Conference Transcript - LCID 2025-12-10

Speaker 5

Good morning, everybody. So I'm Ed Aubin from Morgan Stanley. Today I have the great pleasure to welcome Mark Winterhoff, CEO of Lucid, and Taufik Boussaid, CFO of Lucid. So thank you so much for coming to London to spend some time with us. Maybe, Mark, if I can start with a relatively broad question, which is kind of where, you know, how does Lucid position itself within the overall

Speaker 6

EV segment? Well, I mean, we started three years ago in the luxury segment. We started with the Lucid Air, which is by now the most award-winning EV in the space, and actually also the market leader right now in our segment in the United States. Then in this year, throughout this year, we ramped up our first SUV, mainly also in the United States, but also in our markets in in Middle East, which is the gravity, the lucid gravity, seven-seater. I actually recently saw an article with a headline, the first seven-seater supercar. So that's how we like also to talk about it. And it will also come very soon to Europe. We already opened the orders, and by the end of this year and beginning of next year, those vehicles will then come as well. And we are working right now on our next-generation midsize platform that will then allow us to go into a segment which is more around 50,000 U.S. dollars and therefore also attracting bigger markets and bigger volumes at that point. It's not only one vehicle, it's actually three vehicles that are based on one common platform. Beyond that, we want to still stay in the premium slash luxury space. We don't have plans to go down to, let's say, $35,000 or something like that. And beyond that, this year we started to open another addressable market for us with the whole Robotaxi segment where we started out with a cooperation with Uber and Nuro and we will expand on that. And besides that, we also did a larger cooperation with NVIDIA.

Speaker 5

Okay, wonderful. Thank you so much. Would it be fair to say that Lucid is no longer a startup but really properly a scale-up now? And I guess kind of related to that, what's the strategic advantage does the majority ownership of PIF, you know, gives Lucid?

Speaker 6

Yeah, you're right. I mean, we're in the scale-up phase, absolutely. And I mean, now living for many, many years in the U.S., I always use U.S. examples. Not everybody knows about baseball, but for those you know, it's a very long game and it's counted in innings. And I think we are maybe still in the second inning maybe of a baseball game. Typically, it has nine, ten or more. So we're still in the beginning. What we've done so far is we invested. We developed great cars. We started to launch them. We invested in our footprints, in our plants. We are right now in the midst of creating a second plant, which is in Saudi Arabia, which also leads me then to the topic around our majority shareholder, the PIF. The PIF and I should also say Saudi Arabia, they are a long-term partner supporting us. They also know that automotive is a very investment-heavy business. You need to do in the beginning investments until you can then really reap the benefits later on. We are very thankful for this long-term perspective. and they have been a great partner and I anticipate them to be good partners in the future.

Speaker 5

Great, thank you so much. Talking about your model, so Gravity was the first SUV you launched. It was, I guess, basically same time last year, November 24, if I'm not mistaken. Could you give us a bit of an update in terms of the ramp-up you had over the past 12 months? I think you had some production and suppliers issue initially, but to what extent you overcome these issues and things are running smoothly and also kind of in terms of the, again, the production, the volume, you know, the second half of the year and next year?

Speaker 6

Well, I mean, we have this year, 2025, I think the whole industry, but also particular for us, there was no shortage of challenges. We all know that particular for us, you know, where all of our vehicles so far at this point are being built in the United States. In March, you know, first of all, then we got the tariffs And we had to then rethink, okay, what does that mean for our supply chain? Then later in Q2, we had, based on the trade war evolving further, the whole topic around unavailability of magnets out of China, which also caused us at least to make changes in our build plans, which we were actually able to still build the vehicles, but not to sell them when we want them, because we had to change to vehicles that go to the kingdom. them, which then are obviously a couple of weeks or months actually longer on the boat. Then, on top of that, all of a sudden, our largest aluminum provider had a fire in one of their biggest plants where they do the aluminum for us. And last but not least, then an Xperia topic that probably everybody knows here as well that shook the automotive industry. So there's no shortage of challenges. Nevertheless, we are on track right now to get to our guidance. You know, we basically, in the last earnings call, we guided between 18,000 and 20,000. And, you know, we also said it's going to be given the situation more on the lower end. And we do everything right now to make sure that that happens. And as an information, we have now weeks where we are producing 1,000 vehicles in a week.

