AutoBeta(AutoBeta.net)08/07 Report--

Lucid, a US electric vehicle startup, announced on Aug. 5 that the Saudi Public Investment Fund (PIF) had pledged $1.5 billion, including $750 million in convertible preferred stock investments and $750 million in deferred withdrawal term loans.

It is understood that the Saudi sovereign fund (PIF) holds a 60 per cent stake in Lucid, making it the largest shareholder. The financing is another big investment after Lucid received a $1 billion injection from the Saudi Public Investment Fund (PIF) in March. On March 25, Lucid said it would raise $1 billion from Ayar Third Investment Company, an affiliate of the Saudi Public Investment Fund (PIF), some of which would be used for capital expenditure and working capital. Lucid's pre-market gains widened to 20 per cent on the news.

It is understood that this financing will provide a source of funds for Lucid to launch new cars. Lucid's medium and large SUV Gravity is scheduled to go into production at the end of 2024 and is expected to sell for about $80, 000, while a more affordable medium-sized car is scheduled to be launched by the end of 2026.

On the same day, Lucid released its second-quarter financial results. Lucid reported revenue of $200.6 million in the second quarter, ahead of analysts' expectations of $185.8 million, while a net loss of $790 million, compared with $764 million a year earlier. In terms of production and marketing, Lucid produced a total of 2110 new cars in the second quarter; a total of 2394 new cars were delivered, an increase of 70.5% over the same period last year.

At the end of the second quarter, Lucid's total liquidity was about $4.28 billion. Gagan Dhingra, interim chief financial officer and chief accounting officer of Lucid, said: "the Saudi Public Investment Fund (PIF) is committed to $1.5 billion and is expected to provide sufficient liquidity at least in the fourth quarter of 2025." It is important to note that in March, Peter Rawlinson, chief executive of Lucid, said that Lucid could not rely solely on blood transfusions from its Saudi investors when seeking financing in the coming year, but had to find ways to reduce costs and increase sales, noting that it was working to cut spending and increase production of electric vehicles.

So far, Lucid has only one Air sedan, and the price is high, which is not suitable for the mass market, which is doomed to a difficult life for Lucid. On February 15th of this year, Lucid announced that the price of its models would be reduced by 1% by 10%. Among them, the entry-level model Air Pure fell by $7500, or nearly 10%, to an adjusted price of $69900 (about 504000 yuan); the price of Air Touring fell from $85900 to $77900 (about 562000 yuan); and the price of the top model, Air Grand Touring, fell by $1000 to $109900 (about 792000 yuan). The industry believes that behind the price reduction is the continued sharp drop in delivery volume.

Then, on May 24, Lucid announced that it would cut 6 per cent of its workforce to address market challenges and internal restructuring, while optimizing operating expenses and boosting productivity. It is understood that as of December 2023, Lucid has about 6500 full-time employees worldwide, that is, about 400 employees will be affected by the layoffs. And Lucid layoffs, the most direct reason is the lack of money, like most of the new car makers, Lucid is also in a loss state, in this context, through layoffs to reduce costs is very important for Lucid.

As a luxurious new American car-building brand, Lucid's development path is very similar to Tesla and was once known as the "Tesla killer", but the development of Lucid is not smooth and there is a huge funding gap, no matter the production scale or sales volume can not be compared with Tesla.

Now, Lucid has come to the moment of life and death. Lucid CEO Peter Rawlinson (Peter Rawlinson) said in a previous internal email: "We must be vigilant about costs and are optimizing resources to help the company achieve success and growth opportunities in the future." Before that, in June 2022, Elon Musk, chief executive of Tesla, said bluntly that Lucid showed signs of bankruptcy and that unless the company could slash costs, it would go bankrupt.

For Lucid, the Lucid Air alone is doomed to go far. If it wants to make a breakthrough in delivery volume, it will have to launch cheaper models, but a more affordable medium-sized car will not be available until the end of 2026, while the Gravity SUV positioning high-end market, which will be launched at the end of the year, is expected to sell for about $80, 000, which is also expensive. At present, the important problem facing Lucid is production capacity and sales volume, unable to achieve large-scale is the key to Lucid can not get out of the loss. According to the plan, Lucid expects to produce 9000 cars this year, but far below analysts' expectations of 14000. For reference, the production and sales of Lucid in 2023 are 8428 and 6001 respectively.

According to the financial report, the cumulative income of Lucid in the first half of the year was $373 million, up 24.31% from the same period last year, and the cumulative net loss was $1.324 billion, down 14.22% from the same period last year. What needs to be faced squarely is that at present, the new energy vehicle market has entered the Red Sea stage, and the market competition is quite fierce. under the background of persistent losses, lack of money and weak cash reserves, we have no way to know whether Lucid will get better in the second half of 2024. It is still unknown how long Lucid can be supported by the $1.5 billion promised by the Saudi Public Investment Fund (PIF), but what is certain is that after entering the era of new energy vehicles, Lucid may have to face more adjustments and changes if it wants to get a share of the increasingly competitive electric vehicle market.

As of Aug. 5, Lucid shares closed at $3.000, down 3.85%, with a total market capitalization of $6.921 billion.

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