Lucid Group, Inc.

Previous wording

We sell vehicles directly to consumers through our retail sales network and online channels, including Lucid Financial Services, in North America and the Middle East. We believe that owning and operating our sales network provides the best opportunity to closely manage the customer experience, gather direct feedback, and ensure that every interaction is tailored to customer needs. We are also actively exploring, and have adopted in certain international markets, alternative importer and agency models to enhance flexibility, preserve capital, and optimize our distribution strategy in response to evolving market dynamics. We also own and operate a vehicle service network comprised of service centers in major metropolitan areas and a fleet of mobile service vehicles. In addition to our in-house capabilities, we continue to grow an approved list of specially trained collision repair shops, which in some cases serve as repair hubs for mobile service.

Current wording

We sell vehicles directly to consumers through our retail sales network and online channels, including Lucid Financial Services. We believe that owning and operating our sales network allows us to closely manage the customer experience, gather direct feedback, and ensure that every interaction is tailored to customer needs. We are also actively exploring, and have adopted in certain international markets, alternative importer and agency models to enhance flexibility, preserve capital, and optimize our distribution strategy in response to evolving market dynamics. We also own and operate a vehicle service network comprised of service centers in major metropolitan areas and a fleet of mobile service vehicles. In addition to our in-house capabilities, we continue to grow an approved list of specially trained collision repair shops, which in some cases serve as repair hubs for mobile service.

Previous wording

A global economic recession, downturn or other adverse economic conditions, whether due to changes or uncertainties in trade policies, the imposition or proposed imposition of tariffs, export controls, threat of a trade war, persistent inflation, political instability, global or regional conflicts or other geopolitical events, public health crises, interest rate increases or other central bank policy actions, bank closures and liquidity concerns at financial institutions, or other factors, have in the past and may in the future have an adverse impact on our business, prospects, financial condition and results of operations. If any of our suppliers, sub-suppliers or partners experience financial distress, insolvency or disruptions in operations, they may be unable to fulfill their obligations or meet our production and quality requirements. Adverse economic conditions and uncertainty about the current and future domestic or global economic conditions may also cause our customers to defer purchases or cancel their orders in response to higher interest rates, limited consumer credit availability, lower cash reserves, fluctuations in foreign currency exchange rates, and weakened consumer confidence. A reduction in demand for our products may result in a decline in product sales, with a corresponding material adverse impact on our business, prospects, financial condition and results of operations. Given our premium brand positioning and pricing, an economic recession or downturn is likely to have a disproportionate adverse effect on us compared to our competitors in the EV and traditional automotive sectors, to the extent that consumer demand for luxury goods declines in favor of more cost-conscious alternatives. In addition, adverse economic conditions and uncertainties surrounding trade policies, tariffs and export controls could also cause supply chain and logistical challenges and operational risks. In particular, the U.S. federal government enacted the law commonly referred to as the OBBBA, which eliminates, limits or phases out certain tax credits that had previously provided significant benefits to lessees and purchasers of EVs and adds new eligibility requirements on manufacturers to continue claiming tax credits on EV components. It also eliminates certain penalties for noncompliance with certain fuel efficiency standards and introduces certain key tax law modifications.

Current wording

A global economic recession, downturn or other adverse economic conditions, whether due to changes or uncertainties in trade policies, the imposition or proposed imposition of tariffs, export controls, threat of a trade war, persistent inflation, political instability, global or regional conflicts or other geopolitical events, public health crises, interest rate increases or other central bank policy actions, bank closures and liquidity concerns at financial institutions, or other factors, have in the past and may in the future have an adverse impact on our business, prospects, financial condition and results of operations. If any of our suppliers, sub-suppliers or partners experience financial distress, insolvency or disruptions in operations, they may be unable to fulfill their obligations or meet our production and quality requirements. Adverse economic conditions and uncertainty about the current and future domestic or global economic conditions may also cause our customers to defer purchases or cancel their orders in response to higher interest rates, limited consumer credit availability, lower cash reserves, fluctuations in foreign currency exchange rates, and weakened consumer confidence. A reduction in demand for our products may result in a decline in product sales, with a corresponding material adverse impact on our business, prospects, financial condition and results of operations. Given our premium brand positioning and pricing, an economic recession or downturn is likely to have a disproportionate adverse effect on us compared to our competitors in the EV and traditional automotive sectors, to the extent that consumer demand for luxury goods declines in favor of more cost-conscious alternatives. In addition, adverse economic conditions and uncertainties surrounding trade policies, tariffs and export controls could also cause supply chain and logistical challenges and operational risks. In particular, the U.S. federal government enacted the OBBBA, which eliminates, limits or phases out certain tax credits that had previously provided significant benefits to lessees and purchasers of EVs and adds new eligibility requirements on manufacturers to continue claiming tax credits on EV components. It also eliminates certain penalties for noncompliance with certain fuel efficiency standards and introduces certain key tax law modifications.

