Lucid Group Inc

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 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.

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, offering robust performance together with a sleek exterior design and expansive interior space due to our miniaturized key drivetrain components. We anticipate continued consumer demand for the Lucid Air based on its luxurious design, high-performance technology, sustainability leadership, and the growing acceptance of and demand for electric vehicles as substitutes for gasoline-fueled vehicles. We expect that these attributes will also drive demand for future models, including the Lucid Gravity and our Midsize platform.

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 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.

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 and other electric vehicles that we may offer over the coming decade, including to open additional studios, expand our sales force, grow marketing and brand awareness, and establish a robust service center operation. As of September 30, 2024, we have opened 55 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, five in Germany, two in Switzerland, one in Netherlands, one in Norway, three 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 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.

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 constructing the completely-built-up (“CBU”) portion of AMP-2 and expanding AMP-1. 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 meet customer demand at anticipated levels, 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 Lucid Gravity SUV and our Midsize platform, and future generations of our electric vehicles and other products.

Current wording

We develop in-house battery and powertrain technology, which requires significant capital investment in research and development. The electric vehicle market is highly competitive, including both established automotive manufacturers and new entrants. To establish market position and attract customers, we plan to continue making 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, as well as 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 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.

Current wording

The U.S. and Saudi Arabian economies have experienced increased inflation. Our vehicle manufacturing costs are heavily influenced by the cost of the key components and materials used in the vehicle, labor costs, as well as the cost of equipment used in our manufacturing facilities. As we continue the phased construction of our AMP-1 and AMP-2 facilities, any further increases in material and infrastructure equipment prices, as well as construction labor costs, could lead to higher capital expenditures.

Previous 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.

Current wording

Revenue increased by $62.2 million or 45% and $135.2 million or 31% for the three and nine months ended September 30, 2024, respectively, as compared to the same periods in the prior year. The increases were primarily driven by higher deliveries of the Lucid Air vehicles, partially offset by a lower average selling price of vehicles for the three and nine months ended September 30, 2024, as compared to the same periods in the prior year. The increase in revenue for the nine months ended September 30, 2024, as compared to the same period in the prior year, was also due to an increase of $21.3 million of regulatory credit sales.

Previous 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.

Current wording

Cost of revenue decreased by $57.2 million or 12% and $238.4 million or 16% for the three and nine months ended September 30, 2024, respectively, 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. The decrease in cost of revenue for the nine months ended September 30, 2024, as compared to the same period in the prior year, was also partially offset by a provision associated with a special warranty campaign recorded in the current year. 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 $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.

Current wording

We recorded write-downs of $154.9 million and $446.9 million for the three and nine months ended September 30, 2024, respectively, and $230.8 million and $752.8 million for the same periods in the prior year, respectively, 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 decrease in overall inventory balances and obsolescence for the three months ended September 30, 2024, compared to the same period in the prior year, was primarily driven by higher deliveries of the Lucid Air vehicles. The decrease in overall inventory balances and obsolescence for the nine months ended September 30, 2024, compared to the same period in the prior year, was primarily driven by lower purchases of raw materials and higher deliveries of the Lucid Air vehicles. 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 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.

Current wording

On August 16, 2022, the Inflation Reduction Act of 2022 (the “IRA”) was enacted with clean energy incentives. For the three and nine months ended September 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

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 wording

Research and development expense increased by $93.6 million, or 41% for the three months ended September 30, 2024, as compared to the same period in the prior year. The increase was primarily attributable to higher personnel-related expenses of $63.0 million ($45.3 million increase due to our growth in headcount and $17.7 million higher stock-based compensation expenses) and an increase of $26.1 million for prototype material, engineering, design and testing services.

Previous 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.

Current wording

Research and development expense increased by $202.1 million, or 29% for the nine months ended September 30, 2024, as compared to the same period in the prior year. The increase was primarily attributable to higher personnel-related expenses of $142.2 million ($118.8 million increase due to our growth in headcount and $23.4 million higher stock-based compensation expenses) and an increase of $70.9 million for prototype material, engineering, design and testing services, partially offset by lower utilization of contractors and professional fees of $17.8 million.

Previous wording

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 wording

Selling, general, and administrative expense increased by $100.9 million, or 18% for the nine months ended September 30, 2024, as compared to the same period in the prior year. The increase was primarily attributable to higher personnel-related expenses of $60.4 million ($68.8 million increase due to our growth in headcount, partially offset by $8.4 million lower stock-based compensation expense), an increase in sales and marketing expenses of $27.8 million, and an increase of $9.7 million in allocated facilities costs.

