Major U.S. stock indexes are hitting new highs again this week, but some electric vehicle (EV) stocks accelerated in the other direction. Lucid Group (NASDAQ: LCID) led the EV stock plunge with a drop of about 24% as of Friday midday trading. Chinese EV names Nio (NYSE: NIO), and Li Auto (NASDAQ: LI) weren't far behind with declines of 15.5% and 8%, respectively, according to data provided by S&P Global Market Intelligence.

Investors were selling these names for company-specific reasons, but also due to a tempered outlook for EV sales globally. China is the largest EV market in the world, but its economy is struggling, and government efforts to spur growth didn't give investors what they hoped for this week.

Lucid needs cash

The big hit for Lucid shares came when the company announced new plans to raise cash. That's just over two months after the company said its largest shareholder, Saudi Arabia's Public Investment Fund (PIF), was committing another $1.5 billion to help sustain the company as it works to grow EV sales.

Now Lucid is selling more than 260 million new shares to raise even more fresh capital. On top of that the company is separately selling another 375 million shares to an affiliate of the Saudi PIF. While the share sales will bring another nearly $1.7 billion into the company's coffers, it will significantly dilute existing shareholders. The new shares issued will cause dilution of about 27%, meaningfully reducing stockholders' ownership stake.

In a release of preliminary third-quarter results, Lucid said it ended Q3 with about $4 billion in cash, cash equivalents, and investment balances. But with revenue of just about $200 million expected, it continues to lose money at a rapid rate. Management said its loss from operations in the third quarter could reach $790 million.

So regardless of the capital raised, the news of further shareholder dilution and continued losses didn't sit well for investors this week. The company will issue its full Q3 report on Nov. 7. Investors should look for signs that its upcoming new, fully electric SUV is garnering interest. A successful launch of the Gravity SUV is likely the only hope the company has, even as the Saudi fund continues to pour billions into Lucid.

China stimulus falls short

EV investors have also been watching China recently. But Chinese government plans to stimulate its economy and boost consumer spending fell flat this week. Chinese leaders are trying to ensure the country reaches its 5% growth target for the year. But last week Chinese politicians announced a smaller-than-expected stimulus plan that caused a rally in the Chinese markets to pause.