All discussion of Lucid Motors

[Mengy]

Lucid to cut 18% of it's employees, about 1300 people:

EV startup Lucid to cut about 18% of its workforce

Electric-vehicle maker Lucid Group Inc said on Tuesday it would lay off about 18% of its workforce, or around 1,300 employees, to cut costs as part of a restructuring plan.

www.reuters.com

That ain't good.

 

[MP3Mike]

Lucid to cut 18% of it's employees, about 1300 people:

EV startup Lucid to cut about 18% of its workforce

Electric-vehicle maker Lucid Group Inc said on Tuesday it would lay off about 18% of its workforce, or around 1,300 employees, to cut costs as part of a restructuring plan.

www.reuters.com

That ain't good.

Actually it is good. That is if Lucid wants any chance of surviving; they have to get their costs under control. (And they have to find buyers for the vehicles that they produce.)

 

[Electroman]

(And they have to find buyers for the vehicles that they produce.)

..and that will happen only if they reduce the price by at least 20% and solve the long distance charging problem

 

[chinney]

Actually it is good. That is if Lucid wants any chance of surviving; they have to get their costs under control. (And they have to find buyers for the vehicles that they produce.)

It’s not good to the extent that those employees would be ones they would need to grow to become a viable large-scale EV manufacturer, which was the Lucid ambition. It is good if they want to retrench to become a niche high-end, small-scale producer, at least for the foreseeable future.

But I am not sure that either of those scenarios are all that likely. What is more likely at this point is that they will be bought out by another vehicle manufacturer and their technology and designs will be scavenged and repurposed. Or they will simply go under. At a certain point the Saudis are going to turn off the money taps.

 

[MP3Mike]

..and that will happen only if they reduce the price by at least 20%

That would actually makes things worse right now. They can't lower the prices until they can get their costs under control. At this point the more they sell the worse off they are. I think they need to slow down and design out some of the costs before ramping up. (I don't think any amount of ramping production up is going to get enough cost savings to become profitable on even a gross basis.)

It’s not good to the extent that those employees would be ones they would need to grow to become a viable large-scale EV manufacturer,

But are the people they are letting go really the employees they need to grow? Maybe they are redundant management levels, people that weren't being productive, or just couldn't help design a way to lower costs/increase output. They have no chance of becoming a viable large-scale EV manufacturer until they get costs under control and at least turn a positive gross profit. (Nevertheless, a positive net profit.)

 

[Electroman]

Maybe they are redundant management levels, people that weren't being productive,

Maybe they are Em Bee Aa types ?

 

[Bouba]

Hard to buy a very expensive car from a failing/retrenching company

 

[chinney]

[...]


But are the people they are letting go really the employees they need to grow? Maybe they are redundant management levels, people that weren't being productive, or just couldn't help design a way to lower costs/increase output. They have no chance of becoming a viable large-scale EV manufacturer until they get costs under control and at least turn a positive gross profit. (Nevertheless, a positive net profit.)

Unless that 18% of the workforce that is being was truly doing little or nothing to contribute to Lucid's operations or growth, then the cut is one has the real possibility to affect the company negatively. There is often the impression that there is a massive amount of useless 'fat' in staffing, but the truth is generally quite different (unless a company is very poorly managed to begin with, which would be a problem in its own right).

Yes, Lucid desperately needs to do something about its massive losses, but ideally that would be done by making and selling many more vehicles with the infrastructure and staff that is already in place. Cuts of this scale only make sense if Lucid accepts that big growth is not coming, at least not for the time being, and that the only immediate way forward is by trying to survive for now as a small, 'niche' manufacturer. I don't think that was Lucid's plan, but I guess that they have accepted that the plans have to be substantially revised.

 

[Bouba]

It probably was easy to chose who gets made redundant…..hands up all those who don’t want to relocate to Saudi Arabia

 

[Todd Burch]

Timing for Lucid combined with strategy couldn't have been worse IMO.

Rawlinson focused too much on product perfection while ignoring costs, I think in an effort to thumb his nose at Musk and claim a superior product. But Rawlinson ignored Musk’s warnings about needing to focus on cost and efficiency to ramp effectively and become profitable.

They came out with a very expensive car that on its own seems quite good, but without a solid charging infrastructure and with their own growing pains, were trying to ramp in the face of an economic environment with high interest rates, high COGS, and high economic uncertainty. All bad when you’re trying to sell a very expensive car with significantly negative gross margins.

Thru 2023 I think we’ll see COGS drop and interest rates peak and start dropping—and this layoff will help bring down expenses—but it may be too little, too late. All boils down to how much the Saudis and investors are willing to pour into Lucid.

 

[SO16]

Timing for Lucid combined with strategy couldn't have been worse IMO.

Rawlinson focused too much on product perfection while ignoring costs, I think in an effort to thumb his nose at Musk and claim a superior product. But Rawlinson ignored Musk’s warnings about needing to focus on cost and efficiency to ramp effectively and become profitable.

They came out with a very expensive car that on its own seems quite good, but without a solid charging infrastructure and with their own growing pains, were trying to ramp in the face of an economic environment with high interest rates, high COGS, and high economic uncertainty. All bad when you’re trying to sell a very expensive car with significantly negative gross margins.

Thru 2023 I think we’ll see COGS drop and interest rates peak and start dropping—and this layoff will help bring down expenses—but it may be too little, too late. All boils down to how much the Saudis and investors are willing to pour into Lucid.

Tesla opening their supercharger network could be a major lifeline for Lucid if Lucid would upgrade their wunderbox. But they may not have the resources for that either right now.

