Lucid Group Inc
For the period ended Jun 30, 2024. Filed Aug 5, 2024.
View on SEC.govAbout this filing
A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Jun 30, 2024 · Filed Aug 5, 2024
LCID$3.29+10.4%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2024-03-31; filed 2024-05-06.
0001628280-24-020633
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2024-06-30; filed 2024-08-05.
0001628280-24-034730
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 65 previous paragraphs and 150 current paragraphs.
36 unchanged; 24 reworded; 90 added; 5 removed; 0 previous and 0 current paragraphs rearranged.
Tables are not compared: 4 previous and 6 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (90)
Current report
Series B Subscription Agreement
Current report
On August 4, 2024, we entered into a subscription agreement (the “Series B Subscription Agreement”) with Ayar. Pursuant to the Series B Subscription Agreement, Ayar agreed to purchase from us 75,000 shares of our Series B convertible preferred stock, par value $0.0001 per share (the “Series B Redeemable Convertible Preferred Stock”), for an aggregate purchase price of $750 million in a private placement. We intend to issue on or about August 16, 2024, the shares to Ayar pursuant to the Series B Subscription Agreement and receive aggregate gross proceeds of $750 million.
Current report
Research and development expense increased by $53.7 million, or 23% for the three months ended June 30, 2024, as compared to the same period in the prior year. The increase was primarily attributable to higher personnel-related expenses of $34.9 million ($38.8 million increase due to our growth in headcount, partially offset by $3.9 million lower stock-based compensation expenses) and an increase of $32.0 million for prototype material, engineering, design and testing services, partially offset by a decrease of $15.3 million in other expenses.
Current report
Selling, general, and administrative expense increased by $12.5 million, or 6% for the three months ended June 30, 2024, as compared to the same period in the prior year. The increase was primarily attributable to higher personnel-related expenses of $13.6 million ($22.7 million increase due to our growth in headcount, partially offset by $9.1 million lower stock-based compensation expense), and an increase in sales and marketing expenses of $10.0 million, partially offset by lower utilization of contractors and professional fees of $8.0 million, and a decrease of $2.8 million in other expenses.
Current report
Selling, general, and administrative expense increased by $57.0 million, or 16% for the six months ended June 30, 2024, as compared to the same period in the prior year. The increase was primarily attributable to higher personnel-related expenses of $34.2 million ($44.8 million increase due to our growth in headcount, partially offset by $10.6 million from lower stock-based compensation), an increase in sales and marketing expenses of $26.0 million, partially offset by lower utilization of contractors and professional fees of $3.7 million.
Current report
Change in Fair Value of Derivative Liability Associated with Series A Redeemable Convertible Preferred Stock (Related Party)
Current report
We concluded that the conversion features, inclusive of all settlement outcomes where the pay-off is indexed to the if-converted value, meets all the requirements to be separately accounted for as a bifurcated derivative. As a result, we bifurcated the Series A Redeemable Convertible Preferred Stock between (i) the host contract which is accounted for within mezzanine equity, and (ii) the bifurcated derivative liability related to the conversion features. The bifurcated derivative is remeasured to fair value at each reporting period with changes in fair value recorded in the condensed consolidated statement of operations and comprehensive loss. The derivative liability was initially measured at a fair value of $497.1 million and was remeasured to a fair value of $394.1 million as of June 30, 2024. We recognized a gain of $103.0 million for the three and six months ended June 30, 2024, primarily driven by a reduction in our stock price, in change in fair value of derivative liability associated with Series A redeemable convertible preferred stock (related party) in the condensed consolidated statements of operations and comprehensive loss. See Note 8 “Redeemable Convertible Preferred Stock” to our condensed consolidated financial statements included elsewhere in this Quarterly Report for more information.
Current report
Interest expense remained flat for the three and six months ended June 30, 2024, as compared to the same periods in the prior year.
Current report
Other Expense, net
Current report
Other expense, net increased by $4.1 million and $5.8 million, respectively, for the three and six months ended June 30, 2024, as compared to the same periods in the prior year, primarily due to changes in foreign currency exchange rates.
Current report
Provision for (Benefit from) Income Taxes
Current report
The following table presents our provision for income taxes for the periods presented (in thousands):
Current report
Our provision for (benefit from) income taxes consists primarily of U.S., state and foreign income taxes in jurisdictions in which we operate. We maintain a valuation allowance against the full value of our U.S. and state net deferred tax assets because we believe it is more likely than not that the recoverability of these deferred tax assets will not be realized.
Current report
Liquidity and Capital Resources
Current report
Sources of Liquidity
Current report
As of June 30, 2024, Lucid had $3.9 billion of cash, cash equivalents and investments. Since inception, our sources of cash are predominantly from proceeds received upon the completion of the Merger, the issuance of convertible debt and preferred stock and proceeds from equity offerings.
Current report
We expect that our current sources of liquidity together with our projection of cash flows from operating activities will provide us with adequate liquidity for at least the next 12 months, including investment in funding (i) ongoing operations, (ii) research and development projects for new products/ technologies, (iii) further construction of AMP-1 phase 2 in Casa Grande, Arizona, (iv) construction of the CBU portion of AMP-2 in Saudi Arabia, (v) expansion of retail studios and service centers, and (vi) other initiatives related to the sale of vehicles and/ or technology.
