Lucid Group Q4 2024 Earnings Report

Lucid Group EPS Results

• Actual EPS: -$2.20
• Consensus EPS: -$2.60
• Beat/Miss: Beat by +$0.40
• One Year Ago EPS: N/A

Lucid Group Revenue Results

• Actual Revenue: ($573.36) million
• Expected Revenue: $211.77 million
• Beat/Miss: Missed by -$785.13 million
• YoY Revenue Growth: N/A

Lucid Group Announcement Details

• Quarter: Q4 2024
• Date: 2/25/2025
• Time: After Market Closes
• Conference Call Date: Tuesday, February 25, 2025
• Conference Call Time: 5:30PM ET

Lucid Group (NASDAQ:LCID) is a California-based electric vehicle manufacturer specializing in the design, engineering and production of luxury electric sedans. Its flagship model, the Lucid Air, features a proprietary battery and powertrain architecture that emphasizes energy efficiency, extended driving range and high performance. In addition to passenger vehicles, Lucid offers charging solutions and software-enabled services aimed at optimizing the ownership experience and accelerating adoption of zero-emission transportation.

The company was founded in 2007 under the name Atieva, initially focusing on battery technology and electric powertrains for other automakers before transitioning to its own branded vehicles. In 2016, it rebranded as Lucid Motors to reflect its shift toward complete-vehicle development. In 2021, Lucid completed a business combination with a special purpose acquisition company, marking its entry onto the NASDAQ exchange under the ticker LCID. The firm’s primary manufacturing hub is its state-of-the-art factory in Casa Grande, Arizona, which supports its mission to scale production and meet growing global demand.

Lucid serves markets in North America and has begun deliveries in the Middle East, with plans to expand into Europe and Asia. The company is led by CEO and CTO Peter Rawlinson, a former chief engineer at Tesla, who has guided Lucid’s technology strategy and product roadmap. Lucid’s executive team brings experience in automotive engineering, manufacturing and luxury brand development as it works to establish itself in the competitive electric vehicle landscape.

Lucid Group Q4 2024 Earnings Call Transcript

Key Takeaways

• Leadership transition: Mark Winterhoff was named Interim CEO, Tofik Bouseid appointed CFO, and Gagan Dhingra promoted, aiming to bring financial discipline and operational efficiency.
• Record production and 2025 guidance: Deliveries hit 10,241 vehicles in 2024 (up 71% YoY) and the company forecasts ~20,000 units of production in 2025, signaling accelerated growth.
• Strong demand for Lucid Gravity: Orders launched in November have outpaced the Air, with over 75% from new customers and many configurations priced above $120,000 despite minimal marketing.
• Improving gross margins: GAAP gross margin improved from -225% in 2023 to -114% in 2024 (Q4 at -89%), with a pledge for further significant margin gains in 2025.
• Robust liquidity position: The company ended Q4 with $5.08 billion in cash and equivalents, $6.13 billion total liquidity, and an upsized credit facility providing runway into mid-2026.

Presentation

[Operator]

Hello, and welcome to Lucid Q4 twenty twenty four Earnings Call. At this time, all participants are in a listen only mode. After the speakers' presentation, there will be a question and answer session. To ask a question during the session, you will need to press 11 on your telephone. You would then hear automated message advising your hand is raised.

[Operator]

To withdraw your question, please press 11 again. I would now like to turn the conference over to Maynard Umpe. Sir, you may begin.

[Maynard Um, Head-Investor Relations at Lucid Group]

Thank you, and welcome to Lucid Group's fourth quarter twenty twenty four earnings call. Joining me today are Mark Winterhoff, our Interim CEO Gagan Dhingra, Senior Vice President of Finance and Principal Accounting Officer and Tofik Basaid, CFO. Before handing the call over to Mark, let me remind you that some of the statements on this call include forward looking statements under federal securities laws. These include, without limitation, statements regarding the future financial performance of the company, production and delivery volumes, vehicle and products, studios and service networks, financial and operating outlook and guidance, macroeconomic, policy and industry trends, company initiatives and other future events. These statements are based on the predictions and expectations as of today, and actual events of results may differ due to a number of risks and uncertainties.

[Maynard Um, Head-Investor Relations at Lucid Group]

We refer you to the cautionary language and the risk factors in our most recent filings with the SEC in the forward looking statements on Page two of our investor deck available on the Investor Relations section of our website at ir.lucidmotors.com. In addition, management will make reference to non GAAP financial measures during this call. A discussion of why we use non GAAP financial measures and information regarding reconciliation of our GAAP versus non GAAP results is available in our earnings press release issued earlier this afternoon as well as in the investor deck. With that, I'd like to turn the call over to Lucid's Interim CEO, Mark Winteroff. Mark, please go ahead.

[Marc Winterhoff, Interim CEO at Lucid Group]

Thank you, Maynard, and thank you everyone for joining us in our twenty twenty four and fourth quarter earnings call. This is my first time speaking to you as interim CEO. I'm honored the Board has named me to this role at a pivotal and exciting time in the company's journey. It's a true pleasure to be here and share our vision, progress and the remarkable strides Lucid had made in 2024. Before I get to my prepared remarks, I'd like to first thank Peter Robinson. Peter founded Lucid as you know it today, helping to bring the world the most advanced EV technology, the Lucid Air, the world's best sedan and the Lucid Gravity, an SUV with truly no compromise.

[Marc Winterhoff, Interim CEO at Lucid Group]

Under his leadership, the team built the most advanced greenfield EV manufacturing plant in The U. S, built the first car plant in Saudi Arabia, signed the company's first technology supply agreement with an OEM and put us on a determined path to further advance the state of the art of electrical cars with our next generation Atlas powertrain and the midsize platform. I could probably spend the entire hour speaking to his accomplishments, but above all, Peter put together an incredible team to advance the company's mission and I'm honored to lead this team into the next phase of its journey. This sets nicely into my delight to introduce today, Lucid's CFO, Tufik Bouseid. Tufik brings very strong financial experience as a CFO that aligns very well with our long term strategy.

[Marc Winterhoff, Interim CEO at Lucid Group]

We have decades of experience in strategic finance and operational transformation with a proven ability to align financial strategy with business objectives as we scale our operations efficiently. He joined us a few weeks ago, but is already getting into the thick of it. Tufik, would you like to give a brief introduction?

