Lucid Group, Inc. (LCID) Q3 2025 Earnings Call Transcript

Access earnings results, analyst expectations, report, slides, earnings call, and transcript.

Overview

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.

Key Financial Performance

Revenue Revenue was up 30% sequentially and 68% year-over-year, driven by deliveries growth and gravity mix.

Deliveries Delivered 4,078 vehicles, a 47% increase year-over-year. ASP moved higher with Gravity mix and more high-value configurations.

Production Produced 3,891 vehicles and over 1,000 additional vehicles for final assembly in Saudi Arabia. Production rates picked up towards the end of the quarter.

Gross Margin Gross margin improved about 6 points sequentially as mix improved and productivity and cost reduction actions took hold.

Adjusted EBITDA Adjusted EBITDA was negative $718 million, reflecting increased sales and marketing effort and ongoing investment in midsized platform, Atlas powertrain platform, and autonomy initiatives.

Free Cash Flow Free cash flow improved to negative $955 million on tighter working capital and execution discipline.

Liquidity Ended the quarter with $4.2 billion, including $3 billion of cash and investment and $1.2 billion of credit facilities. Subsequent to the quarter, increased delayed draw term loan facility with PIF from $750 million to approximately $2 billion, extending runway into the first half of 2027.

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Operating Highlights

Robotaxis and Level 4 Autonomy: Lucid announced a $300 million strategic investment from Uber to deploy 20,000 robotaxis. The first batch of robotaxi engineering vehicles was delivered to Nuro, with deployment planned in the San Francisco Bay Area in 2026. Lucid is also collaborating with NVIDIA to develop Level 4 autonomous driving capabilities for both B2B and B2C markets.

Lucid Air Sapphire: The Lucid Air Sapphire was awarded German Performance Car of the Year, showcasing its advanced EV technology and performance.

International Expansion: Lucid expanded its operations internationally, with European orders up year-over-year and increased brand awareness globally. The company also launched campaigns in New York and Abu Dhabi to boost visibility.

Brand Awareness: Lucid's brand awareness increased by 8 points among luxury EV intenders in the U.S., driven by the 'Driven' campaign featuring Timothée Chalamet, which achieved over 1 billion impressions.

Production Challenges: Lucid faced supply chain crises involving magnets, aluminum, and chips, which impacted production and delivery numbers. Despite these challenges, the company achieved its seventh consecutive record quarter for deliveries.

Organizational Changes: Key leadership appointments were made to streamline decision-making and enhance accountability, including new roles for Senior Vice Presidents in Engineering, Revenue, and Quality.

Partnerships for Growth: Lucid's partnerships with Uber, Nuro, and NVIDIA aim to optimize costs, enable capital-efficient growth, and open new revenue streams in software and data services.

Focus on Autonomy: Lucid is pursuing both in-house and partnership-driven development of autonomous driving technology to balance cost efficiency and technological advancement.

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Risk or Challenges

Supply Chain Disruptions: Lucid faced three consecutive industry-wide supply chain crises involving magnets, aluminum, and chips. These disruptions impacted production schedules, delivery numbers, and operational efficiency. For example, a magnet shortage forced a temporary shift in production plans, and a fire at an aluminum supplier's plant caused further challenges.

Production Delays: The delayed ramp-up of the Gravity model was attributed to supplier issues and external headwinds, threatening production continuity multiple times throughout the year. This has hindered the company from achieving its desired production targets.

Macroeconomic and Geopolitical Headwinds: The company acknowledged ongoing macroeconomic and geopolitical challenges, which have created a volatile environment for operations and financial planning.

Capital Allocation and Cost Management: Lucid is balancing in-house development and partnerships for autonomous driving technology to optimize capital expenditure. However, this approach may limit the company's ability to fully control and differentiate its technology in the long term.

Demand Volatility: The expiration of certain U.S. tax credits and tapering of incentives have created temporary demand fluctuations, impacting delivery growth and market dynamics.

Liquidity and Financial Stability: While Lucid has extended its liquidity runway into the first half of 2027 through increased credit facilities, the company remains reliant on external financing and faces ongoing pressure to maintain a healthy liquidity position.

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Guidance & Outlook

Revenue Expectations: Revenue was up 30% sequentially and 68% year-over-year in Q3. The company expects significant delivery growth in Q4 and anticipates demand to normalize in early 2026, supported by expanded marketing campaigns and broader availability of Lucid Gravity.

Production and Delivery Projections: Lucid expects total production at year-end to be around 18,000 units, assuming no unexpected supply chain disruptions. For the first time, Lucid Gravity is expected to make up the majority of production in Q4.

Market Trends and Demand: While the industry expects a continuation of demand effects due to tapering incentives and expiration of U.S. tax credits, Lucid sees this as temporary and expects demand to normalize in early 2026. European orders are up year-over-year, and North American traffic and test drives in October were solid.