Current report
We anticipate our cumulative spending on capital expenditures to be approximately $1.3 billion for the fiscal year 2024 to support our continued commercialization and growth objectives as we strategically invest in manufacturing capacity and capabilities, our retail studios and service center capabilities throughout North America and across the globe, development of different products and technologies, and other areas supporting the growth of Lucid’s business. Our future capital expenditures may vary and will depend on many factors including the timing and extent of spending and other growth initiatives. In addition, we expect our operating expenses to increase in order to grow and support the operations of a global automotive company targeting volumes in line with Lucid’s aspirations.
Current report
As of June 30, 2024, our total minimum lease payments are $476.0 million, of which $31.1 million is due in fiscal year 2024. We also have non-cancellable long-term commitments of $5.0 billion, primarily relating to certain inventory component purchases. For details regarding these obligations, refer to Note 11 “Leases” and Note 12 “Commitments and Contingencies” to the condensed consolidated financial statements included elsewhere in this Quarterly Report for more information.
Current report
2026 Notes
Current report
In December 2021, we issued $2,012.5 million of the 2026 Notes. The 2026 Notes accrue interest at a rate of 1.25% per annum, payable semi-annually in arrears on June 15 and December 15 of each year, beginning on June 15, 2022. The 2026 Notes will mature on December 15, 2026, unless earlier repurchased, redeemed or converted. Before the close of business on the business day immediately before September 15, 2026, noteholders will have the right to convert their Notes only upon the occurrence of certain events. From and after September 15, 2026, noteholders may convert their Notes at any time at their election until the close of business on the second scheduled trading day immediately before the maturity date. We will settle conversions by paying or delivering, as applicable, cash, shares of our common stock or a combination of cash and shares of our common stock, at our election. The initial conversion rate is 18.2548 shares of common stock per $1,000 principal amount of Notes, which represents an initial conversion price of approximately $54.78 per share of common stock. The conversion rate and conversion price will be subject to customary adjustments upon the occurrence of certain events. In addition, if certain corporate events that constitute a “Make-Whole Fundamental Change” (as defined in the indenture) occur, then the conversion rate will, in certain circumstances, be increased for a specified period of time. As of June 30, 2024 and December 31, 2023, we were in compliance with applicable covenants under the indenture governing the 2026 Notes.
Current report
International Manufacturing Expansion
Current report
On February 27, 2022, we announced that we had selected King Abdullah Economic City (“KAEC”) in Saudi Arabia as the location of our first international manufacturing plant and signed related agreements with the Ministry of Investment of Saudi Arabia, the Saudi Industrial Development Fund, and the Economic City at KAEC. The operations at the new plant initially consist of re-assembly of the Lucid Air vehicle “kits” pre-manufactured in the U.S. and, over time, will consist of production of complete vehicles.
Current report
Saudi Industrial Development Fund (“SIDF”) Loan Agreement
Current report
On February 27, 2022, Lucid, LLC, a limited liability company established in Saudi Arabia and our subsidiary (“Lucid LLC”) entered into a loan agreement (as subsequently amended, the “SIDF Loan Agreement”) with SIDF, a related party of Public Investment Fund (“PIF”), which is an affiliate of Ayar. Under the SIDF Loan Agreement, SIDF has committed to provide loans (the “SIDF Loans”) to Lucid LLC in an aggregate principal amount of up to SAR 5.19 billion (approximately $1.4 billion); provided that SIDF may reduce the availability of SIDF Loans under the facility in certain circumstances. SIDF Loans will be subject to repayment in semi-annual installments in amounts ranging from SAR 25 million (approximately $6.7 million) to SAR 350 million (approximately $93.3 million), commencing on April 3, 2026 and ending on November 12, 2038. SIDF Loans are financing and will be used to finance certain costs in connection with the development and construction of AMP-2. Lucid LLC may repay SIDF Loans earlier than the maturity date without penalty. Obligations under the SIDF Loan Agreement do not extend to us or any of our other subsidiaries.
Current report
SIDF Loans will not bear interest. Instead, Lucid LLC will be required to pay SIDF service fees, consisting of follow-up and technical evaluation fees, ranging, in aggregate, from SAR 415 million (approximately $110.6 million) to SAR 1.77 billion (approximately $471.8 million), over the term of the SIDF Loans. SIDF Loans will be secured by security interests in the equipment, machines and assets funded thereby.
Current report
The SIDF Loan Agreement contains certain restrictive financial covenants and imposes annual caps on Lucid LLC’s payment of dividends, distributions of paid-in capital, or certain capital expenditures. The SIDF Loan Agreement also defines customary events of default, including abandonment of or failure to commence operations at the plant in KAEC, and drawdowns under the SIDF Loan Agreement are subject to certain conditions precedent. As of June 30, 2024 and December 31, 2023, no amount was outstanding under the SIDF Loan Agreement.
Current report
Ministry of Investment of Saudi Arabia (“MISA”) Agreements
Current report
In February 2022, Lucid LLC entered into agreements with MISA, a related party of PIF, which is an affiliate of Ayar, pursuant to which MISA has agreed to provide economic support for certain capital expenditures in connection with Lucid LLC’s on-going design and construction of AMP-2. The support by MISA is subject to Lucid LLC’s completion of certain milestones related to the construction and operation of AMP-2. Following the commencement of construction, if operations at the plant do not commence within 30 months, or if the agreed-upon scope of operations is not attained within 55 months, MISA may suspend availability of subsequent support.