[Taoufiq Boussaid, CFO at Lucid Group]

Thanks, Marc, and hello, everyone. I couldn't be more excited to be here at Lucid at such a pivotal moment, not just for the company, but for the entire EV industry. We are in the middle of once in a generation shift towards electrification. This is a secular shift and Lucid is at the leading edge of that transformation. What immediately struck me about Lucid is that this isn't just another car company.

[Taoufiq Boussaid, CFO at Lucid Group]

It's a company built on engineering excellence, board innovation and a clear vision to redefine the future of sustainable mobility. And that's exactly what I'm here. Throughout my career, I've helped companies navigate through complex transformation, growth expansions and large scale operational turnarounds. I have worked in industries where disruption, competition and rapid change were constant realities. And I've seen firsthand what it takes for a company to go from a visionary ID to a financially strong globally scaled business.

[Taoufiq Boussaid, CFO at Lucid Group]

The key to the success is about smart capital allocation, operational efficiency and making sure we set up for long term profitable growth. At Lucid, we have world class technology, industry leading efficiency and a brand that stands for performance and luxury. But as we move into the next phase, scaling production, optimizing operations and accelerating growth, bringing financial discipline will be more critical than ever. What really excites me is the opportunity ahead. The EV market is still in its early days and as demand continues to grow, the real challenge is scaling, scaling efficiently, operating smartly and driving sustained financial performance.

[Taoufiq Boussaid, CFO at Lucid Group]

That's where my focus will be, ensuring we scale efficiently, balancing growth with operational excellence, driving financial discipline and smart capital allocation, while making sure we invest in the right areas to maximize long term value and strengthening our financial strategy, so that we're not just building great cars, but also building sustainable, profitable company that delivers for our investors and stakeholders. I've had the chance to drive the Lucid Air and experience the Lucid Gravity, and I can confidently say that these are game changing vehicles. But great products alone don't make a great company. It takes strong execution, a clear financial roadmap and the right leadership to turn potential into sustained success. That's why I'm here and that's why I'm committed to delivering.

[Taoufiq Boussaid, CFO at Lucid Group]

Over the coming weeks and months, I look forward to engaging with our investors, analysts and key stakeholders, sharing more about our strategy and working with this incredible team to make Lucid a true powerhouse in the industry. I'm honored to be here and I can't wait to get started. Thank you.

[Marc Winterhoff, Interim CEO at Lucid Group]

Thank you, Tufik. I also want to take a moment to give a special thank you to Gagan Dhingra for his great work as our Interim CFO. Gagan is an incredible example of Louis' experience internal talent that we can utilize to maintain seamless continuity. I'd also like to congratulate him on his promotion and expanded role as Senior Vice President of Finance and Accounting, in addition to his role as Principal Accounting Officer. We look forward to your continued contributions to Lucid.

[Marc Winterhoff, Interim CEO at Lucid Group]

I believe Tufek's addition and Gaggen's promotion set the finance organization up for continued success in accelerating our strategic priorities at Lucid. Now turning to the business. 2024 was an incredible year for Lucid. We established ourselves as the preeminent leader in EV technology, producing the longest range, fastest charging, most efficient sedans on the market, achieving a market lead at five miles per kilowatt hour. We saw four consecutive quarters of record deliveries, significant year over year improvements in gross margin and our working capital, delivered our first lucid gravity SUV and strengthened our balance sheet.

[Marc Winterhoff, Interim CEO at Lucid Group]

I think it's fair to say that our say do ratio was very good. These accomplishments are a testament to the hard work and the support of the Lucep team, our supply chain partners and our strategic partner, the BIF. We are grateful for all their continued support. Now to the numbers. In 2024, we produced 9,029 vehicles with deliveries of 10,241, a record year.

[Marc Winterhoff, Interim CEO at Lucid Group]

But let me put this in context for you. In 2024, the Lucid Air was the third best selling EV in its segment in The U. S. According to Motor Intelligence. But that doesn't reflect the momentum we gained because we were the number one best selling EV in the back half of twenty twenty four Ford segment and the third best selling vehicle when including all gas powered vehicles in the segment.

[Marc Winterhoff, Interim CEO at Lucid Group]

I think this is worth repeating. The Lucid Air was the number one best selling EV in the second half of twenty twenty four Ford segment and the third best selling vehicle among all vehicle in its class, including gas powered vehicles. Think about that for a second. We outsold many of the most storied and well known brands in in the automotive industry in both the EV and the gas market. This is a testament to how much customers love the Lucid Air.

[Marc Winterhoff, Interim CEO at Lucid Group]

They love how it drives its performance, its drivability, the design, the charging speed, the interior space and the range of course. Now I'll tell you why this is so important as we enter 2025. Because everything that customers love about the Air, we brought to the Lucid Gravity. This is why we are tremendously optimistic about the Lucid Gravity in the SUV segment. In the coming weeks, we expect virtually all of our studios to have showroom and test drive cars, so buyers can see and feel just how great it is for themselves.

[Marc Winterhoff, Interim CEO at Lucid Group]

Turning to the Lucid Gravity demand. We opened U. S. Orders for the Lucid Gravity Grand Touring in November of last year and orders have exceeded my expectations. We've opened the orders for the Grand Touring in U.

[Marc Winterhoff, Interim CEO at Lucid Group]

S. And the order before the Gravity Grand Touring are exceeding the Air Grand Touring by far in the same timeframe. And this is with an intentionally very limited marketing push, which you can expect us to significantly ramp up throughout 2025. Mark late Q1 in your calendars. We are working on something truly special.

[Marc Winterhoff, Interim CEO at Lucid Group]

And we expect to open orders for the Turing trim late this year. So we feel very optimistic about the large market opportunity ahead. I'd also highlight that well more than three quarters of the Lucid Gravity orders are new customers to Lucid. The Lucid Gravity is attracting new people to the brand, again, despite very limited marketing. As we ramp up the number of Lucid gravities on the road and our marketing campaigns, we anticipate seeing a strong growth trajectory like we saw with the Lucid Air, but in a much larger market opportunity.

