The electric vehicle manufacturer, whose main shareholder is Saudi Arabia’s sovereign wealth fund Public Investment Fund — which owns 62% of Lucid — wants to prove to investors that it is able to manage the panoply of problems currently facing all vehicle manufacturers and especially upstarts.
The Covid-19 pandemic has completely disrupted supply chains. The resurgence of the coronavirus in China has not helped matters. China has taken new restrictions, such as a new lockdown in Shanghai where many automotive supplier factories are located. Added to this is the soaring prices of raw materials.
Lucid, presented as one of Tesla’s (TSLA) – Get Tesla Inc Report most serious rivals, recognizes that these difficulties are unwelcome. But the group also wants to show that these problems are not insurmountable. Lucid has just made some announcements aimed at reassuring investors during the results of the first quarter.
Production Target Confirmed
Lucid confirmed its goal of producing between 12,000 and 14,000 vehicles in 2022. The company also delivered 360 vehicles in the first quarter and had 30,000 reservations, representing $2.9 billion in potential revenue, according to a press release.
In February, Lucid had lowered its production target from 20,000 to between 12,000 and 14,000 vehicles in 2022. The 30,000 reservations do not include vehicles from the huge order of 100,000 vehicles recently placed with Saudi Arabia over 10 years.
“Similar to many companies in our industry, we continue to face global supply chain and logistics challenges, including Covid-related factory shutdowns in China,” said Sherry House, Lucid’s chief financial officer. “We are working closely with our suppliers to mitigate the impact of disruptions.”
“While any extended disruptions could result in an impact to our production forecast, today we are reiterating our 12,000-14,000 vehicle production forecast for 2022 based on the information we have at this point combined with our mitigation plans.”
Lucid also explained that it has enough cash on hand to finance its operations until 2023. This is good news because Lucid is in the midst of increasing production rates.
“Our Q1 revenue was $57.7 million, primarily driven by higher customer deliveries of Lucid Air vehicles. We continue to have a healthy balance sheet, closing the quarter with nearly $5.4 billion of cash on hand, which we believe is sufficient to fund the company well into 2023,” said House.
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Morgan Stanley analyst Adam Jonas doesn’t seem convinced that Lucid can meet its production target. If he believes that Lucid will probably not need new funds in 2022, Jonas says he is convinced that the group will have to find new injections of capital in 2023.
“We forecast 9.9k deliveries for FY22 which we believe may be on the aggressive side given the company delivered 360 vehicles in 1Q including approximately 185 (our calculation) in the month of March,” the analyst explained.
Jonas estimates $2 billion of new equity will be raised in FY23 and an additional $3 billion of capital (50/50 equity/debt) in 2024.
Lucid shares are down 10.4% to $18.15 since May 5, the day of publication.
Lucid has also decided to increase the prices of its vehicles as of June 1. The electric vehicle manufacturer has however promised that customers who have already placed their orders will not be affected. Ditto for customers who order a vehicle by May 31.
Prices for Lucid vehicles will roughly increase between 10% and 12% depending on configuration. Lucid produces the Lucid Air Sedan which comes in several configurations, including the Lucid Air Dream Edition, Lucid Air Pure, Lucid Air Grand Touring.
“The world has changed dramatically from the time we first announced Lucid Air pricing in September 2020, but I want to reassure our existing reservation holders that we will be honoring current pricing for them as well as for any new reservations made before the end of the month,” Peter Rawlinson, Lucid’s CEO and chief technology officer, said.
“Looking forward, we remain intently focused on ramping production and are excited about our product roadmap in 2022 and beyond with Air Grand Touring Performance deliveries expected in June; Air Touring and Air Pure later this year; and with our Project Gravity SUV remaining on target to begin production in the first half of 2024.”
Project Gravity SUV is the second model of the company.
The company delivered its first car in October 2021.