Previous wording

Taken together, adverse economic conditions and uncertainties surrounding trade policies, tariffs and export controls, coupled with supply chain challenges and the potential difficulty of passing costs to consumers or sharing the burden with suppliers, could reduce demand for our products and have a material adverse effect on our business, prospects, results of operations and financial condition. In addition, the deterioration of conditions in the financial markets may limit our ability to obtain external financing to fund our operations and capital expenditures for business growth on terms favorable to us, if at all. See “Risk Factors” in Part II, Item 1A of this Quarterly Report for more information regarding risks associated with a global economic downturn or recession, changes or uncertainties in trade policies, or the imposition or proposed imposition of tariffs, including under the captions“A global economic recession, downturn or other adverse economic conditions may have a material adverse impact on our business, prospects, results of operations and financial condition.” and “Changes in U.S. trade policy, including the imposition of or uncertainties surrounding tariffs or revocation of normal trade relations and the resulting consequences, could adversely affect our business, prospects, results of operations and financial condition.”

Current wording

Taken together, adverse economic conditions and uncertainties surrounding trade policies, tariffs and export controls, coupled with supply chain challenges and the potential difficulty of passing costs to consumers or sharing the burden with suppliers, could reduce demand for our products and have a material adverse effect on our business, prospects, results of operations and financial condition. In addition, the deterioration of conditions in the financial markets, as well as geopolitical events, including in the Middle East, may limit our ability to obtain external financing to fund our operations and capital expenditures for business growth on terms favorable to us, if at all. See “Risk Factors” in Part II, Item 1A of this Quarterly Report for more information regarding risks associated with a global economic downturn or recession, changes or uncertainties in trade policies, or the imposition or proposed imposition of tariffs, including under the captions“A global economic recession, downturn or other adverse economic conditions may have a material adverse impact on our business, prospects, results of operations and financial condition.” and “Changes in U.S. trade policy, including the imposition of or uncertainties surrounding tariffs or revocation of normal trade relations and the resulting consequences, could adversely affect our business, prospects, results of operations and financial condition.”

Previous wording

We operate a direct-to-consumer sales and service model in North America, 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 sales of our current vehicles and any future vehicle programs, including the upcoming Midsize platform, 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 June 30, 2026, we have opened 62 studios and service centers (excluding temporary and satellite service centers): 39 in the U.S. (14 in California, four in New York, three in Florida, two in each of Arizona, Illinois, Massachusetts, New Jersey, Texas, Virginia and Washington, and one in each of Colorado, Georgia, Michigan and Pennsylvania), seven in Germany, five in Canada, four in Saudi Arabia, three in Switzerland, two in Norway, one in the Netherlands, and one in the United Arab Emirates. We also plan 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 EVs we currently manufacture and sell.

Current wording

We operate a direct-to-consumer sales and service model in North America and the Middle East, 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 sales of our current vehicles and any future vehicle programs, including the upcoming Midsize platform, 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, 2026, we had 61 studios and service centers and one body shop (excluding temporary and satellite service centers): 39 in the U.S. (14 in California, four in New York, three in Florida, two in each of Arizona, Illinois, Massachusetts, New Jersey, Texas, Virginia and Washington, and one in each of Colorado, Georgia, Michigan and Pennsylvania), seven in Germany, five in each of Canada and Saudi Arabia, three in Switzerland, one in Norway, one in the Netherlands, and one in the United Arab Emirates. We also plan 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 EVs we currently manufacture and sell.

Previous wording

Achieving commercialization and growth for each generation of our EVs requires us to make significant capital expenditures to scale our production capacity and improve our supply chain processes in the U.S. and internationally. We expect our capital expenditures to increase as we continue constructing and putting into operation the 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 EVs, 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.

Current wording

Achieving commercialization and growth for each generation of our EVs requires us to make significant capital expenditures to scale our production capacity and improve our supply chain processes in the U.S. and internationally. We expect our capital expenditures to increase as we continue putting into operation AMP-2 and developing 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 EVs, 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

Revenue increased by $145.9 million, or 56% and $193.3 million, or 39% for the three and six months ended June 30, 2026, respectively, as compared to the same periods in the prior year. The increases were primarily driven by higher Lucid vehicle deliveries for the three and six months ended June 30, 2026, as compared to the same periods in the prior year. In addition, our ramp-up of the Lucid Gravity, which has a higher average selling price, resulted in a favorable product mix that further contributed to the increases in revenue. The increase in revenue was partially offset by a decrease of $24.8 million in regulatory credit sales for the six months ended June 30, 2026 as compared to the same period in the prior year. We believe the recent proposal to lower the U.S. federal fuel economy standards and eliminate CAFE EV credit trading may create uncertainties regarding our ability to generate future regulatory credit sales. Please see “Risk Factors — Risks Related to Our Business and Operations — The unavailability, reduction or elimination of certain government and economic programs could have a material adverse effect on our business, prospects, financial condition and results of operations”.

Current wording

We believe the recent final rule scheduled to be effective November 30, 2026 to lower the U.S. federal fuel economy standards and eliminate CAFE EV credit trading will reduce our ability to generate future regulatory credit sales. Please see “Risk Factors — Risks Related to Our Business and Operations — The unavailability, reduction or elimination of certain government and economic programs could have a material adverse effect on our business, prospects, financial condition and results of operations”.