[Marc Winterhoff, Interim CEO at Lucid Group]

I'd like to add that thus far while we priced the Lewis' Gravity Grand Touring attractively starting at $94,900 we are seeing customers ordering highly optioned equipped configurations. A significant portion of the orders have a configured price of above $120,000 and more than two thirds opting for the seven seater. We would expect this trend to go down over time as we mix in less equipped configurations for inventory. Others are moving away from larger three row SUVs because it's challenging to create an SUV with lots of space without sacrificing range or having a large battery pack that makes it less financially attractive to make. But we solved that problem with our technology, and I think customers will be really happy with the Lucid Gravity.

[Marc Winterhoff, Interim CEO at Lucid Group]

I believe it's very unique in the industry. Customers have been telling me that it has every feature they want in an SUV and it's underpinned by our industry leading technology that customers can only expect from Lucid. In December, we launched Compromise Nothing as our brand promise with a hero video and a campaign. I have to say, I'm impressed by the response and the positive feedback. I think we found the perfect way of expressing what Lucid is all about and what the customers can expect from joining the Lucid family.

[Marc Winterhoff, Interim CEO at Lucid Group]

We once again achieved the highest level of brand awareness among customers intending to purchase EVs and we are just getting started. We have a long list of exciting creative concepts we are working on. Stay tuned. In 2025, we will take a much bolder approach on marketing than ever before at Lucid, starting with the Lucid Gravity and then in just a few weeks' time in New York City. Now we're going to put a lot of focus on quality and ensure customers get what they expect from the Lucid brand.

[Marc Winterhoff, Interim CEO at Lucid Group]

As mentioned last quarter, this means we will have more gradual delivery ramp in the first quarter. We'll prioritize Lucid Gravity's for showrooms and test drive, which I think is the right strategy and one of the key learnings from the Lucid Air launch. We want our customers to be able to experience Lucid Gravity. We are also working with our suppliers to ensure they can ramp with high quality parts and support our production ramp in Q2. We also opened orders in Saudi Arabia in early February, and we expect to start producing a number of Lucid Gravities for customers there.

[Marc Winterhoff, Interim CEO at Lucid Group]

These vehicles will be in transit in the first quarter for final production at our M2 factory in the second quarter. So you'll see those in our Q2 production numbers. Now turning to Europe. It's still early, but we continue to see traction and that's despite the very tough market for EVs in Europe these days, especially in our segment. And we have our eyes set on accelerating our progress.

[Marc Winterhoff, Interim CEO at Lucid Group]

We have added additional sales studios and service centers, for example, in Germany, and we are accelerating the growth of our retail footprint and market coverage in Europe by introducing additional distribution channels like importers and agency models for select countries in addition to our existing direct to consumer model. We are very excited about 2025 and expect another big year. We expect to produce approximately 20,000 vehicles with continued growth in 2026 as we get a full year of Lucid Gravity, further brand awareness growth and more maturity in the business and markets. This will take us to midsize with scheduled start of production in late twenty twenty six. I was just down in the design studio and I can tell you the vehicles looked amazing.

[Marc Winterhoff, Interim CEO at Lucid Group]

I think customers are going to love them and I can't wait to show them to you. I don't want to reveal too much, but we are currently planning to unveil them late this year or early next year. In closing, I'd like to highlight the four strategic priorities I'm focused on. First, I continue to be laser focused on driving our growth of customer deliveries of our high quality and technology leading vehicles. As mentioned before, this includes doubling down on marketing across regions we are active in, expanding our retail footprint and distribution channels, and most importantly, ramping production of the Lusi gravity.

[Marc Winterhoff, Interim CEO at Lucid Group]

Second, continue to advance our technology leadership in vehicle, especially powertrain technology, but equally important further advancing our advanced driver assistance system functionality. For example, by introducing hands free driving, which we expect to roll out later this year. Third, bringing our three mid sized vehicles to market with the first vehicle scheduled for start of production in late twenty twenty six. In fact, we signed off on the advanced engineering phase of two of the midsize variants, which will now move to the development and industrialization phase. This includes the Atlas powertrain, which is well under development and is all about a lower cost version of our Zeus powertrain in the air. Fourth, expanding our technology license business and drive forward other new technology monetization options. This will be a core focus in terms of the discussions that are already well underway as well as examining new opportunities. And of course, underpinning all of this will be a laser focus on cost and efficiency, which will be enhanced with a partnership with Tofiq. With that, I'd like to turn over to Gagan Dhingra to provide an update on our financials.

[Gagan Dhingra, SVP - Finance and Accounting at Lucid Group]

Thank you, Mark, and thank you to those who are taking the time to join us today. Before I get to my prepared remarks, I wanted to take a moment to express my gratitude for Peter's leadership, guidance, contributions and for his continued vision to drive the company's success. I'm grateful for the opportunity to learn and grow under his leadership. I would also like to take this opportunity to thank the leadership team, the Board of Directors and the entire Lucid team for their unwavering support. It was an honor and a privilege to serve as the company's Interim CFO.

[Gagan Dhingra, SVP - Finance and Accounting at Lucid Group]

It was also a pleasure telling the Lucid story and getting to know so many of you in the analyst and investor community. I truly appreciate the thoughtful discussions and insights you have shared. I remain deeply appreciative of the relationships we have built and the journey we have taken together over the last several earnings calls. As I turn my focus to my new and expanded role, I would like to take this opportunity to officially welcome Tophik to the Lucid team. Turning to our 2024 and fourth quarter results.

[Gagan Dhingra, SVP - Finance and Accounting at Lucid Group]

As Mark mentioned, 2024 was a transformational year for Lucid. We delivered four consecutive quarters of record deliveries. We made significant improvement in gross margins, nearly having them on a year over year basis and we expect significant improvement in 2025. We successfully managed operating expenses despite strategic growth investments, delivering on our guidance for operating margin improvement year over year. We strengthened our balance sheet with continued strong support from our strategic partner, the PIF, as well as new investors in our last transaction.

[Gagan Dhingra, SVP - Finance and Accounting at Lucid Group]

And we also significantly improved working capital behind strategic improvement in inventory management and despite mix headwinds. We have a lot to be proud of in light of the challenges we and the industry faced, but we recognize that we still have a lot more work to do. The team is invigorated with the Lucid Gravity ramp still ahead of us and as we get closer to the launch of our high volume midsize platform. Turning to production and deliveries. In 2024, we produced 9,029 vehicles, up 7% year over year and in line with our guidance of approximately 9,000 vehicles, while delivering 10,241 vehicles, up 71% year over year. During the fourth quarter, we produced 3,386 vehicles, up 42% year over year and up 88% sequentially and delivered 3,099 vehicles, up 79% year over year and up 11% sequentially.