Previous 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.

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 substantially completed the 2024 Restructuring Plan in the third quarter of 2024.

Previous 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.

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 nine months ended September 30, 2023, we recorded restructuring charges of $0.5 million and $24.5 million, respectively, and recorded no restructuring charges for the same periods in the current year related to the 2023 Restructuring Plan. 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

Our common stock warrant liability relates to the privately placed common stock warrants (the “Private Placement Warrants”) to purchase shares of Lucid Group common stock that were effectively issued upon the Closing in connection with the reverse recapitalization treatment of the Merger. Our common stock warrant liability is subject to remeasurement to fair value at each reporting period. Changes in the fair value of our common stock warrant liability were recognized in the condensed consolidated statements of operations and comprehensive loss.

Current wording

Our common stock warrant liability relates to the privately placed common stock warrants (the “Private Placement Warrants”) to purchase shares of our common stock that were effectively issued upon the Closing in connection with the reverse recapitalization treatment of the Merger. Our common stock warrant liability is subject to remeasurement to fair value at each reporting period.

Previous 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.

Current wording

The Private Placement Warrants remained unexercised as of September 30, 2024. The liability was remeasured to fair value, resulting in a loss of $13.7 million and a gain of $20.8 million for the three and nine months ended September 30, 2024, respectively, and gains of $60.3 million and $61.6 million for the same periods in the prior year, respectively. 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 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.

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 $45.7 million and $81.5 million as of September 30, 2024 and December 31, 2023, respectively. The change in fair value resulted in unrealized losses of $8.8 million and $38.2 million for the three and nine months ended September 30, 2024, respectively, 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

Change in Fair Value of Derivative Liability Associated with Series A Redeemable Convertible Preferred Stock (Related Party)

Current wording

Change in Fair Value of Derivative Liabilities Associated with Redeemable Convertible Preferred Stock (Related Party)

Previous 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.

Current wording

In March 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. Subsequently, in March 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

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 wording

In August 2024, we entered into 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 Redeemable Convertible Preferred Stock for an aggregate purchase price of $750.0 million in a private placement. Subsequently, in August 2024, we issued the shares to Ayar pursuant to the Series B Subscription Agreement and received aggregate gross proceeds of $750.0 million.

Previous wording

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 wording

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 and Series B Redeemable Convertible Preferred Stock (the “Redeemable Convertible Preferred Stock”) between (i) the host contracts which are accounted for within mezzanine equity, and (ii) the bifurcated derivative liabilities related to the conversion features. The bifurcated derivatives are remeasured to fair value at each reporting period with changes in fair value recorded in the condensed consolidated statement of operations and comprehensive loss.

Previous 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.

Current wording

Interest income decreased by $16.0 million, or 24% for the three months ended September 30, 2024, as compared to the same period in the prior year, primarily due to lower average balances and lower 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 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.

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”) and the DDTL Credit Facility, interest on Gulf International Bank (“GIB”) revolving credit facility and on our finance leases, and capitalized interest on construction in progress related to significant capital asset construction.

Previous wording

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 wording

Our provision for 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.

Previous wording

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 wording

We anticipate our cumulative spending on capital expenditures to be approximately $1.0 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.

Previous wording

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 wording

As of September 30, 2024, our total minimum lease payments are $490.1 million, of which $15.6 million is due in fiscal year 2024. We also have non-cancellable long-term commitments of approximately $3.0 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.

Previous wording

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 wording

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 scope of operations is not attained within 55 months, MISA may suspend availability of subsequent support.

Previous wording

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 wording

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 September 30, 2024, we recorded $97.5 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.

Previous wording

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 wording

As of September 30, 2024 and December 31, 2023, we had outstanding borrowings of SAR 175 million (approximately $46.6 million) and SAR 272 million (approximately $72.5 million), respectively. The weighted average interest rate on the outstanding borrowings was 7.56% and 7.49% as of September 30, 2024 and December 31, 2023, respectively. As of September 30, 2024 and December 31, 2023, availability under the GIB Credit Facility was SAR 823 million (approximately $219.4 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 September 30, 2024 and December 31, 2023, we were in compliance with applicable covenants under the Amended GIB Facility Agreement.

