Earnings call transcript: Lucid Group’s Q1 2025 revenue misses, stock edges higher

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Overview

Lucid's earnings call summary and Q&A provide mixed signals. Financial performance shows improvement in EBITDA and liquidity, but increased inventory and vague responses on production and convertible bonds raise concerns. Product development updates are positive, with strong orders for Lucid Gravity and plans to sell technology to other manufacturers. However, the lack of urgency in production ramp and potential supply chain risks temper optimism. The overall sentiment is neutral, as positive aspects are balanced by uncertainties, making a stock price movement within a -2% to 2% range likely.

Key Financial Performance

Vehicle Deliveries 3,109 vehicles delivered, up more than 58% year over year. This increase was achieved despite limited deliveries in Saudi Arabia due to a system change that has since been resolved.

Vehicle Production 2,212 vehicles produced, up 28% year over year. This increase reflects improved operational execution.

Total Revenue $235,000,000, representing 36% growth year over year. This growth was driven by increased vehicle deliveries and regulatory credit revenue.

Regulatory Credit Revenue $31,500,000 recognized in Q1, contributing significantly to total revenue and indicating continued opportunity in this area.

Gross Margin GAAP gross margin was negative 97.2%, an improvement from negative 134.3% in the prior year quarter. The improvement reflects higher regulatory credit revenue and a focus on cost transformation.

R&D Expenses $251,000,000, down from Q4, largely due to lower Lucid Gravity related development expenses. However, R&D is expected to increase throughout the year as investments in the midsized program accelerate.

SG&A Expenses $212,000,000, a 13% sequential decline, primarily due to a one-time reversal of $35,400,000 related to previously recognized stock-based compensation expenses.

Adjusted EBITDA Negative $563,000,000, an improvement of 2% versus Q4.

Cash and Investments Approximately $4,560,000,000 in cash and investments, with total liquidity of $5,760,000,000, providing a strong platform for executing long-term strategy.

Inventory Increased to $471,000,000, up from $408,000,000 in Q4, in line with production ramp plans.

CapEx $161,200,000 for the first quarter, with expectations for total capital expenditure for 2025 to be approximately $1,400,000,000.

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Operating Highlights

Vehicle Deliveries: Delivered 3,109 vehicles, up more than 58% year over year, marking the fifth consecutive quarter of record deliveries.

Vehicle Production: Produced 2,212 vehicles, up 28% year over year.

Lucid Gravity Launch: Strong interest in Lucid Gravity, with significant marketing campaigns planned for 2025.

Lucid Air Recognition: 2025 Lucid Air named Best Luxury Electric Car for the fourth consecutive year.

Market Positioning: Lucid Air remains the number one best-selling EV and third best-selling sedan overall in the U.S.

New Customer Acquisition: More than three-quarters of Lucid Gravity orders are from new customers.

Global Ambassador: Signed a global ambassador to enhance brand visibility and marketing efforts.

Operational Efficiency: Significant year-over-year improvements in gross margin, ahead of guidance.

Convertible Notes Offering: Completed a convertible notes offering with strong support from the public investment fund.

Acquisition of Nikola Assets: Acquired certain assets for approximately $17 million, valued at hundreds of millions, enhancing operational capabilities.

Technology Licensing: Increased interest in technology access and licensing discussions with OEMs.

Collaboration with KAUST: Announced MOU with King Abdullah University to enhance technology leadership in ADAS and autonomous driving.

Supply Chain Strategy: Proactively working on localizing supply chains to mitigate tariff impacts.

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Risk or Challenges

Tariff Impact: The company anticipates a potential gross margin headwind of 8% to 15% due to tariffs, which is an increase from the previous estimate of 7% to 12%. This situation is complicated by market volatility and regulatory challenges.

Supply Chain Challenges: Lucid is facing uncertainties in the automotive supply chain, particularly due to global tariff changes and the need to localize supply chains. The company is actively working to mitigate these impacts through various optimization initiatives.

Regulatory Issues: The company is exposed to regulatory challenges that could affect financial performance, particularly in relation to tariffs and trade policies.

Production and Delivery Risks: There are concerns regarding the production ramp-up of the Lucid Gravity and the midsize platform, with potential delays due to supply chain bottlenecks and the need for careful sourcing decisions.

Economic Factors: The macroeconomic environment remains uncertain, which could impact consumer behavior and overall demand for vehicles.

Competitive Pressures: Lucid faces competitive pressures from other OEMs, particularly in the EV market, which may affect market share and pricing strategies.

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Guidance & Outlook

Vehicle Deliveries: Delivered 3,109 vehicles, up more than 58% year over year, marking the fifth consecutive quarter of record deliveries.

Production: Produced 2,212 vehicles, up 28% year over year, with over 600 vehicles in transit to Saudi Arabia.

Marketing Initiatives: Significantly ramping up marketing campaigns throughout 2025, including a special campaign for the Lucid Gravity.

Technology Access and Licensing: Increased interest in technology access and licensing, with ongoing discussions with OEMs.

Collaboration with KAUST: Announced an MOU with King Abdullah University of Science and Technology to enhance technology leadership in ADAS and autonomous driving.

Acquisition of Nikola Assets: Acquired certain assets from Nikola for approximately $17 million, enhancing manufacturing capabilities.