Current report
Pursuant to the agreements, MISA has the right to require Lucid LLC to transfer the ownership of AMP-2 to MISA, at the fair market value thereof, minus an amortized value of the support provided in the event of customary events of default including abandonment or material and chronically low utilization of AMP-2. Alternatively, Lucid LLC is entitled to avoid the transfer of the ownership of AMP-2 by electing to pay such amortized value. The agreements will terminate on the fifteenth anniversary of the commencement of CBU operations at AMP-2 at the latest.
Current report
During the year ended December 31, 2022, we received support of SAR 366 million (approximately $97.3 million) in cash, of which $64.0 million was recorded as deferred liability within other long-term liabilities and $33.3 million was recorded as a deduction in calculating the carrying amount of the related assets in the consolidated balance sheet as of December 31, 2022. Subsequently, we recorded $64.0 million as a deduction in calculating the carrying amount of the related assets in the consolidated balance sheet as of December 31, 2023.
Current report
During the year ended December 31, 2023, we received support of SAR 366 million (approximately $97.5 million) in cash, of which $62.5 million was recorded as deferred liability within other long-term liabilities and $35.0 million was recorded as a deduction in calculating the carrying amount of the related assets in the consolidated balance sheet as of December 31, 2023. As of June 30, 2024, we recorded $29.8 million as deferred liability within other long-term liabilities and $67.7 million as a deduction in calculating the carrying amount of the related assets in the condensed consolidated balance sheet. There were no unfulfilled conditions and contingencies attached to the payments received.
Current report
Gulf International Bank (“GIB”) Facility Agreement
Current report
On April 29, 2022, Lucid LLC entered into a revolving credit facility agreement (the “GIB Facility Agreement”) with GIB, maturing on February 28, 2025. GIB is a related party of PIF, which is an affiliate of Ayar. The GIB Facility Agreement provided for two committed revolving credit facilities in an aggregate principal amount of SAR 1 billion (approximately $266.1 million). SAR 650 million (approximately $173.0 million) under the GIB Facility Agreement was available as bridge financing (the “Bridge Facility”) of Lucid LLC’s capital expenditures in connection with AMP-2. The remaining SAR 350 million (approximately $93.1 million) might be used for general corporate purposes (the “Working Capital Facility”). Loans under the Bridge Facility and the Working Capital Facility had a maturity of no more than 12 months. The Bridge Facility incurred interest at a rate of 1.25% per annum over 3-month SAIBOR and the Working Capital Facility incurred interest at a rate of 1.70% per annum over 1~3-month SAIBOR and associated fees.
Current report
On March 12, 2023, Lucid LLC entered into an amendment of the GIB Facility Agreement (together with the GIB Facility Agreement, the “Amended GIB Facility Agreement”) to combine the Bridge Facility and the Working Capital Facility into a committed SAR 1 billion (approximately $266.6 million) revolving credit facility (the “GIB Credit Facility”) which may be used for general corporate purposes. Loans under the Amended GIB Credit Facility Agreement have a maturity of no more than 12 months and bear interest at a rate of 1.40% per annum over SAIBOR (based on the term of borrowing) and associated fees.
Current report
We are required to pay a quarterly commitment fee of 0.15% per annum based on the unutilized portion of the GIB Credit Facility. Commitments under the Amended GIB Facility Agreement will terminate, and all amounts then outstanding thereunder would become payable, on the maturity date of the Amended GIB Facility Agreement. The Amended GIB Facility Agreement contains certain conditions precedent to drawdowns, representations and warranties and covenants of Lucid LLC and events of default.
Current report
As of June 30, 2024 and December 31, 2023, we had outstanding borrowings of SAR 256 million (approximately $68.2 million) and SAR 272 million (approximately $72.5 million), respectively. The weighted average interest rate on the outstanding borrowings was 7.67% and 7.49% as of June 30, 2024 and December 31, 2023, respectively. As of June 30, 2024 and December 31, 2023, availability under the GIB Credit Facility was SAR 742 million (approximately $197.8 million) and SAR 727 million (approximately $193.9 million), respectively, after giving effect to the outstanding letters of credit. The outstanding borrowings were recorded within other current liabilities in the condensed consolidated balance sheets. As of June 30, 2024 and December 31, 2023, we were in compliance with applicable covenants under the Amended GIB Facility Agreement.
Current report
ABL Credit Facility
Current report
In June 2022, we entered into the ABL Credit Facility with a syndicate of banks that may be used for working capital and general corporate purposes. The ABL Credit Facility provides for an initial aggregate principal commitment amount of up to $1.0 billion (including a $350.0 million letter of credit subfacility and a $100.0 million swingline loan subfacility) and has a stated maturity date of June 9, 2027. Borrowings under the ABL Credit Facility bear interest at the applicable interest rates specified in the credit agreement governing the ABL Credit Facility. In June 2024, we amended the ABL Credit Facility to update the Canadian reference rate. Availability under the ABL Credit Facility is subject to the value of eligible assets in the borrowing base and is reduced by outstanding loan borrowings and issuances of letters of credit which bear customary letter of credit fees. Subject to certain terms and conditions, we may request one or more increases in the amount of credit commitments under the ABL Credit Facility in an aggregate amount up to the sum of $500.0 million plus certain other amounts. We are required to pay a quarterly commitment fee of 0.25% per annum based on the unutilized portion of the ABL Credit Facility.