[Gagan Dhingra, SVP - Finance and Accounting at Lucid Group]

This was the primary driver of the $234,500,000 in revenue for the quarter. GAAP gross margin for 2024 was negative 114%, a significant improvement from the negative 225% in 2023. In the fourth quarter, GAAP gross margin was negative 89%. This included a favorable impact related to a net supply recovery, which we were able to successfully negotiate. Excluding this benefit, gross margin of negative 108% was similar to the third quarter and in line with the guidance we provided.

[Gagan Dhingra, SVP - Finance and Accounting at Lucid Group]

In 2025, we expect another year of significant gross margin improvement similar to the trend in 2024. We expect this improvement to be driven by a combination of production scale, mix and continued focus on cost reductions. Gross margin for the first half of twenty twenty five is expected to be near the levels of Q4 twenty twenty four, excluding the one time favorable recovery benefit. This is due to one time incremental cost associated with the Lucid Gravity ramp up and then significantly improved with scale in the second half of the year. We expect Q1 to be more impacted by seasonality and then improve in Q2 with the ramping of the Lucid Gravity.

[Gagan Dhingra, SVP - Finance and Accounting at Lucid Group]

Turning to OpEx. R and D in 2024 was approximately $1,180,000,000 up 26% year over year driven largely by gravity investments. R and D in the fourth quarter of $280,000,000 was down from $324,000,000 in the prior quarter as costs related to gravity diminished with the start of production. In 2025, we expect R and D to steadily increase throughout the year as we ramp up mid size and Atlas investments. SG and A in 2024 was $9.00 $1,000,000 up 13% year over year and $243,900,000 in the fourth quarter up 4.4% sequentially.

[Gagan Dhingra, SVP - Finance and Accounting at Lucid Group]

The Lucid Gravity is an opportunity for Lucid to accelerate its brand around a compelling new product in a much more desirable SUV market segment and we expect to put more muscle behind the Lucid Gravity to drive sales and brand awareness. We expect to be able to leverage the brand awareness growth into the mid sized market with the mid sized vehicles we expect to start producing in late twenty twenty six. We expect operating expenses in 2025 as a percentage of revenue to improve by more than 100 percentage points. Turning to other income. In Q4, we recorded a gain of $292,600,000 in other income from a change in fair value of derivative liability and a corresponding total accretion of $239,700,000 associated with our redeemable convertible preferred stock under a line item below net loss.

[Gagan Dhingra, SVP - Finance and Accounting at Lucid Group]

This was mainly due to the decrease in our share price at the end of the fourth quarter compared to the prior quarter. Adjusted EBITDA in Q4 twenty twenty four was approximately negative $577,000,000 an improvement of 6% from Q3 twenty twenty four. Moving to the balance sheet. We ended the quarter with approximately $5,080,000,000 in cash, cash equivalents, investments and equity securities with total liquidity of approximately $6,130,000,000 This does not include the MISA grants or the SIDF loans. Additionally, we also renewed and upsized the GIB credit facility, increasing the commitment amount from R1 billion to R1.9 billion, further improving our liquidity profile by approximately $240,000,000 in U.

[Gagan Dhingra, SVP - Finance and Accounting at Lucid Group]

S. Dollars and demonstrating strong support from our global banking network. Turning to inventory. Inventory was $407,800,000 in Q4 twenty twenty four, down from $506,800,000 in Q3 twenty twenty four due to continuous improvement in inventory management. Capital expenditure for 2024 was $883,800,000 slightly below the $1,000,000,000 we guided to on our third quarter earnings conference call.

[Gagan Dhingra, SVP - Finance and Accounting at Lucid Group]

The lower CapEx was primarily related to the deferral of projects into 2025. Before moving to the outlook for 2025, let me touch on some external factors. The industry faces a number of uncertainties with regard to potential policy and regulation changes in The U. S. We have been working tirelessly to find ways to mitigate some of these impacts.

[Gagan Dhingra, SVP - Finance and Accounting at Lucid Group]

For example, we have been taking steps to localize supply. We have also actioned certain supply chain optimization efforts that we think could help mitigate some of the tariff impacts as we understand them today. And we expect some of these actions should also benefit us from a cost perspective. Of course, we don't expect to be immune from potential policy changes and understanding precise impacts has a number of dependencies. We are closely monitoring the situation and will continue to work with our government partners.

[Gagan Dhingra, SVP - Finance and Accounting at Lucid Group]

Our production outlook embeds our best understanding of the possible impacts as we comprehend it today. We forecast production of approximately 20,000 vehicles in 2025. With regard to our liquidity position, we ended the quarter with total liquidity of approximately $6,130,000,000 Due to our cost transformation efforts and cash management, we expect our current liquidity will now give us runway into the second half of twenty twenty six in addition to the recent upsizing of the GIB facility. I would also highlight that this does not include future FIDF loan or MISA grants. Moving to CapEx.

[Gagan Dhingra, SVP - Finance and Accounting at Lucid Group]

Our focus is increasing investments in our future growth initiatives and we expect capital expenditures for 2025 to be approximately 1,400,000,000 reflecting Amp2 expansion for our completely built up unit factory, Atlas Powertrain manufacturing in Amp1, certain defers in our capital outlay from 2024 and our continued investments in retail infrastructure. From a product perspective, we are scheduled for start up production of our high volume mid size platform in late twenty twenty six. As we close-up 2024 and look ahead to 2025, I couldn't be more excited about the opportunities that lie ahead for our company. We built a strong financial foundation, established ourselves as the EV technology leader and positioned ourselves for significant growth. In the coming year, we will continue to focus on driving efficiency, invest strategically and creating value for our stakeholders.

[Gagan Dhingra, SVP - Finance and Accounting at Lucid Group]

We thank you for your continued trust and support. With that, let me turn it back to Menard to get to your questions.

