Lucid Q3 2024 Earnings Call

[00:00:02] Beim Quiz Wer weiß denn sowas erwartet dich der Gipfel des unglaublichen Wissens.

[00:00:08] Kennst du die richtige Antwort?

[00:00:09] 2018 wurde ein Wilderer im US-Bundesstaat Missouri dazu verurteilt, während seiner einjährigen

[00:00:16] Gefängnisstrafe a rein vegetarisch zu leben, b einmal im Monat den Film Bambi anzusehen

[00:00:22] oder c ein Kinderlexikon über Tiere auswendig zu lernen.

[00:00:26] Die richtige Antwort ist b einmal im Monat den Film Bambi anzusehen.

[00:00:30] Wer weiß denn sowas?

[00:00:32] Immer montags bis freitags um 18 Uhr im Ersten.

[00:00:39] Ladies and gentlemen, thank you for standing by and welcome to the Lucid Group 3rd quarter

[00:00:44] 2024 Earnings Conference Call.

[00:00:47] Please be advised that today's conference is being recorded.

[00:00:51] Welcome to Lucid Group 3rd quarter 2024 Earnings Call.

[00:00:54] Joining me today are Peter Rawlinson, our CEO and CTO, and Gog and Dingra, our interim CFO

[00:01:00] and Principal Accounting Officer.

[00:01:01] Before handing the call over to Peter, let me remind you that some of the statements on

[00:01:06] this call include forward-looking statements under federal securities laws.

[00:01:10] These include, without limitation, statements regarding the future financial performance

[00:01:14] of the company, production and delivery volumes, financial and operating outlook and guidance,

[00:01:20] macroeconomic and industry trends, company initiatives, and other future events.

[00:01:25] These statements are based on predictions and expectations as of today, and actual events

[00:01:30] or results may differ due to a number of risks and uncertainties.

[00:01:34] We refer you to the cautionary language and the risk factors in our most recent filings with

[00:01:39] the SEC and the forward-looking statements on page two of our investor deck available on

[00:01:44] the investor relations section of our website at ir.lucidmotors.com.

[00:02:03] Hello, everyone, and welcome to Kilowatt, a podcast about electric vehicles, renewable energy,

[00:02:07] autonomous driving, and much, much more.

[00:02:09] My name is Bodhi, and I am your host.

[00:02:12] And tonight, on November 15th, 2024, I am currently watching boxing, which is something I haven't

[00:02:20] done in a really long time.

[00:02:22] But Mike Tyson is fighting Jake Paul, and I would love it if Mike Tyson just destroyed Jake

[00:02:28] Paul's face.

[00:02:30] So I'm watching boxing.

[00:02:31] I used to love boxing in my 20s and in my 30s, right before I had kids.

[00:02:35] And then I got rid of cable and I stopped watching.

[00:02:38] So anyway, while I record this episode, I've got the match in the background.

[00:02:44] And right now, I'm watching a really good fight.

[00:02:47] And if you haven't seen it yet, I would highly encourage you to go watch the Serrano-Taylor

[00:02:53] fight.

[00:02:54] These ladies just are battling.

[00:02:58] I think it's the eighth round right now, and they are just going hard.

[00:03:03] It's a good fight.

[00:03:04] So if you like fighting, go to Netflix.

[00:03:06] And I didn't see the other fights before this because I was doing family stuff.

[00:03:11] But I would highly encourage you to go watch because, like I said, Taylor and Serrano,

[00:03:17] they are just, I don't even know how to say it without being crude.

[00:03:22] They are just fighting hard.

[00:03:26] Let's just put it that way.

[00:03:27] All right.

[00:03:29] Let's move past the fight.

[00:03:30] I'll give you updates if you want as we go through this.

[00:03:34] If you don't want any spoilers, then maybe you don't listen.

[00:03:36] But yeah, so we are here to talk about Lucid's Q3 2024 earnings call.

[00:03:44] Lucid is like on the cusp of releasing their Lucid Gravity, which is a SUV.

[00:03:52] I think it's a three-row SUV starting at $94,000.

[00:03:56] I think it is $94,900.

[00:03:58] We'll talk about that more in a little bit here.

[00:04:00] But this was a pretty good earnings call.

[00:04:03] I think we learned a little bit.

[00:04:04] And let's go ahead and dive into this.

[00:04:06] We're going to start off with Peter Rawlinson's opening remarks.

[00:04:09] And I should say, just like always, I cut this up so that it makes the most amount of sense for this show.

[00:04:16] If you want to go listen to the entire earnings call, you can do so.

[00:04:20] I'll put a link in the show notes.

[00:04:21] But it's ir.lucidmotors.com.

[00:04:24] Thank you, everyone, for joining us on our third quarter 2024 earnings call.

[00:04:30] Now, before I get to the third quarter results, I'd like to start by thanking all our employees, suppliers, and partners for their support and hard work.

[00:04:40] I'd like also to thank our investors and the PIF for their continuous support and partnership.

[00:04:48] Last month, we raised approximately $1.75 billion through a public offering of common stock of approximately $719 million

[00:05:01] and a corresponding pro-rata investment by an affiliate of the public investment fund of approximately $1.026 billion.

[00:05:15] This additional capital gives us sufficient financial runway into the ramp of lucid gravity and, indeed, well into 2026.