Current report
The ABL Credit Facility contains customary covenants that limit our ability and our restricted subsidiaries to, among other activities, pay dividends, incur debt, create liens and encumbrances, redeem or repurchase stock, dispose of certain assets, consummate acquisitions or other investments, prepay certain debt, engage in transactions with affiliates, engage in sale and leaseback transactions or consummate mergers and other fundamental changes. The ABL Credit Facility also includes a minimum liquidity covenant which, at our option following satisfaction of certain pre-conditions, may be replaced with a springing, minimum fixed charge coverage ratio financial covenant, in each case on terms set forth in the credit agreement governing the ABL Credit Facility. As of June 30, 2024 and December 31, 2023, we were in compliance with applicable covenants under the ABL Credit Facility.
Showing the first 40 of 90 passages. Open the source sections for the rest.
Removed paragraphs (5)
Previous report
2024 Subscription Agreement
Previous report
Selling, general, and administrative expense increased by $44.5 million, or 26% for the three months ended March 31, 2024, as compared to the same period in the prior year. The increase was primarily attributable to higher personnel-related expenses of $20.6 million from our headcount growth as well as increases in sales and marketing expenses of $16.0 million and allocated facilities costs of $4.3 million.
Previous report
Interest expense increased by $0.4 million for the three months ended March 31, 2024, as compared to the same period in the prior year, due to an increase of $1.4 million in interest expense primarily from the GIB credit facility, partially offset by an increase of $1.2 million in interest capitalized on construction in progress related to significant capital asset construction.
Previous report
Other Income (Expense), net
Previous report
Other income (expense), net decreased by $1.7 million for the three months ended March 31, 2024, as compared to the same period in the prior year, primarily due to changes in foreign currency exchange rates.
Reworded paragraphs (24)
Previous wording
We are a technology company with a mission to inspire the adoption of sustainable energy by creating advanced technologies and the most captivating luxury electric vehicles, centered around the human experience. Our focus on in-house hardware and software innovation, vertical integration, and a “clean sheet” approach to engineering and design led to the development of the award-winning Lucid Air.
Current wording
We are a technology company with a mission to create exceptional experiences to drive the world forward. Our focus on in-house hardware and software innovation, vertical integration, and a “clean sheet” approach to engineering and design led to the development of the award-winning Lucid Air.
Previous wording
We began delivering the Lucid Air to customers in October 2021 and we expect to launch additional vehicles over the coming decade. We have leveraged and expanded the technological advancements from the Lucid Air to the Gravity sport utility vehicle (“SUV”) program, which is scheduled for start of production in late 2024. After the Lucid Air and the Gravity SUV program, start of production of our Midsize platform is scheduled for late 2026.
Current wording
We began delivering the Lucid Air to customers in October 2021 and we expect to launch additional vehicles over the coming decade. We have leveraged and expanded the technological advancements from the Lucid Air to the Lucid Gravity sport utility vehicle (“SUV”), which is scheduled for start of production in late 2024. After the Lucid Air and the Lucid Gravity SUV, start of production of our Midsize platform is scheduled for late 2026.
Previous wording
The Redeemable Convertible Preferred Stock sold to Ayar pursuant to the 2024 Subscription Agreement were issued pursuant to our Certificate of Designations of the Convertible Preferred Stock (the “Certificate of Designations”) filed with the Secretary of State of the State of Delaware on March 28, 2024 and were sold in reliance on the exemption from registration provided in Section 4(a)(2) of the Securities Act.
Current wording
The Series B Redeemable Convertible Preferred Stock sold to Ayar pursuant to the Series B Subscription Agreement will be issued pursuant to our certificate of designations of the Series B Redeemable Convertible Preferred Stock (the “Series B Certificate of Designations”) to be filed with the Secretary of State of the State of Delaware on or about August 16, 2024 and will be sold in reliance on the exemption from registration provided in Section 4(a)(2) of the Securities Act.
Previous wording
We believe that we are positioned to be a leader in the electric vehicle market by unlocking the potential for advanced, high-performance, and long-range electric vehicles to co-exist. The Lucid Air is designed with race-proven battery and powertrain technologies and robust performance together with a sleek exterior design and expansive interior space given our miniaturized key drivetrain components. We anticipated continued consumer demand for the Lucid Air based on its luxurious design, high-performance technology and sustainability leadership, and the growing acceptance of and demand for electric vehicles as a substitute for gasoline-fueled vehicles. We continue to receive significant interest in the Lucid Air from potential customers.
Current wording
We believe that we are positioned to be a leader in the electric vehicle market by unlocking the potential for advanced, high-performance, and long-range electric vehicles to co-exist. The Lucid Air is designed with race-proven battery and powertrain technologies and robust performance together with a sleek exterior design and expansive interior space given our miniaturized key drivetrain components. We anticipate continued consumer demand for the Lucid Air based on its luxurious design, high-performance technology and sustainability leadership, and the growing acceptance of and demand for electric vehicles as a substitute for gasoline-fueled vehicles. We continue to receive significant interest in the Lucid Air from potential customers.