Previous wording

Cost of vehicle sales includes direct parts, materials, shipping and handling costs, allocable overhead costs such as depreciation of manufacturing related equipment and facilities, information technology costs, personnel costs, including wages and stock-based compensation, estimated warranty costs, charges to reduce inventories to their net realizable value, charges for any excess or obsolete inventories, and losses from firm purchase commitments. Cost of vehicle sales also includes depreciation of operating lease vehicles. Manufacturing credits earned are recorded as a reduction to cost of vehicle sales.

Current wording

Cost of revenue includes direct parts, materials, shipping and logistics costs related to materials purchases, allocable overhead costs such as depreciation of manufacturing related equipment and facilities, information technology costs, personnel costs, including wages and stock-based compensation, estimated warranty costs, charges to reduce inventories to their net realizable value, charges for any excess or obsolete inventories, losses from firm purchase commitments, costs associated with providing non-warranty after-sales services, costs for retail merchandise, depreciation of operating lease vehicles, and the purchase cost of pre-owned vehicles. Manufacturing credits earned are recorded as a reduction to cost of vehicle sales.

Previous wording

Cost of revenue increased by $300.3 million, or 56% and $430.9 million, or 43% for the three and six months ended June 30, 2026, as compared to the same periods in the prior year. The increases were primarily due to higher deliveries of Lucid vehicles and higher inventory write-downs associated with inventory optimization actions, partially offset by reduction in losses on firm commitment as a result of lower volume for the three and six months ended June 30, 2026, as compared to the same periods in the prior year. The increases were also partially offset by the IEEPA tariff refund of approximately $9.5 million and $62.5 million recorded during the three and six months ended June 30, 2026, following the U.S. Supreme Court’s February 2026 ruling that certain tariffs imposed under the IEEPA were unlawful. In the near term, we expect our production volume of vehicles to continue to be less than our manufacturing capacity.

Current wording

Cost of revenue increased by $369.3 million, or 22%, for the nine months ended September 30, 2026, as compared to the same period in the prior year. The increase was primarily due to more deliveries of Lucid vehicles, higher inventory write-downs, and an increase in pre-owned vehicle sales. The increases were partially offset by reduction in losses on firm commitments and the International Emergency Economic Powers Act (“IEEPA”) tariff refund recorded during the nine months ended September 30, 2026, following the U.S. Supreme Court’s February 2026 ruling that certain tariffs imposed under the IEEPA were unlawful. In the near term, we expect our production volume of vehicles to continue to be less than our manufacturing capacity.

Previous wording

We recorded write-downs of $299.7 million and $537.6 million for the three and six months ended June 30, 2026, respectively, and $184.7 million and $336.3 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 increases in the write-downs were primarily due to higher inventory balances driven by higher Lucid Gravity mix for the three and six months ended June 30, 2026, as compared to the same periods in the prior year.

Current wording

We recorded write-downs of $94.5 million and $632.0 million for the three and nine months ended September 30, 2026, respectively, and $192.1 million and $528.5 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 decrease in write-downs for the three months ended September 30, 2026, as compared to the same period in the prior year was primarily associated with lower material purchases. The increase in the write-downs for the nine months ended September 30, 2026, as compared to the same period in the prior year was primarily due to change in product mix.

Previous wording

On August 16, 2022, the Inflation Reduction Act of 2022 (the “IRA”) was enacted with clean energy incentives. The impact of the IRA on our results of operations was not material for the three and six months ended June 30, 2026 and 2025. We will continue to evaluate the expected future impact of the IRA on our business and financial statements upon issuance of additional regulatory guidance.

Current wording

On August 16, 2022, the Inflation Reduction Act of 2022 (the “IRA”) was enacted with clean energy incentives. The impact of the IRA on our results of operations was not material for the three and nine months ended September 30, 2026 and 2025. We will continue to evaluate the expected future impact of the IRA on our business and financial statements upon issuance of additional regulatory guidance.

Previous wording

Gross margin worsened slightly for the six months ended June 30, 2026, as compared to the same period in the prior year. The decrease in gross margin was primarily driven by higher inventory write-downs, partially offset by the IEEPA tariff refund of approximately $62.5 million and a favorable product mix, during the six months ended June 30, 2026, as compared to the same period in the prior year.

Current wording

Gross margin improved to (96.0)% for the nine months ended September 30, 2026, as compared to (100.4)% for the same period in the prior year, primarily driven by the IEEPA tariff refund and favorable product mix, partially offset by higher inventory write-downs and lower regulatory credits.

Previous wording

Research and development expense increased by $131.9 million, or 25% for the six months ended June 30, 2026, as compared to the same period in the prior year. The increase was primarily attributable to increases of $84.0 million in engineering, design and testing services, and prototype materials related mostly to the Midsize platform, $36.0 million in payroll related expenses, and $11.1 million in utilization of contractors and professional fees primarily related to an increase in headcount to support our Midsize platform, partially offset by $5.7 million in lower stock-based compensation expenses.