[Maynard Um, Head-Investor Relations at Lucid Group]

Hi, Towanda. So, before we get to the calls on by phone, I'd like to take some retail questions from investors on the Safe Technology Platform. Our first question comes from Patrick M. Peter mentioned how Lucid aims to be 80% tech company and 20% car company. When is revenue from tech plays expected?

[Maynard Um, Head-Investor Relations at Lucid Group]

What categories products do you see making up that 80% of revenue?

[Marc Winterhoff, Interim CEO at Lucid Group]

Yes, Meena, let me take this. Well, thanks for the question, Patrick. I think this statement by Pierre was a bit taken out of context. I want to stress that it doesn't mean that you are deprioritizing our automotive car business. Quite the opposite is the fact.

[Marc Winterhoff, Interim CEO at Lucid Group]

We are very excited about the growth potential that we have with the particularly with the gravity coming to market. 80% tech company and 20% car company basically means that we see ample opportunity to leverage our technology and with external customers beyond our car business. But it doesn't mean like one of the articles that I read in the headline, Lucid wants to become a supplier and do cars on the site. This is not what we're planning to do. I wanted to make this very clear.

[Marc Winterhoff, Interim CEO at Lucid Group]

We are in constant discussions with additional partners to for deals and we're expecting deals to close soon, but I cannot go into further details. Types of products and revenues, right now it's definitely vehicle technology related, but we are exploring other means of monetization and other technologies going forward.

[Maynard Um, Head-Investor Relations at Lucid Group]

Thanks. Mark, we'll go to our second question from Paul C. It has been mentioned that discussions are ongoing regarding potential tech deals since 2021 with one deal made. Are the recently mentioned discussions the same or with different manufacturers? Do you see a deal being made before the Atlas motor is ready?

[Marc Winterhoff, Interim CEO at Lucid Group]

The recently mentioned discussions are not with the same as the potential partners that we talked to in 2021. As a matter of fact, the list is getting longer and longer. Just this week, we had additional very large OEMs reaching out to us in order to have discussions. As a matter of fact, regarding the second question regarding the Atlas motor, it is not needed to have the Atlas motor ready. As a matter of fact, some of the current discussions are about the discussions are about the ZEUS powertrain and not about the Atlas.

[Marc Winterhoff, Interim CEO at Lucid Group]

But future discussions definitely around are around the Atlas motor. But we don't have to wait until the motor is ready. By now, we are established as the technology leader, so we don't have to show it first anymore.

[Maynard Um, Head-Investor Relations at Lucid Group]

Thanks. And our last question is from Paul C. With gravity deliveries being low, while your manufacturing ramp up quality mindset constraint, are you concerned that you will lose a lot of customers who have pre ordered due to the long wait times similar to what happened with Air?

[Marc Winterhoff, Interim CEO at Lucid Group]

Well, let's put long wait times into perspective. We opened the orders in November, so that's a few months ago, and we are starting to ramp up our deliveries over the next coming weeks. So it's not really in comparison what we've seen at a long wait time. And also, let's not make a mistake. Every automotive OEM has a gradual ramp at the beginning when they launch a new product.

[Marc Winterhoff, Interim CEO at Lucid Group]

So it's not abnormal what we're experiencing here. So and even beyond that, yes, there might be some customers that changed their mind because it doesn't fit their timing. But our order intake right now is healthy, it's actually very healthy without any marketing. And we said that in the earnings call and we expect this to become even healthier going forward.

[Maynard Um, Head-Investor Relations at Lucid Group]

Great. Towanda, we'd like to now take questions from the phone lines.

[Operator]

Thank you. Our first question comes from the line of John Murphy with Bank of America Securities. Your line is open.

[John Murphy, Managing Director at Bank of America Merrill Lynch]

Good evening, everybody. Just wanted to go kind of right to the heart of I think what a lot of people are questioning right now is, I mean, Peter is not on the call. It's a bit untraditional to make a change with it like this without having sort of the founder involved with the transition call. I'm just curious why Peter isn't present and why you would make an announcement like this without a successor, why you wouldn't stick around until a successor was chosen? I know it's a tough question, but I mean it's the one that everybody's thinking right now.

[Marc Winterhoff, Interim CEO at Lucid Group]

Yes, I can take that. Obviously, I think we clearly announced that Peter made the decision that after twelve years, it's now a good time to pass the baton. What Peter did in that time is extraordinary and he built this company, but he also built a very strong team and he felt that it's now a good time after bringing air to life, establishing our technology leadership and gravity to pass the baton. And that's why we are sitting here right now to take the call.

[John Murphy, Managing Director at Bank of America Merrill Lynch]

Okay. Then just a second question. I wonder if you could kind of give us an idea of the Gravity order book, and how that's developing. I'm not sure you'll be willing to give us the size, but we'd love to hear that, but just kind of the trajectory and how that's developing.

[Marc Winterhoff, Interim CEO at Lucid Group]

Yes. I mean, I just mentioned that in the earnings call. I mean, we opened the orders last November, and I was actually positively surprised about the demand. Let's not forget, we only opened the orders for the Grand Touring trim, which starts at $94,900 And the vast majority of orders that we get are north of $120,000 and that limits potentially the numbers, but we see actually very strong take off of orders. And I want to repeat, we haven't done much marketing.

[Marc Winterhoff, Interim CEO at Lucid Group]

I would actually almost say we have done no marketing so far for the gravity, which we are planning to increase drastically over the next couple of weeks. For state, you will see some very interesting things coming.

[John Murphy, Managing Director at Bank of America Merrill Lynch]

So, Mark, is it fair to state that the gravities that you have within the 20,000 guidance is what you think you're going to sell or is it what you're limited for production? I'm just trying to understand because it sounds like the order book is not is still early days. I mean, how are you coming up with that number and is it capacity constrained?

[Marc Winterhoff, Interim CEO at Lucid Group]

Yes. I think Peter said that in previous earnings calls that we're expecting to be capacity constrained in the first couple of quarters. And that's the way right now we are projecting this. We have also considered in the 20,000 the fact that obviously there's a lot of uncertainty right now with regulatory changes and in other parts. That's why we wanted to be a little bit more prudent with the numbers.

[Marc Winterhoff, Interim CEO at Lucid Group]

But yes, we expect to be in the first couple of quarters, so by constraint.

