Q2 Earnings Call

The path to profitability is murky at best. It will take years of continued funding to launch and scale Cosmos and there's no guarantee that it will be successful. The short term objective of reducing the cash burn might extend the runway a bit but there are significant headwinds. Investors now must recalibrate expectations over a longer period of time with a new, unproven leadership team and a new set of metrics.

What concerns me is the lack of demand for the current line-up. The Air and Gravity are routinely singled out as the best vehicles in their class. And in many instances there is very little competition in those classes. The closest alternatives being the Model S and X and those two vehicles will soon be disappearing. It suggests that demand for Lucid's products should be increasing and yet that's not the case. In fact the company is now looking to scale back production significantly to reflect weaker demand and preserve cash.

The lack of demand was loud and clear but the question of why it's not there hasn't been answered. We can speculate on the price point, software issues, and the challenges in being a start-up company. Cosmos may or may not solve some of those problems. And it will be aimed at the most competitive segment of the market with established brands offering compelling products. For Lucid and Cosmos to succeed they must first determine why the current offering isn't resonating with enough buyers.

I can tell you why it's not reasonating: software issues, service issues and concerns about Lucid's long-term viability. This is what everyone cites. It's tough to ask people to pay premium prices if all the above are legitimate concerns. It seems like they're aware of this based on the earnings call.

Edit: My opinion is software and service issues exacerbate people's concerns with long-term viability. If they make strides on those two (for ALL of their vehicles), then I think things will start to fall into place.

my bet is for that off roady concept they showed to tap into the rivian cult. way more buyers than a 250k rocket. no brainer

The_Don said:

I can tell you why it's not reasonating: software issues, service issues and concerns about Lucid's long-term viability. This is what everyone cites. It's tough to ask people to pay premium prices if all the above are legitimate concerns. It seems like they're aware of this based on the earnings call.

Edit: My opinion is software and service issues exacerbate people's concerns with long-term viability. If they make strides on those two (for ALL of their vehicles), then I think things will start to fall into place.

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Correct, Software and Service issues are highly visible to customers and make it appear like they are not a health company. Even if they weren't a healthy company, a rock solid experience would cover that up much more. That being said this map is quite illustrative in how many blind spots where the vehicles are not available and out of mind because there are no studios. Since new EV sales are only 6% of the market, and expensive 3 row is a niche of a niche....For whatever reason the cars are categorized into a niche, rather than the total new 3-row market in the premium segment where I think it's a superior offering regardless of drivetrain.

Northpointe said:

The path to profitability is murky at best. It will take years of continued funding to launch and scale Cosmos and there's no guarantee that it will be successful. The short term objective of reducing the cash burn might extend the runway a bit but there are significant headwinds. Investors now must recalibrate expectations over a longer period of time with a new, unproven leadership team and a new set of metrics.

What concerns me is the lack of demand for the current line-up. The Air and Gravity are routinely singled out as the best vehicles in their class. And in many instances there is very little competition in those classes. The closest alternatives being the Model S and X and those two vehicles will soon be disappearing. It suggests that demand for Lucid's products should be increasing and yet that's not the case. In fact the company is now looking to scale back production significantly to reflect weaker demand and preserve cash.

The lack of demand was loud and clear but the question of why it's not there hasn't been answered. We can speculate on the price point, software issues, and the challenges in being a start-up company. Cosmos may or may not solve some of those problems. And it will be aimed at the most competitive segment of the market with established brands offering compelling products. For Lucid and Cosmos to succeed they must first determine why the current offering isn't resonating with enough buyers.

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I know it’s anecdotal but I feel like I’m seeing more Gravity’s around me in SoCal. I saw two yesterday which was usually how many I would see in a year. One can hope!

I think Lucid’s current lineup has faced some inherent challenges. The Air is a large, low-slung sedan competing in the luxury sport-sedan segment, a category that has not been especially popular in recent years.

