There is Hope for Lucid Motors

As the world moves toward a cleaner and more efficient future, electric vehicles are getting bigger and better. Lucid Motors is leading the charge with their flagship luxury EV, the Lucid Air. From their long-range capabilities and leading power density to their advanced features like Super Cruise and the glass “hero” instrument panel display, Lucid has created a flagship vehicle that stands out from its competitors. And they don’t plan on stopping there. With expansion plans including the limited edition Lucid Dream Edition, the upcoming Lucid Gravity Crossover SUV, and a new manufacturing plant, Lucid is well on its way to creating a new electric vehicle revolution.

Lucid is the New Kid on the Block (Kind of)

Most have heard of Tesla by now, but not many have heard of Lucid. Think of Lucid as the younger brother with the cooler clothes and haircut, but still lives at mom and dad’s. Lucid Motors is a manufacturer of electric luxury sports cars and grand tourers headquartered in Newark, California.^[1] Lucid vehicles are designed in California and manufactured at Lucid’s factory in Arizona. Founded in 2007, they currently are producing one model the Lucid Air which comes in four trims.[2]

Over the past 7 years, I have been an early EV evangelist singing the praise of this revolutionary EV manufacturer that has a vehicle that is superior to the Model S in just about every category.[3] But I’m not the only one that has been closely following the Lucid Motor story closely. Motor Trend named the Lucid Air the car of the year in 2022. “Automotive progress usually happens in baby steps. Slowly, like a white oak sapling growing in a forest. But every now and then a new car jumps off the automotive forest floor like a rainbow eucalyptus, advancing like crazy while making a colourful splash. The Air sedan from startup EV-maker Lucid is just such a car, and its level of innovation and sophistication are as fresh and unexpected as multicoloured tree bark.”[4]

Small Beginnings

Lucid Motors formed in the shadow of Tesla, the household name for EVs and probably cars these days. Originally called Atieva, the company focused on developing batteries and electric drivetrains for other automotive companies. Lucid had contracts with the likes of BMW, Mercedes-Benz, Volkswagen, and even Tesla. But everything changed when Peter Rawlinson joined the company in the fall of 2014. He was made CEO and began to recruit Tesla engineers to build his vision for the EV. Previous to Lucid Peter Rawlinson had served as the Chief Engineer for the Model S sedan since 2012, helping to develop the vehicle, as well as overseeing production. The Lucid team began to slowly and carefully crafting the marvel of a vehicle that became the Lucid Air. But first it created the platform it would rest on, perhaps the most difficult part of the process. The LEAP (Lucid Electric Advanced Platform) is one of the most advanced in the industry, which Lucid disputes having the smallest and most efficient electric motor. Just as the motor are designed, engineered, and produced entirely in-house by Lucid, the new motorsports front drive unit is completely proprietary.[5]

Car of the Future

The Lucid Air is widely regarded by many reviewers as the car of the future, thanks to its features that make it one of the most advanced electric vehicles on the market. From its sleek and luxurious aesthetic to its long-range capabilities and cutting-edge technology such as the “hero” instrument panel display, the Lucid Air stands out from its competitors. With a 0-60 acceleration of less than three seconds, advanced air and cabin purification systems, and a Level 3 Autopilot, the Lucid Air is the perfect combination of performance and efficiency. The Lucid Air is without a doubt the car of the future leaving what the competition has to offer look dated, plain and boring. Yes, even a Model S looks plain compared to Lucid’s premium trim, the Sapphire.

Trouble in Paradise

Fast forward to September 2021 and Lucid Motors began producing the Air. It was a special moment considering the 6-month delay from the original production kickoff data. When the Airs began to roll off the assembly line.[6] But less than 2 years later the party looks to be over. In a recent article by The Motley Fool the future for Lucid looks to be quite bleak.[7]

Problem #1: Production Isn’t Improving Very Quickly

Lucid Motors has been in the process of expanding their manufacturing capabilities with the construction of a new plant in Arizona, but they have yet to reach the capacity needed to make a significant impact on the overall production rate. This slow production rate has put the company in a tight spot as it is unable to keep up with the demand for their vehicles.

Problem #2: Cash Is Being Burned at an Unsustainable Rate

Lucid Motors is burning through cash at an unsustainable rate due to the rapidly increasing costs of developing and producing electric vehicles. The company must look for ways to reduce spending while still investing in research and development in order to stay ahead of the competition.

Problem #3: Competition Is Getting Stronger

Lucid Motors is up against some stiff competition in the form of other electric vehicle makers such as Tesla, Rivian, and Hyundai. These companies have well-established production processes and are investing heavily in research and development of new features and technologies. In order to stay competitive, Lucid Motors must develop products that can match or exceed their competitors in order to gain market share.