[John Murphy, Managing Director at Bank of America Merrill Lynch]

And then just one last one on the mid size. I mean, it sounds like it's getting close to design freeze almost. I'm just curious when that hits, when we get to see it because we'd love to see it, because most of your vehicles or your vehicles so far are pretty good looking. And who is kind of taking the lead on that now that Peter has stepped aside? Is he still involved with that product in the final stages or is the rest of the team leading the charge?

[Marc Winterhoff, Interim CEO at Lucid Group]

No, it's clearly the rest of the team. So really Peter has handed over the day to day responsibilities to the team. And we have a Head of Product, we have Head of Powertrain, we have Head of Design, all those people that are with the company for many, many years, some north of ten years, will continue the baton to the finish line.

[John Murphy, Managing Director at Bank of America Merrill Lynch]

And when do we get to see it, the prototypes?

[Marc Winterhoff, Interim CEO at Lucid Group]

Yes, I think I said that earlier, later this year, beginning next year.

[John Murphy, Managing Director at Bank of America Merrill Lynch]

Okay, great. Thank you very much.

[Operator]

Thank you. Please stand by for our next question. Our next question comes from the line of Tom Noreen with RBC. Your line is open.

[Tom Narayan, Lead Equity Analyst at RBC Capital Markets]

Hi, thanks for taking the question. Hi, Mark, Tafeek. Congrats to Guggen on your new role. I just had follow ups to what John was asking some of his questions. The first on Peter's new role, just curious as to what that is exactly.

[Tom Narayan, Lead Equity Analyst at RBC Capital Markets]

You mentioned not day to day, but as an advisor, what exactly does that mean? It's such a strong presence obviously for all of us. I would just love to hear more on that first.

[Marc Winterhoff, Interim CEO at Lucid Group]

Well, I mean, it's basically a senior technical advisor for the Chairman of the Board. And, strategic technical advisor. So again, we will not be part of the day to day business, but if there are questions arising and the Chairman thinks it is worthwhile to involve Peter, then he will. But it's up to the discretion of the Chairman to have that interaction.

[Tom Narayan, Lead Equity Analyst at RBC Capital Markets]

Okay. And then the other follow-up, again on gravity. I guess what it I understand capacity constraint on the 20,000. Are you guys still seeing that six times total addressable market for gravity versus the sedans or has that been lowered by any chance? Because you're only doubling the size from basically production year to year.

[Marc Winterhoff, Interim CEO at Lucid Group]

Yes. As I said, it's more production supply constraint than it is demand constraint. So that's really the reason we're ramping up. We want to make sure that we are ramping up with high quality, and that's the main reason. So we haven't changed the plan for air and gravity together.

[Tom Narayan, Lead Equity Analyst at RBC Capital Markets]

Okay. And my final one on the IRA credit, could you remind us what portion of your demand came from the lease portion of the IRA? That's I think what folks are thinking may go away. Just seeing of what headwind that could be for you guys?

[Marc Winterhoff, Interim CEO at Lucid Group]

I think right now it's no secret that a good portion or a big portion of the all in lease sales in North America are leases and it also applies to us. But I wanted to point out earlier I said already that in our production numbers and obviously linked the delivery numbers, we already anticipated regulatory changes and how that potentially impacts our demand. One maybe additional information on gravity. As I mentioned, we only have opened orders for the Grand Touring, yes? And a vast majority of that car right now is configured at prices around $120,000 where the price elasticity is not as big as when you talk about your $60,000 vehicle or $50,000 vehicle.

[Marc Winterhoff, Interim CEO at Lucid Group]

So it's not that we have not considered anything we actually did, but we don't expect this to be a super big swing.

[Tom Narayan, Lead Equity Analyst at RBC Capital Markets]

Okay. Last one on the licensing. I think you mentioned there's very large OEMs reaching out to have discussions. I mean, is there any more detail on that? Is that are they far along or is it just like kind of very introductory level for these large OEMs?

[Marc Winterhoff, Interim CEO at Lucid Group]

Well, I mean, it changes actually because, yes, for the ones that I just mentioned, the two that just reached out, it's introductory, but we have others that are much further along. So and it's not only for upcoming technologies, even for technology, as I mentioned, for the ZEMISS powertrain that we already have, yes. So I'm not commenting on how far we are. We hope to surprise everybody.

[Tom Narayan, Lead Equity Analyst at RBC Capital Markets]

Okay. Thank you.

[Operator]

Thank you. Our next question comes from the line of Steven Gengaro with Stifel. Your line is open.

[Stephen Gengaro, Managing Director at Stifel Financial Corp]

Thanks. Good afternoon, everybody. I think two for me. Can you give us a sense when we think about 2025, how the mix, the gravity mix impacts the progression in gross margins?

[Gagan Dhingra, SVP - Finance and Accounting at Lucid Group]

Yes, absolutely. So if we look at from like year '25 perspective, we said in the prepared remarks, we expect a significant improvement in gross margin, in line with what we see in 2024 compared to 2023. So we are on the right trajectory. During this call, we are not sharing the split between air and gravity, but we it's going to significantly improve.

[Stephen Gengaro, Managing Director at Stifel Financial Corp]

Okay, okay. Thanks. And the other question was, I mean, it's kind of come up, given sort of a demand expectations for gravity and how it unfolds, could you ballpark for us either what you think like the 4Q production exit rate could be or how we should think about like a 2026 production capability without giving maybe specific numbers of what you expect? But what kind of capacity would you have in 2026 once gravity is kind of rolling at the end of this year?

[Marc Winterhoff, Interim CEO at Lucid Group]

I'm not prepared to disclose this. I mean, we have variability. We can add additional shift, for instance. So that's all things that we are going to decide throughout 2025 when we see how the demand evolves and also when we then later in the year, as mentioned, open orders for the Touring. So I think that has to wait a few quarters until we talk about that.

[Stephen Gengaro, Managing Director at Stifel Financial Corp]

Okay. I appreciate the context. Thank you.

[Operator]

Thank you. Our next question comes from the line of Chris Pierce with Needham and Company. Your line is open.

[Chris Pierce, Senior Analyst at Needham & Company]

Hey, good evening, everyone. I just love to hear why you want to lean into marketing so aggressively right now when your production constraints. Would it be that you're trying to market the Air as the family of cars? Or is it trying to precede the market for the Touring edition? I just kind of want to get a sense of why leaning to marketing so soon.

