Lucid's big SUV arrives with high expectations, and big risks

Lucid Motors gets rave reviews from critics. But it's sorely lacking customers.

That's a occupation the institution can't afford.

The Arizona-based EV shaper has top-shelf tech, deep-pocketed backers, and highly praised cars. However, it has struggled to conscionable accumulation targets, and has been incapable to bargain the spotlight distant from established luxury brands with century-old pedigrees.

Lucid is ramping up accumulation of its high-end, three-row, Gravity SUV, though it has sold lone a fewer 100 units truthful acold successful 2025. The Gravity's accumulation ramp has faced a slew of challenges, chiefly proviso concatenation shortages.

Yet the institution already has plans for different conveyance aimed much astatine the mediate of the market, wherever it would vie with the top-selling Tesla Model Y SUV. And it's investing successful self-driving cars for consumers portion moving connected a robotaxi fleet with Uber and self-driving tech shaper Nuro.

In the process, Lucid is burning done a batch of money. The company's third-quarter results were worse than Wall Street expected, with a nett nonaccomplishment of adjacent to $1 billion.

"Their gross nett has been getting benignant of worse," said Tom Narayan, an expert at RBC Capital Markets. "A batch of radical are doing the math. How agelong tin the institution support losing cash?"

Adding to its challenges is simply a tougher situation for each EV manufacturers. Demand has fallen abbreviated of expectations, and galore automakers are pulling back. EVs person mislaid cardinal enactment from the national government, including a $7,500 taxation credit, backing for charging, and restrictions connected authorities level programs that incentivize automakers to nutrient zero-emission vehicles.

A 'fantastic car'

Lucid's archetypal vehicle, a sedan telephone the Air, is the astir fashionable conveyance successful its segment, according to Cox Automotive. Through the 3rd quarter, it was the 3rd best-selling full-size luxury sedan, and the apical selling electrical one, according to the company. The Air is often a "critic's pick." No different EV tin interaction the 512-mile scope of the Air Grand Touring, 1 of its apical trim levels.

Last year, Lucid delivered 10,241 vehicles, the bulk of which were Air sedans, a 71% summation from 2023. U.S. EV person Tesla delivered 1.8 million.

Unfortunately, sedans person consistently compared to SUVs, crossovers, and pickups--which present each but predominate the roads. Of the apical 10 best-selling models successful the U.S., 7 are from those 3 segments, according to Edmunds.

"It was a fantastic car," said Sam Abuelsamid, vice president of marketplace probe for Telemetry. "It inactive is simply a fantastic car. But it came to marketplace astatine benignant of the incorrect time."

In 2023, Tesla's Model Y was the best-selling conveyance successful the world, according to JATO Dynamics. It sold much than 265,000 units successful the U.S. done the 3rd 4th of 2024, according to Cox Automotive, astir 100,000 much than the Model 3 sedan. Among EVs, the Model 3 is unusually fashionable for a sedan. Behind the 2 Tesla Models, the 3 vehicles that circular retired the apical 5 are crossovers — Chevrolet Equinox, Ford Mustang Mach-E and Hyundai Ioniq5.

The Model S, the Air's closest Tesla rival successful presumption of size, performance, and price, sold conscionable implicit 4,500 units successful the aforesaid period.

The highest measurement EVs, specified arsenic the Model Y, are besides little costly than the Air, which starts conscionable supra $70,000 and runs up to astir a 4th of a cardinal dollars. The Model 3 is astir fractional that. The mean EV transaction terms successful November was conscionable supra $59,000, according to Cox Automotive.

"There's conscionable not capable of a marketplace for those premium electrical sedans close now," Abuelsamid said.

Lucid sold somewhat much than 300 Gravity SUVs successful the US done the 3rd 4th of 2025, according to Cox Automotive. Like the Air, the Gravity has a precocious terms tag. Nevertheless, the institution has said the Gravity stands to pull six times arsenic galore customers arsenic the Air.

"We'll spot if that's the case," said Narayan. "The latest numbers I've seen amusement it benignant of equalizing the income of sedans."

Lucid interim CEO Mark Winterhoff told CNBC successful an interrogation that the institution has seen "a precise bully uptick successful request erstwhile it comes to the Gravity arsenic compared to the Air." He added that astir customers are configuring the car successful ways that tally the terms up supra $100,000.

Production trouble

Demand mightiness beryllium strong, but Lucid besides has to get the conveyance into customers' hands. Gravity's motorboat earlier successful 2025 was beset by shortages of cardinal materials similar magnets, aluminum, and chips, Winterhoff said connected the company's third-quarter net call.

"We haven't been capable to nutrient arsenic galore arsenic we wanted up until this point," Winterhoff told CNBC. "We're precise assured close present that we solved those problems."

Deliveries person risen for 7 consecutive quarters, culminating successful a 47% percent leap implicit the 3rd 4th of 2024. Lucid has added a 2nd displacement to the last assembly conception of its mill to conscionable demand.

The institution said request has been resilient contempt worries the EV marketplace is stalling aft the national EV inducement ended connected Sept. 30.

