Lucid Is In So Much Trouble That Even The Deep-pocketed Saudis Might Not Be Able To Rescue The Company

Lucid

Lucid reported Q2 net connected Tuesday, and nan results were rough. The institution mislaid much than $850 cardinal ($632 cardinal connected an adjusted basis) connected gross of astir $260 million. It delivered a benignant of respectable 3,309 vehicles successful nan quarter, but is besides guided toward little full 2025 accumulation of 18,000-20,000 units, and successful immoderate lawsuit Lucid really needs to crank up manufacturing and flooded proviso concatenation issues to deed that mark. The institution said it has adjacent to $5 cardinal successful liquidity available, but of that little than $2 cardinal is existent cash.

The banal was hammered successful post-market trading Tuesday and opened 7% down connected Wednesday. Not precisely an perfect result because Lucid besides wants to do a reverse banal split, turning 10 shares into 1 and getting nan institution retired of penny-stock territory, staving disconnected a NASDAQ delisting if shares autumn beneath $1. The institution says it tin prolong itself until mid-2026, but there's nary mobility that it needs to raise a batch much money to proceed its existent pain complaint — probably arsenic overmuch arsenic it raised successful its 2021 nationalist offering, a SPAC woody that brought successful $4.4 billion. Oh, and Lucid still doesn't person a existent CEO, aft Peter Rawlinson departed earlier this year.

Lucid

The book connected Lucid has ever been that PIF, nan Saudi sovereign wealthiness fund, will everlastingly backstop nan startup. PIF owns astir 60 percent of Lucid and has seemed contented to move billions into what has been an awesome cash-incinerating operation. PIF is estimated to person betwixt $600-700 billion, truthful keeping Lucid going isn't ruinously expensive. But astatine immoderate constituent you person to inquire yourself really overmuch PIF is consenting to fto Lucid lose.

Because Lucid really does look structurally unprofitable, arsenic it's presently being operated (and there's thing recently named marque ambassador Timothée Chalamet tin do astir that). In 3 months, it spent complete $850 cardinal to bring successful $260 million. That was chiefly connected income of its pricey Air sedan, arsenic nan new Gravity SUV hasn't yet ramped up to presume nan income burden. According to interim CEO Marc Winterhoff connected nan convention telephone pinch analysts aft Q2 numbers were announced, nan Gravity has besides suffered delays owed to difficulties obtaining capable magnets from China, which nan SUV needs for its electrical motors. But moreover if Lucid resolves that problem, it has to massively summation gross to break moreover connected a quarterly basis. And nan cheaper, sub-$50,000 conveyance that could alteration it to execute much standard is slated to get until 2026.

Lucid

Carrying its beleaguered equilibrium expanse into an EV marketplace that's slowing and quickly losing national authorities incentives successful nan U.S. is terrifying. Lucid is besides facing importantly much title than Tesla ever did, erstwhile nan second was struggling to validate its business successful nan mid-2010s. Consumers person tons of options these days erstwhile it comes to buying all-electric SUVs, truthful Lucid can't presume that it's going to person moreover nan little extremity of its 2025 accumulation guidance to sales.

And moreover if it did, it's uncertain that those income would beryllium moreover remotely profitable. Overall, Lucid has followed nan shape of galore SPAC companies and fundamentally go challenging arsenic an finance (the banal has declined complete 70 percent from its peak). You'd usually expect PIF to beryllium reasoning astir taking nan institution backstage to flight what could beryllium a decease spiral, but nan reverse divided implies that Lucid will effort to thrust retired this dismal play and effort to get Gravity into a decent position.

Lucid will make plentifulness of numbers betwixt now and mid-2026, but nan ones that matter are topline and cash-burn. Absent a awesome backing infusion aliases immoderate epic deals pinch different automakers, that yawning spread has to constrictive aliases Lucid could face immoderate dire scenarios.