Current wording

Research and development expense decreased by $13.5 million, or 4%, for the three months ended September 30, 2026, as compared to the same period in the prior year. The decrease was primarily attributable to $46.8 million in lower stock-based compensation expenses and a decrease of $6.2 million in utilization of contractors and professional fees, partially offset by $39.2 million in higher engineering, design and testing services, and prototype materials related mostly to the Midsize platform.

Previous wording

Research and development expense increased by $47.5 million, or 17% for the three months ended June 30, 2026, as compared to the same period in the prior year. The increase was primarily attributable to increases of $41.1 million in engineering, design and testing services, and prototype materials related mostly to the Midsize platform, $8.4 million in payroll related expenses and $3.9 million in facilities and rental related costs, partially offset with $8.6 million in lower stock-based compensation expenses.

Current wording

Research and development expense increased by $118.4 million, or 14%, for the nine months ended September 30, 2026, as compared to the same period in the prior year. The increase was primarily attributable to increases of $123.2 million in engineering, design and testing services, and prototype materials related mostly to the Midsize platform and $31.9 million in payroll related expenses related mostly to the Midsize platform, partially offset by $52.5 million in lower stock-based compensation expenses.

Previous wording

Selling, general, and administrative expense increased by $135.6 million, or 29% for the six months ended June 30, 2026, as compared to the same period in the prior year. The increase was primarily attributable to increases of $31.3 million in sales and marketing expenses, $26.3 million in stock-based compensation expenses, primarily driven by a reversal of previously recognized expenses for the former CEO’s unvested time-based RSUs during the six months ended June 30, 2025, $24.3 million in payroll related expenses due to our continued commercialization and growth strategy, $19.4 million in facilities and rental related costs and $17.2 million in utilization of contractors and professional fees.

Current wording

Selling, general, and administrative expense increased by $3.1 million, or 1%, for the three months ended September 30, 2026, as compared to the same period in the prior year. The increase was primarily attributable to increases of $24.9 million in payroll related expenses due to our continued commercialization and growth strategy, $13.5 million in utilization of contractors and professional fees and $2.2 million in facilities and rental related costs, partially offset by $31.4 million in lower stock-based compensation expenses and a decrease of $6.6 million in sales and marketing expenses.

Previous wording

Selling, general, and administrative expense increased by $43.6 million, or 17% for the three months ended June 30, 2026, as compared to the same period in the prior year. The increase was primarily attributable to increases of $15.5 million in sales and marketing expenses, $14.7 million in utilization of contractors and professional fees, and $8.5 million in other general corporate expense.

Current wording

Selling, general, and administrative expense increased by $138.7 million, or 18%, for the nine months ended September 30, 2026, as compared to the same period in the prior year. The increase was primarily attributable to increases of $49.2 million in payroll related expenses due to our continued commercialization and growth strategy, $30.7 million in utilization of contractors and professional fees, $24.7 million in sales and marketing expenses and $21.6 million in facilities and rental related costs.

Previous wording

On June 22, 2026, we announced the June 2026 Plan that was designed to advance our path toward profitability and positive cash flow generation by streamlining our organizational structure, optimizing operating expenses, and aligning production plans with anticipated demand. We expect to substantially complete the June 2026 Plan by the end of the third quarter of 2026, subject to local law and consultation requirements. As a result of the June 2026 Plan, we expect to incur total workforce reduction charges of approximately $34 million.

Current wording

On June 22, 2026, we announced the June 2026 Plan that was designed to advance our path toward profitability and positive cash flow generation by streamlining our organizational structure, optimizing operating expenses, and aligning production plans with anticipated demand. We substantially completed the June 2026 Plan in the third quarter of 2026.

Previous wording

On February 20, 2026, we announced the February 2026 Plan that intended to align with our long-term operating goals as we focus on the start of production of our Midsize platform, expansion into the robotaxi market and development of ADAS technologies, as well as the sale and distribution of our current models in existing and new geographies. We substantially completed the February 2026 Plan in the second quarter of 2026.

Current wording

On February 20, 2026, we announced the February 2026 Plan that intended to align with our long-term operating goals as we focus on the start of production of our Midsize platform, strategic partnerships related to the robotaxis programs, development of ADAS technologies, as well as the sale and distribution of our current models in existing and new geographies. We completed the February 2026 Plan in the third quarter of 2026.

Previous wording

During the three and six months ended June 30, 2026, we recorded workforce reduction charges of $33.7 million and $71.6 million, respectively, in the condensed consolidated statements of operations and comprehensive loss. The workforce reduction charges are comprised of $33.3 million related to the June 2026 Plan for the three and six months ended June 30, 2026, and $0.4 million and $38.3 million related to the February 2026 Plan for the three and six months ended June 30, 2026, respectively. The workforce reduction charges were primarily related to severance payments, employee benefits, employee transition, and acceleration of stock-based compensation expense. See Note 3 “Workforce Reduction” to our condensed consolidated financial statements included elsewhere in this Quarterly Report for more information.

