Lucid Group, the luxury electric-vehicle maker backed by Saudi Arabia, reported a drop in production for the second quarter of this year, while deliveries remained flat. As a result, the company’s shares fell by about 12% on Wednesday.
Lucid has been facing challenges in scaling up production due to supply chain issues, and competition has intensified with Tesla’s price war that started in January. In the quarter ending June 30, Lucid delivered 1,404 vehicles, a slight decrease from the previous quarter’s 1,406 deliveries. Meanwhile, production declined by 6% to 2,173 vehicles.
The company had already lowered its 2023 production forecast and experienced lower-than-expected first-quarter revenue due to Tesla’s price war and rising interest rates. Analyst Garrett Nelson from CFRA Research called Lucid a “broken growth story” and expressed disappointment with its slow ramp-up rate at its state-of-the-art factory in Casa Grande, Arizona.
Lucid’s luxury sedans, known as the Air, start at $87,400, putting them in direct competition with Tesla’s Model S, which is priced at $88,490. Nelson suggested that significant price cuts are necessary for the Air to stimulate demand, especially considering the increasing competition.
In addition to production challenges, Lucid has been struggling financially and announced plans in May to raise about $3 billion through a stock offering. Saudi Arabia’s Public Investment Fund (PIF), Lucid’s largest investor, is expected to contribute nearly two-thirds of the funding.
Last month, Lucid signed a deal with Aston Martin, granting the British automaker access to Lucid’s electric powertrain and battery technologies in exchange for a 3.7% stake.
Lucid plans to release its financial results for the second quarter on August 7 after the market closes.
Reporting by Akash Sriram in Bengaluru; Editing by Arun Koyyur and Shounak Dasgupta