Previous wording
We operate a direct-to-consumer sales and service model, which we believe allows us to offer a personalized experience for our customers based on their purchase and ownership preferences. We expect to continue to incur significant expenses in our sales, service and marketing operations for sale of the Lucid Air, including to open studios, hire a sales force, invest in marketing and brand awareness, and establish a robust service center operation. As of March 31, 2024, we have opened fifty studios and service centers (excluding temporary and satellite service centers): thirty-five in the United States (eleven in California, four in each of Florida and New York, two in each of Arizona, Illinois, Massachusetts, Texas, Virginia and Washington, and one in each of Colorado, Michigan, New Jersey and Pennsylvania), five in Canada, four in Germany, two in Switzerland, one in Netherlands, one in Norway, and two in Saudi Arabia. We also expect to hire additional sales, customer service, and service center personnel. We believe that investing in our direct-to-consumer sales and service model will be critical to deliver and service the Lucid electric vehicles we manufacture and sell.
Current wording
We operate a direct-to-consumer sales and service model, which we believe allows us to offer a personalized experience for our customers based on their purchase and ownership preferences. We expect to continue to incur significant expenses in our sales, service and marketing operations for sale of the Lucid Air, including to open studios, hire a sales force, invest in marketing and brand awareness, and establish a robust service center operation. As of June 30, 2024, we have opened 53 studios and service centers (excluding temporary and satellite service centers): 37 in the United States (12 in California, four in each of Florida and New York, two in each of Arizona, Illinois, Massachusetts, Texas, Virginia and Washington, and one in each of Colorado, Georgia, Michigan, New Jersey and Pennsylvania), five in Canada, four in Germany, two in Switzerland, one in Netherlands, one in Norway, two in Saudi Arabia, and one in the United Arab Emirates. We also expect to hire additional sales, customer service, and service center personnel. We believe that investing in our direct-to-consumer sales and service model will be critical to delivering and servicing the Lucid electric vehicles we manufacture and sell.
Previous wording
Achieving commercialization and growth for each generation of electric vehicles requires us to make significant capital expenditures to scale our production capacity and improve our supply chain processes in the United States and internationally. We expect our capital expenditures to increase as we continue our expansion of AMP-1 and construction of the completely-built-up (“CBU”) portion of AMP-2. The amount and timing of our future manufacturing capacity requirements, and resulting capital expenditures, will depend on many factors, including the pace and results of our research and development efforts to meet technological development milestones, our ability to develop and launch new electric vehicles, our ability to achieve sales and experience customer demand for our vehicles at the levels we anticipate, our ability to utilize planned capacity in our existing facilities and our ability to enter new markets.
Current wording
Achieving commercialization and growth for each generation of our electric vehicles requires us to make significant capital expenditures to scale our production capacity and improve our supply chain processes in the United States and internationally. We expect our capital expenditures to increase as we continue our expansion of AMP-1 and construction of the completely-built-up (“CBU”) portion of AMP-2. The amount and timing of our future manufacturing capacity requirements, and resulting capital expenditures, will depend on many factors, including the pace and results of our research and development efforts to meet technological development milestones, our ability to develop and launch new electric vehicles, our ability to achieve sales and experience customer demand for our vehicles at the levels we anticipate, our ability to utilize planned capacity in our existing facilities and our ability to enter new markets.
Previous wording
We develop in-house battery and powertrain technology, which requires us to invest a significant amount of capital in research and development. The electric vehicle market is highly competitive and includes both established automotive manufacturers and new entrants. To establish market share and attract customers from competitors, we plan to continue to make substantial investments in research and development for the commercialization and continued enhancements of the Lucid Air, the development of the Gravity SUV program, and future generations of our electric vehicles and other products.
Current wording
We develop in-house battery and powertrain technology, which requires us to invest a significant amount of capital in research and development. The electric vehicle market is highly competitive and includes both established automotive manufacturers and new entrants. To establish market share and attract customers from competitors, we plan to continue to make substantial investments in research and development for the commercialization and continued enhancements of the Lucid Air, the development of the Lucid Gravity SUV and our Midsize platform, and future generations of our electric vehicles and other products.
Previous wording
The U.S. and Saudi Arabia economies have experienced increased inflation. Our cost to manufacture a vehicle is heavily influenced by the cost of the key components and materials used in the vehicle, cost of labor, as well as cost of equipment used in our manufacturing facilities. As we continue our phased construction of our AMP-1 and AMP-2 facilities, any further increases in material and infrastructure equipment prices and cost of construction labor could lead to higher capital expenditures.
Current wording
The U.S. and Saudi Arabia economies have experienced increased inflation. Our cost to manufacture vehicles is heavily influenced by the cost of the key components and materials used in the vehicle, cost of labor, as well as cost of equipment used in our manufacturing facilities. As we continue our phased construction of our AMP-1 and AMP-2 facilities, any further increases in material and infrastructure equipment prices and cost of construction labor could lead to higher capital expenditures.