Previous wording

As of June 30, 2024 and December 31, 2023, we had no outstanding borrowings under the ABL Credit Facility. Outstanding letters of credit under the ABL Credit Facility were $48.4 million and $45.4 million as of June 30, 2024 and December 31, 2023, respectively. Availability under the ABL Credit Facility was $329.2 million (including $147.9 million cash and cash equivalents) and $413.4 million (including $144.0 million cash and cash equivalents) as of June 30, 2024 and December 31, 2023, respectively, after giving effect to the borrowing base and the outstanding letters of credit.

Current wording

As of September 30, 2024 and December 31, 2023, we had no outstanding borrowings under the ABL Credit Facility. Outstanding letters of credit under the ABL Credit Facility were $67.4 million and $45.4 million as of September 30, 2024 and December 31, 2023, respectively. Availability under the ABL Credit Facility was $335.0 million (including $169.9 million cash and cash equivalents) and $413.4 million (including $144.0 million cash and cash equivalents) as of September 30, 2024 and December 31, 2023, respectively, after giving effect to the borrowing base and the outstanding letters of credit.

Previous wording

In August 2024, we entered into the DDTL Credit Facility with Ayar that may be used for working capital and general corporate purposes. The DDTL Credit Facility provides for a delayed draw term loan credit facility in an aggregate principal amount of $750 million and has a stated maturity date of August 4, 2029. Borrowings under the DDTL Credit Facility bear interest at the applicable interest rates specified in the credit agreement governing the DDTL Credit Facility. We are required to pay a quarterly undrawn fee of 0.50% per annum based on the unutilized portion of the DDTL Credit Facility.

Current wording

In August 2024, we entered into the DDTL Credit Facility with Ayar that may be used for working capital and general corporate purposes. The DDTL Credit Facility provides for a delayed draw term loan credit facility in an aggregate principal amount of $750.0 million and has a stated maturity date of August 4, 2029. Borrowings under the DDTL Credit Facility bear interest at the applicable interest rates specified in the credit agreement governing the DDTL Credit Facility. We are required to pay a quarterly undrawn fee of 0.50% per annum based on the unutilized portion of the DDTL Credit Facility.

Previous wording

The DDTL 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 sale and leaseback transactions or consummate mergers and other fundamental changes. The DDTL Credit Facility also includes a minimum liquidity covenant.

Current wording

The DDTL 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 sale and leaseback transactions or consummate mergers and other fundamental changes. The DDTL Credit Facility also includes a minimum liquidity covenant. As of September 30, 2024, we were in compliance with applicable covenants under the DDTL Credit Facility.

Previous wording

At-the-Market Offering, Subscription Agreements and Underwriting Agreement

Current wording

At-the-Market Offering, Subscription Agreements and Underwriting Agreements

Previous wording

In December 2022, we completed our at-the-market offering program (the “At-the-Market Offering”) pursuant to the equity distribution agreement for net proceeds of $594.3 million after deducting commissions and other issuance costs and also consummated a private placement of shares to Ayar (the “Subscription Agreement”) pursuant to the Subscription Agreement for $915.0 million.

Current wording

In December 2022, we completed our at-the-market offering program (the “At-the-Market Offering”) pursuant to the equity distribution agreement for net proceeds of $594.3 million after deducting commissions and other issuance costs and also consummated a private placement of shares to Ayar (the “2022 Subscription Agreement”) pursuant to the 2022 Subscription Agreement for $915.0 million.

Previous wording

In March 2024, we issued 100,000 shares of our Series A Redeemable Convertible Preferred Stock, par value $0.0001 per share to Ayar pursuant to the Series A Subscription Agreement and received aggregate gross proceeds of $1.0 billion. See Note 8 “Redeemable Convertible Preferred Stock” to the condensed consolidated financial statements included elsewhere in this Quarterly Report, for more information.

Current wording

In March 2024, we issued 100,000 shares of our Series A Redeemable Convertible Preferred Stock to Ayar pursuant to the Series A Subscription Agreement and received aggregate gross proceeds of $1.0 billion. In August 2024, we also issued 75,000 shares of our Series B Redeemable Convertible Preferred Stock to Ayar pursuant to the Series B Subscription Agreement and received aggregate gross proceeds of $750.0 million. See Note 8 “Redeemable Convertible Preferred Stock” to the condensed consolidated financial statements included elsewhere in this Quarterly Report, for more information.

Previous wording

In August 2024, we entered into 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 Redeemable Convertible Preferred Stock, for an aggregate purchase price of $750 million in a private placement. We will issue the shares to Ayar pursuant to the Series B Subscription Agreement and expect to receive aggregate gross proceeds of $750 million on or about August 16, 2024. See Note 17 “Subsequent Events” to the condensed consolidated financial statements included elsewhere in this Quarterly Report, for more information.