[00:05:25] Now, the raise is consistent with our strategy.

[00:05:29] We've said that we'd continue to be opportunistic based upon the market,

[00:05:33] and we deliver this with strong support from the PIF as well as other institutional investors.

[00:05:41] So, turning to third quarter results, we had another quarter of record deliveries with a momentum in the first half of the year continuing into the third quarter.

[00:05:52] We delivered 2,781 vehicles, up approximately 91% year over year, and up 16% sequentially,

[00:06:03] outperforming what is typically a seasonally softer period for the industry.

[00:06:10] In September, in the U.S. market, the lucid air not only outsold many of the largest and most storied brands in the industry

[00:06:19] within our competitive set of electric vehicles, but we also outsold many of the competitive set in the gas market as well.

[00:06:28] So, I think our momentum is quite notable.

[00:06:32] And I believe a part of this is due to lucid's growing brand awareness, which is reaching an all-time high in the third quarter since we started tracking this metric.

[00:06:44] Whilst I believe we still have much more opportunity to grow our brand awareness, we're still making very good progress.

[00:06:51] And I think you can see this in our delivery numbers.

[00:06:56] The number of vehicles on the road continues to grow, and I'd like to thank our loyal customers who are our biggest advocates.

[00:07:04] You are a key part of our success, and I'd like to extend my sincere gratitude.

[00:07:11] Turning to production, we produced 1,805 vehicles in the third quarter, and are on track to produce approximately 9,000 vehicles for the full year 2024.

[00:07:25] I'm delighted with the progress we've made with vehicle inventory, and will continue to manage this judiciously.

[00:07:32] As that said, I would expect an increase in production in the fourth quarter.

[00:07:37] All right. So, a couple things here.

[00:07:40] First of all, the Saudi Investment Fund gave another billion dollars to Lucid.

[00:07:46] According to Barron's, the PIF owns approximately 60% of Lucid Motors in total.

[00:07:54] Now, this wasn't a direct investment from the Saudi Investment Fund.

[00:07:59] That came from an affiliate, but I think it all kind of funnels into the same pot eventually.

[00:08:04] So, 60%, which is, you know, that's a pretty significant amount.

[00:08:13] Deliveries are up for Lucid, which is great.

[00:08:17] But 2,781 vehicles delivered is not a great number.

[00:08:22] You know, it's great for Lucid, but for most car companies, that's not a great number.

[00:08:28] They produced 1,805 vehicles, and they're expected to produce over 9,000 vehicles for 2024.

[00:08:36] So, yeah. I mean, I hope that this happens for sure.

[00:08:40] One of the things that he talked about that I didn't play was their cost-cutting measures at the factory.

[00:08:45] They actually will talk about this at the end of the earnings call, so I didn't think it was worth adding that little bit that he talked about.

[00:08:52] But the spoiler alert is there's a lot of increased automation at their Casa Grande factory, so that's good.

[00:09:00] Before we move into Peter's further opening remarks, I will say the fight between Serrano and Taylor was a good one.

[00:09:11] It went all the way to the end, and I did not like the decision.

[00:09:15] I do not think the person who won should have won.

[00:09:19] I'm not going to ruin it for you, but both fighters knocked it out of the park.

[00:09:25] But unfortunately, I think the wrong fighter won.

[00:09:29] All right, let's go ahead and continue with his opening remarks.

[00:09:32] Turning to software.

[00:09:34] On our last quarter's earnings call, I promised we would release over-the-air software updates,

[00:09:42] substantively enhancing our Advanced Driver Assistance System, or ADAS.

[00:09:47] And we delivered with a number of over-the-air updates in the third quarter, including our Lucid UX 2.4 package,

[00:09:57] which introduced many enhanced features such as Lane Change Assist, Active Curve Speed Control, and Extended Top and Go.

[00:10:07] Now, UX 2.4 also introduced our new Lucid Assistant, our new in-cabin voice assistant, as well as user interface upgrades.

[00:10:19] And last week, we started deploying via an over-the-air software update, Lucid UX 2.5,

[00:10:28] which adds an innovative curb rush assist feature, warning the driver of the Lucid Air before a wheel scrapes the curb.

[00:10:36] We also upgraded the performance of our audio systems for improved response and performance.

[00:10:44] Now, these are further examples of how we continue to bring tremendous value to the vehicle long after a customer's purchase.

[00:10:53] The software team is invigorated, and we have much more in store.

[00:10:59] In the very near future, we're targeting the release of an over-the-air software update that will enable hands-free highway assist.

[00:11:09] Watch this space. I believe the roadmap is robust, and I think customers are really going to love it.

[00:11:16] I'm also delighted to announce that Lucid Air earned the highest possible overall safety rating of five stars

[00:11:25] from the National Highway Traffic Safety Administration's New Car Assessment Programme.

[00:11:33] This is the government's premier customer information programme for evaluating vehicle safety.

[00:11:40] The Lucid Air Pure, Touring, Grand Touring, and Sapphire received the maximum five-star scores

[00:11:50] for overall safety in frontal crash, side crash, and rollover testing.

[00:11:56] This follows the highest possible European rating of five stars for the Lucid Air

[00:12:02] in the rigorous Euro NCAP crash testing process.

[00:12:07] We worked assiduously on making the most advanced electric vehicle enabled by a clean sheet design

[00:12:14] and engineering with the goal of securing the highest possible safety ratings.

