Good day, and welcome to Lucid Group's Third Quarter 2025 Earnings Call. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker, Mr. Nick Twork, Vice President of Communications. Please go ahead.

Thank you, and welcome to Lucid Group's Third Quarter 2025 Earnings Call. Joining me today are Marc Winterhoff, our Interim CEO; and Taoufiq Boussaid, our CFO. Before handing the call over to Marc, let me remind you that some of the statements on this call include forward-looking statements under federal securities law. These include, without limitation, statements regarding the future financial performance of the company, production and delivery volumes, vehicles and products, studios and service networks, financial and operating outlook and guidance, macroeconomic policy and industry trends, tariffs and trade policy, company initiatives and other future events. These statements are based on various assumptions, whether or not identified in this communication and on the predictions and expectations of our management as of today. Actual events or results are difficult or impossible to predict and may differ due to a number of risks and uncertainties. We refer you to the cautionary language and the risk factors in our annual report on Form 10-K for the year ended December 31, 2024, subsequent quarterly reports on Form 10-Q, current reports on Form 8-K and other SEC filings and the forward-looking statements on Page 2 of our quarterly earnings presentation available on the Investor Relations section of our website. We undertake no obligation to revise or update any forward-looking statement for any reason, except as required by law. In addition, management will make reference to non-GAAP financial measures during this call. A discussion of why we use non-GAAP financial measures and information regarding reconciliation of our GAAP versus non-GAAP results is available in our earnings press release issued earlier this afternoon as well as in the earnings presentation. With that, I'd like to turn the call over to Lucid's Interim CEO, Marc Winterhoff. Marc, please go ahead.

