All discussion of Lucid Motors

[scubastevo80]

I reserved the Pure model earlier this month before they announced the increase. There are things I really like about the car based on what I've seen in the showroom and watched in videos from others. A salesperson called me the other day and asked if I had any questions. What he couldn't answer, and what I want to know, is how transparent Lucid will be with their manufacturing improvements. I hope their "class leading" motors and batteries, technology, etc continue to be upgraded over time like Tesla. Still waiting on final pricing with options, but this looks to be a good alternative $75-80k with (minimal options and tax credit) versus the $100k Model S and $57-60k Dual Motor Model 3.

As of now, sales advisor believes a limited number of Pure's will be delivered in Q4. I'm probably looking at mid-2023 for mine if their ramp goes according to plan.

 

[Mengy]

Lucid had a rough Q2, and the stock is dropping on the news. They are only expecting to produce 6000-7000 cars for 2022 now, and they only built 1405 cars in the first half of 2022. Sounds like they are having issues ramping up.

 

[MP3Mike]

LUCID is getting hammered.... surprised?

Yep, bad quarter...

Their initial results: Lucid Announces Second Quarter 2022 Financial Results, Reports Strong Demand While Lowering Production Guidance for the Year | Lucid Group, Inc.

• Q2 revenue of $97.3M driven by customer deliveries of 679 vehicles in the quarter
• Strong demand with over 37,000 reservations, representing potential sales of approximately $3.5B
• Production volume outlook for 2022 revised to a range of 6,000 to 7,000 vehicles

Cutting production guidance by 50%.

I thought they had way more than 37k reservations... Have that many people dropped their reservation? (edit: I see they only reported 30k in Q1, so they actually have more now.)

But this is probably the worst news:

Lucid ended the quarter with $4.6 billion cash, cash equivalents, and investments, which is expected to fund the Company well into 2023

They are going to run out of money in 2023 before they get fully ramped? Do they think the market will give them a good deal on a capital raise?

they only built 1045 cars in the first half of 2022.

Their release says 1,405. (I assume you have a typo, not that the extra ~350 makes things seem any better.)

 

[Mengy]

Their release says 1,405. (I assume you have a typo, not that the extra ~350 makes things seem any better.)

Woops, yeah I typed it wrong. Thanks!

 

[MP3Mike]

They burned 2.2 b of cash in this Q and has 3.1B left WTF. Am I reading this right?
Edit, looks like they have 4.6B left if you add their investments.

How do you come up with them burning $2.2B of cash? They had $5.4B at the end of Q1 and have $4.6B now. That looks more like burning $0.8B.

Their wording is slightly different in that Q1 didn't mention investments, but from looking at the Q1 details I think it did include them.)

It looks like they pulled investments out of the Q1 number and then split it between short term and long term assets for the Q2 reporting.

 

[MP3Mike]

It seems like they are still losing ~$287k per vehicle delivered:

 

[Cosmacelf]

All these EV startups are going to go through the painful learning experience that building vehicles at scale profitably is really hard. A bunch of them will go bankrupt.

 

[MP3Mike]

It sounds like logistics was a big bottleneck. And that they had outsourced the logistics, and that company couldn't keep up with the volume of parts needed to ramp. They are now insourcing logistics... Sounds like more cash may be spent in the next quarter to make that happen.

 

[MP3Mike]

Did I hear correctly ~80 service vans for the 1,405 vehicles they have delivered? (One per ~17 vehicles.)

Are they just getting ahead on service, or are they not really putting out the quality vehicles that he went on and on about?

 

[Doggydogworld]

It seems like they are still losing ~$287k per vehicle delivered:

View attachment 836271

Lucid delivered 319 more vehicles in Q2 than Q1. ASP fell ~10%, but IMHO that's due to fewer Founders Editions or whatever rather than actual content reductions that would lower COGS. So those 319 incremental vehicles caused 46m of incremental COGS, implying a variable cost of 144m. That's almost exactly equal to their Q2 ASP, so at least they are not "losing money on every car they make".