[00:12:20] Safety has been a top priority from the outset at Lucid,

[00:12:25] and achieving five stars in NHTSA's new car assessment programme

[00:12:30] should give owners even more confidence in the Lucid Air.

[00:12:36] So we have much to celebrate this quarter, and thus far throughout the year.

[00:12:41] I think our progress through the first three quarters of the year

[00:12:45] is a testament to our tremendous progress.

[00:12:49] Turning to the lucid gravity,

[00:12:52] I'm delighted to announce that we opened orders and pricing today.

[00:12:57] Our configurator is now live.

[00:13:01] Customers are telling us they are keen to get behind the wheel of a lucid gravity,

[00:13:06] and we know there's an incredible amount of interest.

[00:13:11] For example, we held lucid gravity road show event in our studios across the country,

[00:13:16] and in those studios, we saw foot traffic increase more than 70% versus the prior 30 days.

[00:13:24] I think certainly the lucid gravity is having a positive effect on the lucid breath,

[00:13:30] and it's also helping to raise awareness of the lucid air.

[00:13:36] The scheduled source of production is just a number of weeks away,

[00:13:41] and I think very soon we'll be in a position to announce

[00:13:44] when we might be able to make the very first delivery.

[00:13:49] In terms of software update, I don't know that this is big news.

[00:13:54] We've talked about some of that stuff in the past, so not much to say there.

[00:14:00] High marks for safety, so congrats to the lucid team for that.

[00:14:03] That's a good thing.

[00:14:05] We definitely want to be driving around in vehicles that are safe.

[00:14:08] And then the lucid gravity.

[00:14:11] Again, this car starts at $94,900.

[00:14:14] Now, that's not going to be the actual starting price of the vehicle once they get all the trims out.

[00:14:20] That's just going to be the price, or I should say the initial price of the gravity when it first comes out.

[00:14:25] Eventually, they'll have some more affordable versions of the gravity,

[00:14:30] but it's going to start off right at $94,900.

[00:14:33] In the configurator, there's not a lot that you can do.

[00:14:36] You can change colors and some wheel options and things like that,

[00:14:39] but there's not a lot you can do in the configurator.

[00:14:41] It's basically $94,000 plus.

[00:14:46] But like I said, more affordable models after launch.

[00:14:50] I'm really looking forward to seeing one of these bad chickens in real life.

[00:14:54] I haven't seen one yet.

[00:14:55] And, you know, I've spent a little bit of time in and around Casa Grande lately.

[00:15:00] So haven't seen one driving around yet.

[00:15:03] So they must still have it under wraps.

[00:15:05] You think Lotto 6 aus 49 is not that yellow from the eye?

[00:15:12] Then give yourself 8, 7, 3, 9, 1 and 3 in a pocket.

[00:15:18] And turn it over.

[00:15:20] What do you read?

[00:15:21] Eye-gelb.

[00:15:22] Kein Witz and quite a bit of a joke.

[00:15:25] We take your luck ernst.

[00:15:27] Lotto 6 aus 49.

[00:15:38] All right, let's move on to our retail investor questions, which is really just one question.

[00:15:48] Do you plan to offer a more affordable vehicle?

[00:15:51] If so, what's the timeline?

[00:15:52] Oh, man, yeah.

[00:15:53] Well, maybe we haven't made this clear enough because this has been on our vision, our mission, our schedule for many years now.

[00:16:02] We're not here to be just a niche player.

[00:16:05] This is so misunderstood.

[00:16:08] Lucid exists to have a meaningful impact upon the planet.

[00:16:12] And to do that, we need scale.

[00:16:14] And to get that scale, we need to bring a price down.

[00:16:17] So our mid-size vehicle is scheduled for start of production late 26.

[00:16:22] The work is well in the way.

[00:16:26] And in our technology and manufacturing day presentation we showed in September, we already actually gave a sneak peek of one version of this mid-size vehicle.

[00:16:39] We estimate the total addressable market to be about 30 times than our market last year.

[00:16:45] This is our product, which we're targeting about $48,000 to $50,000.

[00:16:51] You know, the vision is I'd love to sell a million of these a year.

[00:16:54] You know, the opportunity is vast.

[00:16:56] This was actually announced a couple of months ago.

[00:16:59] And I think even they talked about it at their last earnings call.

[00:17:03] But I left it in just in case anybody was not aware that Lucid was planning on doing a more affordable version.

[00:17:10] They're also planning on making it like off-road capable or at least a version that's off-road capable.

[00:17:16] Maybe competing a little bit more with what Rivian's trying to do, which I'm not sure is a good idea or a bad idea.

[00:17:22] My general feeling is it's a bad idea, but it might be a good idea.

[00:17:26] I don't know.

[00:17:27] Maybe they're trying to compete with the Scout brand.

[00:17:30] I honestly don't know.

[00:17:32] But, you know, they're going to do what they're going to do.

[00:17:35] So hopefully it works out for them.

[00:17:38] All right.

[00:17:38] Let's move into our analyst questions.

[00:17:42] And then maybe I could ask a second question.

[00:17:45] And I apologize for skipping over the gravity to some degree and trying to get to the midsize.

[00:17:50] But when you think about the commonality between the air, the gravity, then whatever the name will be on the midsize,

[00:18:00] what are the reuse potential there?