Thank you, Nick, and thank you, everyone, for joining us. First, I want to acknowledge all our employees, customers, and partners. We appreciate your commitment and support. Secondly, I'm pleased to point out that in Q3, despite all of the headwinds, we delivered our seventh consecutive quarter of record delivery numbers. With that in mind, I would like to reiterate the near-term priorities we are focused on, which we laid out earlier this year, disciplined execution and scaling production, building our brand and further driving consumer demand and advancing our technology leadership, and this has not changed. We remain focused on designing and delivering the best cars, period. This is the core of our business, and in a moment, we'll review our progress against these near-term priorities. But before I talk about the near-term priorities, I'd like to share how our strategy has evolved from the beginning of the year and how we have been executing that strategy with intention. Beyond expanding our core business, we are pushing hard on what will be our next chapter, a push into new markets and high-value adjacencies. So before reviewing the quarter with you, I want to explain to you a bit about the next stage of our strategic evolution, where we have already been working hard building block by building block toward the future of robotaxis, Level 4 autonomy, and new opportunities for revenue. Our vehicles are not only awesome driving machines, but built on industry-leading EV technology. But also a platform for the delivery of new customer service and next-generation customer experience, and we're starting with autonomy. As you all know, we announced in September that we closed a $300 million strategic investment from Uber as part of our partnership to deploy 20,000 robotaxis or more. We already reached a first milestone with successfully delivering the first batch of robotaxi engineering vehicles to Nuro. Nuro is now finalizing their integration and will begin further testing activities. And we announced last week that the San Francisco Bay Area has been chosen as the first location for deployment planned in 2026. Uber is a global leader in ridesharing and their scale, brand, and global reach help position Lucid at the forefront of the B2B Level 4 market. Their strategic investment in Lucid validates our highly advanced technology platform and aligns with our strategy. But we don't stop at robotaxis because we believe demand for high levels of autonomous driving will grow as consumers have the opportunity to experience this technology and that they will not only choose vehicles that have these capabilities over those that don't, but also are willing to pay for this capability. And that's why we are very excited about our collaboration with NVIDIA to deliver full Level 4, eyes, hands, and mind, of point-to-point autonomous driving capabilities to our consumers. We are playing to win. We plan to leverage our agility and focus to be the first to bring full Level 4 capabilities to the B2C market, and we couldn't ask for a better partner than NVIDIA. Lucid's vehicle platforms and safety architectures, combined with the world's AI computing leader will result in a vehicle with formidable performance and intelligence. We will jointly develop L4 capabilities, drawing on years and millions of miles of data and continuously update software as technology improves to remain at the forefront of the industry. To be clear, while we are pushing for L4 with this partnership, we plan to provide significant upgrades to our advanced driving assist functionality beyond what we're already doing in-house as early as end of next year. For decades, cars have been a symbol of freedom to go anywhere at any time. With autonomy, this freedom expands by being able to be productive during your commute or being driven home safely after dinner with friends. And of course, with Lucid's exceptional driving feel, you always have the option to experience the thrill of driving your Lucid yourself whenever you choose. So in a nutshell, we continue to develop the best driving vehicles, provide the most advanced EV technology, significantly advance our autonomous driving capabilities and user experience, expand into new businesses and optimize our operations to become leaner and more efficient. Now maybe there's a question about developing autonomous technology fully in-house versus working with partners. Well, Lucid's strategy here is clear and very intentional. We are doing both. Developing higher levels of autonomy, especially true for L4, requires enormous investments. And while some of our peers spend vast sums for in-house development to provide this functionality to their customers, our focus is to provide a high level of autonomy to our customers as soon as possible and with optimized CapEx spend. Our partnerships are enabling us to do exactly that. Having said that, we are continuing our in-house development, but with a smart and resource-efficient approach. In early Q3, we already rolled out hands-free highway driving for the Lucid Air via OTA, and we will bring the same to the gravity soon, fully developed in-house. The verdict is still out on whether owning autonomous driving technology in-house will be a sustainable differentiator or will become commoditized in the long run. Working with our partners allows us to monitor how the technology develops and make focused in-sourcing decisions once the future path becomes clear and avoid costly investments. I hope this gives you some insight into where Taoufiq and I and the leadership team plan to take Lucid. We are fully committed to technology leadership and innovation. But at the same time, we are committed to efficient and smart capital allocation. Now let's turn back to the progress on near-term priorities. First, let's talk about our operational execution. As mentioned at the beginning, we achieved a seventh consecutive record quarter for deliveries. I've said before that our delayed ramp-up of the gravity is mainly due to a small number of suppliers not able to ramp as expected. On top of that, we had to cope