Lucid Group (NASDAQ:LCID) stock is getting a Tesla (NASDAQ:TSLA) valuation before it demonstrates Tesla performance.

LCID stock has jumped 50% in just a few weeks as the company began deliveries of its Air sedan. The cars are getting reviews a lot like the early Tesla cars, filled with superlatives.

But Lucid has yet to do what Tesla did years ago, scale production and march into the mass market. Despite this, LCID stock is trading for around $35 with a market cap of nearly $60 billion.

That’s just $10 billion short of Ford Motor (NYSE:F). TV analyst Jim Cramer prefers Ford.  So do I.

A Closer Look at LCID Stock

Most electric car start-ups have failed because they lacked the capital to scale production.

That’s not a problem with Lucid, thanks to the Kingdom of Saudi Arabia. The Kingdom owned a 60% stake when Lucid went public last summer and made bank on the IPO. Its $2.9 billion stake rose in value to $20 billion.

This has been a very, very good year for the Saudis, who have seen oil profits triple at Saudi Aramco. Despite their gusher, they’re looking to renewable energy, taking big stakes in solar projects.

Lucid is another piece of their puzzle. The company has promised to build a factory in the Kingdom, as the Sauds need high-paying jobs for a growing population. Lucid has promised production will begin there in 2024.  It’s part of a program dubbed Saudi Vision 2030.

But whether Saudi citizens will take auto jobs, even good ones, and how well they will do is an open question. For now, Lucid is looking to the bright side. Saudi Arabia is the second-largest market for Lucid’s pre-orders.

The Enthusiasm Barrier

Enthusiasm for electric cars is rising as oil prices rise. The Biden Administration is stoking that enthusiasm by seeking to extend a $7,500 tax credit for buyers. Lucid has already announced a second model, a crossover SUV dubbed the Gravity.

But enthusiasm is running into a wall of analyst skepticism. The average one-year price target for Lucid stock at Tipranks is 23.33, well below where it now trades. The average 2022 sales estimate is $1.74 billion. That means investors are already paying 22 times next year’s revenue to get into the stock.

Even Musk himself is becoming skeptical.

“Scaling production, supply chain, logistics & service is a world of hurt,” he recently tweeted.

He should know. The company got by on hype and Musk lived on his factory floor while trying to work out the scaling problems in 2018, as I wrote at the time.

Even before its latest run-up, analysts were questioning Lucid’s valuation, saying $41 billion was too high. If $41 billion was too high, how high is $60 billion?

Lucid isn’t even the only new electric car player now delivering product. Rivian, backed by Ford and Amazon.Com (NASDAQ:AMZN), which wants 100,000 delivery vans from it, already has an electric pick-up truck.

The Bottom Line

Lucid will only go as far as its battery production.

The company has launched production in Arizona but, like Rivian, it’s dependent on Korea for the technology. LC Chem (OTCMKTS:LGCLF) was named as Lucid’s sole supplier almost two years ago.

Tesla, by contrast, makes its own batteries, which is why the company may be worth $1 trillion. Batteries are the name of the game when it comes to electric vehicles. They’re where the value is, not in the body, the styling or the tech.

Batteries are why Musk can look at companies like Lucid and Rivian with a wry smile. He has figured out what they have yet to learn.

On the date of publication, Dana Blankenhorn held a long position in AMZN. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

Dana Blankenhorn has been a financial and technology journalist since 1978. Just in time for Halloween he has a collection of COVID-19 stories https://www.amazon.com/Bridget-OFlynn-Virus-COVID-19-Pandemic-ebook/dp/B09K8PSQC8/ at the Amazon Kindle store. Write him at danablankenhorn@gmail.com or tweet him at @danablankenhorn. He writes a Substack newsletter, Facing the Future, which covers technology, markets, and politics.