Lucid Motors, the struggling American electric vehicle startup, eyes long-term business growth after suffering from low customer demand and failing to meet production targets since launching its first offering in 2021.
“We’ve got the very best technology. What we haven’t got is scale and an economy of scale.”
Lucid CEO Peter Rawlinson said during the Q4 2023 Earnings Call
Lower-than-expected production
Lucid’s production of its inaugural Air electric sedan only reached 8,428 units in 2023 and only sold 6,001 units, indicating 2,427 unsold units. It prompted the California-based automaker to significantly lower its production target to 9,000 units in 2024.
For comparison, it previously set a target of producing 49,000 electric vehicles in 2023 and 90,000 units this year. In effect, Lucid’s stock price declined almost 17% in the day following the earnings report.
It is indeed disheartening, considering that Lucid offers very remarkable electric vehicle technologies. Fortunately, the automaker still holds enough funds worth $4.78 billion to support its operations until 2025.
It can also expect additional support from its major investor, Saudi Arabia’s sovereign fund, when things get too rough.
Lucid’s strategy
Lucid’s current electric vehicle strategy apparently has three parts, including price cuts, three-row SUV production, and midsize platform development to achieve the crucial “scale and an economy of scale.”
Step 1: Price cuts
Chief Rawlinson announced that the first phase of the strategy involves the price reduction of its Air electric sedan to attract more customers and boost sales figures.
Lucid recently announced a $7,500 price cut on the entry-level Air Pure RWD, dropping its price to $69,900. According to the Lucid boss, this pricing expands the brand’s total addressable market (TAM) by threefold.
“…now we go into E-Class Mercedes territory rather than S-Class.”
Lucid Motors
Step 2: Three-row SUV production
Lucid Motors plans to kick off the production of its new three-row electric SUV, the Gravity, by the end of 2024.
It will play a significant role in boosting Lucid’s electric vehicle sales this year, considering the growing popularity of SUVs over sedans in the US market. That said, it can surpass the demand for the Air electric sedan.
To put it in perspective, electric rugged pickup truck and SUV startup Rivian had stronger growth with about 57,000 units produced in 2023.
Step 3: Midsize platform development
Lastly, Lucid aims to develop and launch a new midsize platform to support a smaller and cheaper offering than the Air and Gravity EV.
This upcoming model is expected to hit the production lines in late 2026, CEO Rawlinson announced on Wednesday. It apparently represents 20x Lucid’s current addressable market.
“Today, we’re competing with Mercedes and Porsche. With midsize, we compete directly with Tesla Model Y and Model 3. That’s the best-selling car in the world.”
Lucid CEO Peter Rawlinson
All these efforts will play a crucial role in Lucid’s potential advancement in the highly competitive electric vehicle market. It would be interesting to watch how Lucid will continuously strive to achieve great lengths in the industry, especially considering the progressive electrification efforts of legacy brands and emerging startups.