with a number of extraordinary external headwinds that threatened to shut our production down several times throughout the year. That's why we are not where we want to be. Let me elaborate a bit on this to give you a flavor of what our teams are working through each day. Over the last 6 months, we have contended with 3 consecutive industry-wide supply chain crises: magnets, aluminum, and chips. These are crises that set even far bigger competitors on their heels. However, thanks to our vertical integration and our team's agility and resourcefulness, we have been able to problem-solve our way through each one to limit impact. First, the magnet shortage in Q2. The magnets we were able to get were incompatible with our unique NACS boost charging drive units for gravity. Hence, we had to temporarily shift our production plan from the grand touring trim for North America to the touring trim for export to Saudi Arabia until magnet availability improved. Unfortunately, that impacted our Q3 production and delivery numbers simply because of the additional transport time needed. After we successfully crossed that bridge, a fire at our aluminum supplier's plant shut other OEMs down, but we were once again able to minimize the impact. And right after this, chip supply threatened the whole industry. While once again, our team is on the job, and we are still working through it. I hope this gives you some insight into what our teams are able to navigate on a daily basis, and I'm very proud of what they have been able to accomplish and continue to accomplish. Having said that, I want to assure you that we hold ourselves to a high standard and constantly evaluate how we can improve as an organization. So today, we are making some key organizational changes to streamline decision-making, enhance accountability, and accelerate growth as the company scales globally. To support these objectives, we are making the following organizational changes. Emad Dlala has been appointed Senior Vice President, Engineering and Digital. In addition to leading the powertrain organization, he will now oversee all product development functions, including vehicle engineering, digital systems, and software. In his expanded role, he will continue to drive Lucid's technology leadership, lead vehicle development, improve cost efficiency and manufacturability, and advance Lucid's software-defined vehicle architectures. Emad has made remarkable contributions to Lucid's technology leadership over the last 10 years, and we expect this leadership will have a similar impact on vehicle development as he will now have end-to-end responsibility. Erwin Raphael has been elevated to Senior Vice President, Revenue with expanded oversight of Lucid's global operations. Since Erwin has been at Lucid, he has driven consecutive record results every quarter. He will now lead global sales and services operations, driving accountability for revenue and customer experience as Lucid expands further into new consumer markets worldwide. We are also appointing a new seasoned quality leader to our executive team. Marnie Levergood is appointed Senior Vice President, Quality and will lead efforts to ensure Lucid delivers vehicles that meet the highest standard of quality and craftsmanship, working in close concert with engineering and manufacturing. She previously held quality and manufacturing roles at Scout Motors, Stellantis, and Magna. Levergood succeeds Jeri Ford, who is retiring after more than 35 years in the automotive industry. We thank Jeri for her service to Lucid. These organizational changes are designed to capitalize on opportunities to strengthen our business, and we are confident that they will help drive the results we need moving forward. Before I hand over to Taoufiq, I'd like to share a few points on our efforts to boost awareness and strengthen our brand. In Q3, we accelerated our focus on building the Lucid brand and increasing awareness among luxury EV intenders, and we are already seeing results. In the United States, brand awareness jumped 8 points month-over-month among consumers who plan to purchase an EV. This improvement was driven by the launch of our new brand campaign titled Driven, starring our first global brand ambassador, Timothée Chalamet, and directed by Academy Award-nominated Director, James Mangold. Driven is now the most successful brand campaign in Lucid's history with more than 7.2 million views on YouTube and over 1 billion total impressions in the U.S. Lucid's cultural relevance continues to grow. In October, we launched the We Ride for New York campaign featuring NBA All-Stars, Jalen Brunson and Josh Hart with billboards across New York City and global extension in Abu Dhabi during the Knicks preseason game. And we are just getting started. Stay tuned for more to come. We also received another award our whole Lucid team is especially proud of. The Lucid Air Sapphire was selected as this year's German Performance Car of the Year by 30 leading German motor journalists. Let this sink in for a moment. The German Performance Car of the Year is designed and built in America. To my dear fellow countryman, sorry to wrap that in, but you probably can imagine how proud the Lucid team feels about that. Last but certainly not least, on Midsize, SOP of the first variant of our all-important Midsize platform remains scheduled for the end of 2026, and I can share that we are very pleased with the progress of sourcing and the cost structure the team is able to achieve. On our Atlas drive unit family, it is on track with again, class-leading efficiency, much fewer parts, lower BOM costs, lower weight, and it will include also a rare-earth-free variant. With that said, we are entering a new phase and looking forward to a very exciting year ahead, one where Lucid's award-winning vehicles, our leading technology, thoughtful partnerships, brand, and focus on execution come together to define the next generation of mobility. Thank you for your continued support and confidence in Lucid. With that, I'll turn over the call to Taoufiq to discuss our financial results and outlook.

