Middle East geopolitical conflicts have been specifically called out in Lucid’s 10-K risk factors. It stands to reason that those risks are greater today. It would be naive to think otherwise.
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- Thread starter The_Don
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No. It's small potatoes if you want to inflict economic damage on the Saudis.
I think it important to differentiate analysis from recommendations. Numbers are numbers - they are data and, absent of errors, fact.
Recommendations are simply opinion. The same data can spawn vastly different opinions, depending on how an individual interprets the data.
Are sales more important than R&D? Is reducing inventory a cost cutting measure? We all have our opinions - as do analysts at investment banks and customers at their dinner tables. Even in this world of AI, as far as I know, nothing can reliably predict the future. Opinion is stating out loud what we think is going to happen - but, no one really knows - at least not yet.
That's why being human is so cool - we all have the same data and yet often come to different conclusions. Only history tells us what actually happens and we'll have to wait until tomorrow (or next month, or. next quarter or next decade) to find out which opinion was most accurate.
It's great to be alive!
Recommendations are simply opinion. The same data can spawn vastly different opinions, depending on how an individual interprets the data.
Are sales more important than R&D? Is reducing inventory a cost cutting measure? We all have our opinions - as do analysts at investment banks and customers at their dinner tables. Even in this world of AI, as far as I know, nothing can reliably predict the future. Opinion is stating out loud what we think is going to happen - but, no one really knows - at least not yet.
That's why being human is so cool - we all have the same data and yet often come to different conclusions. Only history tells us what actually happens and we'll have to wait until tomorrow (or next month, or. next quarter or next decade) to find out which opinion was most accurate.
It's great to be alive!
Getting the insurance payout would be worth way more to Lucid than whatever cars that factory can build in its first year or two.
Almost a billion dollars to be able to build 5k cars in year one is hilariously wasteful
Insurance policies routinely exclude acts of war.
The investment decisions in AMP-2 were driven by the Saudis and represent a major shift in their economic priorities. I wouldn't read too much into their initial production projections as it's not indicative of what their future plans are. And having a full functioning auto manufacturing facility is more important than the banner its producing vehicles under. Lucid may fail but the KSA will still have AMP-2.
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I agree. Starting manufacturing a vehicle is hard enough when you have the established industrial base for such things. The Saudi's aren't just trying to get Lucid to build vehicles in the country, they're trying to kickstart the full industrial base, including a big fraction of the supplier network. Having low production goals for the first year seems entirely sane.
By all means, if you know a way to build a factory that can build 5,000 cars in a year and include the capacity to scale to build many, many more afterward without spending a billion dollars. I'm sure Lucid and every other auto manufacturer would love to hear it .
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I doubt it.
Think of it this way:
You have a limited amount of offensive weapons available. You want to find a way to exert the most pressure as possible, including pressuring the rest of the world to make your opponent negotiate.
Then, you have a set of targets to hit
1. Oil infrastructure that is so established that the facilities themselves contribute several millions of barrels per day to the global oil demand.
2. Oil shipping routes that would go through the Red Sea and Straight of Hormuz, where any interruption means they would have to go around through the continent of Africa just to reach Asia.
3. A manufacturing plant that currently assembles knock-down kits for a car company.
Among these, hitting a manufacturing plant doesn't necessarily mean you can give the most amount of pressure. Hitting a single oil refinery or even scaring shipping to a halt with a single strike is more than enough to get the entire world nervous.
L
And Houthis probably never heard of Lucid!
I think Lucid and PIF are in a difficult predicament: assuming Lucid is able to execute its business plan perfectly, it will still need several billion dollars to bridge it to profitability, with the next injection likely required by 1H 2027.
Lucid can continue with it's sub-billion-dollar capital raises, but that doesn't give investors confidence because solvency will remain a quarterly or semi-annual concern for a couple years no matter how well Lucid is operating.
Alternatively the PIF can, again, provide a several billion dollar cash injection via convertible preferred shares to stabilize the stock, but at the current share price, that would lead to untenable shareholder dilution at issuance and in subsequent years (PIKable). Remember, the PIF also wants this to remain as an American company. This strategy would make that impossible.
The PIF can also upsize Lucid's DDTL to the tune of several billion dollars, but that'll saddle a negative cash-flowing company with even more debt at unfavorable interest rates. Not an ideal outcome.
A couple months ago, Silvio said the next capital raise would be favorable for investors. However, I'm struggling to think of any capital raise that could actually be favorable for investors. More dilution, more debt, or some combination of the two, none are appealing.
Lucid can continue with it's sub-billion-dollar capital raises, but that doesn't give investors confidence because solvency will remain a quarterly or semi-annual concern for a couple years no matter how well Lucid is operating.
Alternatively the PIF can, again, provide a several billion dollar cash injection via convertible preferred shares to stabilize the stock, but at the current share price, that would lead to untenable shareholder dilution at issuance and in subsequent years (PIKable). Remember, the PIF also wants this to remain as an American company. This strategy would make that impossible.
The PIF can also upsize Lucid's DDTL to the tune of several billion dollars, but that'll saddle a negative cash-flowing company with even more debt at unfavorable interest rates. Not an ideal outcome.
A couple months ago, Silvio said the next capital raise would be favorable for investors. However, I'm struggling to think of any capital raise that could actually be favorable for investors. More dilution, more debt, or some combination of the two, none are appealing.
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Specially in the current environment
If the financial narrative when Cosmos launches is still "we have enough cash to last until XX" the company will be in deep trouble. They not only need enough cash to facilitate the launch but they also have to stabilize and grow the sales organization and service network. There are simply too many areas of the country that don't have a service center within a reasonable distance to alleviate buyer concerns. Add to that the history of lengthy service center scheduling and repair times and it's a recipe for disaster. Prospective customers will need to get comfortable with the Lucid model and that's a tall order right now. These are all solvable problems but they will take billions in capital to solve. And to your point, any capital raise will carry its own set of consequences.
They won’t send that many Cosmos to US initially, most will initially go to Europe and GCC. Hence the European service expansion. Partnering in Europe makes it cheaper to expand service there vs building service centers in the US. Saudi commitment to buy 100k vehicles mostly comes from those produced in AMP 2.
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Brand awareness in the EU is even lower than in the US. Plus, they have real competition there with BYD and the other chinese brands