Meanwhile, the Gravity could have been a much more compelling vehicle if its launch had not been plagued by delays and glitches. Its styling is also somewhat hit-or-miss. Some people see a sleek, futuristic SUV, while others see a minivan-like silhouette. It may be an excellent urban family vehicle, but it does not necessarily appeal to buyers who prefer the rugged, boxier styling that has become popular in the SUV market.

Both vehicles seem to reflect some strategic miscalculations, but the underlying technology is strong, and I sincerely hope Lucid ultimately succeeds. I also hope its new products gain traction and that the EV market rebounds domestically.

Throw my 2 bits in. Have long had an interest in the vehicle, but issues already highlighted.

Service/support. Only 1 service center in the Southwest and must reviews of them are pretty awful (understaffed for the amount of volume they need to deal with). Insecurity that if things get tighter financially that the ability to pick up and drop off a vehicle for service will disappear. I don't have the flexibility to drive 200-250 miles each way to drop off a car with my work.

Financial stability - doesn't look good, Feeds into problem #1.

Software - hear its improved. Really last of my issues.

Cost - Incentives help, but can never find a vehicle with my preferred options/packages list in my region. Everything is always a $4k transport fee. They don't qualify for many of the incentives either.

End of the day, hard to over pay for a product where you don't have confidence in the company and the service department.

The remarkably slack demand for the Gravity has definitely thrown a wrench into the long-term trajectory. We all know the several reasons why demand has been much lower than hoped as Lucid entered this much larger market. But it remains that the projected ramp up of both manufacturing and sales has seriously stalled.

I wonder why they would not break out the actual numbers for Air versus Gravity? An easy assumption is that the Air numbers look so bad that it might discourage future possible Air buyers? There was a sideways mention yesterday of backing off on the Air for a while, though it’s not clear what they really meant besides the larger theme of reducing manufacturing to match real world demand

It seems like it would be a useful data point to know how much the excessive warranty repair cost in the service centers is weighing down their balance sheet (both labor and having to re-purchase many original parts). It’s definitely flooded the service centers to the point where the system is broken in many places… And a 30% increase in staff won’t even begin to solve it. I’ll be looking for plans to fairly significantly expand service center (and studio) locations during 2027, preparing in advance for sales and servicing on the hopefully (relatively) vast quantities of Cosmos on the road as we head into 2028 and beyond. (yup, more capex—but I’ll happily pay the price of dilution in exchange for the survival and hopefully future thriving of the company).

On the bright side, assuming that the recent improvements on the software side solidify and continue, with any luck by 2027 we can move beyond that as a damper on demand. And if they manage to get the service centers closer to functional, that also should fade as an issue by the time the Cosmos is really rolling out in 2028. Which will also spur future sales of the Gravity variants. It’s not that hard to imagine Lucid’s prospects looking very different a couple years from now.

It’s certainly no fun traversing the Valley of Death—but we knew that was the journey we were on. I sure hope we make it to the other side!

donfenn said:

I think Lucid’s current lineup has faced some inherent challenges. The Air is a large, low-slung sedan competing in the luxury sport-sedan segment, a category that has not been especially popular in recent years.

Meanwhile, the Gravity could have been a much more compelling vehicle if its launch had not been plagued by delays and glitches. Its styling is also somewhat hit-or-miss. Some people see a sleek, futuristic SUV, while others see a minivan-like silhouette. It may be an excellent urban family vehicle, but it does not necessarily appeal to buyers who prefer the rugged, boxier styling that has become popular in the SUV market.

Both vehicles seem to reflect some strategic miscalculations, but the underlying technology is strong, and I sincerely hope Lucid ultimately succeeds. I also hope its new products gain traction and that the EV market rebounds domestically.

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Great point. Specially with the Gravity. Being a prior owner of an R1S, that car always resonated well with people due to it being a boxy SUV. When showing my friends and family the Gravity as a vehicle of interest, the response was...less enthusiastic. Across the board.

When you break down the features, space and luxury of the Gravity, it becomes appealing but the initial bite is not there. My sister herself said "I wish I could have the Rivian looks with the Lucid interior". R1S sales are strong for this segment while the Gravity struggles for traction. On the spec sheet, should be other way around. But most people don't buy the spec sheet, they buy the emotion the vehicle gives them - at this price point, specially.