Previous wording
We recognize vehicle sales when the customer obtains control of the vehicle, which is upon delivery. We also generate revenue from non-warranty after-sales vehicle services and parts, powertrain kits, retail merchandise, and regulatory credits.
Current wording
We recognize revenue from vehicle sales when the customer obtains control of the vehicle, which is upon delivery. We also generate revenue from non-warranty after-sales vehicle services and parts, powertrain kits, retail merchandise, and regulatory credits.
Previous wording
Revenue increased by $23.3 million, or 16% for the three months ended March 31, 2024, as compared to the same period in the prior year. The increase was primarily driven by higher deliveries of the Lucid Air vehicles and $5.4 million increase in regulatory credit sales, partially offset by a lower average selling price of vehicles.
Current wording
Revenue increased by $49.7 million or 33% and $73.0 million or 24%, respectively, for the three and six months ended June 30, 2024, as compared to the same periods in the prior year. The increases were primarily driven by higher deliveries of the Lucid Air vehicles and increases of $12.1 million and $17.5 million of regulatory credit sales for the three and six months ended June 30, 2024, respectively, as compared to the same periods in the prior year. The increases were partially offset by a lower average selling price of vehicles for the three and six months ended June 30, 2024, as compared to the same periods in the prior year.
Previous wording
Cost of revenue decreased by $95.7 million, or 19% for the three months ended March 31, 2024, as compared to the same period in the prior year, primarily due to the decreases in inventory write-downs and losses from firm purchase commitments, partially offset by higher sales of the Lucid Air vehicles. We continue to incur significant personnel and overhead costs to operate our large-scale manufacturing facilities while ramping up production. In the near term, we expect our production volume of vehicles to continue to be significantly less than our manufacturing capacity.
Current wording
Cost of revenue decreased by $85.5 million or 15% and $181.2 million or 17%, respectively, for the three and six months ended June 30, 2024, as compared to the same periods in the prior year, primarily due to the decreases in inventory write-downs and losses from firm purchase commitments, partially offset by higher deliveries of the Lucid Air vehicles and provision associated with a special warranty campaign. We continue to incur significant personnel and overhead costs to operate our large-scale manufacturing facilities while ramping up production. In the near term, we expect our production volume of vehicles to continue to be significantly less than our manufacturing capacity.
Previous wording
We recorded write-downs of $137.8 million and $227.0 million in the three months ended March 31, 2024 and 2023, respectively, to reduce our inventories to their net realizable values, for any excess or obsolete inventories, and losses from firm purchase commitments. The decrease in the inventory write-downs and losses from firm purchase commitments was primarily due to decreases in overall inventory balances and obsolescence. The decreases in overall inventory balances and obsolescence were driven by lower purchases of raw materials in the three months ended March 31, 2024, compared to the same period in the prior year. We expect inventory write-downs could negatively affect our costs of vehicle sales in upcoming periods in the near term as we ramp production volumes up toward our manufacturing capacity.
Current wording
We recorded write-downs of $154.2 million and $292.0 million, respectively, for the three and six months ended June 30, 2024, and $295.0 million and $522.0 million, respectively, for the same periods in the prior year, to reduce our inventories to their net realizable values, for any excess or obsolete inventories, and losses from firm purchase commitments. The decreases in the inventory write-downs and losses from firm purchase commitments were primarily due to decreases in overall inventory balances and obsolescence. The decreases in overall inventory balances and obsolescence were driven by lower purchases of raw materials in the three and six months ended June 30, 2024, compared to the same period in the prior year. We expect inventory write-downs could negatively affect our costs of vehicle sales in upcoming periods in the near term as we ramp production volumes up toward our manufacturing capacity.
Previous wording
On August 16, 2022, the Inflation Reduction Act of 2022 (the “IRA”) was enacted with clean energy incentives. For the three months ended March 31, 2024, the impact of the IRA on our results of operations was not material. We will continue to evaluate the expected future impact of the IRA on our business and financial statements as additional regulatory guidance is issued.
Current wording
On August 16, 2022, the Inflation Reduction Act of 2022 (the “IRA”) was enacted with clean energy incentives. For the three and six months ended June 30, 2024, the impact of the IRA on our results of operations was not material. We will continue to evaluate the expected future impact of the IRA on our business and financial statements as additional regulatory guidance is issued.
Previous wording
Our research and development efforts have primarily focused on the development of our battery and powertrain technology, the Lucid Air, the Gravity SUV program, and future generations of our electric vehicles. Research and development expenses consist primarily of materials, supplies and personnel-related expenses for employees involved in the engineering, designing, and testing of electric vehicles. Personnel-related expenses primarily include salaries, benefits and stock-based compensation. Research and development expenses also include prototype material, engineering, design and testing services, and allocated facilities costs, such as office and rent expense and depreciation expense, and other engineering, designing and testing expenses.
Current wording
Our research and development efforts have primarily focused on the development of our battery and powertrain technology, the Lucid Air, the Lucid Gravity SUV, and future generations of our electric vehicles. Research and development expenses consist primarily of materials, supplies and personnel-related expenses for employees involved in the engineering, designing, and testing of electric vehicles. Personnel-related expenses primarily include salaries, benefits and stock-based compensation. Research and development expenses also include prototype material, engineering, design and testing services, and allocated facilities costs, such as office and rent expense and depreciation expense, and other engineering, designing and testing expenses.
