Over recent articles at InvestorPlace, I mentioned that the narrative for electric vehicles isn’t exactly as clear cut as previously thought. Though EVs may be the future, they’re still awfully expensive. As well, lack of infrastructure is a major challenge. Therefore, my general bullishness in Churchill Capital (NYSE:CCIV) seems contradictory. Wouldn’t CCIV stock succumb to the difficulties?

Adding the most skepticism is that Lucid Motors is about as aspirational of a company as you can get. Technically, the term is pre-revenue, which is just euphemism for aspirational, which is also euphemism for extremely speculative. But that’s not going to appeal to investors of the special purpose acquisition company (SPAC) which Lucid will reverse merger with. So pre-revenue it is for CCIV stock.

Markets analyst Joanna Makris pointed out the other glaring problem with the EV hopeful and that’s valuation. Simply put, you can make the argument that the premium for CCIV stock is completely out of touch with reality. She wrote:

While Lucid’s valuation falls short of the previous $42 billion estimate, it’s still aggressive by any measure. As a comparison, at an implied $38 billion, Lucid would trade at the same market capitalization as Tesla (NASDAQ:TSLA) in early 2017.

But there’s another wrench in Lucid’s numbers, so to speak. Lucid’s final valuation will depend on what portion of Lucid’s PIPE investors cash in on redemptions. The PIPE priced at $15 — a roughly 60% discount to CCIV’s current $24 share price. With the lockup expiring in September, there’s a high likelihood that these short-term insiders take their profits. And that’s another reason for downside in CCIV stock.

With so many challenges in Lucid’s pipeline, is playing this reverse merger worth a shot?

CCIV Stock Is Strangely the EV Investment You Can Trust

I’ll expand on an issue that I only briefly mentioned above and that’s infrastructure. If the U.S. were to make a pivot to EVs, infrastructure to around the level that you see gasoline stations today for combustion cars is a must. For various reasons, we can’t all just charge at home.

But to loosely paraphrase Dr. Emmett Brown, “Infrastructure? Where we’re going, we don’t need infrastructure.”

While so many EV companies — and legacy automakers pivoting toward EVs — have their eyes on building vehicles for the average household, Lucid is going completely the opposite direction. Specifically focused on premium luxury EVs, the company’s cheapest offering start at just under $70,000. For context, the median U.S. household income was $68,703 in 2019.

Logically, the folks that are even considering buying Lucid EVs already have access to ample charging infrastructure: their own. Yes, I understand that someone making $70,000 could conceivably go out and buy one. But most people don’t spend 100% of their pre-tax income on a car. That would be nuts.

Plus, you’ve got to figure that Lucid’s target audience would already have another vehicle at the ready, whether electric or not. Sure, multiple variables exist with CCIV stock. But infrastructure concerns will not be one of them.

However, you can’t say that if you’re aiming for the lower end of the price spectrum. Here, infrastructure very much matters because not everybody has access to a garage or carport to do their charging. And in some locales, money isn’t necessarily the central issue.

For instance, the Wall Street Journal noted that New Yorkers bought personal vehicles for the first time during last year’s novel coronavirus outbreak. Usually, that’s a superfluous purchase in that area due to the abundance of public transport options and that owning a car is a pain. So if people from these areas continue to go electric, infrastructure is a necessity.

Speculative But Rational

Having said all that, I don’t outright disagree with Makris. The valuation on CCIV stock is incredibly rich. I don’t think anybody will deny that. But really, the question is whether or not it’s justified.

Obviously, no one but yourself can answer that. What I will suggest is that CCIV stock is a speculative albeit rational investment. Yes, it’s priced high but the business model is the one that makes the most sense. Currently, we don’t have solid-state battery technology to make fully functional EVs that are priced like a base model Civic or Camry.

With Lucid, that question is not part of the equation whatsoever. Do you see Ferrari (NYSE:RACE) sweating bullets about who can afford the cars? Heck no! In fact, you have to earn the brand’s respect before you can be on the waiting list.

Lucid isn’t in that same ballpark but it’s a similar idea. By focusing on a specific, high-end market, it takes away the variability that you would incur if you had to rely on mass consumer sentiment.

On the date of publication, Josh Enomoto did not have (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.

A former senior business analyst for Sony Electronics, Josh Enomoto has helped broker major contracts with Fortune Global 500 companies. Over the past several years, he has delivered unique, critical insights for the investment markets, as well as various other industries including legal, construction management, and healthcare.