The stock market is relentless. As soon as the American automotive start-up Lucid announced its results for the third quarter of this year, its share price fell by 27 cents. The reason was that the Californians revised their production forecast for 2023 downwards from over 10,000 to 8,500. At first glance, this is not good news. Lucid still has a tight budget and is further hit by falling demand for electric cars. It doesn’t help that critics praise the Lucid Air for its combination of performance and efficiency. Despite this bad news, people in Newark, California, remain optimistic.
“In September we started producing the rear-wheel drive Air Pure, which costs just $77,400,” explains Lucid boss Peter Rawlinson. Lucid has also recognized that although premium and luxury are all well and good, the path to financial recovery can only be achieved with a cheaper entry-level model that appeals to a larger number of buyers. In order to get production costs under control, the Californians have also reduced the variety of equipment. There is also a battery with a capacity of 88 kilowatt hours. So less than the more powerful models, whose energy storage capacity is up to 118 kWh. In order to achieve Lucid’s stated range of 410 miles (660 kilometers), engineers also limited the power to 316 kW / 430 hp. Still more than enough to get around quickly.
Whether this Air will finally boost sales enough to drive the financially ailing automobile start-up into the profit zone is still up in the air. Once again, the Lucid Gravity will be a large seven-seater SUV that is particularly popular in the USA and will come onto the market in the second half of 2024. “Gravity will show how strong the Lucid business idea is,” explains CFO Sherry House. Lucid emphasizes that although the Gravity shares technology with the Air with the Lucid Electric Advanced Platform (LEAP) architecture, it is a completely different car. “I know that we are operating in an uncertain macro environment and that there are factors that we cannot influence, but I am confident. We will grow again next year,” beams Rawlinson. But the product offensive is not over yet. Lucid then wants to bring a smaller, cheaper mid-size vehicle onto the market. However, this will probably not be the case until 2026 at the earliest.
The question remains where the money will come from. Lucid says it has around $5.45 billion in financial resources. According to CFO Sherry House, this will ensure liquidity until 2025 and the start of production of the Gravity. If the SUV hits as hoped, that would be the relief needed. The stilt electric vehicle definitely has what it takes. But the imponderables of the market remain. “The implementation of the global strategy in sales on international markets, production and the supply chain is crucial to our success,” explains Peter Rawlinson, who wants to focus even more on strategic aspects in the future. In order to keep the CEO’s back free, Lucid is expanding the corporate structure and installing a Chief Operating Officer (COO), Marc Winterhoff. Peter Rawlinson describes this appointment as a “natural evolution of the company”. The German chief engineer Eric Bach is another technology expert on board the Californian ship who relieves the CEO.
The expansion continues in other areas and the Americans are not only doing business with automobiles, but also as technology suppliers. Lucid is joining Aston Martin and will, among other things, supply electric motors to the British manufacturer. Some people may think of Ferdinand Piëch’s statement about the two sick people who cannot walk together. However, this partnership could have a positive impact for Lucid, as such synergies counteract financial pressure. The bottom line is that the deal is expected to bring around $350 million into the coffers. More deals could follow.
Peter Rawlinson reports increased interest from other companies in Lucid technology. All the more so since the Americans are expanding the product range and thus the technology for vehicle classes below the luxury segment with the midsize platform. Since many manufacturers are still struggling with the profitability of bringing an electric car onto the market, the Californians’ know-how should be quite interesting. Especially since the Lucid drivetrain is very efficient. This leads to a domino effect: Since the motors use less energy, the batteries can have less capacity. This makes cars lighter and, above all, cheaper. A calculation that many manufacturers are only too happy to follow.
That’s not enough. Lucid has imposed rigorous austerity measures. This includes the supply chain, the costs of parts, materials and also indirect expenses for advertising and administration. In the future, the level of automation in production will also be increased in order to further reduce labor costs. “We are looking at everything closely to reduce expenses,” explains Sherry House. Apparently Lucid burns a lot of money with every car. “There is a lot of misunderstanding,” House clarifies, almost angrily. Because this sum includes costs such as the buildings or investments in the company.
Production is also making progress. An engine production line is set up in Arizona. Lucid has set up a factory in Saudi Arabia with an initial capacity of 5,000 units per year. The Middle East is playing an increasingly important role for Lucid. In addition to the 1,550 cars produced in the third quarter, the carmaker delivered more than 700 vehicles to Saudi Arabia, which will be assembled there as Semi Knocked Down (SKD). This is hardly surprising, since a Saudi Arabian state fund helped Lucid with a financial injection of three billion US dollars. What role does the Old Continent play in the planning? “We are at the beginning of our journey in Europe,” admits Rawlinson, who also expects growth there next year.