Previous wording
Research and development expense increased by $54.8 million, or 24% for the three months ended March 31, 2024, as compared to the same period in the prior year. The increase was primarily attributable to higher personnel-related expenses of $44.3 million ($34.7 million increase due to our growth in headcount and $9.6 million higher stock-based compensation expenses) and an increase of $12.8 million for prototype material, engineering, design and testing services, partially offset by a decrease of $8.7 million from lower utilization of contractors and professional fees.
Current wording
Research and development expense increased by $108.5 million, or 23% for the six months ended June 30, 2024, as compared to the same period in the prior year. The increase was primarily attributable to higher personnel-related expenses of $79.2 million ($73.5 million increase due to our growth in headcount and $5.7 million higher stock-based compensation expenses) and an increase of $44.8 million for prototype material, engineering, design and testing services, partially offset by lower utilization of contractors and professional fees of $12.8 million and a decrease of $12.5 million in other expenses.
Previous wording
Selling, general, and administrative expenses consist primarily of personnel-related expenses for employees involved in general corporate, selling and marketing functions, including executive management and administration, legal, human resources, facilities and real estate, accounting, finance, tax, and information technology. Personnel-related expenses primarily include salaries, benefits and stock-based compensation. Selling, general, and administrative expenses also include allocated facilities costs, such as office, rent and depreciation expenses, professional services fees and other general corporate expenses. As we continue to grow as a company, build out our sales force, and commercialize the Lucid Air and planned future generations of our electric vehicles, we expect that our selling, general and administrative costs will increase.
Current wording
Selling, general, and administrative expense consists primarily of personnel-related expenses for employees involved in general corporate, selling and marketing functions, including executive management and administration, legal, human resources, facilities and real estate, accounting, finance, tax, and information technology. Personnel-related expenses primarily include salaries, benefits and stock-based compensation. Selling, general, and administrative expenses also include allocated facilities costs, such as office, rent and depreciation expenses, professional services fees and other general corporate expenses. As we continue to grow as a company, build out our sales force, and commercialize the Lucid Air, the development of the Lucid Gravity SUV and our Midsize platform, and future generations of our electric vehicles, we expect that our selling, general and administrative costs will increase.
Previous wording
Restructuring charges of $22.5 million for the three months ended March 31, 2023 was primarily related to severance payments, employee benefits, employee transition and stock-based compensation, net of a reversal of previously recognized stock-based compensation expense.
Current wording
On May 24, 2024, we announced a restructuring plan (the “2024 Restructuring Plan”) intended to optimize operating expenses in response to evolving business needs and productivity improvement through a reduction in workforce. We expect to substantially complete the 2024 Restructuring Plan by the end of the third quarter of 2024, subject to local law and consultation requirements. As a result of the 2024 Restructuring Plan, we expect to record total restructuring charges of approximately $21 million to $25 million, primarily related to severance payments, employee benefits, employee transition and stock-based compensation. During the three and six months ended June 30, 2024, we recorded restructuring charges of $20.2 million related to the 2024 Restructuring Plan within restructuring charges in the condensed consolidated statements of operations and comprehensive loss. The restructuring charges were primarily related to severance payments, employee benefits, employee transition and stock-based compensation, net of a reversal of previously recognized stock-based compensation expense.
Previous wording
On March 28, 2023, we announced a restructuring plan (the “Restructuring Plan”) intended to reduce operating expenses in response to evolving business needs and productivity improvement through a reduction in workforce. We completed the Restructuring Plan in 2024.
Current wording
On March 28, 2023, we announced a restructuring plan (the “2023 Restructuring Plan”) intended to reduce operating expenses in response to evolving business needs and productivity improvement through a reduction in workforce. We completed the 2023 Restructuring Plan during the first quarter of 2024. During the three and six months ended June 30, 2023, we recorded restructuring charges of $1.5 million and $24.0 million, respectively, and recorded no restructuring charges for the same periods in the current year related to the 2023 Restructuring Plan.
Previous wording
The Private Placement Warrants remained unexercised as of March 31, 2024. The liability was remeasured to fair value, resulting in a gain of $27.1 million and a loss of $40.8 million for the three months ended March 31, 2024 and 2023, respectively, and was classified within change in fair value of common stock warrant liability in the condensed consolidated statements of operations and comprehensive loss. See Note 7 “Common Stock Warrant Liability” to our condensed consolidated financial statements included elsewhere in this Quarterly Report for more information.
Current wording
The Private Placement Warrants remained unexercised as of June 30, 2024. The liability was remeasured to fair value, resulting in gains of $7.5 million and $34.6 million, respectively, for the three and six months ended June 30, 2024, and gains of $42.1 million and $1.3 million, respectively, for the same periods in the prior year. The change in fair value was classified within change in fair value of common stock warrant liability in the condensed consolidated statements of operations and comprehensive loss. See Note 7 “Common Stock Warrant Liability” to our condensed consolidated financial statements included elsewhere in this Quarterly Report for more information.