Speaker 5

In a week. Okay, impressive. Thank you. So I think one of your next projects you've talked about is, you know, you're going the launch of the midsize. So, you know, you have, you know, advanced sedan in terms of EV, one of the most advanced in the market in the SUV. You talked about it. Kind of what's the next step with the midsize vehicle? It's a more competitive segment of the market. Why is it an opportunity for you?

Speaker 6

Well, I mean, it's the main reason is it is a much bigger segment. The air segment with the luxury sedan, it is actually not a big segment in the market. And it's also, in the last five years, it has not been growing. It actually has been shrinking. More and more, you know, people moved from that area to crossovers or also to SUVs. Now, with our gravity, the SUV, we have the first, let's say, foot in the SUV segment, but still on a relatively high price level. And so with the midsize, we're kind of like when I use U.S. as an example in the middle of the market. Two weeks ago or so it was when, for the first time, the average selling price of a car, not only EV but all cars, in the United States crossed $50,000. And that's the area where we want to be with our midsize. It will again have, you know, the same amazing technology performance combination of that drive handling, you know, driving a comfort space. All the things that people know from our air and our gravity, we also will pack again into our midsize vehicles.

Speaker 5

And in the midsize segment, will competition be tougher with the Chinese competitors or with the local domestic players?

Speaker 6

Well, it depends where you play, right? We have no plans to go to China. I want to make that very clear. And when you think about where the Chinese competition is most fierce, it is clearly in China. I mean, the price points, price levels in China are not even sustainable for the local players. There are two automotive players that are, one allegedly, I'm not really believing that, that are profitable right now. Everybody else makes no money. So that's nothing for us what we want to entertain and work in. And obviously they also then try, because there is so tough competition in their own market, they try to get into other markets. But most of the volume that we see right now would be in lower segments than what we want to play when it comes to a price point. And when I see the current uptake of, let's say, more luxurious vehicles, Chinese vehicles outside of China, it's not that high. There are not very high sales numbers. So I'm confident that there is a good position for us. And so we see ourselves competing more against established players. And, you know, obviously there we see also many of the established players currently retracting and not really investing into EVs, which in our opinion is A, a big mistake, and B, opens an opportunity for us because we think that EV is the technology of the future and if you take the foot of the pedal, it will bite you in five years from now.

Speaker 5

Moving on to autonomy, which is a very exciting development, obviously, for the industry. So I guess one of the interesting developments is the robotaxi. So you signed an agreement with Uber. I think they are going to deploy, if I'm not mistaken, 20,000 Lucid gravity vehicles equipped with the new oil drivers over the next six years. I think they're starting in the Bay Area next year. If you could talk a little bit about why the deal, the economics to start with on the robot taxi, that would be helpful.

Speaker 6

Yeah, I mean, in general, I would like to explain a little bit our strategy around autonomous driving and advanced driving system levels. In the past, we have focused very much on creating the best driving vehicles. That established us on the map in the industry as the EV technology leader. But going forward, particularly when you look at the segments that we want to play in, we had to start to invest and advance what we already have. It's not that we have nothing. We actually have a good, we call it DreamDrive Pro Level 2 system that works on highways even in the air with hands-off. You don't actually have to put your hands on the steering wheel. But we realized that we need to double down on that and accelerate. And then when it comes, that's one element, you know, when you look at the vehicles that we are building ourselves for right now. But then when you look at the robot taxes, we didn't even think about that segment as, you know, something for us. And that came about, you know, Uber actually reaching out to us and saying, okay can we do something together here because they they realized when when they looked into the market that we are a great fit for them from a technology point of view and also from a you know speed to market how fast we could would implement things so that's why we are focusing right now on partnerships it's basically to to enable speed to market you know we have done already things in the past but we really have high ambitions we want to have a very very competitive solution by the end of next year and we basically looked internally okay what will it take to do this internally is it even possible in that short period of time or should we partner for now and you know the decision was to to partner for the sake for our customers because we want to offer something that works great and then also from a from a economics perspective it was actually almost like a no-brainer for us to do that. So that's why we went in that area. When it comes to robotaxis, for us, this is a starting point because when you just look at the numbers, I mean, 20,000 over six years is compared to what we want to produce in not-so-distant future is a little bit of a drop in the bucket. So for us, we have bigger plans, and there's things obviously in discussions going on that will come. And we think it is actually a very important market. We are on the verge that this really becomes viable. And we've been talking about this now since 10 years. It's coming, it's coming, it's coming. Now I'm also convinced it will in the not-so-distant future. And I think with our technology and with our partners, we are in a good spot.