Problems for the Consumer

There is no doubt that consumers would love to get their hands on the Lucid Air, but there are 3 big problems facing potential customers:

Price

The Lucid Air starts at $77,400 USD for the base model, with higher trims like the Grand Touring and Dream Edition costing $121,000 USD and $169,000 USD, respectively. Other competitors such as the almighty Tesla start $39,990 for the Model 3 where 77% of sales exist.[8] Tesla’s comparable luxury model starts at $76,990 a few hundred cheaper than the Air.

Availability

The Lucid Air is currently only available in a handful of states, including California, Connecticut, Illinois, Maryland, Massachusetts, New York, and Texas.

Service Centers

Lucid currently operates service centers in California, Maryland, and Nevada, with plans to expand into other states in the future. Although there are plans to expand to other states and Canada in the future, there is no clear timeline for this. Tesla has service centers in over 70 cities in the US and Canada.

Fixing the Problems

In order to fix the production and cash issue at Lucid Motors, the company must focus on reducing costs and increasing efficiency across its operations while investing in new product development and marketing initiatives to maximize potential revenue growth. By doing this, Lucid can stay competitive with their rivals and regain the edge they had when Peter Rawlinson took the helm.

Short Term

In the short term, Lucid can look at ways to reduce costs, increase efficiency, and generate more revenue through new marketing initiatives, product launches, and cost-saving measures.

1. Cost Control: Introduce stronger cost controls in the production process.
2. Improve Efficiency: Increase efficiency across all areas of production.
3. Increase Revenue: Look for ways to increase revenue to offset cash burn, such as new marketing initiatives or product launches.
4. Reduce Overhead: Reduce overhead costs by streamlining processes and/or outsourcing functions.
5. Reduce R&D: Cut back on R&D spending and focus efforts on existing and upcoming initiatives.
6. Listen to the Customer. Listen to existing and potential customers, using platforms like Twitter, Threads and LinkedIn, be open to constructive criticism. Musk and Tesla used his strategy and it created devout followers.
7. Get More People in the Cars. Lucid must get more people in their vehicles. It doesn’t necessarily need to only be potential customers, but sons, daughters, nephews, nieces and friends of people that could become loyal customers. Tesla used this strategy and it worked brilliantly. Word of mouth is a powerful thing.

Long Term

In the long term, Lucid can focus on developing a strategic plan to ensure sustainable production, long-term growth, and cost-effectiveness. Additionally, they can look to invest in research and development, boost customer loyalty, expand into new markets, and utilize data and analytics to inform decisions and strategies.

1. Reduce Costs of Vehicles: Lucid needs to find a means to reduce the costs of their vehicles to attract more customers. To start they should offer incentives such as financing options and leasing programs. Additionally, Lucid could partner with organizations such as employers, local governments, and not-for-profits to access grants or other incentives to reduce purchase costs for their customers. Lucid could also look to introduce subscription services or other cost-effective options to make their vehicles more widely accessible.
2. Increase Availability: In order to make their vehicles more available to potential customers and reduce wait times, Lucid could increase their production capacity and look to expand the dealerships where their vehicles are sold. They could also design their own online sales platform or partner with trusted third-party sellers to increase the accessibility of their vehicles. Additionally, Lucid could look to introduce programs that allow customers to purchase their vehicles remotely.
3. Fix the Service Centers Gap: Lucid could fix the service centers gap without building new facilities by partnering with existing service centers and dealerships. They could provide authorized service providers with the necessary training, tools, and equipment to service their vehicles. This would allow them to extend the reach of their service centers without needing to build new ones. They could also look to add mobile solutions, such as repair vans, to help provide service to remote areas.
4. Sustainability, Growth and Cost: Develop a strategic plan that focuses on sustainable production, long-term growth, and cost-effectiveness.
5. Invest in R&D: When things have begun to turn around Lucid should re-initiate investments in research and development to stay ahead of competitors in terms of both technological advancements and product offerings.
6. Focus on Customer Loyalty: Develop plans to boost customer loyalty, such as loyalty rewards programs and create lifetime customers.
7. New Market Expansion: Expand into new markets to extend the reach of Lucid Motors.
8. Leverage Big Data. Utilize data and analytics to inform decisions and strategies.

Big Plans & Lifelines

Lucid Motors is looking to the future by expanding their product offerings and taking steps to increase efficiency in their production process. From their flagship Lucid Air to their concept SUV and pickup, Lucid is committed to revolutionizing the electric vehicle market and positioning themselves on the cutting-edge of the industry.