Current wording

In October 2024, we completed the public offering pursuant to the 2024 Underwriting Agreement and received aggregate proceeds of approximately $719.0 million and also consummated the private placement of shares to Ayar pursuant to the 2024 Subscription Agreement for aggregate proceeds of approximately $1,026.5 million. See Note 17 “Subsequent Events” to the condensed consolidated financial statements included elsewhere in this Quarterly Report, for more information.

Previous wording

We have generated significant losses from our operations as reflected in our accumulated deficit of $11.5 billion and $10.2 billion as of June 30, 2024 and December 31, 2023, respectively. Additionally, we have generated significant negative cash flows from operations and investing activities as we continue to support the growth of our business.

Current wording

We have generated significant losses from our operations as reflected in our accumulated deficit of $12.5 billion and $10.2 billion as of September 30, 2024 and December 31, 2023, respectively. Additionally, we have generated significant negative cash flows from operations and investing activities as we continue to support the growth of our business.

Previous wording

Net cash used in operating activities decreased by $477.9 million to $1,023.7 million during the six months ended June 30, 2024, as compared to the same period in the prior year. The decrease was primarily due to an overall decrease in net operating assets and liabilities of $578.7 million, partially offset by an increase in net loss excluding non-cash expenses and gains of $100.8 million. The change in net operating assets and liabilities was mainly attributable to a decrease in inventory of $364.6 million due to lower purchases of raw materials and a decrease in accounts payable of $99.2 million due to timing of payments, partially offset by an increase in accounts receivable of $48.6 million during the six months ended June 30, 2024, as compared to the same period in the prior year. We had $101.4 million accounts receivable, net as of June 30, 2024, compared to $51.8 million as of December 31, 2023. The increase in the accounts receivable, net primarily resulted from higher vehicle sales during the six months ended June 30, 2024, and payment term associated with the EV purchase agreement with the Government of Saudi Arabia, a related party of PIF, which is an affiliate of Ayar, as represented by the Ministry of Finance (the “EV Purchase Agreement”).

Current wording

Net cash used in operating activities decreased by $528.7 million to $1,486.5 million during the nine months ended September 30, 2024, as compared to the same period in the prior year. The decrease was primarily due to an overall decrease in net operating assets and liabilities of $727.1 million, partially offset by an increase in net loss excluding non-cash expenses and gains of $198.4 million during the nine months ended September 30, 2024, as compared to the same period in the prior year. The change in net operating assets and liabilities was mainly attributable to a decrease in inventory of $354.5 million due to lower purchases of raw materials and continuous improvement in inventory management, and a decrease in accounts payable of $157.4 million due to timing of payments. The decreases are partially offset by an increase in accounts receivable of $42.8 million during the nine months ended September 30, 2024, as compared to the same period in the prior year. We had $98.2 million accounts receivable, net as of September 30, 2024, compared to $51.8 million as of December 31, 2023. The increase in the accounts receivable, net primarily resulted from higher vehicle sales during the nine months ended September 30, 2024, as compared to the same period in the prior year, and payment term associated with the EV purchase agreement with the Government of Saudi Arabia, a related party of PIF, which is an affiliate of Ayar, as represented by the Ministry of Finance (the “EV Purchase Agreement”).

Previous wording

Our cash flows provided by (used in) investing activities primarily relate to purchases of investments and capital expenditures to support our growth.

Current wording

Our cash flows provided by (used in) investing activities primarily relate to purchases of investments and capital expenditures to support our growth, and proceeds from maturities of investments.

Previous wording

Net cash provided by investing activities was $6.3 million during the six months ended June 30, 2024, compared to $466.7 million of net cash used in investing activities for the same period in the prior year. The change was primarily attributable to $305.4 million higher proceeds from maturities of investments and $293.1 million lower purchases of investments, partially offset by $143.4 million lower proceeds from sale of investments during the six months ended June 30, 2024 compared to the same period in the prior year.

Current wording

Net cash provided by investing activities was $290.0 million during the nine months ended September 30, 2024, compared to $1,599.1 million of net cash used in investing activities for the same period in the prior year. The change was primarily attributable to $1,211.0 million lower purchases of investments and $770.8 million higher proceeds from maturities of investments, partially offset by $143.4 million lower proceeds from sale of investments during the nine months ended September 30, 2024 compared to the same period in the prior year.