Speaker 5

We'll open it up to the audience in a few minutes. I'm sure you're going to get more questions on that because that's a very exciting development. Just to finish on the autonomy, on the consumer autonomy front, so Lucid announced kind of a strategic collaboration with NVIDIA to co-develop the next-gen L4 autonomous driving tech that will integrate NVIDIA drive AF system. So, yeah, could you, again, come back on kind of, you know, the deal, why the deal, and what the opportunities, you know, could be generated?

Speaker 6

Yeah, I need to take on what I just said. just said you know it's really for us the decision was speed to market and also the the second piece was the required investment um it is actually from our perspective very affordable it's uh normally you would do this all in-house um you would spend billions uh you know until you get to where we want to be and uh when you compare that what you know i cannot obviously disclose the numbers, but it's a very, from an economic point of view, a very attractive decision that we made. I mean, as a comparison, we're spending on developing the seats for our upcoming midsize. We're spending about as much money as what we're investing in that, which tells you a little bit that's actually a quite good deal. So I'm very, very looking forward to work with NVIDIA on that.

Speaker 5

Okay, wonderful. I don't know if there's a mic or if there are questions from the audience. Any questions? Sorry over that.

Speaker 4

Thank you. Just wondering if you could provide some comments on the capabilities that you have regarding the ADAS and autonomous vehicles. What really, I mean, as an EV player, how did you decide to go after this? And maybe relative to kind of a Google or Waymo who had a head start, where do you position and what do you have to do to catch it?

Speaker 6

Yeah, I mean, first of all, what we started with, and as I mentioned, we already have an L2 solution, which is basically highway assist or drive assist, how we're calling it, hands-free for the Lucid Air. You don't have to have the hands on the steering wheel, and obviously you need to be able to, actually you need to look forward. Otherwise it will, you know. So that's what we worked on. The other thing that we worked on extensively is in our vehicles, they're already very much prepared when it comes to the sensor set. We have radar, we have obviously cameras, and we also have LiDAR in our vehicles, both in the air and in the gravity. So we have created all of the infrastructure needed in order to do that. So then what I mentioned before, we were focusing actually in the last couple of years on, yes, getting to hands-free L2, but not making enormous additional investments like, for instance, like Google did with Waymo. So and therefore, you know, beginning of the year, I looked at the market and said, OK, we need to do we need to get closer there. So how do we get there? And that's why we started to have conversations with partners like like NVIDIA. And we're already using actually their technology in our cars anyway. So the technology in our vehicles in the gravity is is NVIDIA based. But then on top of that, partner with them from the from the software side. And we are very confident that we will have something very attractive very soon in our vehicles. And when it comes to the robotaxis, what Google does, what they do with Waymo, we are doing the same right now with Nuro, which is our partner there. And we will get to a solution that we can deploy by the end of next year. That's the plan.

Speaker 1

Could you touch on the liquidity and funding?

Speaker 6

I would hand this over to you.

Taoufiq Boussaid, CFO

So liquidity, we already gave some colors around where we stand in terms of funding. So we finished the Q3 Proforma with $5.5 billion, which takes our funding well into 2027. Recently, we have refinanced a 2026 maturity convertible bond, so we have raised just short of $1 billion to do this refinancing. The PIF continues to show strong support to the company, so we have a deferred Rotorium loan with them, which was initially just below $1 billion, which has been doubled and which is an outstanding to two billion that we are not planning to draw on so I mean in the context of the investment that we still have to do next year which are mainly related to the plants the plant in KSA that we're finalizing we're completely covered in terms of of liquidity just if we look at the end of

Speaker 3

the decade given your investment plans how many vehicles do you think will be rolling off your production lines per week. You gave us a stat of 1,000 per week. Obviously, you're bringing in this new mid-market vehicle. I think in the context of a competitor of yours trying to get one robo-taxi off the line every 10 seconds, which is obviously potentially a pipe dream, maybe doable. Interesting to hear your thoughts on where you might be in the 2030s.

