in a few month’s time, and a drop far greater than one reported between last quarter, when net reservations fell by 3,000 vehicles.

With this reservation backlog dropping, it is now even more questionable that this company will significantly scale up over the next few years. In light of the disappointing reservation numbers, one sell-side analyst (Bank of America’s John Murphy), who has cut his rating on LCID from “buy” to “neutral,” believes it won’t be until 2027 that the company gets out of the red.

If Murphy’s new forecast is correct, and heavy losses will continue longer-than-expected, high shareholder dilution (a key risk that I’ve highlighted in past coverage) could now be a near-certainty.

The Likely End Result

Rivian Automotive (NASDAQ:RIVN), another prominent EV contender, may be facing its own set of challenges, but Lucid Group is in a much worse position. Rivian is currently producing tens of thousands of vehicles per quarter, and has a six-figure reservation backlog.

In the months ahead, merely hitting five-figure annual production could become a stretch goal for Lucid. If reservation trends continue, its backlog could drop sharply yet again.

At the start of 2022, LCID had $6.2 billion in cash and short-term investment. As of Dec. 31, 2022, that figure had dwindled to just $3.9 billion, and that was after a $1.5 billion dilutive capital raise shortly before the end of the year.

With further disappointment and dilution very likely, instead of a stunning comeback for LCID stock, expect a continued slide over the next 12 months.

On the date of publication, Thomas Niel did not hold (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.