Thanks, Marc. Good afternoon, everyone. Q3 for Lucid was really about progress, preparation, and stabilization in what continues to be a complex and volatile environment. We pushed through those headwinds and kept the plan moving. Revenue was up 30% sequentially and 68% year-over-year, which is a strong result. Just as important, we strengthened our balance sheet. Today, I will cover the strategic actions we took and why they matter, how the quarter played out, and how we're thinking about the months ahead. On strategy, Marc already touched on our partnership with Uber, Nuro, and NVIDIA. These collaborations are important because they reshape our financial model in a very meaningful way. They give us a capital-efficient path to growth and open the door to new recurring revenue streams in advanced driver assistance, software, and data services. At the same time, they help us optimize costs through smarter manufacturing and operational efficiencies. These partnerships are a key part of our midterm plan to strengthen our path to profitability and deliver long-term shareholder value. We expect them to improve margins, support scalable growth, and drive returns aligned with disciplined capital deployment. Now we all know the industry and geopolitical headwinds are real, but what matters is execution, and our team is delivering. We hit record deliveries, improved our product mix, and set new highs for average selling prices. Production rates picked up towards the end of the quarter, which is especially important in a context where the rest of the industry is reporting major headwinds. On top of that, we expanded internationally and built strong consumer awareness ahead of next year's midsized launch. All of this puts us on a solid trajectory for Q4. And here is the big milestone. For the first time, Lucid Gravity is expected to make up the majority of our production in Q4. And the momentum is already here. October deliveries are climbing, especially for Gravity, and that gives us confidence that this quarter is going to be a turning point for Lucid. We also announced today that we strengthened our liquidity subsequent to quarter-end to an increase of our delayed draw term loan facility with our majority shareholder, the public investment fund, from $750 million to approximately $2 billion, all of which remains undrawn. This increase lengthens our runway into the first half of 2027 and provides Lucid with stable access to liquidity. This underscores PIF's ongoing support of Lucid and their strong commitment to our business and confidence in our long-term strategy. We are committed to maintaining a healthy liquidity position, and we'll continue to evaluate all financing and liquidity options, including in the public markets when the appropriate conditions materialize. Now moving to our business performance in the third quarter. Demand once again exceeded our production. We delivered 4,078 vehicles, our seventh straight quarterly record and a 47% increase year-over-year. ASP moved higher with Gravity mix and more high-value configurations. On the production side, we built 3,891 vehicles and produced over 1,000 additional vehicles for final assembly in Saudi Arabia. During the first 3 quarters, we produced 9,966 vehicles, just short of 10,000 units excluding additional vehicles in transit to Saudi Arabia for final assembly. Our second shift that came online in October is expected to further accelerate our production growth. Our exit rate improved late in the quarter, and we plan to carry that momentum into Q4. Now as Marc mentioned earlier, the supply chain remains challenging, not just for us, but across the industry. We're working through issues one by one, but we can't completely rule out further volatility. On the financials, revenue came in at $337 million, up 68% year-on-year and roughly 30% sequentially, driven by deliveries growth and gravity mix. Gross margin improved about 6 points sequentially as mix improved and productivity and cost-reduction actions took hold. Margins are still below our long-term goals as we work through tariffs and input costs. Adjusted EBITDA was negative $718 million, reflecting our increased sales and marketing effort and ongoing investment in our midsized platform, the Atlas powertrain platform and our autonomy initiatives. Free cash flow improved to negative $955 million on tighter working capital and execution discipline. On liquidity, we ended the quarter with $4.2 billion, $3 billion of cash and investment and $1.2 billion of credit facilities. That includes the $300 million strategic investment from Uber. After the quarter closed and as disclosed earlier today, we agreed to increase our delayed draw term loan with the PIF from $750 million to about $2 billion. It's undrawn and extends our runway into the first half of 2027. This again underscores PIF's ongoing support and strong commitment to our business and confidence in our long-term strategy. We are committed to maintaining a healthy liquidity position, and we'll continue to evaluate all financing and liquidity options, including in the public markets when the appropriate conditions materialize. Now on the outlook. We're entering Q4 with stronger visibility and a solid foundation for growth. Over the past quarters, we made real progress, refining processes, tightening quality controls, and ensuring supplier readiness. We exited Q3 with higher production run rate. And in October, we successfully launched the second shift that we trained during the third quarter. We also have units already in transit to Saudi Arabia for final assembly, along with the vehicles produced so far this month. Assuming no unexpected disruption from supply chain factors, we expect total production at year-end to be around 18,000 units. This is in the range of our guidance, and it's a strong outcome given the complexity of the macro environment. Looking ahead, while the industry expects a continuation of the effects on the demand related to the tapering of incentives and the expiration of certain U.S. tax credit, which pulled some demand forward in Q3, we do see this as a temporary dynamic, and we expect a significant delivery growth in Q4. We anticipate demand to normalize in early 2026, supported by expanded marketing campaigns and the broader availability of Lucid Gravity across multiple streams. In October, while U.S. EV sales in general have dropped, our deliveries and market share have increased, showing strong demand for Lucid vehicles. While other OEMs are slowing down EV investments, we believe we can turn the current challenges into an opportunity, continue to grow market share, capturing shares from other luxury makers. We are already seeing encouraging signals. European orders are up year-over-year and North American traffic and test drives in October were solid compared to historical levels. Gravity orders becoming a larger portion of total order intake will help to drive higher ASPs and revenue. These trends are confirming the strength of our brand and position us well to capture growth as the market stabilizes. We believe the steps we've taken this year, including operational improvements, disciplined incentive management, and strategic product expansion are setting the stage for sustainable growth and margin improvement. As the Gravity touring launches and our marketing reach expands, we expect to unlock new demand opportunities globally, reinforcing our long-term trajectory. For 2025 CapEx, we are planning $1 billion to $1.2 billion. We will continue to focus on scaling production, midsized development, automation, and cost-reduction initiatives. We intend to lower capital intensity per unit as we move through the year. Directionally, the goal is clear, more towards breakeven as mix scale and cost actions compound. To close, Q3 showed that we can grow, derisk, and strengthen liquidity at the same time. Orders and delivery reached record levels, mix improved, quality and exit rate moved the right way despite higher complexity, and we extended the runway with an undrawn facility that takes us into first half 2027. Our focus remains the same: compound liquidity, derisk the ramp, and improve unit economics every quarter. I want to thank our teams for their execution and our customers, investors, and partners for their continued support. With that, I will hand the call back over to Nick.

