Lucid Lowers Production Targets After Disappointing Q1

Lucid Group’s report for the first quarter of 2023 was off the mark, with the automaker suffering a $780-million net loss. While any burgeoning carmaker should expect to burn through cash for a while, electric-vehicle firms seem broadly dedicated to the practice. Many EV startups have floundered and some have even bordered on shell games, promising things they shouldn’t in the hopes to draw in more investment capital. However, Lucid has seemed committed to delivering enviable products — making the financial report genuinely disappointing. 

If you’ve read anything written by me about electric vehicles, you’ll know that I am no fanboy. Blindly championing an entire sub-genre of automobiles seems like a poor way to ensure better products. But Lucid managed to release cars that even I would have considered buying if money were less of a concern.

Sadly, it looks like even the big spenders want to save money where they can. Chief rival Tesla has been lowering prices, with CEO Elon Musk citing recessional pressures. But tweaking the MSRP of vehicles has also allowed it to continue taking advantage of government subsidies while also applying heat to mainstay and startup automakers producing EVs.

"I believe that there is a challenge to the entire market right now because of macroeconomics and because of interest rates," Lucid CEO Peter Rawlinson said on Monday.

While it’s not exactly uncommon these days, Lucid has already announced restructuring plans that included laying off about 1,300 employees. Reuters noted that represents about 18-percent of its total workforce, adding that the Air luxury sedan still starts at $87,400.

That’s not really all that bad for a segment that’s loaded up with vehicles loaded up on either side of the six-figure range, especially since there’s a lot to like about the car. But Tesla’s Model S is still competitive, despite showing its age, and has the brand recognition everyone else envies.

From Reuters:

The company reported quarterly revenue of $149.4 million, compared with analysts' average estimate of $209.9 million, according to Refinitiv. It last month reported first-quarter production and delivery figures lower than in the preceding three months.

"The revenue was actually the weakest that's been since the second quarter of last year, so there's a big miss on the top line," said Garrett Nelson, analyst at CFRA Research. "This could be an indication that this pricing war is having a direct impact on their results."

Rawlinson said on Monday the company was on track to produce over 10,000 vehicles in 2023, compared with an earlier forecast for 10,000 to 14,000 units this year.

The first quarter net loss widened to $779.5 million from $604.6 million a year earlier, while cash and cash equivalents fell to $900 million at the end of the first quarter from $1.74 billion in the fourth quarter.

It’s not a great report and Lucid’s top dog also acknowledged that brand awareness needed to come up, noting that Andrea Soriani would now head the company’s marketing efforts. Though Rawlinson did have some good news to share.

"We're seeing some early wins," Rawlinson said. "The number of test drives has nearly doubled in the first quarter from the fourth quarter of last year."

"We're still early on in our customer growth stage of innovators and early adopters,” he continued, adding that a revised marketing push should help the cause.

Considering Tesla's overwhelmingly dominant role in the all-electric space. Simply being a blip on the public radar is probably heartening. I rarely hear individuals who aren’t obsessed with cars reference any EV that’s not made by Tesla. However, numerous people I know expressed an interest in both Lucid and Rivian products this year. Though, considering data suggesting that EV demand will remain lower than anticipated (at least in North America), that may not turn out to be a big win for the above companies.

Ultimately, it’s not obvious that demand has matured sufficiently for every luxury automaker to produce all-electric sedans retailing dangerously close to (or above) $100,000. Your author is less inclined to believe that Lucid’s problems are the result of a pricing war between all-electric luxury sedans, however.

While perhaps lacking in terms of NVH and interior polish against Porsche’s Taycan or the BMW i7, Lucid’s Air offers the kind of range that other manufacturers should aspire to. Granted, you do have to pay more to get into the trims offering bigger batteries. But they’re there, right along with some of the quickest 0-60 times any sedan has ever boasted. On paper, Lucid’s offerings are highly competitive and the company seems to be gunning for Tesla in particular.

For what it’s worth, Lucid attributed production shortfalls to supply chain disruptions and noted that higher interest rates and economic hurdles are negatively affecting demand in the broader sense. Valid or not, supply chain issues are becoming a hackneyed excuse used by all automakers and we’re all losing patience. It’s been years since things went sideways during the global pandemic tantrum and the industry needs to get itself organized.

Lucid hasn’t said exactly how many orders are on the books that still need to be built. But leadership seems confident that demand will continue to grow with the right kind of advertising. In fact, the company is currently on a national tour where the Air will be displayed at pop-up stores located in key markets.

But will it still be around by the time those efforts have paid off? The company seems to think so and CFO Sherry House has confirmed that it presently has $4.1 billion in liquidity. That’s supposedly enough enough to fund Lucid into second quarter of next year — if not a little longer.

[Image: Jonathan Weiss/Shutterstock]

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