Current wording

During the three and nine months ended September 30, 2026, we recorded workforce reduction charges of $1.3 million and $72.9 million, respectively, in the condensed consolidated statements of operations and comprehensive loss. The workforce reduction charges were primarily related to the June 2026 Plan for the three months ended September 30, 2026, and were comprised of $38.2 million and $34.7 million related to the February 2026 Plan and June 2026 Plan, respectively, for the nine months ended September 30, 2026. The workforce reduction charges were primarily related to severance payments, employee benefits, employee transition, and acceleration of stock-based compensation expense. See Note 3 “Workforce Reduction” to our condensed consolidated financial statements included elsewhere in this Quarterly Report for more information.

Previous wording

The following table presents our other income, net for the periods presented (in thousands):

Current wording

The following table presents our other income (expense), net for the periods presented (in thousands):

Previous wording

The Private Placement Warrants remained unexercised as of June 30, 2026, and the liability was remeasured to a fair value of nil as of June 30, 2026 and December 31, 2025. The changes in fair value were nil during the three and six months ended June 30, 2026, and resulted in unrealized gains of $5.3 million and $18.2 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.

Current wording

The private placement warrants remained unexercised as of December 31, 2025. The liability was remeasured to a fair value of nil as of December 31, 2025, and the private placement warrants subsequently expired in July 2026. The changes in fair value were nil during the three and nine months ended September 30, 2026, and resulted in unrealized gains of $0.4 million and $18.6 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.

Previous wording

On November 6, 2023, in connection with the commencement of the Strategic Technology Arrangement with Aston Martin, we received 28,352,273 ordinary shares of Aston Martin. The ordinary shares of Aston Martin are subject to remeasurement to fair value at each reporting period. Such shares were remeasured to fair values of $14.2 million and $24.3 million as of June 30, 2026 and December 31, 2025, respectively. The changes in fair value resulted in an unrealized gain of $0.5 million and an unrealized loss of $9.7 million for the three and six months ended June 30, 2026, respectively, and an unrealized gain of $3.9 million and an unrealized loss of $9.5 million for the same periods in the prior year, respectively, and were 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 15 “Related Party Transactions” to our condensed consolidated financial statements included elsewhere in this Quarterly Report for more information.

Current wording

On November 6, 2023, in connection with the commencement of the Strategic Technology Arrangement with Aston Martin, we received 28,352,273 ordinary shares of Aston Martin. The ordinary shares of Aston Martin are subject to remeasurement to fair value at each reporting period. Such shares were remeasured to fair values of $13.0 million and $24.3 million as of September 30, 2026 and December 31, 2025, respectively. The changes in fair value resulted in unrealized losses of $1.2 million and $10.9 million for the three and nine months ended September 30, 2026, respectively, and an unrealized gain of $0.9 million and an unrealized loss of $8.6 million for the same periods in the prior year, respectively, and were 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 15 “Related Party Transactions” to our condensed consolidated financial statements included elsewhere in this Quarterly Report for more information.

Previous wording

On April 14, 2026, we entered into the Series C Subscription Agreement with Ayar. Pursuant to the Series C Subscription Agreement, Ayar agreed to purchase from us 55,000 shares of our Series C Redeemable Convertible Preferred Stock, for an aggregate purchase price of $550.0 million in a private placement. Subsequently, on April 28, 2026, we issued the shares to Ayar pursuant to the Series C Subscription Agreement and received aggregate net proceeds of $548.9 million after deducting issuance costs of $1.1 million. We determined that the Subscription Agreement was required to be accounted for at fair value between the execution date and the settlement date as it represented a contract to sell redeemable stock. As a result, we recognized a gain of $142.2 million reflecting the change in fair value of the contract as measured upon settlement based on the difference between the fair value of the Series C Redeemable Convertible Preferred Stock at issuance versus the cash purchase price negotiated at fair value at contract inception, such that the Series C Redeemable Convertible Preferred Stock is initially recognized at fair value of $292.4 million on the issuance date.

Current wording

On April 14, 2026, we entered into the Series C Subscription Agreement with Ayar. Pursuant to the Series C Subscription Agreement, Ayar agreed to purchase from us 55,000 shares of our Series C Redeemable Convertible Preferred Stock, for an aggregate purchase price of $550.0 million in a private placement. Subsequently, on April 28, 2026, we issued the shares to Ayar pursuant to the Series C Subscription Agreement and received aggregate net proceeds of $548.9 million after deducting issuance costs of $1.1 million. We determined that the Subscription Agreement was required to be accounted for at fair value between the execution date and the settlement date as it represented a contract to sell redeemable stock. As a result, we recognized a gain of $142.2 million reflecting the change in fair value of the contract as measured upon settlement based on the difference between the fair value of the Series C Redeemable Convertible Preferred Stock at issuance versus the fair value at contract inception, such that the Series C Redeemable Convertible Preferred Stock is initially recognized at fair value of $292.4 million on the issuance date.