[00:18:04] And as you think about sort of in general in the organization, you know, how much of your resources from a human capital perspective

[00:18:12] and an actual capital, dollar capital perspective is now being focused on that midsize?

[00:18:19] So I think if you look at some of our core technology, all our expertise in battery management system, control logic,

[00:18:26] traction control, stability control, motor control, all of that is directly transferable.

[00:18:33] If you look at our infotainment technology suite, ADAS, a lot of that is directly transferable.

[00:18:39] A lot of our core software expertise, absolutely.

[00:18:43] But in terms of motor technology, we're taking the very best learning from our Zeus program and transferring that into Atlas.

[00:18:51] Atlas is well on its way, actually.

[00:18:53] Atlas is all about an absolute ultra affordable version of Zeus.

[00:18:59] And Zeus was affordable because it enabled cost down in batteries.

[00:19:04] So we're going to, you know, take next generation battery tech and a completely new architectural,

[00:19:11] very advanced architectural look at midsize.

[00:19:14] And that is going to be really aimed at reducing the bill of materials cost for high volume.

[00:19:21] So we will use different high volume processes and very much focus upon the factory as the center of the cost down driver.

[00:19:32] This is a very different animal.

[00:19:34] We've proven we've got the best vehicle in, you know, the technological tour de force in air and gravity.

[00:19:42] And midsize is going to be the really different approach.

[00:19:45] It's going to be cost conscious.

[00:19:49] Its focus is the machine that builds the machine.

[00:19:53] What an Elon Musk thing to say.

[00:19:57] The machine that builds the machine.

[00:19:59] That's what the Elon's been saying that about factories since they built Kiga Factory in Nevada.

[00:20:04] Maybe even before that.

[00:20:05] But that's when I remember him saying it.

[00:20:07] This is not a great answer.

[00:20:10] But I will tell you that this answer sets up another question that's going to actually be at the end of the episode.

[00:20:17] So I think that, or based on his answer, I don't have confidence that Lucid has the midsize platform completely figured out yet.

[00:20:35] But it's not to say that they won't.

[00:20:37] And it's not to say that it won't be good.

[00:20:39] Because Peter Rawlinson is a heck of a marketer.

[00:20:41] But he's also a really good engineer.

[00:20:44] It's just to say, of course they want to make it cheaper.

[00:20:47] It's a cheaper vehicle.

[00:20:49] Of course they want to make it great.

[00:20:50] There's a lot of great vehicles in that price range.

[00:20:54] You know, from Hyundai, Kia, Genesis, Tesla.

[00:21:00] Rivian will be in that price range eventually.

[00:21:03] So, of course they want this to be affordable.

[00:21:07] Because they want to make money.

[00:21:08] Like, that makes total sense to me.

[00:21:10] And like I said earlier, their cost savings measures are coming from automation.

[00:21:17] Or at least they hope it is anyway.

[00:21:18] We'll have to see.

[00:21:21] But based on this answer, and maybe he just doesn't want to answer.

[00:21:25] And that's entirely possible.

[00:21:26] And he's just, you know, throwing out a word salad to confuse everybody.

[00:21:30] I don't feel like they have the mid-sized platform completely dialed in yet.

[00:21:36] They probably have an idea.

[00:21:38] You know, they have a concept of a plan.

[00:21:39] But I don't know how, where they're at in that design process.

[00:21:45] Are they pencils down?

[00:21:46] Probably not.

[00:21:46] Are they close?

[00:21:48] Probably not.

[00:21:49] Again, I just want to reiterate.

[00:21:51] That is based on that answer that he just gave.

[00:21:54] And listening to the rest of the earnings call and all the other earnings calls that we've heard to this point.

[00:22:00] Let's move into our next analyst question.

[00:22:04] Andres Shepard, Bitcantor Fitzgerald.

[00:22:06] Please go ahead.

[00:22:09] Hey, everyone.

[00:22:10] Good evening.

[00:22:11] Congratulations on the quarter.

[00:22:12] And thanks so much for taking our questions.

[00:22:15] My thanks.

[00:22:17] Hey, Peter.

[00:22:18] I'm wondering if, I know it might be a bit early, but curious to see if you have a sense or an idea, you know, what kind of unit mix are you anticipating for next year with the gravity ramping up in terms of the air and the gravity?

[00:22:37] Just curious.

[00:22:38] Just what is the better way to think about that for next year?

[00:22:41] Thank you.

[00:22:42] So what we've done, we've started with a high-end product first, the gravity, lucid gravity grand touring.

[00:22:48] We think there is a huge latent demand for that.

[00:22:51] We've announced that later in 2025, an appropriate moment in time will bring out the lucid gravity touring, which starts at the 79,900.

[00:23:04] The grand touring starting at 94,900, which I think is a cracking price point for the product over 440 miles of range, true seven-seater, high-performance, 828 horsepower, a machine.

[00:23:20] It really is a flying machine.

[00:23:21] So I think there's huge latent demand for the grand touring.

[00:23:25] I've stated before that we're not manufacturing constrained with our build for air.

[00:23:31] We've been market constrained.

[00:23:32] I anticipate that we're going to be manufacturing constrained next year in the buildup of gravity.