Speaker 6

I have to admit, I haven't made that math or you know what we what it will be per second and if we haven't yet disclosed that i actually have to pump the answer to a investor day that we are doing in q1 next year where we want to lay out all of that that strategy including also what it means you know where do we want to grow into and by then i will make that calculation as well how many seconds it's going to be maybe if I if you allow me also because there were a couple of questions on the autonomy strategy and why are we doing what we're doing and it's actually two things for us it's smart capital allocation you know in order to get to high levels of autonomy we're talking really about billions of investments and obviously right now we We don't want to have to raise a couple of billions. At the same time, when you look at even the biggest and most successful companies in the world have once in a while sidestepped and used partners for their technology. One very simple example is Apple. To this day, when you search on your phone, the search results don't come from Apple. They come actually from Google. That's number one. Number two is, and it was probably like 15 years ago, when they realized that, oh, you know, our investments into the PowerPC chips were not enough, they went with Intel for a long period of time in order to be competitive. while they were figuring out, is it worth for us to invest into our own Silicon Valley? And then they switched. And at the same time, they delivered fantastic products. And in that meantime, by the way, even they used Qualcomm modems that they also now insource. They did a lot of changes over time once they realized there is a value of doing it. But we are in a very similar situation. I wanted to make a smart investment allocations and then we monitor and see is that something that we should actually own in-house and if you just look at autonomy as a very good example if we would have made an investment five years started the investment five years ago where would we be right now we probably would be you know poor five billion dollars at least poorer than we are yeah and at the same time it would have something that somehow works and if with a new AI models now in a year or two from now things look completely different with less less investments so we think that is a very you know simply smart way of approaching approaching things to provide something for our customers and at the same time monitor you know how things develop and what we should be doing and where should be you place our bets in the future. Other questions?

Speaker 5

Just maybe related to that and the way you grow by partnering with some other players, in terms of coming back on the robotaxi, you know, as you said, you have big ambitions going forward. Should we, are you in discussion? You're limited in terms of what you can disclose, but are you in discussion with other market

Speaker 6

participants? We are, but I'm very limited to disclose anything. And I mean, there are also continuous discussions with Uber but yeah there are more discussions than that either you know in the US but even internationally and I really hope that by actually that investor day in Q1 that we are able to talk more freely about additional things.

Speaker 5

Got it, sorry another question.

Speaker 3

I guess conceptually we're now seeing the pace rollouts across cities across in the states and also in europe faster they seem to have accelerated so what is the gating factor for your partnership with uber in san francisco expanding more broadly is it is it availability of vehicles or is it regulation maybe you could just explain how that evolves yeah it's a combination

Speaker 6

of things well first of all and i think it's a good thing because now i can explain a little bit more how automotive works you don't sign a partnership and then you start rolling out things the next day in automotive there's actually from even with with our vehicles that are well prepared we have to add additional uh you know technology to to the vehicles so there's a development phase that still has to happen to to integrate the the neuro driver into our vehicles and on top of that But there's a long validation cycle that you can make 100% sure it works every time, everywhere. So the gating factor right now is simply to go through that process, finalizing the development. We have recently handed over the first development vehicles, which we outfitted with everything. And I think by the end of this year, we will have delivered all of the 75 that we are planning to have. From there, it's training the algorithm based on that new vehicle together with the driver. And then it is about validation and also regulation. There are still one or two hurdles to overcome on that area. When this is done once, then it's simply compute power and training the vehicles in other locations. that is something that with the new technology, AI-based technology, it works much faster than it used to in the past.

Speaker 5

Maybe one last question, if any. Okay, I think it's noon. So, noon, I mean, if the delegate could please head upstairs for lunch. I think it's the Tanzinger suite. Lunch will be served. Thank you so much. Thank you.