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 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.

Current wording

We concluded that the conversion features, inclusive of all settlement outcomes where the pay-off is indexed to the if-converted value, meet all the requirements to be separately accounted for as a bifurcated derivative. As a result, we bifurcated 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

The derivative liabilities of the Redeemable Convertible Preferred Stock were remeasured to a fair value of $163.7 million and $16.2 million as of June 30, 2026 and December 31, 2025, respectively. We recognized gains of $102.8 million and $110.2 million for the three and six months ended June 30, 2026, respectively, and gains of $111.5 million and $393.2 million for the same periods in the prior year, respectively, primarily driven by changes in our stock price. The gains for the three and six months ended June 30, 2026 includes $142.2 million of gain from Series C Subscription Agreement. The change in fair value are recorded within change in fair value of derivative liabilities and subscription agreements associated with redeemable convertible preferred stock (related party) in the condensed consolidated statements of operations and comprehensive loss. See Note 7 “Redeemable Convertible Preferred Stock” to our condensed consolidated financial statements included elsewhere in this Quarterly Report for more information.

Current wording

The derivative liabilities of the Redeemable Convertible Preferred Stock were remeasured to a fair value of $48.5 million and $16.2 million as of September 30, 2026 and December 31, 2025, respectively. We recognized gains of $115.2 million and $225.3 million for the three and nine months ended September 30, 2026, respectively, and a loss of $36.4 million and a gain of $356.8 million for the same periods in the prior year, respectively, primarily driven by changes in our stock price. The gain for the nine months ended September 30, 2026 includes $142.2 million of gain from Series C Subscription Agreement. The change in fair value is recorded within change in fair value of derivative liabilities and subscription agreements associated with redeemable convertible preferred stock (related party) in the condensed consolidated statements of operations and comprehensive loss. See Note 7 “Redeemable Convertible Preferred Stock” to our condensed consolidated financial statements included elsewhere in this Quarterly Report for more information.

Previous wording

In April 2025, we repurchased $1,052.5 million aggregate principal amount of the 2026 Notes, using $931.4 million of the net proceeds of the 2030 Notes. The repurchases of the 2026 Notes were accounted for as a debt extinguishment. The difference between the consideration paid to repurchase a portion of the 2026 Notes and the then carrying value of the 2026 Notes resulted in a gain of $116.4 million, and was recorded within gain on extinguishment of debt in the condensed consolidated statement of operations and comprehensive loss during the three and six months ended June 30, 2025.

Current wording

In April 2025, we repurchased $1,052.5 million aggregate principal amount of the 2026 Notes, using $931.4 million of the net proceeds of the 2030 Notes. The repurchases of the 2026 Notes were accounted for as a debt extinguishment. The difference between the consideration paid to repurchase a portion of the 2026 Notes and the then carrying value of the 2026 Notes resulted in a gain of $116.4 million, and was recorded within gain on extinguishment of debt in the condensed consolidated statement of operations and comprehensive loss during the nine months ended September 30, 2025.

Previous wording

Interest income decreased by $34.7 million, or 78% for the three months ended June 30, 2026, as compared to the same period in the prior year, primarily due to lower average cash and investment balances and lower interest rates on investments.

Current wording

Interest income decreased by $23.2 million, or 67%, for the three months ended September 30, 2026, as compared to the same period in the prior year, primarily due to lower average cash and investment balances and lower interest rates on investments.

Previous wording

Interest income decreased by $73.8 million, or 76% for the six months ended June 30, 2026, as compared to the same period in the prior year, primarily due to lower average cash and investment balances.

Current wording

Interest income decreased by $97.0 million, or 74%, for the nine months ended September 30, 2026, as compared to the same period in the prior year, primarily due to lower average cash and investment balances.

Previous wording

Interest expense increased by $24.1 million, or 101% and $53.3 million, or 149% for the three and six months ended June 30, 2026, respectively, as compared to the same periods in the prior year. The increases were primarily due to higher interest expense of $18.1 million and $48.9 million from the issuances of the 2030 Notes and the 2031 Notes in April 2025 and November 2025, respectively, and higher interest expense of $16.1 million and $21.6 million from the GIB credit facility and DDTL Credit Facility resulting from higher average borrowings, partially offset by increases of $7.8 million and $15.9 million in interest capitalized on construction in progress related to significant capital asset construction during the three and six months ended June 30, 2026, respectively, as compared to the same periods in the prior year.

Current wording

Interest expense increased by $44.3 million, or 173%, and $97.6 million, or 159%, for the three and nine months ended September 30, 2026, respectively, as compared to the same periods in the prior year. The increases were primarily due to higher interest expense of $17.1 million and $66.0 million from the issuances of the 2030 Notes and the 2031 Notes in April 2025 and November 2025, respectively, and higher interest expense of $37.4 million and $59.0 million from the GIB credit facility and DDTL Credit Facility resulting from higher average borrowings, partially offset by increases of $9.4 million and $25.3 million in interest capitalized on construction in progress related to significant capital asset construction during the three and nine months ended September 30, 2026, respectively, as compared to the same periods in the prior year.

