Lucid Motor’s stock experienced a dramatic drop of over 40% in intraday trading before closing 16% lower at $4.62 per share on Tuesday. The volatility led to multiple trading halts amid rumors that the electric vehicle company might be exploring plans to either go private or file for Chapter 11 bankruptcy protection. These claims surfaced from a specialized EV news site, which reported that Lucid had engaged consulting firm AlixPartners to evaluate these serious options and recommend a course ahead of its upcoming board meeting.

In response, Lucid firmly denied the bankruptcy and going-private speculations, labeling them as “completely false.” The company emphasized it has adequate liquidity to support operations through the next year, as outlined in their recent quarterly reports. Moreover, Lucid stated that no special board committee has been formed to investigate such scenarios and that AlixPartners is assisting only with operational improvements rather than bankruptcy considerations. The company’s current focus remains on refining execution, strengthening its structure, and maximizing the value of its technology and product offerings.

Lucid’s challenging financial position is linked to a slower-than-expected pace in electric vehicle adoption and regulatory shifts, especially under the Trump administration, including the removal of a $7,500 federal EV purchase incentive. The company, backed significantly by Saudi Arabia’s Public Investment Fund, recently announced layoffs impacting 18% of its U.S. workforce as part of cost-saving measures. Earlier this July, Lucid reported second-quarter delivery figures that fell short of Wall Street’s expectations, prompting a leadership restructure led by new CEO Silvio Napoli.

In addition to operational adjustments, Lucid has paused its production guidance as Napoli reviews business strategies aimed at reducing the currently high inventory levels of vehicles. The advisor AlixPartners reportedly recommended restructuring both in the U.S. and Europe and suggested prioritizing the company’s Gravity SUV. Despite the volatility and market difficulties, Lucid asserts that bankruptcy is not on the table and remains focused on positioning itself for long-term success in the competitive EV industry.