They could remedy this by releasing the Gravity X concept as a trim. I was hoping this was coming over a Gravity Sapphire or a different kind of performance variant. I hope they surprise us and unveil it in the coming weeks.

As a lurker, my holdup is what others have said as well. Software issues, concerns over the company's future and long service times are not an experience anyone wants to endure, specially at this price point, specially for a vehicle that is great on paper but merits a "meh" reaction in public. I'd probably take the leap for the Gravity X. The Gravity currently is appealing but one I seriously need to talk myself into before making pulling the trigger.

illopp00 said:

Correct, Software and Service issues are highly visible to customers and make it appear like they are not a health company. Even if they weren't a healthy company, a rock solid experience would cover that up much more. That being said this map is quite illustrative in how many blind spots where the vehicles are not available and out of mind because there are no studios. Since new EV sales are only 6% of the market, and expensive 3 row is a niche of a niche....For whatever reason the cars are categorized into a niche, rather than the total new 3-row market in the premium segment where I think it's a superior offering regardless of drivetrain.

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This cannot be stressed enough. It is infuriating to see them expand abroad and yet neglect so many blindspots in their domestic market. Meanwhile Rivian is expanding both showrooms and service rapidly across the country. They are becoming more visible. This makes a huge difference. Lucid has also seen the footpring from Tesla. Not saying they should copy and paste, but they seem to be making a lot of errors that could have been avoided. They are doing too much at once. It is tough to watch, specially when you are really hoping the company succeeds.

Spaceship said:

This cannot be stressed enough. It is infuriating to see them expand abroad and yet neglect so many blindspots in their domestic market.

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Infuriating? The KSA owns over 50% of the company's shares and it's representative has been the Board Chairman since 2023. The company is looking to position itself as a major automaker abroad because that's what it's owners and leaders require. Perhaps it's not the company you thought it was?

Northpointe said:

Infuriating? The KSA owns over 50% of the company's shares and it's representative has been the Board Chairman since 2023. The company is looking to position itself as a major automaker abroad because that's what it's owners and leaders require. Perhaps it's not the company you thought it was?

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One that wants to be successful? If so, then maybe I was wrong. European expansion with their current lineup is expending a lot of money and energy for not a lot of sales. Abroad focus should have expanded closer to release of the midsize, where they could really gain traction in that market. They would have been way better of positioning themselves in the U.S. with their current lineup instead of spreading themselves thin and choosing to target other markets abroad. Infuriating is very much the word.

HC_79 said:

New sportier version of the Gravity to be announced in the coming days

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I found this to be the most surprising announcement of the call. While I look forward to seeing the new model/trim, it seems that adding complexity to the already lower-than-desired Gravity production line is not directionally aligned with cost savings. Personally, I would favor a real deep (i.e. deeper than what they have) cut on the remaining 2026 Gravity inventory to clear that shadow as a priority. This will also put more Gravity on the road. That's where they need to be for word of mouth marketing rather than baking in the sun at Casa Grande.

Spaceship said:

One that wants to be successful? If so, then maybe I was wrong. European expansion with their current lineup is expending a lot of money and energy for not a lot of sales. Abroad focus should have expanded closer to release of the midsize, where they could really gain traction in that market. They would have been way better of positioning themselves in the U.S. with their current lineup instead of spreading themselves thin and choosing to target other markets abroad. Infuriating is very much the word.

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Success is defined by the owner's Vision 2030 plan. There doesn't seem to be a significant investment occurring in European countries at the moment. Any sales that are happening are likely incremental and not a significant source of capital or operating cost.

illopp00 said:

Correct, Software and Service issues are highly visible to customers and make it appear like they are not a health company. Even if they weren't a healthy company, a rock solid experience would cover that up much more. That being said this map is quite illustrative in how many blind spots where the vehicles are not available and out of mind because there are no studios. Since new EV sales are only 6% of the market, and expensive 3 row is a niche of a niche....For whatever reason the cars are categorized into a niche, rather than the total new 3-row market in the premium segment where I think it's a superior offering regardless of drivetrain.