[00:23:39] We need to get the quality right and take a judicious and very prudent approach to meeting customer expectations with the quality as we ramp up.

[00:23:50] I anticipate we will be manufacturing ramp up quality mindset constrained in that ramp up, not constrained by market demand.

[00:24:03] And then we'll transition to the touring at some stage late next year when we deem appropriate.

[00:24:10] Okay.

[00:24:11] So this is hard because a lot of this is speculation, right?

[00:24:16] But I don't think 2025 is going to be a great year for Lucid and the gravity.

[00:24:24] I think that they are going to have to wait until 2026 and 2027 to really see how that vehicle sells.

[00:24:33] And I think that's the only fair way to judge it.

[00:24:36] Because they're going to release a few in the first quarter because they have to ramp up production.

[00:24:43] They have to make sure that they have all of their suppliers in order.

[00:24:46] They have to make sure they have distribution in order.

[00:24:48] There's just a bunch of things that they have to do in order to sell this vehicle.

[00:24:56] Actually, you know, from raw materials to out the door in delivery in customers' hands.

[00:25:02] There's just a lot of things that needs to happen.

[00:25:04] And none of these companies, none of these car companies that has introduced the new product,

[00:25:10] or at least none of the new EV companies that have done this,

[00:25:12] have been able to move into production without a lot of problems.

[00:25:19] So I don't think 2025 is going to be a good bellwether on whether or not the gravity is going to sell well or not.

[00:25:29] Because, you know, Lucid, let's say they have 50,000, and I don't know how many they have,

[00:25:35] but let's say they have 50,000 reservations for the gravity.

[00:25:40] And let's say they're only able to build 6,000 vehicles.

[00:25:44] Well, the news headline isn't going to be that Lucid has 50,000 reservations.

[00:25:52] It's that they only delivered 6,000 vehicles in 2025.

[00:25:55] Lucid currently has plenty of money.

[00:25:58] So let's let them cook.

[00:26:00] Let's let them figure things out.

[00:26:02] And if their numbers are still low in 2026 and 2027,

[00:26:06] then I think that's really telling for the company and basically where they're at in terms of manufacturing or demand.

[00:26:14] They say they don't have a demand problem with the Lucid Gravity,

[00:26:17] or they won't have a demand problem, but it still starts at $94,900.

[00:26:24] Still not a cheap vehicle.

[00:26:25] There's only so many people who can afford that vehicle.

[00:26:29] So we'll see.

[00:26:31] I do want to see Lucid succeed, so I hope that it does well, but that is a concern that I have.

[00:26:37] What are your thoughts?

[00:26:38] You can email me, Bodie, B-O-D-I-E, at 918digital.com.

[00:26:44] Let's listen to our next clip.

[00:26:46] At just kind of a high level, when you think about your capital needs and timing of capital,

[00:26:51] like you did the recent capital raise, and I'm just curious on how you chose kind of when to do it versus need,

[00:27:01] because it felt like you had a longer runway, and I know it creates confidence to have the capital.

[00:27:06] I'm just sort of thinking about how you banished that out.

[00:27:10] Well, thank you for asking.

[00:27:11] I'm glad you asked me that, Stephen, actually.

[00:27:13] So to recap, we recently raised nearly $1.75 billion, and that secures the future of the company,

[00:27:20] and it secures our financial runway well into 2026.

[00:27:25] And that takes us way past not just the start of production of gravity, but well through its ramp-up phase.

[00:27:34] And you know, that means that this year in 2024, we've raised well over $4 billion in what's been a brutal market,

[00:27:41] where Wall Street's really fallen out of love with the EVs.

[00:27:44] And it just shows just how we can buck the trend, because there's been a cognizance of the value of our tech,

[00:27:52] both commercially and as a key product differentiator.

[00:27:58] Now, this should have come as no surprise whatsoever,

[00:28:02] because before we had a financial runway into Q4 2025,

[00:28:10] you never want to have a runway less than a year.

[00:28:14] So it makes perfect sense.

[00:28:16] And I've always said, I would want to be opportunistic,

[00:28:21] and raise capital when the moment is right,

[00:28:26] and not just run things right to the last minute.

[00:28:29] Why would I run things to the last minute?

[00:28:32] What we did, I think, was a very prudent move.

[00:28:35] We took the opportunity.

[00:28:37] You know, why would I want to run it into the holiday period?

[00:28:41] And don't want to be running less than a year's financial runway.

[00:28:48] So I think this has been misinterpreted.

[00:28:51] I think it's super positive news for the company.

[00:28:54] We've raised capital when others have not been able to.

[00:28:58] It's had a huge step forward in securing our future.

[00:29:04] And there's another litmus here, which again should be recognized.

[00:29:10] The PIF went pro rata on that 1.75 billion.

[00:29:15] So you've got two factors.

[00:29:17] You've got independent third-party validation of our value.

[00:29:21] So we're not just dependent upon the PIF.

[00:29:24] But the PIF go and show shoulder-to-shoulder commitment to Lucid

[00:29:30] and their support of us again,

[00:29:33] because we're absolutely in this together long-term,

[00:29:36] but a long-term partnership,

[00:29:37] which transcends a mere financial arrangement,

[00:29:41] because we are cornerstone of Saudi Arabia's bold vision for 2030

[00:29:49] to transition to a sustainable economy.

