Lucid reported Q2 earnings on Tuesday, and the outcomes have been tough. The corporate misplaced greater than $850 million ($632 million on an adjusted foundation) on income of about $260 million. It delivered a type of respectable 3,309 automobiles within the quarter, however can be guided towards decrease complete 2025 manufacturing of 18,000-20,000 items, and in any case Lucid actually must crank up manufacturing and overcome provide chain points to hit that mark. The corporate stated it has near $5 billion in liquidity out there, however of that lower than $2 billion is precise money.
The inventory was hammered in post-market buying and selling Tuesday and opened 7% down on Wednesday. Not precisely a super consequence as a result of Lucid additionally desires to do a reverse inventory break up, turning ten shares into one and getting the corporate out of penny-stock territory, staving off a NASDAQ delisting if shares fall under $1. The corporate says it could possibly maintain itself till mid-2026, however there isn’t any query that it wants to boost much more cash to proceed its present burn price — most likely as a lot because it raised in its 2021 public providing, a SPAC deal that introduced in $4.4 billion. Oh, and Lucid nonetheless does not have a real CEO, after Peter Rawlinson departed earlier this yr.
What in regards to the Saudis?
The e-book on Lucid has all the time been that PIF, the Saudi sovereign wealth fund, will eternally backstop the startup. PIF owns about 60 % of Lucid and has appeared content material to pour billions into what has been a powerful cash-incinerating operation. PIF is estimated to have between $600-700 billion, so conserving Lucid going is not ruinously costly. However in some unspecified time in the future you need to ask your self how a lot PIF is prepared to let Lucid lose.
As a result of Lucid actually does look structurally unprofitable, because it’s at the moment being operated (and there is nothing newly named model ambassador Timothée Chalamet can do about that). In three months, it spent over $850 million to usher in $260 million. That was primarily on gross sales of its dear Air sedan, because the new Gravity SUV hasn’t but ramped as much as assume the gross sales burden. In response to interim CEO Marc Winterhoff on the convention name with analysts after Q2 numbers have been introduced, the Gravity has additionally suffered delays because of difficulties acquiring sufficient magnets from China, which the SUV wants for its electrical motors. However even when Lucid resolves that drawback, it has to massively enhance income to interrupt even on a quarterly foundation. And the cheaper, sub-$50,000 automobile that might allow it to realize extra scale is slated to reach till 2026.
A weak EV market and depressing fundraising prospects
Carrying its beleaguered stability sheet into an EV market that is slowing and quickly shedding federal authorities incentives within the U.S. is terrifying. Lucid can be going through considerably extra competitors than Tesla ever did, when the latter was struggling to validate its enterprise within the mid-2010s. Shoppers have a number of choices nowadays with regards to shopping for all-electric SUVs, so Lucid cannot assume that it is going to convert even the decrease finish of its 2025 manufacturing steering to gross sales.
And even when it did, it is unsure that these gross sales can be even remotely worthwhile. Total, Lucid has adopted the sample of many SPAC firms and principally develop into difficult as an funding (the inventory has declined over 70 % from its peak). You’d usually count on PIF to be fascinated by taking the corporate non-public to flee what might be a demise spiral, however the reverse break up implies that Lucid will attempt to experience out this dismal interval and try to get Gravity into an honest place.
Lucid will generate loads of numbers between now and mid-2026, however the ones that matter are topline and cash-burn. Absent a serious funding infusion or some epic offers with different automakers, that yawning hole has to slender or Lucid might confront some dire eventualities.