Thanks, Taoufiq. We'll now start the Q&A portion of the call. Before we take questions from those on the phone, I want to pose some of the questions that our retail investors sent in through the Say Technology platform. The first one comes from Patrick M. Please share Lucid's plan to increase the market cap and shareholder value within the next 12 months.

We appreciate the question, Patrick. What will drive market cap and shareholder value is profitability and cash generation. Short term, it's about executing against our plan to reduce cash usage and improve profitability. This relies on ramping the gravity and next year, launching and ramping the Midsize with the right focus on capital allocation and spend. Midterm, we want to further accelerate our cash generation. Marc has laid out some of the foundations of how we can achieve that. Technology and software will be key as they will allow us to maximize return in a repeatable model and with a low capital intensity. There are many exciting developments in the pipeline. I strongly believe that if we continue to make progress against the strategy we laid out, the results of these efforts will be reflected in the share price and the shareholders' return.

Our next question comes from Min. Any updates on the robotaxi partnership with Uber?

Yes. Thanks, Min. This is Marc. Yes, there's a lot of updates. There's a lot of progress being made between the teams at Lucid and at Nuro, and we successfully delivered the first batch of the engineering vehicles to Nuro during the quarter for testing. We also announced that San Francisco is the first city we are working towards launching in 2026, subject to regulatory approvals. And we closed the $300 million equity investment from Uber during the quarter, which speaks to their level of confidence as Lucid as a partner.

Okay. Our third question comes from an indiscernible source. When will the company become profitable?

Well, we have an internal road map and stage gates against which we are executing. This plan is the North Star for the company and our teams in everything we do. We haven't yet publicly communicated the timing for breakeven. But as a management team, we are continuously working towards this goal through a disciplined focus on executing our short-term plans and midterm strategy. We have a pathway mapped out, and we continue to make significant progress on both short- and midterm plans, as Marc has explained. We are confident that in the short term, the combination of Gravity and Midsize will allow us to achieve the scale needed to become profitable. Midterm, Marc has explained some of the strategies and plans we are executing against to further consolidate the cash generation capabilities of the company. One last piece of information. We are planning to organize an Investor Day early next year, which will give us the opportunity to explain our short-term plans and strategy as well as our roadmap towards cash generation.

Okay. Our next question comes from Nicholas A. What is the timeline of an affordable entry-level vehicle for Lucid?

Thanks, Nicholas. The first variant of our Midsize platform remains scheduled for the end of 2026. Nothing has changed, and we're working towards that goal.

All right. Now we'd like to take questions from the phone lines. Operator?

And our first question will come from the line of Ben Kallo with Baird.

Maybe can we start with just where you are with choosing suppliers for the Midsize vehicle? And then if you could talk about any kind of overlap that can be leveraged from the Air Gravity suppliers? And then I have a follow-up as well.

Yes, I can address that. We are making great progress with our sourcing for the Midsize vehicle and are on track with our timeline. I'm also happy to share that we are seeing favorable BOM costs, often below our own target calculations, which is promising and reflects the strong relationships we have with our suppliers. Regarding your second question, it is encouraging that many of the suppliers we are currently working with for the Air and Gravity programs are also providing us with better pricing due to being awarded the Midsize programs. Overall, this is an encouraging development, and we are very pleased with the results.

Could you talk about how you are prioritizing capital between your work in autonomy and advancing your technology manufacturing? If you approach it differently, I would like to hear that perspective as well.

Yes, absolutely. This aligns perfectly with the partnerships we have announced. They are capital expenditure efficient, which means we don't need to invest heavily in capital expenditures. Our goal is to offer advanced capabilities and features to our customers without a significant capital outlay at this moment. That was our reasoning behind the Uber-Nuro partnership for the B2B market, and now also the NVIDIA partnership for autonomy in consumer vehicles. This is precisely what we plan to do. While pursuing this, we are also assessing future opportunities where it may make sense to invest capital. However, currently, given the high costs and substantial investments required to accomplish everything in-house, we have opted for this approach.

One moment for our next question. And that will come from the line of Itay Michaeli with TD Cowen.

