It's an exciting time for Lucid Group (LCID 2.80%). Sales are expected to grow by 72% this year and 97% next year thanks to the recent introduction of its Gravity SUV platform. Plus, several new models may be on the way as early as 2026. But there's one critical risk point that every investor should be monitoring right now.

Could this 1 change kill Lucid Group stock?

Few companies completely control their own destiny. But some are more exposed to outside events than others. Right now, Lucid is particularly vulnerable to changes in federal policies. The U.S. government is mulling the elimination of several long-standing subsidies. The most talked about right now is the federal tax credit for EV buyers, which can reach as high as $7,500.

If these incentives are eliminated, the effective cost of purchasing an EV will rise, a direct hit to nearly every electric car stock. Analysts are split on how damaging this policy shift could be. But we can glean clues from other countries that abruptly eliminated EV tax incentives. The reality may surprise you.

Image source: Getty Images.

Incentives that lower the cost of buying an EV have been in place throughout Europe for many decades. Norway was the first to begin incentives all the way back in the 1990s. Over time, incentives have been increased and decreased, sometimes gradually, other times suddenly. What happened when incentives were reduced? It's not good news for EV makers like Lucid.

Germany, for example, paid average incentives of around €4,700 per car from 2016 to 2023. More than 2 million vehicles qualified over that time period. Then the program ended suddenly in 2023. Over the next six months, EV sales grew by 9.4% in the rest of Europe. German EV sales, meanwhile, dropped by 16.4%.

While the effects in the U.S. remain to be seen, Lucid's sales growth may decline sharply should domestic tax credits be eliminated.