LCID

1. Executive Summary

• Lucid is executing a multi-pronged ramp: Gravity SUV commercialization, a new autonomous robotaxi program with Uber, and geographic expansion (Europe launch announced; deliveries in early 2026). Capital structure was actively managed (2030 notes, reverse split, and a new $300 million strategic investment from Uber).
• Operationally, Q2 2025 showed record deliveries and revenue growth, but gross margins remained deeply negative due to tariff and ramp-related headwinds. Management is prioritizing cost discipline, supply chain localization, and tariff mitigation.

Key Takeaways

• Uber invests $300M (Sep 2025) to fund Lucid’s robotaxi; program targets deployment of 20,000+ vehicles over six years.
• 2025 production guidance updated to 18,000–20,000 vehicles; Q2 2025 revenue $259.4M (+29% Y/Y) with record quarterly deliveries.
• Capex trimmed to $1.1–$1.2B (2025) (from prior ~$1.4B), indicating tighter spend while ramping Gravity and facilities.
• Reverse stock split 1-for-10 effective Aug 29, 2025; authorized shares reduced 15B→1.5B, a step to broaden institutional appeal and manage listing requirements.

2. Financial Performance

Capital Raises & Proceeds

• Sep 2025: Uber strategic investment $300M closed to support robotaxi development; strengthens third-party validation and provides non-dilutive program funding signal.
• Apr 2025: $1.10B 2030 convertible notes closed; ~$935.6M used to repurchase 2026 notes; capped calls lift effective conversion price to $4.80/share.
• Oct 2024: ~$1.75B equity raise (public + PIF private placement) extended runway well into 2026.
• Aug 2025: 1-for-10 reverse stock split; outstanding shares ~3,072.6M→~307.3M post-split; authorized shares cut to 1.5B.
• Liquidity trend: $6.13B (Q4’24) → $5.76B (Q1’25) → $4.86B total liquidity (Q2’25); within that, cash & investments ~$3.6B (Q2’25).

Investor sentiment implications: the Uber investment and continued PIF support provide external validation and funding flexibility; reverse split and debt reprofiling signal capital-market pragmatism but also underscore ongoing cash burn.

Early Revenue Initiatives

• Robotaxi program (Uber/Nuro): exclusive on Uber; first launch targeted “later next year” in a major U.S. city; pathway to fleet sales and technology monetization.
• Technology/accessory revenue: DreamDrive Pro feature expansion (hands-free assist), Android Auto rollout, Supercharger access for Air (from Jul 31, 2025) can enhance perceived value and potential software/feature attach over time.
• Channel partnerships: SIXT (Germany fleet), Four Seasons (luxury mobility experience), and technology licensing history (Aston Martin access to powertrain/battery tech referenced in MD&A).
• Geographic expansion: Gravity unveiled for Europe with order-ready GT trim; deliveries planned early 2026.

Expense Management & Cash Flow

• Q2 2025: Revenue $259.4M (+29% Y/Y); deliveries 3,309 (+38% Y/Y); production 3,863 (+83% Y/Y).
• Gross margin (Q2’25): -105%, improved vs. -134.5% (Q2’24) but worsened vs. Q1 due to tariffs (-21ppt) and write-downs; management targeting tariff mitigation and cost per vehicle reductions.
• Adj. EBITDA (Q2’25): -$632M (loss widened Y/Y on margin pressure). Cash and investments $3.6B; total liquidity $4.86B at quarter-end.
• Capex 2025 guidance cut to $1.1–$1.2B (Aug MD&A), from ~$1.4B (May), reflecting tighter capital discipline amid facility expansions (Nikola AZ assets) and Gravity ramp.

3. Guidance and Future Outlook

Production Ramp–Up

• 2025 guidance: 18,000–20,000 vehicles (updated Aug 5–6). Management expects continued record deliveries as Gravity ramps in H2 2025.
• Europe: Gravity debut at IAA Munich; customer deliveries early 2026.
• Robotaxi: first service targeted in a major U.S. city “later next year” (2026), built at Lucid’s Arizona facilities.