[Marc Winterhoff, Interim CEO at Lucid Group]

No, it's actually not really linked to the touring or the year. But I mean, compared to, let's say, established OEMs, we're still behind with brand awareness. And with the gravity coming to market, we have a very great opportunity to not only introduce a new car, but also introduce the brand to our customers much at a much larger stage and scale than we were able before. And let's not forget, what we're working towards is the mid size. Then we're talking about a much bigger TAM, a much bigger pool of people that we need to reach and that's what we're paving the way for.

[Marc Winterhoff, Interim CEO at Lucid Group]

And important for that is that we continue to build the brand, not only market vehicles, but continue to build the brand in order to really then see the demand when mid size comes around.

[Chris Pierce, Senior Analyst at Needham & Company]

Okay. And then not to put you on the spot too much, but I guess if you think about Rivian as sort of the quasi closest comp, we see them unable to generate positive gross margins without regulatory credits of 50,000 units. Like would you guys do you think you'd be ahead of that pace because of your lower battery input costs? Or like what's the right way to think about longer term production? We can make production estimates, but like how should your margins kind of line up over time when we think a little further out just in terms of advantages and disadvantages versus peers to the extent you can speak to it?

[Gagan Dhingra, SVP - Finance and Accounting at Lucid Group]

Yes. So I can take that. So first of all, there are a lot of uncertainties what's happening. But there are few things which really don't apply to us. And we are taking efforts in our supply chain to localize that.

[Gagan Dhingra, SVP - Finance and Accounting at Lucid Group]

So let me take one by one. So one is basically when we look at on the manufacturing credit side of it, which is battery and inverter. On that one, the chances of appeal, we believe is less. Then we are talking about the 45 W, which is like $7,500 credit, which Mark already covered at this one. And then we are talking about various tariffs related to import from Mexico or Canada or steel, you name it.

[Gagan Dhingra, SVP - Finance and Accounting at Lucid Group]

And our production already embeds that. In fact, we have we expect that if all things apply to us today, like what is like factor, the impact could be like in the range of 7% to 12%. But we are taking efforts to mitigate and I believe we're in much better shape compared to other OEMs.

[Chris Pierce, Senior Analyst at Needham & Company]

Okay, perfect. Thank you.

[Operator]

Thank you. Please standby for our next question. Our next question comes from the line of Andrea Sheppard with Cantor Fitzgerald. Your line is open.

[Andres Sheppard, Analyst at Cantor Fitzgerald]

Hi, everyone. Good afternoon and thanks for taking our questions. I think most of our questions have been asked already, but maybe I just wanted to touch on ASPs and gross margin once more. How should we think about blended ASPs for 2025 now with the mix including gravity? And I guess on margins, you mentioned in your prepared remarks, you expect Q1 and Q2 to be relatively similar to Q4.

[Andres Sheppard, Analyst at Cantor Fitzgerald]

What does the path to just to build on one of the previous questions, what does the path to profitable gross margins look like from a timeline perspective? Thank you.

[Gagan Dhingra, SVP - Finance and Accounting at Lucid Group]

Yes. And I think I mentioned that in my prepared remarks. When we look at the total year 2025, we expect the significant improvement in line with what we had in 2024. And I believe you can do that, Matt. Coming to like the year end gravity, now you look at the we have guided basically 20,000 production, last year was 9,000 production.

[Gagan Dhingra, SVP - Finance and Accounting at Lucid Group]

So now we have more scale. We first of all, we're taking significant effort in the company about the cost transformation. And whether it's a boom of conversion cost, we significantly decreased and we're consistently working. But going to '25 is a completely different trajectory. We're talking about not 20,000 production.

[Gagan Dhingra, SVP - Finance and Accounting at Lucid Group]

The conversion costs significantly come down because like fixed cost per vehicle doesn't change. And this also gives an opportunity to have like how we deal with our suppliers. So altogether, we are in the right trajectory. We are not guiding what will be the precise the range or the percentage, What we're saying is like there's a significant improvement because of the couple of factors that's taking place.

[Andres Sheppard, Analyst at Cantor Fitzgerald]

Got it. Okay. That's helpful. And I guess as a follow-up, regarding your partnership with the government of Saudi Arabia to deliver up to 100,000 vehicles. I think in the past you had mentioned that the I think majority of this mix will comprise of the gravity and the midsize.

[Andres Sheppard, Analyst at Cantor Fitzgerald]

So just wondering if you can A, I guess confirm that and B, if you can maybe quantify a bit further how we should think about those deliveries, I guess starting in late twenty twenty five and throughout 2026? Thank you.

[Marc Winterhoff, Interim CEO at Lucid Group]

That is correct. That is mainly actually the mid size, but also gravity higher than the year, but we cannot disclose further breakdowns because of our agreement.

[Andres Sheppard, Analyst at Cantor Fitzgerald]

Okay, fair enough. I guess one more if I could squeeze it in. Just maybe a bit of a macro question. With the potential or likely implementation of new tariffs in April. Just curious if you can maybe give us your thought as to how exactly you might be impacted and what can be done to try to mitigate some of that impact? Thank you.

[Gagan Dhingra, SVP - Finance and Accounting at Lucid Group]

Yes. I think on that one, I mentioned that the impact including tariffs and 45W, 45X, everything combined and if you factor in, it could range from 7% to 12% on the gross margin impact. But we are taking mitigating factors, localizing our supply and we are taking all efforts there and that also brings us cost down when we localize supply.

[Marc Winterhoff, Interim CEO at Lucid Group]

As an example, we just announced another deal with one graphite in The United States on top of the other one that we already have. So we're taking actions.

[Andres Sheppard, Analyst at Cantor Fitzgerald]

Wonderful. Thank you very much. I appreciate your time. I'll pass it on.

[Operator]

On. Thank you. Our next question comes from the line of Adam Jonas with Morgan Stanley. Your line is open.

[Adam Jonas, Analyst at Morgan Stanley]

Thanks everybody. Good evening gentlemen. I had a question on your artificial intelligence strategy. What is the company's AI strategy, specifically with autonomy? Obviously, you have the partnership with NVIDIA and DreamDrive and Hyperion software defined platform.