[00:29:52] And it's Lucid's technology, which is going to enable that.

[00:29:57] An answer to the question of why raise capital now,

[00:30:02] I think it's a good time for them to raise capital.

[00:30:05] I don't know that Wall Street has fallen out of love with EV makers

[00:30:10] or EV manufacturers.

[00:30:11] I don't know that that part is true.

[00:30:13] Tesla stock's doing just fine,

[00:30:15] and it was doing just fine when this earnings call was recorded.

[00:30:20] Over half of their latest raise,

[00:30:24] their latest investment,

[00:30:27] was the affiliate from the PIF,

[00:30:31] the public wealth fund or investment fund.

[00:30:35] So yeah, I mean,

[00:30:37] if you can raise the money from a partner

[00:30:41] that has a 60% stake in the company,

[00:30:46] you should.

[00:30:47] But we don't know what the next couple of years is going to bring.

[00:30:51] We have a presidential change here in the United States

[00:30:54] with possible changes in regulations,

[00:30:57] EV regulations and incentives.

[00:30:58] So don't know what that's going to look like.

[00:31:01] So I think from a pragmatic standpoint,

[00:31:03] this was a good choice and a good decision.

[00:31:09] Now, back to the Mike Tyson,

[00:31:11] Jake Paul fight.

[00:31:12] Jake Paul's entering the ring in a convertible pickup truck,

[00:31:16] and I hate him so much.

[00:31:18] Let's move on to our next clip.

[00:31:21] And this should be our final clip.

[00:31:23] I just wondered whether you could perhaps place me on a timeline.

[00:31:30] How far are we away from all of the cost savings being realized

[00:31:35] to things like freight and cost savings

[00:31:39] and where you need to take, I guess,

[00:31:42] some more difficult actions to actually remove cost from the air?

[00:31:47] And then I have one for Peter, if that's okay.

[00:31:50] That's a great question.

[00:31:53] Our journey is wrecking.

[00:31:55] We are taking consistent efforts.

[00:31:57] In fact, you know, we have identified our targets,

[00:32:00] where we want to be end of this year,

[00:32:02] where we want to be end of next year,

[00:32:04] where we want to be middle of next year,

[00:32:06] and even beyond that.

[00:32:08] So we are going to make significant efforts on cost reductions.

[00:32:12] In parallel, what we're doing is technology is helping us

[00:32:16] bring the cost down, like the battery cost,

[00:32:18] like the drive unit.

[00:32:20] But what you see in terms of targets,

[00:32:23] and when we come to scale,

[00:32:25] it's significantly going to turn around it.

[00:32:28] Because what we're right now doing with targets,

[00:32:31] bringing the variable cost significantly down.

[00:32:34] And with gravity coming,

[00:32:36] it is going to take us to the next level for scale,

[00:32:40] where all our fixed costs per vehicle

[00:32:43] will significantly come down.

[00:32:45] So, you know, you'll see where we are on the gross margin,

[00:32:48] negative 106%.

[00:32:50] It was negative 241% last year.

[00:32:53] So if you look at that improvement,

[00:32:55] and where will be next year,

[00:32:56] you know, when we provide some directional color

[00:32:58] in the Q4 earnings, about 25,

[00:33:00] we are on the right track in that journey.

[00:33:04] I'm going to break in here for just a second,

[00:33:06] because there's still more to this question.

[00:33:08] He had a follow-up to Peter.

[00:33:11] But Lucid announced their car in 2016.

[00:33:14] They had been working on it longer than 2016,

[00:33:18] but that's when they announced it

[00:33:19] and showed it off to everybody.

[00:33:21] And it was a big hit.

[00:33:22] And I liked it a lot when it came out.

[00:33:25] They started selling their first vehicle

[00:33:28] or delivering their first vehicle in 2021.

[00:33:31] So now we are in 2024,

[00:33:33] and they're still trying to remove inefficiencies

[00:33:37] out of their manufacturing and supply chain system.

[00:33:40] And I'm sure, you know,

[00:33:41] delivery and all that other stuff.

[00:33:42] So they're still trying to pull those unneeded expenses

[00:33:47] out of the cost of building their vehicles.

[00:33:51] And, you know, they're just losing money on these vehicles.

[00:33:55] It seems like,

[00:33:57] and I don't think that Lucid has stupid people working for it

[00:34:00] by any stretch of the imagination,

[00:34:03] but it seems like by now,

[00:34:05] or at least in 2025, we'll give them four years,

[00:34:08] they should have,

[00:34:10] or at least come close to turning a profit,

[00:34:13] like breaking even, turning a profit,

[00:34:15] or maybe just losing a little bit of money.

[00:34:17] Um, the one thing that I think is maybe,

[00:34:24] it's a benefit and a hindrance

[00:34:26] is the Saudi Public Investment Fund.

[00:34:29] Because Lucid has this piggy bank

[00:34:34] that they can draw from,

[00:34:35] and it's possible because they have this safety net

[00:34:38] that maybe they haven't been as aggressive

[00:34:40] as they could have been

[00:34:41] in terms of removing these unneeded costs

[00:34:46] from their,

[00:34:48] whether it's their supply chain,

[00:34:50] manufacturing, like I said,

[00:34:51] all the things that I mentioned.

[00:34:52] I would expect at this point in time

[00:34:54] for Lucid to be closer to profitability

[00:34:58] than they are.