 

[alloverx]

Any new EV company has to have a feature that is better than the market leader (Tesla). The longer range is just that plus they aimed for a comfortable ride to differentiate. Tesla showed they way with starting at high price models and slowly have cheaper options. Lucid is following but the economy is slowly at just the wrong time for them. Cost cutting makes sense after starting up. But they need a SUV ASAP. They might need to undercut Model-S as a loss leader to keep their brand alive, as long as their investors are OK with that. IF Saudi's were not involved I might suspect Toyota to buy them for Lexus.

 

[Todd Burch]

Any new EV company has to have a feature that is better than the market leader (Tesla). The longer range is just that plus they aimed for a comfortable ride to differentiate. Tesla showed they way with starting at high price models and slowly have cheaper options. Lucid is following but the economy is slowly at just the wrong time for them. Cost cutting makes sense after starting up. But they need a SUV ASAP. They might need to undercut Model-S as a loss leader to keep their brand alive, as long as their investors are OK with that. IF Saudi's were not involved I might suspect Toyota to buy them for Lexus.

You don’t want to start development on a second vehicle (with massive costs) while you’re still far into negative margin and bleeding money on the first. That would guarantee Lucid’s demise, and the only thing propping them up right now is continued Saudi investment.

 

[Bouba]

You don’t want to start development on a second vehicle (with massive costs) while you’re still far into negative margin and bleeding money on the first. That would guarantee Lucid’s demise, and the only thing propping them up right now is continued Saudi investment.

Let’s face it, Lucid is a Saudi company and to them a Lamborghini is a mass market car

 

[RobStark]

You don’t want to start development on a second vehicle (with massive costs) while you’re still far into negative margin and bleeding money on the first. That would guarantee Lucid’s demise, and the only thing propping them up right now is continued Saudi investment.

Lucid isn't starting development on a second car. They are almost done. And it is heavily based on their first car. They are adding air suspension but not falcon wing doors. Lucid will reveal the Gravity SUV within the next few months and start taking reservations.

I suspect they have stopped development of their Model Y and Model 3 competitor.

Lucid currently has capacity to make 34k cars per year(or had before the RIF) but Air will not get anywhere close to that anytime soon. Gravity SUV will greatly help.

BTW Ferrari was spun off in 2016. It sold a tad over 13k vehicles in 2022 and is quite profitable. In 2022 Ferrari made a 933M Euro profit on 18% margin.

 

[Todd Burch]

Lucid isn't starting development on a second car. They are almost done. And it is heavily based on their first car. They are adding air suspension but not falcon wing doors. Lucid will reveal the Gravity SUV within the next few months and start taking reservations.

I suspect they have stopped development of their Model Y and Model 3 competitor.

Lucid currently has capacity to make 34k cars per year(or had before the RIF) but Air will not get anywhere close to that anytime soon. Gravity SUV will greatly help.

BTW Ferrari was spun off in 2016. It sold a tad over 13k vehicles in 2022 and is quite profitable.

Their production guidance is 10-14k vehicles for 2023. (Lucid Announces Fourth Quarter and Full Year 2022 Financial Results, Exceeds Annual Production Guidance With 3,493 Vehicles in Q4 and 7,180 in the Full Year 2022 | Lucid Group, Inc.). If their production capacity is more than twice that, it goes to show they can’t even sell what they can make. If they’re going to start producing a second vehicle, the losses will only mount.

Not a good idea to be so in the red on one vehicle and to start a second. Doubles the complexity of almost everything.

 

[RobStark]

Their production guidance is 10-14k vehicles for 2023. (Lucid Announces Fourth Quarter and Full Year 2022 Financial Results, Exceeds Annual Production Guidance With 3,493 Vehicles in Q4 and 7,180 in the Full Year 2022 | Lucid Group, Inc.). If their production capacity is more than twice that, it goes to show they can’t even sell what they can make. If they’re going to start producing a second vehicle, the losses will only mount.

Not a good idea to be so in the red on one vehicle and to start a second. Doubles the complexity of almost everything.

SUVs have demand typically 2x their equivalent sedans.

If they can sell 11k Airs per year and 23k Gravity per year the factory goes from losses to making money hand over fist.

It is not 2x complexity. Everything the customer doesn't see is almost exactly the same.

If Lucid only makes a sedan with trim levels that range from$87k to $249k it guarantees failure.

 

[Knightshade]

SUVs have demand typically 2x their equivalent sedans.

If they can sell 11k Airs per year and 23k Gravity per year the factory goes from losses to making money hand over fist.

This is only true if their cars are actually profitable.

Do we have any evidence that's true? Tesla somewhat famously maintained a positive gross margin even on the early Model S when the company as a whole lost money- AFAIK that's not been true at Rivian (ie they lose MORE as they sell more vehicles) and I've not seen any reason to suspect Lucid is doing better here, but I'm open to it if you found something in the 10k I didn't see at a glance.

 

[Cosmacelf]

BTW Ferrari was spun off in 2016. It sold a tad over 13k vehicles in 2022 and is quite profitable. In 2022 Ferrari made a 933M Euro profit on 18% margin.

Doesn’t mean much as Ferrari has a great brand whereas very few even know who Lucid is. Not to mention that Ferrari isn’t a startup with all the attendant inefficiencies that startups have (Eg. Needing to spend gobs of cash on building service centers).

 

[Bouba]

A lot will depend on how deep the Saudis want to go..is this a business investment...or is it like the ridiculous golf franchise and all those big money fights....where they really only want to promote their country money no object...so when you think of Saudi Arabia your first thought isn’t chop chop square