Production Guidance: Forecast production of approximately 20,000 vehicles in 2025.

CapEx Guidance: Expected capital expenditure for 2025 is approximately $1.4 billion.

Gross Margin Impact: Potential gross margin headwind of 8% to 15% due to tariffs.

Liquidity Position: Ended Q1 with approximately $5.76 billion in total liquidity, providing runway into the second half of 2026.

Revenue Expectations: Total revenue for Q1 was $235 million, representing 36% growth year over year.

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Shareholder Return Plan

Convertible Senior Note Offering: In April, Lucid closed a $1,100,000,000 convertible senior note offering due in 02/1930, which included the full exercise of the $100,000,000 over allotment option. The net proceeds of $935,600,000 were used to repurchase approximately $1,000,000,000 in principal of outstanding 2026 notes.

Credit Facility Renewal: In February, Lucid renewed and upsized its CIB credit facility in Saudi Arabia, increasing the commitment by approximately $240,000,000.

Liquidity Position: Lucid ended Q1 with approximately $4,560,000,000 in cash and investments, and total liquidity of $5,760,000,000, providing a strong platform for executing long-term strategy.

Capital Expenditure Guidance: Lucid expects capital expenditure for 2025 to be approximately $1,400,000,000, which includes investments in AMP1, AMP2, and retail infrastructure.

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Key Q&A

Q:With the acquisition of the Nikola factory, can midsize rollout and ramp be accelerated than previously planned second half twenty twenty six? Also, does this acquisition minimize the capital expenditure than previously planned?

A:We always talked about, and Tufik, you said that earlier in the prepared remarks, late twenty twenty six. The pace at which Lucid has been able to bring Lucid Air and Lucid Gravity to market was already incredibly fast. The midsize is just as difficult. We are in the midst of sourcing and are about to make major sourcing decisions. Hence, we need to take the necessary time to fully evaluate the impact of current developments to ensure we make the right business decisions for the long term, which is difficult to do in a rapidly shifting tariff environment.

Q:Are there any plans for Lucid to sell or lease its technology to other car manufacturers in the future?

A:Yes, that always has been the plan, and this is why we actually named the company Lucid Group, not Lucid Motors. In fact, Aston Martin was our first OEM contract, and we’re in active discussions with many other companies.

Q:What is the impact on Lucid supply chain as a result of Chinese curbs on export of rare earth material? To what extent is Lucid exposed to the tariffs?

A:Because of our vertical integration, we are able to have more control over various components that go into our vehicles. Not only does our high power density drive units in the lucid air and lucid gravity require significantly less rare earth materials, but we could potentially use completely different rare earth materials without impacting vehicle performance.

Q:Is it fair to say that Lucid lacks urgency with regard to production ramp and deliveries?

A:Bringing a high quality vehicle to market requires thoughtful execution. While we encountered a modest supply chain bottleneck that has impacted our timeline, the more important point is that we’re taking the time to get it right, not just getting it out.

Q:Can you tell us where you stand kind of on test drives and what you’re seeing, maybe just call it qualitatively from an order perspective at this point?

A:From the orders perspective, we continue to see strong order inflow. We only have opened so far the ordering for our higher grant Turing TRIM, and we actually see very good numbers continuing.

Q:Do you have an update on where the Atlas drivetrain sits right now?

A:We’re not actually announcing something today, but I think that is something for maybe the next few months or quarters where we then announce the ATLAS drivetrain.

Q:How should we think about the breakdown between the sedans and the gravity, both in terms of maybe production and deliveries for this year?

A:We’re expecting the AIR actually, it sells pretty well right now. In general, we’re not expecting the air to drastically increase in sales. So then the balance will have to come from gravity.

Q:Can you remind us again kind of the plan to address the convertible bonds maturing in 2026?

A:We are not communicating about the timing, because again, as I said, we want to be in a position to choose the right timing and do things when we think it’s the right time, not when we have to do them.

Q:Could you just expand maybe a bit on the resources, either financial or through personnel, that you and your partner might be committing, where the R and D focus might be out of all those different areas you outlined?

A:The financial commitment involved from our side is not much, and that is actually going to be further discussed. But I want to reiterate how much benefit that brings to us.

Q:Do you see a scenario potentially where all the global uncertainty and the tariff talk actually increases interest in some of your technology?

A:Yes, absolutely. This gives us now more options to do things like that.

Q:Review of Unclear Management Responses

A:Management appeared to avoid giving a direct answer to questions regarding the urgency of production ramp and deliveries, as well as the specific timing and strategy for addressing convertible bonds maturing in 2026. Their responses were somewhat vague, lacking detailed timelines or concrete plans.

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Earnings Word Cloud

The most frequently occurring keywords in this quarter's earning call

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The earnings call presents a positive outlook with strong partnerships (Uber-Nuro), promising product launches (Gravity, Midsize), and strategic measures to improve margins. The Q&A highlights progress in autonomy and capital efficiency, despite some uncertainties about profitability timing. The Uber partnership and $300M investment are significant positives, and increased deliveries are expected. However, the lack of profitability guidance and future capital needs pose risks. Overall, the sentiment is positive, with potential stock price appreciation, especially given the positive market reception to new vehicle launches and partnerships.

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