[00:35:00] It's not to say

[00:35:01] that they won't eventually get there,

[00:35:04] but I just wonder whether or not

[00:35:06] the Saudi Wealth Fund was a benefit.

[00:35:09] I mean, obviously it's a benefit.

[00:35:11] They're still getting money from it.

[00:35:12] But because they're able to get money from it

[00:35:15] from what seems like whenever they want to,

[00:35:18] has that left Lucid sitting on its heels a little bit

[00:35:21] and not being more proactive

[00:35:23] at removing those unneeded costs?

[00:35:26] All right, let's move on to our next slide.

[00:35:28] Peter, I wondered if you could explain

[00:35:30] what you mean when you say

[00:35:32] that the Gravity uses a different platform to air.

[00:35:36] If I'm correct,

[00:35:38] both vehicles have nearly identical wheelbases

[00:35:41] and Leap is a modular platform,

[00:35:44] which would allow for differentiation

[00:35:47] via a top hat design.

[00:35:49] So I just want to kind of understand a little bit

[00:35:51] what you mean by gravity uses a different platform.

[00:35:55] Now, Leap is a modular platform

[00:35:58] where you could do a CUV,

[00:36:00] you could have done a minivan,

[00:36:02] you could have done a coupe,

[00:36:04] you could have done lots of things like that

[00:36:06] where you're fairly compromised as a product.

[00:36:09] If you look at an example of that

[00:36:11] is Tesla Model X versus Model S.

[00:36:14] X isn't really a proper SUV,

[00:36:16] it's more CUV-like

[00:36:17] because it's based upon S platforms.

[00:36:19] We took the decision

[00:36:21] to get much more product differentiation

[00:36:23] to avoid a cannibalization of air with gravity.

[00:36:28] We wanted to really capture

[00:36:30] the six times TAM of a true SUV market.

[00:36:35] That means more off-road capability.

[00:36:38] That means more wheel travel,

[00:36:40] larger wheel diameters,

[00:36:43] more suspension movements,

[00:36:44] you need longer links,

[00:36:46] more durable suspension,

[00:36:48] so you're going to have to

[00:36:49] heavier suspension arms and brakes

[00:36:53] and rated for off-road durability

[00:36:57] so the thing endures a long life

[00:37:00] on rugged trails.

[00:37:03] And also we combined that with air suspension

[00:37:06] so we could adjust the ride height of the vehicle.

[00:37:10] The other thing is that with air,

[00:37:12] we sculpted the battery pack around the occupants

[00:37:16] in order to create the most advanced package

[00:37:19] and the space concept,

[00:37:22] which achieved the 500 miles range,

[00:37:24] sculpted around the people.

[00:37:26] And that's great for a sedan, a CUV,

[00:37:29] but for a three-row SUV,

[00:37:32] what you need is a really flat floor.

[00:37:35] So we could achieve that

[00:37:37] with the same battery technology,

[00:37:39] with the same modules,

[00:37:40] but we just moved two of them around

[00:37:42] from underneath the rear seat

[00:37:43] to under the front seat.

[00:37:45] And that makes a different shape battery,

[00:37:48] but we got 95% carryover content.

[00:37:51] But I tell you,

[00:37:53] it's transformative in regards to the product.

[00:37:56] You've got a true SUV

[00:37:58] and you've got a true sports sedan.

[00:38:01] And they're very, very different

[00:38:03] and very optimized.

[00:38:04] And we realized we couldn't really do that

[00:38:08] with a carryover.

[00:38:09] A carryover platform would kill us

[00:38:13] for product differentiation.

[00:38:15] And let me tell you,

[00:38:16] we've done that now just,

[00:38:19] I mean, it's only a smidgen over three years

[00:38:21] from when we launched into the market.

[00:38:24] For a relatively young company,

[00:38:26] no one's ever done a second platform

[00:38:28] in three years.

[00:38:30] There is no precedent

[00:38:31] for the rate that my engineering team

[00:38:35] is operating at.

[00:38:36] And we really, through this year,

[00:38:38] kept gravity on track,

[00:38:40] track admirably.

[00:38:41] To hit start a production late this year

[00:38:44] is an incredible achievement for the team.

[00:38:47] And I really applaud them all for doing it.

[00:38:49] All right, I'm going to break in one more time

[00:38:51] because this is a longer clip.

[00:38:54] I'm sorry for misleading you.

[00:38:56] I think using a different platform

[00:38:58] for the gravity is really smart.

[00:39:01] You know, they can still use

[00:39:03] a lot of the same technologies

[00:39:04] between the platforms.

[00:39:05] They can use the same battery chemistries

[00:39:08] and form factors for the battery,

[00:39:11] the management system for the batteries,

[00:39:13] the different types of motors.

[00:39:14] And they can still, you know,

[00:39:17] share some of that same DNA.

[00:39:20] But a new platform gives them an opportunity

[00:39:23] to change the way they do manufacturing

[00:39:27] to the point where it's going to make

[00:39:29] manufacturing easier.

[00:39:31] Or at least they could

[00:39:31] because they're not handcuffing themselves

[00:39:33] to a legacy technology.

[00:39:36] Now, granted, the Lucid Air is only,

[00:39:39] what is it, three years old

[00:39:42] in terms of a platform.