Expansion Plans

• Manufacturing footprint: acquisition of Nikola’s AZ facilities (+~884k sq ft) and onboarding >300 staff to accelerate Gravity/midsize ramp and testing capacity.
• Supply chain localization: Graphite One multi-year U.S. graphite offtake (production expected 2028); launch of MINAC collaboration to deepen domestic critical minerals access (nickel, manganese, graphite, recycling).
• Retail/service: New Rutherford, NJ studio/service center; ongoing European network build-out.

Operational Targets

• Margin pathway: mitigate tariff impact, improve vehicle BOM and manufacturing efficiency, scale Gravity volumes.
• Capex discipline: tighter 2025 capex range while commissioning added capacity.
• Platform road map: Midsize platform SOP late 2026; ADAS/Autonomy feature cadence to continue via OTA.

4. Strategic Positioning and Initiatives

Cost Management

• Tariff mitigation efforts underway after Q2 impact (-21ppt on gross margin).
• Domestic sourcing (Graphite One, MINAC) to reduce logistics/tariff exposure and improve unit economics over time.
• Capital structure optimization: 2030 converts offset/refinance 2026 notes; post-split share structure aims to broaden investor base.

Product Development

• Gravity: 926V electrical architecture; up to ~400 kW fast charging; seven-seat packaging; UX 3.0.
• DreamDrive™ 2 with NVIDIA DRIVE AGX; hands-free features broaden ADAS value proposition.
• Battery/efficiency leadership: Panasonic cell partnership; record-setting range credentials; continuous software updates (Android Auto, charging features).

Market Expansion

• Europe launch for Gravity (orders open; deliveries early 2026).
• Fleet and hospitality channels (SIXT, Four Seasons) expand awareness and trial.
• Ride-hail autonomy: Uber/Nuro program provides a new B2B/B2G path distinct from retail consumer demand cycles.

5. Competitive Positioning and Market Trends

Market Positioning

• Positioned as a premium EV technology leader with industry-leading range, fast charging, and top safety ratings (Air: NHTSA 5-star).
• Access to Tesla Supercharger network for Air and Gravity widens charging convenience parity with incumbents.

Competitive Strengths

• High-voltage 926V architecture and fast charge rates.
• Long-range efficiency credentials (record-setting drives) and luxury interiors.
• Vertical integration and technology licensing potential.
• Strategic partners: Uber, Panasonic, Nuro; strengthening credibility and ecosystem reach.

Emerging Industry Trends

• Shift to software-defined vehicles and OTA feature monetization.
• Domestic supply chains and critical minerals sourcing gaining strategic importance.
• Autonomous ride-hailing pilot-to-scale transition over 2026+ time frame; regulatory frameworks maturing unevenly.

6. Technology and Innovation Strategy

Technological Advancements

• DreamDrive™ 2 on NVIDIA platform; expanded hands-free features.
• Charging innovations enabling Gravity to utilize both 500V and 1000V infrastructure efficiently.
• Battery system advancements with Panasonic; smaller packs for given range reduce cost/weight.

New Product Developments

• Gravity GT and Touring trims; concept Gravity X explores off-road envelope.
• Midsize platform slated for late 2026 production; broadens TAM.
• Robotaxi vehicle co-developed with Nuro for Uber’s platform; safety case led by Nuro.

Alignment with Market Needs

• Family-ready three-row SUV with luxury performance at competitive price points.
• Supercharger compatibility and Android Auto address friction points in adoption.
• ADAS/Autonomy features tune to evolving customer expectations and regulatory milestones.

7. Risk and Reward Analysis

Growth Catalysts

• Gravity ramp through 2025–2026; European deliveries early 2026.
• Uber/Nuro robotaxi: multi-year volume visibility (20,000+ vehicles target) and non-retail channel diversification.
• Midsize platform in late 2026 to address higher-volume segments.
• Supply chain localization and cost improvements driving medium-term margin uplift.