Previous wording

Other income (expense), net primarily consists of foreign currency gains and losses, changes in residual value guarantee reserve, and realized gains or losses on the sale of available-for-sale securities. 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, changes in residual value guarantee reserve, realized gains or losses on the sale of available-for-sale securities and from expiration of the Lease Agreement. 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.

Previous wording

Other income (expense), net changed by $20.4 million and $31.2 million for the three and six months ended June 30, 2026, as compared to the same periods in the prior year, primarily due to changes in foreign exchange rates and residual value guarantee reserve. The change for the six months ended June 30, 2026 is also due to realized gains on the sale of available-for-sale securities.

Current wording

Other expense, net increased by $18.2 million and $49.4 million for the three and nine months ended September 30, 2026, as compared to the same periods in the prior year, primarily due to changes in residual value guarantee reserve, foreign exchange rates, and loss from expiration of the Lease Agreement. The increase for the nine months ended September 30, 2026 was partially offset by realized gain on the sale of available-for-sale securities.

Previous wording

As of June 30, 2026, we had $775.5 million of cash, cash equivalents, and investments. We also had $1.98 billion, $270.4 million, and $2.3 million of unused available credit amounts from the DDTL Credit Facility, the ABL Credit Facility, and the 2025 GIB Credit Facility, respectively, as of June 30, 2026. Our existing sources of liquidity include cash, cash equivalents, investments, and unused available credit amounts from credit facilities. We funded operations primarily with issuances of common stock, convertible preferred stock, convertible notes, and loans.

Current wording

Our existing sources of liquidity include cash, cash equivalents, investments, and unused available credit amounts from credit facilities. As of September 30, 2026, we had $948.5 million of cash, cash equivalents, and investments. We also had $778.8 million, $263.4 million, and $2.3 million of unused available credit amounts from the DDTL Credit Facility, the ABL Credit Facility, and the 2025 GIB Credit Facility, respectively, as of September 30, 2026. See Note 6 “Debt”, Note 7 “Redeemable Convertible Preferred Stock” and Note 8 “Stockholders’ Equity (Deficit) to the condensed consolidated financial statements included elsewhere in this Quarterly Report for more information.

Previous wording

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 expansion of AMP-1 in Casa Grande, Arizona, (iv) construction of the CBU portion of AMP-2 in Saudi Arabia, (v) vendor tooling, (vi) expansion of retail studios and service centers, and (vii) other initiatives related to the sale of vehicles or technology.

Current wording

We expect that our current sources of liquidity will provide us with adequate liquidity for at least the next 12 months to fund (i) ongoing operations, (ii) research and development projects for new products/ technologies, (iii) continued development of AMP-1 in Casa Grande, Arizona and AMP-2 in Saudi Arabia, (iv) vendor tooling, (v) expansion of retail studios and service centers, and (vi) other initiatives related to the sale of vehicles or technology.

Previous wording

We anticipate our cumulative spending on capital expenditures to be approximately $1.0 billion for the fiscal year 2026 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. We expect to continue to receive financing and support for certain capital expenditures in connection with AMP-2 construction and purchases of machinery, tooling, and equipment. Refer to Note 6 “Debt”, Note 15 “Related Party Transactions” and Note 17 “Subsequent Events” to the condensed consolidated financial statements included elsewhere in this Quarterly Report for more information. 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 technology automotive company targeting volumes in line with Lucid’s aspirations.

Current wording

We anticipate our cumulative spending on capital expenditures to be approximately $1.1 billion for the fiscal year 2026 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. We expect to continue to receive financing and support for certain capital expenditures in connection with AMP-2 construction and purchases of machinery, tooling, and equipment. Refer to Note 6 “Debt”, Note 15 “Related Party Transactions” and Note 17 “Subsequent Events” to the condensed consolidated financial statements included elsewhere in this Quarterly Report for more information. 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 technology automotive company targeting volumes in line with Lucid’s long-term objectives.

Previous wording

As of June 30, 2026, our total minimum lease payments are $630.0 million, of which $55.3 million is due in fiscal year 2026. We also have non-cancellable long-term commitments of approximately $2.55 billion, primarily relating to certain inventory component purchases. For details regarding these obligations, refer to Note 10 “Leases” and Note 11 “Commitments and Contingencies” to the condensed consolidated financial statements included elsewhere in this Quarterly Report for more information.

Current wording

As of September 30, 2026, our total minimum lease payments are $629.5 million, of which $26.7 million is due in fiscal year 2026. We also have non-cancellable long-term commitments of approximately $2.59 billion, primarily relating to certain inventory component purchases. For details regarding these obligations, refer to Note 10 “Leases” and Note 11 “Commitments and Contingencies” 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 $17.7 billion and $15.6 billion as of June 30, 2026 and December 31, 2025, 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 $18.5 billion and $15.6 billion as of September 30, 2026 and December 31, 2025, respectively. Additionally, we have generated significant negative cash flows from operations as we continue to support the growth of our business.