[00:39:44] But it's still,

[00:39:46] and it's almost four years old,

[00:39:47] it's still a completely different type of car.

[00:39:50] So this makes a lot of sense to me

[00:39:52] for them to have the Lucid Gravity

[00:39:55] be its own platform.

[00:39:57] And now we move to our really,

[00:39:59] truly final clip.

[00:40:03] Okay.

[00:40:05] How do you think this has impacted the cost?

[00:40:08] So I guess when I hear things like,

[00:40:12] you know,

[00:40:12] that they're not actually

[00:40:13] just a different top hat,

[00:40:16] it gives me a little bit.

[00:40:17] I know,

[00:40:19] but this is the problem,

[00:40:20] that there is a disproportionate value

[00:40:23] placed upon true platform sharing

[00:40:26] because you very rarely share

[00:40:28] the full platform.

[00:40:29] What happens is

[00:40:29] it's talked about the same platform,

[00:40:31] but it gets modified.

[00:40:33] Now,

[00:40:33] all the superstructure of an SUV

[00:40:35] is going to be different anyway.

[00:40:37] All the seats are going to be different.

[00:40:39] The driver controls are going to be different.

[00:40:41] The wheels are going to be different.

[00:40:43] The suspension is going to be different.

[00:40:44] The brakes are going to be different

[00:40:45] in any way.

[00:40:45] The weight is going to be different.

[00:40:48] So you crash structure

[00:40:49] and collapse mechanisms

[00:40:51] and the way you engineer those

[00:40:52] have to be different.

[00:40:54] So,

[00:40:55] you know,

[00:40:58] where the real value proposition

[00:41:01] an economy of scale goes in

[00:41:03] is in the software

[00:41:05] and the power train

[00:41:07] are architectural and componentry.

[00:41:09] We've got inherently the same motors,

[00:41:11] state-of-the-art motors.

[00:41:12] There's a lot of value,

[00:41:13] the same inverter,

[00:41:14] the same motor control system,

[00:41:17] wonder box,

[00:41:19] all the battery modules.

[00:41:21] 95% of all that value

[00:41:24] in all the software

[00:41:24] is carryover.

[00:41:27] You're not going to be able

[00:41:29] to carry over the doors,

[00:41:30] the glass,

[00:41:30] the suspension,

[00:41:32] the seats,

[00:41:33] and the tailgate anyway.

[00:41:36] So it's just a tiny bit of it,

[00:41:40] a relatively small part of it

[00:41:43] is different

[00:41:44] to get all that product differentiation.

[00:41:47] If we didn't do that,

[00:41:49] you'd be saying,

[00:41:50] well,

[00:41:50] I don't think there's another,

[00:41:51] a new six times tick-tam.

[00:41:53] You'd be saying,

[00:41:54] well,

[00:41:55] this is a cannibalization situation.

[00:41:58] It's not differentiated enough.

[00:42:00] Maybe you got two times the term,

[00:42:01] not six times the term.

[00:42:03] This is a value proposition,

[00:42:05] bit more engineering,

[00:42:06] bit more cost,

[00:42:09] huge market opportunity.

[00:42:11] All right.

[00:42:11] So I already covered a lot of this,

[00:42:12] so I'm not going to belabor the point here.

[00:42:15] I didn't mention software,

[00:42:17] but that's another good point

[00:42:18] is even though the platforms

[00:42:21] aren't the same,

[00:42:22] they can share a lot of the same software.

[00:42:24] So yeah,

[00:42:25] that makes a lot of sense.

[00:42:27] All right.

[00:42:28] That is it for me on this episode.

[00:42:30] I hope you all enjoyed it.

[00:42:32] Right now we're in round two of eight

[00:42:35] in the Paul Tyson fight.

[00:42:36] It looks like Jake Paul

[00:42:38] is trying to run away from Mike Tyson

[00:42:40] and create a little bit of space

[00:42:43] and also maybe try and tire Mike out.

[00:42:46] However,

[00:42:47] when Mike faints,

[00:42:49] anytime he faints,

[00:42:50] Jake Paul gets a lot of distance.

[00:42:52] He's really respecting Mike Tyson's punches.

[00:42:58] And yeah,

[00:42:59] I think Mike in the first round

[00:43:01] did really well.

[00:43:02] Jake Paul does look a little more tired.

[00:43:04] He is moving quite a bit more in the ring,

[00:43:07] whereas Mike is a little bit more steady on his feet

[00:43:10] like he was when he was younger.

[00:43:12] Jake Paul's wrapping up a lot.

[00:43:14] Honestly,

[00:43:15] Jake Paul is an athlete

[00:43:17] and he is a very strong human being

[00:43:19] and it is possible that he could win this for sure.

[00:43:22] He is like 28 years old,

[00:43:24] but I would love to see Mike win.

[00:43:26] Anyway,

[00:43:26] that's your Tyson Paul update.

[00:43:29] I hope you all have a wonderful day.

[00:43:32] And if you watch the fight,

[00:43:33] let me know what you thought.

[00:43:35] I'm going to go post this

[00:43:37] and watch the rest.

[00:43:39] So thank you everybody for listening

[00:43:40] and I will talk to you on Tuesday.

[00:44:02] Thank you everyone for joining.

[00:44:03] You may now disconnect.

[00:44:05] Thank you.