Maybe just to start, a couple of questions on the L4 announcement with NVIDIA. Can you maybe roughly share how you're thinking about the timeline for achieving Level 4 on consumer-owned vehicles? And then for the Midsize, do you expect that the L4 hardware will be standard on the vehicle? And if so, does that have any impact on the projected price of the vehicle?

On the L4 front, we currently don't have a specific number to share, but we do have an internal plan. I prefer to communicate more details once we progress further in the project and have some initial results. The first output from our partnership will be an L2+ and L2++ version for Gravity and the launch of Midsize by the end of next year. That's the first step, and from there, we'll continue to roll out additional updates through OTAs. We will also implement all necessary hardware changes, but I won't commit to a timeline for reaching L4 at this moment. Instead, I'll provide a date when we are more certain about it. Both NVIDIA and we have ambitious goals, and with our collaborative engineering efforts and their capabilities in handling large models and calculations, we are confident that we can achieve this sooner rather than later.

That's very helpful. As a follow-up, can you provide insight on the outlook? With increased production in Q4, how should we approach deliveries in relation to that production level, as well as the potential impact on COGS per unit as you increase production and scale up the Gravity?

Yes, I can take it and maybe afterwards, you can also chime in to fish. But I mean, when it comes to deliveries, we're not guiding deliveries. But obviously, we are expecting a significant ramp-up of the deliveries in Q4 and the majority being the Gravity. And when it comes to COGS, I mean, obviously, the more volume we have in our installed factories with what we have there, the lower the COGS will become, but Taoufiq, maybe you can...

Yes, I believe you pointed out the main issue. When considering the cost of goods sold, we have a strategy in place aimed at continuing to lower the cost per unit compared to last year's performance. That's the goal. We provided guidance regarding gross margin, which serves as a useful indicator for evaluating where the cost of goods sold will settle. We did not anticipate some challenges we faced this year, like the impact of tariffs on costs. However, the combination of increased volume from the ramp-up of Gravity and the volume forecasts we are evaluating for next year, along with the advantages from our components and suppliers, will help us achieve the improvements we are targeting for cost per unit in the near term.

And one moment for our next question. And that will come from the line of Andres Sheppard with Cantor.

Congrats on the quarter. Marc, I was hoping to maybe get a sense of how the contract with the government of Saudi Arabia, the one up for 50,000 plus, another option for 50,000. If you can maybe give us an update on kind of where that stands. I think in the past, we've said most deliveries to that agreement will be the Gravity and then the upcoming Midsize. So I know you're not guiding anything for '26, but should we expect some deliveries to that region next year? Or will that likely come after the completion of the IM2 facility?

Yes. Thanks for the question, Andres. Absolutely. Currently, we are delivering vehicles to Saudi Arabia as part of that arrangement. Initially, it was planned to take place at a lower level with just the Air, and we will increase the deliveries when the Gravity becomes available. The significant increase in deliveries, as part of the 50,000 agreement, will come with the Midsize. However, we will see higher deliveries to the government in 2026 with the ramp-up of the Gravity.

Got it. Okay. That's helpful. And then maybe one for Taoufiq. So you've extended your capital runway into the first half of 2027 now. I'm curious if you can refresh us on near-term capital needs. Does that extension in the draw facility account for the maturity in September of '26? Or how should we think about that?

No, that's 2 separate things. So the maturity, I guess you're referring here to the convert. So the convert will need to be refinanced, and we have a plan for that. So it's not directly related to the DDTL.

One moment for our next question. That will come from the line of James Picariello with BNP Paribas.

This is Jake on for James. So first, I just wanted to follow up on the NVIDIA partnership. Obviously, you guys set a pretty ambitious goal of being the first company to roll out consumer Level 4 capability. Virtually every major automaker has some form of kind of advanced ADAS program. And after billions of dollars invested, no one has really been able to move past Level 2+. So can you just provide some color on why you think you'll be able to succeed where everyone else has failed?

Yes, I can address that. A lot has changed in the last year regarding our approach to autonomy. It's a valid point, especially in light of earlier discussions about capital investments in this area. If we had pursued the same path as others five years ago, we likely would have spent billions without seeing any results. However, the technology surrounding end-to-end models and computing power has evolved significantly. The way these models are trained is now vastly different from two years ago. This advancement is what gives us confidence in our current progress, and in our collaborations and testing with NVIDIA, we can see a viable path forward. While we can't guarantee that we will be the first, we are committed, alongside NVIDIA, to achieving that goal. Our vehicle development cycle also plays a role, as we are in a different position compared to others who may be further behind in development. Given the rapid advancements in AI technology and our approach to autonomy, we believe that achieving our goals is now within reach.