[Adam Jonas, Analyst at Morgan Stanley]

But I don't I'm not sure you've commented on whether you've gone to an end to end Gen AI approach the way many the way the industry seems to be moving quite quickly. And if you are, what would that mean in terms of your expenditure and compute needs? And I just have a follow-up. Thanks.

[Marc Winterhoff, Interim CEO at Lucid Group]

Yes, I can definitely take that. So when it comes to our functionality, be it ADAS or on higher levels on misdriving. I mean, I want to point out first that we actually made quite some strides already in our current functionality over the last couple of months. Better leverage the sensors that we already have in our vehicles. And we continue to do so. We're actually planning to roll out hands free driving later this year.

[Marc Winterhoff, Interim CEO at Lucid Group]

And hopefully, we can surprise everybody with how early that actually might be. So that's something that we're short term working on. When it comes to the AV technology or autonomous driving, then we need to keep in mind that over the last couple of months or maybe a year, the goalpost have shifted. And nowadays, technologies that were mainly AI based are much different from what we've done that we've seen in the past where other players have invested billions and basically have nothing to show for. That is now changing.

[Marc Winterhoff, Interim CEO at Lucid Group]

Having said that, we are considering different routes right now. We have extensive discussions with potential partners to partner on this particular topic. But also with what I just said, with the goalpost shifting, we're analyzing whether it would be worthwhile for us to completely in source that. But we don't have we haven't made that decision yet. We're right now focusing on the short term implementation and improvement of the technology that we have in our cars in gravity obviously upcoming, but then also in air.

[Marc Winterhoff, Interim CEO at Lucid Group]

While we are doing this analysis, a lot of things have changed in the last year. If we would have made a decision one year ago, we probably would have been on the wrong track.

[Adam Jonas, Analyst at Morgan Stanley]

Okay. I appreciate that. Just as a follow-up, I didn't know if you care to address the messaging from your largest shareholder, obviously, with the agreements in place to lower their stake potentially to as low as 45%, billions of dollars at the current share price. I know that was that shelf was kind of previously the prospectus was previously out there, but in identifying that your largest shareholder, it does raise questions in terms of whether you would be a controlled company if they were to fall below 50%. And we're getting some questions about that and we just love to hear any messages that you wanted to convey to the extent that you can on that position? Thanks.

[Gagan Dhingra, SVP - Finance and Accounting at Lucid Group]

Yes. I think, Adam, on the ownership percentage, we believe this is 58.4% based on the number of shares issued.

[Adam Jonas, Analyst at Morgan Stanley]

Right. But there's agreements to reduce that, right?

[Gagan Dhingra, SVP - Finance and Accounting at Lucid Group]

None that I'm aware of.

[Adam Jonas, Analyst at Morgan Stanley]

Okay. We'll follow-up. Appreciate it.

[Gagan Dhingra, SVP - Finance and Accounting at Lucid Group]

Thank you.

[Operator]

Thank you. Our next question comes from the line of James Picariello with BNP Paribas. Your line is open.

[James Picariello, Director & Sr. Automotive Analyst at BNP Paribas]

Hi, everybody.

[James Picariello, Director & Sr. Automotive Analyst at BNP Paribas]

I just have a question on Saudi Arabia shipments in 2024. By my estimation, would have totaled something close to $2,100 just based on the region's generated revenue of $179,000,000 per your 10 ks. Is that the right ballpark figure in terms of unit volume? And just how should we be thinking about Saudi deliveries for this year given the importance of that contribution?

[Gagan Dhingra, SVP - Finance and Accounting at Lucid Group]

Sure. First, looking at it overall, like the Saudi government has a commitment of up to like 50,000 vehicles with an option for another 50,000 vehicles. And we said previously and the mode will go towards like the mid size, mid gravity than air. Now we are going from 9,000 production to 20,000 production. We expect like in year 2025, the proportion of Saudi Arabia come down and will go towards the North America.

[James Picariello, Director & Sr. Automotive Analyst at BNP Paribas]

Okay. Okay. And then just a two quick two part one. The 20,000 units production guidance for this year, given that gravity production is going to be capacity constrained, you can't give us the estimation on what the gravity volumes are within that production figure? And then as we think about the mid size crossover starting in late twenty twenty six, will production solely take place in Saudi Arabia in your Amp2 plant for that crossover?

[James Picariello, Director & Sr. Automotive Analyst at BNP Paribas]

Or when or will it get produced in Arizona as well? Or will it just strictly be dependent on imports into The U. S?

[Marc Winterhoff, Interim CEO at Lucid Group]

We're not disclosing the mix. But I mean, it's clear, obviously, in the beginning of the year that the gravity is low while we are ramping up. And then the picture will change over the year given the fact that the gravity has a higher TAM than the year. And when it comes to midsize, we have M1, but we're also outfitting M sorry, M2 in Saudi Arabia, but we're also outfitting M1 right now to produce vehicles to be locally sold in North America.

[James Picariello, Director & Sr. Automotive Analyst at BNP Paribas]

Okay. So both plants will produce the crossover?

[Marc Winterhoff, Interim CEO at Lucid Group]

Correct.

[Maynard Um, Head-Investor Relations at Lucid Group]

Thank you.

[Operator]

Thank you. Ladies and gentlemen, at this time, I would now like to turn the call back over to Maynard for closing remarks.

[Maynard Um, Head-Investor Relations at Lucid Group]

Thanks. So this concludes Lucid's fourth quarter and full year twenty twenty four earnings conference call. Thanks everyone for joining us today and you may now disconnect.

[Operator]

Ladies and gentlemen, that concludes today's conference call. Thank you for your participation. You may now disconnect.

Participants

Executives

• Maynard Um, Head-Investor Relations
• Marc Winterhoff, Interim CEO
• Taoufiq Boussaid, CFO
• Gagan Dhingra, SVP - Finance and Accounting

Analysts

• John Murphy, Managing Director at Bank of America Merrill Lynch
• Tom Narayan, Lead Equity Analyst at RBC Capital Markets
• Stephen Gengaro, Managing Director at Stifel Financial Corp
• Chris Pierce, Senior Analyst at Needham & Company
• Andres Sheppard, Analyst at Cantor Fitzgerald
• Adam Jonas, Analyst at Morgan Stanley
• James Picariello, Director & Sr. Automotive Analyst at BNP Paribas