Previous wording
On November 6, 2023, pursuant to the terms of the Implementation Agreement, integration and supply arrangements became effective, under which we will provide Aston Martin access to our powertrain, battery system, and software technologies, work with Aston Martin to integrate our powertrain and battery components with Aston Martin’s battery electric vehicle chassis, and supply powertrain and battery components to Aston Martin (collectively, the “Strategic Technology Arrangement”). In connection with the commencement of the Strategic Technology Arrangement with Aston Martin, we received 28,352,273 ordinary shares of Aston Martin (subject to a lock-up provision of 365 days from its issuance). The ordinary shares of Aston Martin are subject to remeasurement to fair value at each reporting period. Such shares were initially measured at a fair value of $73.2 million and were remeasured to fair value of $60.8 million and $81.5 million as of March 31, 2024 and December 31, 2023, respectively. The change in fair value resulted in an unrealized loss of $19.9 million for the three months ended March 31, 2024, and was classified within change in fair value of equity securities of a related party in the condensed consolidated statements of operations and comprehensive loss. See Note 5 “Fair Value Measurements and Financial Instruments” and Note 16 “Related Party Transactions” to our condensed consolidated financial statements included elsewhere in this Quarterly Report for more information.
Current wording
On November 6, 2023, pursuant to the terms of the Implementation Agreement, integration and supply arrangements became effective, under which we will provide Aston Martin access to our powertrain, battery system, and software technologies, work with Aston Martin to integrate our powertrain and battery components with Aston Martin’s battery electric vehicle chassis, and supply powertrain and battery components to Aston Martin (collectively, the “Strategic Technology Arrangement”). In connection with the commencement of the Strategic Technology Arrangement with Aston Martin, we received 28,352,273 ordinary shares of Aston Martin (subject to a lock-up provision of 365 days from its issuance). The ordinary shares of Aston Martin are subject to remeasurement to fair value at each reporting period. Such shares were initially measured at a fair value of $73.2 million and were remeasured to a fair value of $51.5 million and $81.5 million as of June 30, 2024 and December 31, 2023, respectively. The change in fair value resulted in an unrealized loss of $9.4 million and $29.3 million, respectively, for the three and six months ended June 30, 2024, and was classified within change in fair value of equity securities of a related party in the condensed consolidated statements of operations and comprehensive loss. See Note 5 “Fair Value Measurements and Financial Instruments” and Note 16 “Related Party Transactions” to our condensed consolidated financial statements included elsewhere in this Quarterly Report for more information.
Previous wording
On March 24, 2024, we entered into a subscription agreement (the “2024 Subscription Agreement”) with Ayar. Pursuant to the 2024 Subscription Agreement, Ayar agreed to purchase from us 100,000 shares of our Series A Convertible Preferred Stock, par value $0.0001 per share (the “Redeemable Convertible Preferred Stock”) for an aggregate purchase price of $1.0 billion in a private placement. On March 29, 2024, we issued the shares to Ayar pursuant to the 2024 Subscription Agreement and received aggregate gross proceeds of $1.0 billion.
Current wording
On March 24, 2024, we entered into a subscription agreement (the “Series A Subscription Agreement”) with Ayar. Pursuant to the Series A Subscription Agreement, Ayar agreed to purchase from us 100,000 shares of our Series A Convertible Preferred Stock, par value $0.0001 per share (the “Series A Redeemable Convertible Preferred Stock”) for an aggregate purchase price of $1.0 billion in a private placement. On March 29, 2024, we issued the shares to Ayar pursuant to the Series A Subscription Agreement and received aggregate gross proceeds of $1.0 billion.
Previous wording
Interest income increased by $10.6 million for the three months ended March 31, 2024, as compared to the same period in the prior year, primarily due to higher book yield from our investments in available-for-sale securities.
Current wording
Interest income increased by $15.0 million, or 38%, and $25.7 million, or 32%, respectively, for the three and six months ended June 30, 2024, as compared to the same periods in the prior year, primarily due to higher average balances and higher book yield from cash on hand and our investments of available-for-sale securities.
Previous wording
Interest expense primarily consists of contractual interest and amortization of debt discounts and debt issuance costs incurred related to the 2026 Notes issued in December 2021, commitment fees and amortization of deferred issuance costs from the five-year senior secured asset-based revolving credit facility (“ABL Credit Facility”), interest from GIB credit facility and on our finance leases, and capitalized interest on construction in progress related to significant capital asset construction.
Current wording
Interest expense primarily consists of contractual interest and amortization of debt discounts and debt issuance costs incurred related to the 2026 Notes issued in December 2021, commitment fees and amortization of deferred issuance costs from the five-year senior secured asset-based revolving credit facility (“ABL Credit Facility”), interest on Gulf International Bank revolving credit facility and on our finance leases, and capitalized interest on construction in progress related to significant capital asset construction.
Previous wording
Other income (expense), net primarily consists of foreign currency gains and losses. Our foreign currency exchange gains and losses relate to transactions and monetary asset and liability balances denominated in currencies other than the U.S. dollar. We expect our foreign currency gains and losses to continue to fluctuate in the future due to changes in foreign currency exchange rates.
Current wording
Other expense, net primarily consists of foreign currency gains and losses. Our foreign currency exchange gains and losses relate to transactions and monetary asset and liability balances denominated in currencies other than the U.S. dollar. We expect our foreign currency gains and losses to continue to fluctuate in the future due to changes in foreign currency exchange rates.