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This is not totally accurate. In Texas (as well as most of the other states that don’t allow “Direct to buyer” dealerships), the laws are not to stop EV sales but rather protect privately owned dealerships. Lucid can build “Showrooms” in these states (Texas has 2 in Houston and Dallas) where people can go to look at and test drive the cars. They just can’t negotiate the purchase directly with the SC staff. Once you have done your test drive and discussed the cars with the SC staff, you then can go online and place your order or purchase one of the available now cars. Your salesman will then be a Lucid staff in California and all paperwork is done online. You then take delivery back at the SC. No money trades hands directly between you and the local SC. The local SC also has numerous vehicles on hand that you can purchase. If you decide to purchase one of the cars in stock, once again it is all done online with salesman back in California.

The net result is not that much different than a traditional dealership, other than you will be less likely to drive into a Texas SC and then drive off with a new purchased car a couple hours later due to the online back and forth typically can take a couple days vs couple hours.

It is very odd to me that there is no sales or service center in all of Oregon. The closest are in Seattle and Sacramento.

DeaneG said:

It is very odd to me that there is no sales or service center in all of Oregon. The closest are in Seattle and Sacramento.

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Yeah, when you're now a brand with a reputation for having lots of issues that need service, most buyers aren't gonna want to be far from a service center. Even though they typically come to the customer to pick up the car, distance is still a huge limiting factor for getting service. If they made a map of where Lucid owners live, I betcha 90% are within a 50 mile radius of a service center. They're not really a national brand, they're more of a regional brand.

And they're still too small to justify the expense of a lot more services centers.

[emphasis added]

dbsb3233 said:

Yeah, when you're now a brand with a reputation for having lots of issues that need service, most buyers aren't gonna want to be far from a service center. Even though they typically come to the customer to pick up the car, distance is still a huge limiting factor for getting service. If they made a map of where Lucid owners live, I betcha 90% are within a 50 mile radius of a service center. They're not really a national brand, they're more of a regional brand.

And they're still too small to justify the expense of a lot more services centers.

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But isn't that a circular problem? I mean, with respect to national adoption, how can they grow significantly without having a lot more service centers?

AZLucidGuy said:

I found this to be the most surprising announcement of the call. While I look forward to seeing the new model/trim, it seems that adding complexity to the already lower-than-desired Gravity production line is not directionally aligned with cost savings. Personally, I would favor a real deep (i.e. deeper than what they have) cut on the remaining 2026 Gravity inventory to clear that shadow as a priority. This will also put more Gravity on the road. That's where they need to be for word of mouth marketing rather than baking in the sun at Casa Grande.

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I do think that is a reasonably strategy, move them cheaper is better than a write down of rotting inventory. Assuming all those late builds 2026s are more solid in build quality and the software has largely been stabilized, it will help. Then they can reduce production and trim configurations moving forward which will undoubtably help quality and services.

That being said, Air had a slow start 1st 18 months until build quality, pricing and fob issues were sorted, then it became the best seller in the segment, and it still is. It's just the whole segment crashed massively in 2026. I think they could keep the Air platform and shrink it down 6-9 inches and build a competitor to I3 and Model 3. Large luxury sedans don't make much sense anymore, an SUV can be priced higher because its's simply more car, and more space for stuff and more luxury. A small car is more efficient and would easily have better performance, range and efficiency, and Lucid has uniquely proven a smaller footprint doesn't mean tiny interior. In other words, if you want to chase range and efficiency specs, it's much easier done with a small car, especially with their new motors and improving battery tech.

trivalent said:

[emphasis added]



But isn't that a circular problem? I mean, with respect to national adoption, how can they grow significantly without having a lot more service centers?

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Now, yes, that's gonna be really hard to do. They blew it with the Gravity rollout, and that's gonna haunt them. If they'd have come out with a dependable product, they wouldn't have gotten the reputation for problems that needed service nearby (as much).

They've dug a deep hole and it's gonna be hard to repair that reputational damage.