"In October, our transportation numbers went up," Winterhoff said. "Whereas successful galore different axenic EV players oregon adjacent EVs for incumbent players that besides person [internal combustion] vehicles, the deliveries dropped down drastically."

Still, analysts accidental it's a tougher clip to marque EVs than it was erstwhile Tesla was ramping up the Model 3 and Model Y.

"They were the lone crippled successful town," Narayan said. "So determination wasn't contention there. They besides benefited from artillery prices falling significantly. And they got a batch of authorities support. Today we're successful a precise antithetic world." 

If gross nett does support getting worse, the institution volition yet person to instrumentality to investors, Narayan said. Lucid is presently astir 55% owned by the Saudi Public Investment fund, according to FactSet.

In the 3rd quarter, Lucid and the PIF agreed to summation a delayed gully word indebtedness recognition installation from $750 cardinal to astir $2 billion. A DDTL is simply a indebtedness the institution tin gully connected implicit time, alternatively than each astatine once. That brings its full liquidity to $5.5 billion. The institution has said it has capable to get done the archetypal fractional of 2027.

"So far, the Saudis person enactment galore billions of dollars into Lucid, and they've been precise diligent done Lucid's struggles arsenic they effort to ramp up accumulation and sales," said Abuelsamid. "It's unclear however agelong they volition proceed to beryllium patient."

The institution besides received a $300 cardinal concern from Uber successful September to make a level for robotaxis with a 3rd partner, autonomous driving tech developer Nuro. On apical of that, Uber plans to bargain 20,000 Gravity vehicles for the self-driving fleet.

Separately, Lucid has a concern with Nvidia to make what it calls the "the archetypal existent eyes-off, hands-off, and mind-off (L4) user owned autonomous vehicle." L4 means Level 4, astir the highest level of autonomy successful the existent strategy devised by the Society for Automotive Engineers.

"You request to put archetypal and past you reap the benefits aboriginal on," Winterhoff said. "And truthful we person to bash a batch of things successful parallel."

Smaller SUV connected the way

Despite Gravity's accumulation challenges, the institution is already astatine enactment connected its adjacent conveyance — a mid-size crossover priced person to the manufacture mean of astir $50,000.

This could boost volumes, but deepen losses.

"If gross nett is antagonistic astatine a conveyance transacting astir $100,000 oregon much connected average, what Lucid's Air and Gravity are presently going for, what volition it look similar erstwhile the institution is selling a conveyance that is person to fractional of that?" Narayan said.

"One reply could be, well, it's a overmuch bigger scale, truthful you person amended operating leverage," Narayan said. The argument, helium said, is that Lucid's exertion enables it to compression a batch much scope retired of a artillery than competitors.

"Our vehicles are mode much businesslike by 30% to 40% than the competition, which means smaller artillery usage smaller artillery to execute the aforesaid range," said Emad Dlala, elder vice president of engineering and integer astatine Lucid. "That means a little [bill of materials] cost. That means amended margins."

Dlala said the Lucid Air Pure has a artillery size of a Tesla Model Y, but has a scope of 420 miles, astir a 100 miles much than the Tesla Model Y.

Lucid says the wealth it's spending goes to processing an array of technologies and manufacturing processes that are hard to copy.

"Lucid has astir implicit 10 years of powertrain history," Dala said. "This didn't travel overnight. There's tons of IP patented technologies crossed powertrain, conveyance and software," which pb to "gains successful ratio crossed the board," helium said.

That adjacent extends to the mode the cars are made.

"We usage manufacturing processes present that nary 1 other successful the manufacture uses successful powertrain," said Adrian Price, elder vice president of operations astatine Lucid.

"Lucid is precise highly vertically integrated," helium said, meaning it brings overmuch of the car-making process successful house. "We person a batch much of our ain subassemblies. That's besides however we get the show that different radical don't. A batch of that engineering is outsourced by different large automakers. Not lone bash we bash the engineering, but we besides bash the manufacturing, and we tin power immoderate of the Lucid concealed condiment by doing it in-house."

One country wherever Lucid appears to lag competitors is marque awareness.

"A batch of radical don't cognize what Lucid is," Narayan said. "That's the biggest, I think, hurdle that they have."

The institution has fixed much thought to marketing, and raising its illustration successful the luxury market, wherever it's going up against names similar Mercedes-Benz, Porsche, and BMW.

"The purchaser of a luxury brand, typically, they similar things similar heritage," Narayan said. "The marque matters. So, you know, however bash you make that from scratch?"

"We are precise good known and person tons of accolades successful the centrifugal press, Winterhoff said. "So everybody who's funny successful cars knows astir it. But that's not the bulk of conveyance buyers."

So, it has begun a caller selling and advertizing strategy for the Gravity, with Hollywood histrion Timothee Chalamet arsenic its archetypal "global marque ambassador."

"We're shifting from focusing connected our vehicles, astir the capabilities of our vehicles, to what does it mean to ain a Lucid and what does it accidental astir you?" Winterhoff said.

Winterhoff said he's assured the institution tin successfully ramp the Gravity, portion gathering and yet delivering its mid-size vehicle.