Downside Risks

• Sustained negative gross margins until scale and tariff mitigation materialize.
• Execution risk on multi-facility ramp (including acquired AZ sites) and new programs (robotaxi).
• Capital intensity and dilution risk despite improved structure (reverse split, converts, equity raises).
• Regulatory/autonomy timing risk for robotaxi launch and geographic expansion.
• Macro EV demand softness and price competition pressuring ASPs and margins.

Valuation Metrics

• 2025 deliveries guided to 18k–20k; using Q2 revenue per delivery as a proxy, and mix improving with Gravity:
• Illustrative 2025 revenue: $1.5B–$1.8B (19k midpoint × ~$80k–$95k blended ASP).
• Illustrative 2026 revenue (full-year Gravity ramp, late-2026 midsize start): $2.0B–$2.8B range.
• Framework (not a recommendation; adjust to your assumptions and current market data):
• Apply EV/Sales of 1.2x–2.0x to 2026E revenue → implied EV $2.4B–$5.6B.
• Add approximate net cash: Q2’25 cash & investments $3.6B less gross debt (2030 notes $1.1B) = ~$2.5B (pre H2 burn; +$300M Uber in Sep).
• Implied equity value: $4.9B–$8.1B.
• Post-split shares outstanding: ~307M; implied per-share value range: ~$16–$26.
• Sensitivities: each 0.2x change in EV/Sales shifts equity value by roughly $1–$2/share; each $200M change in net cash shifts equity by ~$0.65/share.
• Note: Actual per-share outcomes depend on cash burn, tariff outcomes, Gravity mix/ASP, and any additional capital actions.

8. Investment Thesis

Investment Rationale

• Lucid combines category-leading EV technology (range/charging), an on-trend three-row luxury SUV (Gravity) entering core demand segments, and a strategic adjacency in autonomy via Uber/Nuro that can de-link part of growth from retail cycles.
• Financial de-risking via converts, PIF support, and Uber’s strategic investment provides runway through critical ramps; capex guidance cut reflects discipline.

Price Target Justification

• Using a relative EV/Sales approach on 2026E $2.0B–$2.8B revenue and 1.2x–2.0x multiples yields a post-split per-share range of ~$16–$26 based on current capital structure data and Q2 liquidity metrics.
• Upside to the range if: Gravity delivers higher mix/ASP, robotaxi timeline holds, tariff relief realized, and cost-per-vehicle declines faster than modeled.
• Downside to the range if: autonomy timelines slip, Gravity ramp under-delivers, or incremental capital raises dilute more than anticipated.

Influencing Market Dynamics

• Tariffs and supply chain localization will materially influence near-term margins.
• Charging access parity (Supercharger integration) and software feature cadence can support pricing power and mix.
• Autonomy regulatory progress and ride-hail economics will shape the robotaxi NPV and optionality premium.

9. Macroeconomic and Industry Trends

Regulatory Changes

• Trade/tariff shifts directly impacting gross margins; Lucid actively pursuing mitigation via domestic sourcing and contractual strategies.
• Autonomy regulation evolving; robotaxi deployment dependent on city/state approvals and safety case completion.

Supply Chain Dynamics

• Strategic moves toward U.S.-sourced critical minerals (Graphite One; MINAC collaboration) to improve resilience and reduce tariff/logistics risk.
• Battery cell partnerships (Panasonic) bolster long-term availability and cost roadmaps.

Technology Adoption Trends

• Fast-charging and network access are becoming table stakes; Lucid’s 926V architecture and Supercharger access align with buyer expectations.
• OTA/ADAS features and infotainment integrations (Android Auto) are increasingly important in purchase decisions and potential post-sale monetization.
• Ride-hail autonomy progressing from pilots to early deployments; OEMs with adaptable platforms and strong partners are positioned for early share.