Lucid Motors Cuts 2022 Production Forecast Again

·3 min read
Photo credit: Lucid
Photo credit: Lucid

Just over a month into the second half of the year, Lucid has been forced to concede that its plans for 2022 will have to contend with the harsh realities of the supply-chain crisis that has already prompted course corrections among virtually all automakers.

The luxury EV startup has cut its projected 2022 output for a second time this year, now expecting to produce just 6000 to 7000 vehicles through the end of the year. That's a downgrade from the 12,000 to 14,000 estimate from February of this year, which itself corrected the initial 20,000-unit plan for 2022.

At one point a year ago Lucid seemed to be in an enviable position as it began producing its long-awaited Air sedan, but it now appears to have quickly hit a wall, delivering just 679 sedans in the second quarter. That's a serious dent for an automaker that has some 37,000 reservations for various versions of the Air, many of them priced north of $100,000.

"Our revised production guidance reflects the extraordinary supply-chain and logistics challenges we encountered," said Peter Rawlinson, Lucid’s CEO and CTO. "We’ve identified the primary bottlenecks, and we are taking appropriate measures—bringing our logistics operations in-house, adding key hires to the executive team, and restructuring our logistics and manufacturing organization. We continue to see strong demand for our vehicles, with over 37,000 customer reservations, and I remain confident that we shall overcome these near-term challenges."

This week the EV maker has appointed a new senior vice president of operations, Steven David, who will serve in this newly created role, bringing experience from Stellantis.

Lucid's problems are hardly unique at the moment, though the scale of the company's second-quarter output will surely give some industry watchers flashbacks to the summer of 2017, as Tesla Model 3 production was starting up. The first few months of production saw merely hundreds of units completed at times by hand, which produced a tremendous cash drain for Tesla. But one difference is that Tesla was producing the Model S and the Model X at the time as well, and could rely on that revenue to a certain extent.

Lucid's Air sedan is its only model at the moment, by contrast, though the company indicates it has a financial cushion big enough to weather the slow pace of production.

"Our Q2 revenue was $97.3 million, primarily driven by higher customer deliveries of Lucid Air vehicles. We continue to have a strong balance sheet, closing the quarter with $4.6 billion cash, cash equivalents and investments, which we believe is sufficient to fund the company well into 2023," said Sherry House, Lucid CFO.

Lucid is in an unenviable position at the moment as it has more competitors than it would have faced just two years ago, with more on the way soon, including from BMW. The variety of high-priced electric luxury sedans currently on the global market outnumbers offerings in other segments untouched by EV makers at the moment, while Jaguar axed an EV sedan at the last minute to avoid this sort of competition entirely.

"Despite our immediate challenges, we believe that bringing our logistics center on-site at our Arizona factory will help reduce complexity, cut down lead times, and reduce various costs," House added.

While less expensive variants of the Air are on the way, players in this segment could be fighting over an ever shrinking slice of the pie very soon.

Photo credit: Hearst Owned
Photo credit: Hearst Owned