And then can you just provide some color on the new vehicle order trends you've been seeing since the expiration of U.S. EV tax credits in October. Obviously, the Air and the Gravity weren't eligible for the 30D credit, but it looks like roughly 65% of your U.S. sales in the third quarter came from leases where people were able to take advantage of the 45W credit.

Yes. Well, I mean, what I can definitely say is that actually our delivery numbers in October, meaning first month of the fourth quarter actually went up. And so that is a very encouraging trend compared to many of our, let's say, competitors that have EVs and ICE. There are several ones that reported, I think, a drop of about 50%. Our numbers went up, and so did our market share. And we credit basically our vehicles, in particular, now the Gravity becoming more and more available with us ramping up the production with that. So we believe we're in a very good spot when it comes to sustaining the demand and then, therefore, the deliveries. And we also believe that this is a passing phase, meaning we think that by beginning of next year, the demand will normalize compared to what we are seeing right now or what others are seeing right now.

Our next question will come from Tobias Beith with Rothschild.

I've got 3 questions, if that's okay. First one is for Taoufiq. The gross margin rate when I adjusted for income from emission credit trading depreciation improved by 8 points quarter-over-quarter and was possibly flat on a pre-tariff impact basis. My question is, why wasn't leverage on volumes and the impact of product mix visible?

So the thing is that if you look at the production of Q3, the impact from mix was not as big as what we wanted it to be because we're still in a ramp-up phase for the Gravity. The numbers are improving versus Q2, but they are still at a meaningful level where they can significantly impact the volume. But the real reason behind this flat or lack of improvement is mainly related to the increase of inventory and the impairment associated with that. So we have increased the inventories in preparation of the ramp-up in Q4. We are in a loss-making situation, and we needed to impair these inventories, and this is hitting the gross margin.

Okay. I understand. Marc, what is Lucid's plan regarding the localization of production of the Midsize platform, if at all? I appreciate that the global automotive trade is in flux at the moment, but even an expansion of AMP-1's capabilities would probably have a lead time of at least a year if you started tomorrow.

Well, I mean, we have already made preparations for that to build the Midsize in AMP-1. So I actually thought that we've talked about this some time ago, but maybe not. I mean AMP-1 in Arizona is planned to produce the Midsize as well. It's not only our plant in KSA. AMP-1 is also already being prepared. We will have still to make some investments, but it's actually not that much. Much of the investments that are needed in order to produce the vehicle are already there. So that's the plan. I mean we're more talking about, okay, when would we have to expand that. But for that, we want to be very prudent, and we want to see how everything goes before we pull the next phase. But yes, it is definitely planned to be also built here in AMP-1.

Okay. And last question, the PowerPoint, it shows for the first time, I believe, a detailed render of the Atlas propulsion system. It's very impressive. It seems to show that there's a new inverter, redesigned thermal management system. And I know that the Atlas propulsion system was mentioned in your prepared remarks, Marc. But I wondered if I could ask for even more of an update on the Atlas, please, given its importance.

Yes, I can confirm that everything is on track. That's why we're starting to share some information. It's coming along really well. From a cost perspective, there is a significant improvement. We plan to disclose more details at the upcoming Investor Day about how much lower the costs are compared to our current generation. We’ve reduced the number of parts and achieved high integration, including the inverter. The weight is lower, and the efficiency is even higher than what we have now. We are very pleased with this progress. Additionally, we have different versions of the Atlas that do not require rare earth materials. We truly believe this represents a major advancement for us.

Can I ask why not do all of the Atlas without rare earth, given it has caused problems for Lucid and the broader industry in the last 6 months or so?

That will be the long-term plan, but certain applications and power requirements for some trims still require permanent magnets at this time. We are working on figuring this out. During the upcoming Investor Day, Emad will be present and can provide a detailed explanation of our progress. I am also happy to share more insights on this topic.

Thank you. As I'm showing no further questions in the queue at this time. This concludes today's program. Thank you all for participating. You may now disconnect.