But they still have a very long way to go. They must reduce variable COGS so that each car produces a positive contribution margin. It's hard to reduce variable COGS, however, and ASP will decline as they work into their order book which makes it even harder. Once they achieve positive contribution margin they must ramp enough to cover their 194m of fixed COGS. Only then can they reach gross profit breakeven.

For example let's say ASP drops to 120k and variable COGS drops heroically to 100k. They'd then show a tiny gross profit at 10k cars/quarter.

Neither Lucid nor Rivian seem to have any handle on their costs. Investors can only hope these high variable costs are due to massive amounts of scrap and rework. That's the one variable cost you can significantly reduce over time.

There is one other possibility. If your production line is so screwed up that you can't accept the volumes you committed to, suppliers will revoke your volume discounts and you'll pay much more for parts. But both Lucid and Rivian say it's the suppliers falling short. And right now most suppliers would gladly let you out of your volume commitment so they could sell those parts and mateirals to others at today's higher prices.

 

[Singuy]

How do you come up with them burning $2.2B of cash? They had $5.4B at the end of Q1 and have $4.6B now. That looks more like burning $0.8B.

Their wording is slightly different in that Q1 didn't mention investments, but from looking at the Q1 details I think it did include them.)

It looks like they pulled investments out of the Q1 number and then split it between short term and long term assets for the Q2 reporting.

Yeah I see they made over a billion into investments so that took away their cash on hand and went into -cash part of the balance sheet.

 

[MP3Mike]

But both Lucid and Rivian say it's the suppliers falling short.

Not totally. Rivian had this in their Q1 letter: "losses on firm purchase commitments." That sounds like suppliers were meeting the commitments but Rivian couldn't take the number of parts they had committed to. (So losing volume discounts.)

And even Lucid said the main problem was outsourced logistics, not the supply of parts.

 

[M|S|M MYP]

LUCID 2022 PRODUCTION TARGETS FROM LUCID OVER TIME:

NOV 2021 -> 20,000
FEB 2022 -> 14,000
MAY 2022 -> 12,000
AUGUST 2022 -> 6,000

NOVEMBER 2022 -> Probably 4500

 

[Singuy]

LUCID 2022 PRODUCTION TARGETS FROM LUCID OVER TIME:

NOV 2021 -> 20,000
FEB 2022 -> 14,000
MAY 2022 -> 12,000
AUGUST 2022 -> 6,000

NOVEMBER 2022 -> Probably 4500

Well they are too busy making sure every panel is aligned by hand.

Lucid: Vows to make sure every car is 100% perfect just to separate themselves from Tesla
Lucid: Goes bankrupt during the process

 

[Fred42]

Lucid delivered 319 more vehicles in Q2 than Q1. ASP fell ~10%, but IMHO that's due to fewer Founders Editions or whatever rather than actual content reductions that would lower COGS. So those 319 incremental vehicles caused 46m of incremental COGS, implying a variable cost of 144m. That's almost exactly equal to their Q2 ASP, so at least they are not "losing money on every car they make".

But they still have a very long way to go. They must reduce variable COGS so that each car produces a positive contribution margin. It's hard to reduce variable COGS, however, and ASP will decline as they work into their order book which makes it even harder. Once they achieve positive contribution margin they must ramp enough to cover their 194m of fixed COGS. Only then can they reach gross profit breakeven.

For example let's say ASP drops to 120k and variable COGS drops heroically to 100k. They'd then show a tiny gross profit at 10k cars/quarter.

Neither Lucid nor Rivian seem to have any handle on their costs. Investors can only hope these high variable costs are due to massive amounts of scrap and rework. That's the one variable cost you can significantly reduce over time.

