Release Date: May 06, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Lucid Group Inc (LCID, Financial) reported better-than-expected production and delivery figures for Q1 2024, with 1,728 vehicles produced and 1,967 delivered, marking a 39.9% year-over-year increase.
- The company raised $1 billion in capital through a private placement of convertible preferred stock to an affiliate of the PIF, strengthening its financial position and supporting its strategic partnership.
- Lucid Air was named the best luxury electric car for the third consecutive year, enhancing brand recognition and market competitiveness.
- Lucid Group Inc (LCID) is expanding its vehicle lineup with the introduction of Lucid Air Pure and the upcoming Gravity SUV, which is expected to access a market 6x larger than in 2023.
- The company maintains a strong liquidity position with more than $5 billion, providing a runway through the start of production of the Gravity SUV program and into the second quarter of 2025.
Negative Points
- Despite improvements, Lucid Group Inc (LCID) reported a significant adjusted EBITDA loss of $598.4 million for Q1 2024, indicating ongoing financial challenges.
- The company faces high fixed costs related to the depreciation of its factories and equipment, which continue to impact its cost of revenue and profitability.
- Lucid Group Inc (LCID) is experiencing typical seasonal slowing in sales, particularly in Saudi Arabia in Q2 and globally in Q3, which could affect its quarterly financial performance.
- There are concerns about the company's ability to manage inventory effectively, as indicated by the need to build inventory of components for the Gravity SUV program, potentially increasing LCNRV impairments.
- Lucid Group Inc (LCID) is still in the early stages of scaling up production and deliveries, which poses risks to achieving profitability and operational efficiency in the near term.
Q & A Highlights
Q: Can you elaborate on Lucid's pathway to profitability? What are the key milestones and challenges the company anticipates facing in reducing production costs and achieving positive gross margins?
A: (Peter Dore Rawlinson - CEO, CTO & Director) It's all about scale. The more we can scale, the more cars we make, the more volume we can spread the fixed cost, that's the cost of our investment, our incredible factory and facility, our long-term investments across the sale of each car. So how do we do that? We need to continue growth of Lucid Air sales right now. And right now, we're trending up 40% from Q1 this year relative to last year. The next thing on that scale path is to get gravity into production that will have a multiplier effect upon the market size and gravity is scheduled for startup production late this year. And then beyond that, we need to get a midsized vehicle, our volume vehicle price at around, we believe, about $48,000, get that into production and is on schedule for production for late '26.
Q: The stock price keeps dropping. What measures will you be employing to bring the price up considerably? It seems product output is extremely low.
A: (Peter Dore Rawlinson - CEO, CTO & Director) Now look, our share price, again -- again, it's all about volume. So forgive me, because the share price and the part of profitability are interwoven. Against a broader EV market, where the -- other makers products are really down. We're up. 40% on deliveries year-on-year. We're bucking that trend. It's all about scale. It's about recognition on the brand, and I believe we're getting there. And we've got Gravity coming. Just to put this in perspective, in Q1, for the first time ever, Lucid outsold Porsche Tycan. We've outsold the Mercedes Benz EQE for the third consecutive quarter. We've outsold the Mercedes Benz EQS as well third consecutive quarter. We've sold the new BMW i7, and we've outsold the Audi Itron GT for the [fifth] consecutive quarter.
Q: Is Lucid in talks with any of the legacy automakers to provide battery or motors for production?
A: (Peter Dore Rawlinson - CEO, CTO & Director) Thanks, Justin. Thanks for the question. I can't emphasize enough. This is absolutely central to the whole vision of the company, and that's why we call it Lucid Group. The vision is to have a meaningful impact upon the planet upon the environment to take technological leadership. And to use that leadership that we can travel further with less and be truly sustainable and then to share that technology and provide that technology to other companies. And we've taken the first step, we're providing the sapphire technology, our hypercar technology to no less than Aston Martin. And there's a time scale associated with this, I mean the technology that we've got in our current lineup of touring, grand touring, ideally suited to a luxury performance car from another automaker.
Q: Will Lucid make an affordable car to compete with Tesla?
A: (Peter Dore Rawlinson - CEO, CTO & Director) Well, I've got an answer to that. We already are. The Lucid Air Pure rear wheel drive, finest machine on the planet, $69,900. The price I promised back in September 2020, we're already competing with Tesla. But wait until our midsize comes out late '26. That's when we'll have a car, $48,000, $50,000 and that is the big one, the one that's going to be really exciting.
Q: Peter, you said in your prepared remarks and in the statements that you published that sales momentum is building? Can you quantify what supports that statement? Over what period was it measured? Were you talking year-on-year? Or were you talking about momentum building kind of more during the quarter and sequentially?
A: (Peter Dore Rawlinson - CEO, CTO & Director) Okay. Yes. Adam. So if we look at 2023 versus '22, I believe we were up by 37% or close to 37% on memory. And if you compare Q1 '24 to Q1 '23, that's where we had the 39.9%, very, very close to 40% growth. So we're bucking the trend of the market quite nicely.
Q: Just 2 questions for me. First, Peter, can you just give us an update on kind of supplier readiness for the Gravity launch? What would the progress you're making there? And just over how you're feeling about that?
A: (Peter Dore Rawlinson - CEO, CTO & Director) Thanks, Itay. Yes, so we -- I'm personally overseeing the march towards the Gravity start of production. And literally in this room, every morning, my morning starts with a review of the status. And in order to ready the program, we need to sync 3 activity streams, the readiness of the gravity product, the readiness of the factory, Arizona factory and the build-out of that and the installation of all the equipment. And the third thing you covered in your question was the readiness of the supply base. And absolutely, we're all over this. We have literally a few hundred suppliers with thousands of parts. Truly drawn upon some of the best suppliers right around the world. And that is something we're managing very closely.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