Capital Expenditures: For 2025, Lucid is planning $1 billion to $1.2 billion in CapEx, focusing on scaling production, midsized development, automation, and cost reduction initiatives. The company aims to lower capital intensity per unit as the year progresses.

Strategic Partnerships and Revenue Streams: Partnerships with Uber, Nuro, and NVIDIA are expected to reshape Lucid's financial model, providing a capital-efficient path to growth and opening new recurring revenue streams in advanced driver assistance, software, and data services.

Autonomous Driving and Technology: Lucid plans to deliver significant upgrades to advanced driving assist functionality by the end of next year and aims to bring full Level 4 autonomous driving capabilities to the B2C market in collaboration with NVIDIA.

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Shareholder Return Plan

The selected topic was not discussed during the call.

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Key Q&A

Q:What is Lucid's plan to increase market cap and shareholder value within the next 12 months?

A:Lucid plans to focus on profitability and cash generation by executing their plan to reduce cash usage and improve profitability. This includes ramping the Gravity and launching the Midsize next year with a focus on capital allocation. Midterm, they aim to accelerate cash generation through technology and software to maximize returns with low capital intensity.

Q:Any updates on the robotaxi partnership with Uber?

A:Lucid has made progress with Nuro, delivering the first batch of engineering vehicles for testing. San Francisco is targeted for a 2026 launch, subject to regulatory approvals. Additionally, Uber made a $300 million equity investment in Lucid.

Q:When will the company become profitable?

A:Lucid has an internal roadmap but has not publicly communicated the timing for breakeven. They are focusing on short-term plans and midterm strategies, including the Gravity and Midsize launches, to achieve profitability. An Investor Day is planned early next year to provide more details.

Q:What is the timeline for an affordable entry-level vehicle for Lucid?

A:The first variant of the Midsize platform is scheduled for the end of 2026.

Q:Where is Lucid in choosing suppliers for the Midsize vehicle, and is there overlap with Air and Gravity suppliers?

A:Lucid is on track with sourcing for the Midsize vehicle and is achieving favorable BOM costs. Many suppliers for Air and Gravity are also providing pricing relief for the Midsize program.

Q:How is Lucid prioritizing capital between autonomy and technology manufacturing?

A:Lucid is focusing on capital-efficient partnerships like Uber-Nuro for B2B and NVIDIA for consumer vehicle autonomy. These partnerships reduce the need for large capital investments while providing leading-edge capabilities.

Q:What is the timeline for achieving Level 4 autonomy on consumer-owned vehicles?

A:Lucid plans to roll out L2+ and L2++ versions for Gravity and Midsize by the end of next year, with hardware updates for future Level 4 capabilities. They will provide a timeline for Level 4 once further progress is made.

Q:What is the outlook for deliveries and COGS in Q4?

A:Lucid expects a significant ramp-up in deliveries, primarily for the Gravity. Increased production volume is expected to reduce COGS per unit, despite headwinds like tariffs.

Q:What is the status of the contract with the Saudi Arabian government?

A:Lucid is already delivering vehicles to Saudi Arabia under the agreement. Deliveries will increase with the Gravity ramp-up and further with the Midsize launch.

Q:What are Lucid's near-term capital needs, and does the extended capital runway account for the September 2026 maturity?

A:The extended capital runway does not account for the September 2026 maturity of the convertible debt, which will need to be refinanced.

Q:Why does Lucid believe it can achieve Level 4 autonomy where others have failed?

A:Lucid cites advancements in AI technology, end-to-end models, and compute power as reasons for confidence. Their partnership with NVIDIA and their vehicle development cycle also contribute to their optimism.

Q:What are the new vehicle order trends since the expiration of U.S. EV tax credits in October?

A:Lucid's delivery numbers and market share increased in October, despite competitors reporting declines. They attribute this to the availability of the Gravity and expect demand to normalize by early next year.

Q:Why wasn't leverage on volumes and product mix visible in Q3 gross margin improvements?

A:The impact of product mix was limited due to the Gravity's ramp-up phase. Increased inventory and associated impairments also affected gross margins.

Q:What is Lucid's plan for localizing Midsize platform production?

A:Lucid plans to produce the Midsize platform at AMP-1 in Arizona, with preparations already underway. Additional investments may be needed for future expansion.

Q:What updates are there on the Atlas propulsion system?

A:The Atlas propulsion system is on track, with improvements in cost, weight, and efficiency. Some versions will not require rare earth materials, and more details will be shared at the upcoming Investor Day.

Q:Why not produce all Atlas propulsion systems without rare earth materials?

A:Certain trims with specific power requirements still need permanent magnets. The long-term plan is to eliminate rare earth materials where possible.

Q:Review of Unclear Management Responses

A:Management avoided providing a direct answer to the question about when the company will become profitable, citing an internal roadmap but not disclosing specific timing. Similarly, they did not provide a clear timeline for achieving Level 4 autonomy, stating they would communicate it later when more confident.

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Earnings Word Cloud

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