There is one other possibility. If your production line is so screwed up that you can't accept the volumes you committed to, suppliers will revoke your volume discounts and you'll pay much more for parts. But both Lucid and Rivian say it's the suppliers falling short. And right now most suppliers would gladly let you out of your volume commitment so they could sell those parts and mateirals to others at today's higher prices.

I'm wondering if there's any potential buyer of Lucid that might make sense. Maybe not, as I don't know what they have that a buyer would want.

(They could boast that their factory is near the Nikola factory.)

Their website used to say the Gravity is coming in 2023. Now it says 2024.

 

[MP3Mike]

I'm wondering if there's any potential buyer of Lucid that might make sense. Maybe not, as I don't know what they have that a buyer would want.

It appears that they actually have good motor/inverter tech. Even their battery pack tech is likely ahead of legacies OEMs.

 

[SOULPEDL]

Neither Lucid nor Rivian seem to have any handle on their costs. Investors can only hope these high variable costs are due to massive amounts of scrap and rework. That's the one variable cost you can significantly reduce over time.

Maybe this is what happens when the planned automation doesn't quite work. Headcount is a killer too cuz that's who has to fix it in the interim. Anything about hiring or headcount recently (I almost wrote "for the ramp"), and does it match output increases?

The one investor in Lucid that I met recently rented me a Model X on Turo, Lic plate "Lucid 2", lol. (Amusing at SuperChargers.) He claims he pulled out of TSLA to buy Lucid. When asked about margins... "They have great margins; they're like Tesla and do everything in-house." Been wondering for a while how much of this is true, but new to Lucid myself. But I know I'd never get one. It reminds me of an older family car like a Buick, but love the backseat luxury in pictures anyway. The one in the mall in Phx wasn't that.

 

[Cosmacelf]

It sounds like logistics was a big bottleneck. And that they had outsourced the logistics, and that company couldn't keep up with the volume of parts needed to ramp. They are now insourcing logistics... Sounds like more cash may be spent in the next quarter to make that happen.

Classic startup mistake, outsourcing a core part of the business. Interestingly, Tesla in the very early days also made stupid (in fact even more stupid) mistakes. But they were tiny back then so their mistakes didn’t cost anywhere from $100M to $1B. Unlike Rivian and Lucid.

Gotta say, I am kinda enjoying Mr. Rawlinson and Mr. Scaringe being shown to be boastful Idiots. If they hadn’t dunked on Tesla and said, “we’re smarter than them”, I’d be more understanding. But here we are.

 

[RobStark]

For example let's say ASP drops to 120k and variable COGS drops heroically to 100k. They'd then show a tiny gross profit at 10k cars/quarter.

Lucid's current highest ASP vehicle is Air GT at $154k. Although they are delivering them currently at $139k to grandfathered reservation holders.

Within the next 3 months they will start delivering Air GT Performance with an ASP of $179k. No grandfathered reservation holders with a lower price.

 

[Singuy]

Classic startup mistake, outsourcing a core part of the business. Interestingly, Tesla in the very early days also made stupid (in fact even more stupid) mistakes. But they were tiny back then so their mistakes didn’t cost anywhere from $100M to $1B. Unlike Rivian and Lucid.

Gotta say, I am kinda enjoying Mr. Rawlings and Mr. Scaringe being shown to be boastful Idiots. If they hadn’t dunked on Tesla and said, “we’re smarter than them”, I’d be more understanding. But here we are.

There seems to be a disconnect between how a business should run and competition.

Rawlings repeated many times that this is a "technology race". It's only a technology race vs Tesla because everyone else are distant second. However if you want a car just to be better than legacy auto, then any competent battery car would do. So if your competition is ICE, then why are you breaking your back on competing against Tesla? Over complicate the car just so you can be the "best" but losing entire plot while doing so.

How many times have we seen better technology failing against the competition due to a lack of ability to scale with high production cost? Someone should teach him the word BALANCE and not just pick a hill to die on. This is why I feel like this CEO needs to go ASAP.