Plans

1. Lucid Dream Edition: This is a limited edition variant of the Lucid Air with exclusive features, including an enhanced driver assist package. It’s designed for owners who demand the ultimate in EV performance.
2. Lucid Air Grand Touring: This version of the luxury EV offers unprecedented range and performance for long-distance trips in a luxury package. It has an increased range of up to 832 miles on a single charge.
3. Lucid Gravity: This is a concept crossover SUV based on the Lucid Air platform. It will offer the same advanced features such as advanced air and cabin purification, Super Cruise, and Level 3 Autopilot, but in a larger and higher-riding package.
4. Lucid SUV: This is a planned rechargeable electric truck that is designed to be a workhorse vehicle with the flexibility and power to get heavy tasks done.
5. Lucid Dream Edition Pickup Truck: This is a planned limited edition variant of the Lucid SUV with exclusive features and luxury appointments.
6. Lucid Motors Manufacturing Plant: Lucid Motors is in the process of expanding its manufacturing capabilities with the construction of a new plant overseas in Saudi Arabia. The new plant will enable Lucid Motors to produce over half a million vehicles globally every year. Deliveries are set for Fall 2023.[8]

Lifelines

To start Lucid holds a $1.3 billion investment from the public markets, but it doesn’t stop there. It has a generous lifeline: Saudi’s PIF (Public Investment Fund), led by Crown Prince Mohammed bin Salman. It has been a loyal investor in the automaker with its stake currently worth nearly $9 billion or 60%. And perhaps equally as important the Saudi government has agreed to buy up to 100,000 Lucid vehicles over the next decade.[9]

Advantages Over Competition

Lucid Motors has a long list of advantages over the competition, including Tesla and Rivian. If they want to begin to have traction they must begin to advertise these proudly.

1. Longer Range: upwards of 500 miles on a single charge.
2. Lucid Air has the highest power density in its class, meaning its powertrain delivers more power with less energy.
3. Zero to sixty acceleration in under three seconds with optional twin motor all-wheel-drive.
4. Level 3 Superautopilot that allows the car to self-drive untethered during most highway trips with active safety features.
5. The interior digital display is ergonomically designed with large touch screens and voice commands.
6. Advanced air and cabin purification system, making the cabin cleaner and more comfortable with improved air quality.
7. Advanced materials and construction make the Lucid Air structurally light yet incredibly strong and durable.
8. Low maintenance design, with the ability to go 100,000 miles without service in some instances.

Conclusion

The future looks bumpy as Lucid Motors as it does its best to revolutionize the market. It’s no easy road. Elon Musk and thousands of Tesla employees can attest for that if they were around when times were tough. Although Lucid is creating cutting-edge vehicles with the latest in technology and pushing the boundaries in terms of range and performance, that doesn’t guarantee success. In 2019 Tesla was running on fumes to stay alive. The leadership at Lucid will need to work overtime to put together a master plan that is then executed with precision. They continue to focus on innovation and efficiency to stay ahead of the competition, but they must also find a way to stop burning through all the cash and produce more vehicles. If Lucid executes a strategy with precision and focuses right it could challenge Tesla for market share. With its high-performance vehicles, it could gain a reputation as Lamborghini, Ferrari and Bugatti have in the not-so-distant future. On the other hand, if it gets it wrong it could face a similar fate of the once-popular DeLorean Motor Company.

Sources

1.  “Atieva will launch its Tesla competitor by December”. Recode. October 20, 2016. Retrieved October 21, 2016. the factory will be built in Casa Grande, which happens to be one of the locations [for] Gigafactory to produce battery packs for Tesla vehicles. That facility ended up in Nevada. “Arizona is not going to want to lose out a second time”
2. Lucid Air: What to Know About the Luxury EV’s Four Trims. MotorTrend. March 17, 2023.
3. Reviewer Says Lucid Air One-Ups Tesla Model S At All But One Thing. InsideEVs. December 18, 2022.
4. The Lucid Air Is the 2022 MotorTrend Car of the Year. MotorTrend.
5. https://ir.lucidmotors.com/news-releases/news-release-details/lucid-unveils-state-art-motorsports-electric-drive-unit-taking#:~:text=Just%20as%20the%20motors%20in,drive%20unit%20is%20completely%20proprietary. lucidmotors.com. January 25, 2023.
6. ChatGPT.
7. Lucid rolls first customer Air EVs off AMP-1 assembly line, Dream Editions to deliver in late October. Electrek. September 28, 2021.
8. 3 Red Flags For Lucid’s Future. The Motley Fool. July 13, 2023.
9. Lucid To Launch Saudi-Assembled Vehicles This September. Torque News. March, 24, 2023.
10. EV maker Lucid to raise $3 billion, mainly from Saudi’s PIF. Reuters. June 1, 2023.