Previous wording

The expenditures associated with the development and commercial launch of our vehicles, the anticipated increase in manufacturing capacity, and the international expansion of our business operations are subject to significant risks and uncertainties, many of which are beyond our control, and therefore, may affect the timing and magnitude of these anticipated expenditures. These risk and uncertainties are described in more detail in the section entitled “Risk Factors” in Part II, Item 1A of this Quarterly Report.

Current wording

The expenditures associated with the development and commercial launch of our vehicles, the anticipated increase in manufacturing capacity, and the international expansion of our business operations are subject to significant risks and uncertainties, many of which are beyond our control, and therefore, may affect the timing and magnitude of these anticipated expenditures. These risks and uncertainties are described in more detail in the section entitled “Risk Factors” in Part II, Item 1A of this Quarterly Report.

Previous wording

Net cash used in operating activities increased by $1,149.0 million to $2,407.9 million during the six months ended June 30, 2026, as compared to the same period in the prior year. The increase was primarily due to increases in net operating assets and liabilities of $688.4 million and net loss excluding non-cash expenses and gains of $460.6 million during the six months ended June 30, 2026, as compared to the same period in the prior year. The increase in net operating assets and liabilities was primarily attributable to higher inventory purchases driven by the Lucid Gravity production ramp-up.

Current wording

Net cash used in operating activities increased by $1,145.0 million to $3,160.5 million during the nine months ended September 30, 2026, as compared to the same period in the prior year. The increase was primarily due to increases in net loss excluding non-cash expenses and gains of $606.2 million and increase in net operating assets and liabilities of $538.8 million during the nine months ended September 30, 2026, as compared to the same period in the prior year. The increase in net operating assets and liabilities was primarily attributable to higher payment of inventory purchases driven by the Lucid Gravity production ramp-up.

Previous wording

Net cash provided by investing activities decreased by $715.2 million to $592.8 million during the six months ended June 30, 2026, as compared to the same period in the prior year. The decrease was primarily attributable to lower volume of investment sales and maturities compared to investment purchases during the six months ended June 30, 2026, as compared to the same period in the prior year.

Current wording

Net cash provided by investing activities decreased by $1,233.4 million to $329.7 million during the nine months ended September 30, 2026, as compared to the same period in the prior year. The decrease was primarily attributable to lower volume of investment sales and maturities net of investment purchases during the nine months ended September 30, 2026, as compared to the same period in the prior year.

Previous wording

Net cash provided by financing activities increased by $1,439.4 million to $1,581.1 million during the six months ended June 30, 2026, as compared to the same period in the prior year. We received net proceeds of $549.3 million from the issuance of Series C Redeemable Convertible Preferred Stock, $500.0 million from borrowings from the DDTL Credit Facility, $291.9 million from issuance of common stock under 2026 Underwriting Agreement and $200.0 million from issuance of common stock under 2026 Subscription Agreement during the six months ended June 30, 2026. We received net proceeds of $1.1 billion from the issuance of the 2030 Notes and repurchased a portion of the 2026 Notes using $931.4 million during the six months ended June 30, 2025.

Current wording

Net cash provided by financing activities increased by $2,261.1 million to $2,778.9 million during the nine months ended September 30, 2026, as compared to the same period in the prior year. We received $1,700.0 million from borrowings from the DDTL Credit Facility, net proceeds of $548.9 million from the issuance of Series C Redeemable Convertible Preferred Stock, $291.5 million from issuance of common stock under the 2026 Underwriting Agreement and $199.8 million from issuance of common stock under the 2026 Subscription Agreement during the nine months ended September 30, 2026. We received gross proceeds of $1.1 billion from the issuance of the 2030 Notes, repurchased a portion of the 2026 Notes using $931.4 million, and received gross proceeds of $300.0 million from the 2025 Subscription Agreement during the nine months ended September 30, 2025.

Previous wording

We recognize revenue related to the vehicle when the customer obtains control of the vehicle which occurs at a point in time either upon completion of delivery to the agreed-upon delivery location or upon pick up of the vehicle by the customer. As the unspecified OTA software updates are provided when-and-if they become available, revenue related to OTA software updates is recognized ratably over the basic vehicle warranty term, commencing when control of the vehicle is transferred to the customer. Payments received before the customer obtains control of the vehicle are recorded within other current liabilities in the condensed consolidated balance sheets.

Current wording

We recognize revenue related to the vehicle when the customer obtains control of the vehicle which occurs at a point in time either upon completion of delivery to the agreed-upon delivery location or upon pick up of the vehicle by the customer. As the unspecified OTA software updates are provided when-and-if they become available, revenue related to OTA software updates is recognized ratably over the basic vehicle warranty term, commencing when control of the vehicle is transferred to the customer. Remarketing revenue is recognized at a point in time upon completion or expiration of the remarketing service obligation. Revenue for maintenance services is recognized ratably over the term of the contract, which is generally two years. Payments received before the customer obtains control of the vehicle are recorded within other current liabilities in the condensed consolidated balance sheets.