LCID 2021 Q4 Earnings

[CLTGT]

Out of curiosity, what model did you order, what date did you make the reservation and have you confirmed that reservation yet?

 

[hmp10]

In a few weeks will know if I’m wrong, but I will be blown away because in November they say 577 and then if they only delivered 250 by the end of the year. That would be gross incompetence and justify firing the whole team.

Let's see here. Lucid engineered a car from scratch that got the highest range rating ever recognized by the EPA by a long shot. It won Motor Trend's Car of the Year out of the gate. The reviews across the automotive press and media have been overwhelmingly positive. Its structural solidity, fit and finish, and interior space easily trump Tesla's updated Model S. Its fast charging capabilities have been independently verified by Tom Moloughney and others. Its dynamic performance has wowed everyone who has driven it.

Yet, because Lucid has missed some early delivery numbers at a time when almost every car manufacturer has experienced similar difficulties in getting new models out the door, you think the Lucid team is grossly incompetent and should be fired.

Yes, there is gross incompetence afoot here. But it's not on the Lucid team. It's in letting one's real agenda slip out into the open.

 

[Adnillien]

The executive team at Lucid confirmed 577 deliveries on their November 15 call.

I may have missed it but I don't think Peter or Sherry mentioned the 577 target during the Q3 earnings call in November. They did reaffirm the 20k target for 2022 though. A quick text search of the transcript does not find 577.

 

[SaratogaLefty]

I may have missed it but I don't think Peter or Sherry mentioned the 577 target during the Q3 earnings call in November. They did reaffirm the 20k target for 2022 though. A quick text search of the transcript does not find 577.

You are correct. There was no mention at all of any delivery target for 2021 during the Q3 earnings call.

 

[MidwestLucidDude]

I may have missed it but I don't think Peter or Sherry mentioned the 577 target during the Q3 earnings call in November. They did reaffirm the 20k target for 2022 though. A quick text search of the transcript does not find 577.

You are correct. I just listened to the entire call and was surprised by that. They did mention a target of 20,000 by end of 2022 but hedged it by saying there are several supply issues to be concerned with. This is what was said:

1. Peter mentioned the 30 Dream Editions delivered at the end of October, and delivered an additional two dozen Dream Editions over the weekend before the call which was November 13-14.

2. Peter also mentioned the increase of Dream Edition production from 500 to 520 based on both demand and to commemorate the 520 mile range. Note that the day of the earnings call was the same day the Air won the Car of the Year award. Demand surely took off from there.

With no promised target number of deliveries by the end of 2021, there should be no let down if they only delivered 200. The important data will be do they still feel they can hit 20,000 in 2022, and how much have reservations grown. Good work!

 

[HC_79]

With no promised target number of deliveries by the end of 2021, there should be no let down if they only delivered 200. The important data will be do they still feel they can hit 20,000 in 2022, and how much have reservations grown. Good work!

That's interesting. I'm not sure if they're allowed to do that though without actually mentioning something because they previously said the dreams would be delivered by Q4. So if you know you're going to miss the target I don't think you can get away with not mentioning it. If they were private they could do whatever they want but being public information like that needs to be disclosed. Rivian had fess up and revise its guidance which I'm sure they wouldn't have done it they weren't legally obligated to as it just looks bad for a company getting off the ground.

Maybe a number of us have misread or heard something wrong but we all seemed to be under the impression that the Dreams would be done in Q4

 

[Dortreo]

What Lucid is trying to do is hard. What they’ve accomplished so far is remarkable. Let’s cut them a little slack and not overly punish them if they missed an early target and hinder their ability to be a going concern. Otherwise, who’s going to service our cars in 10 years?

 

[Adnillien]

The last I remeber hear 577 target was during an interview after the Sept 27 factory comissing where Peter was asked about it and his response was that Lucid is trying their best to reach that goal. I do not remember the exact words.

 

[Mountain Man]

I guarantee you there is at least one attorney in that 520 or multiple purchasers who the attorneys' fees are not an issue. It becomes a matter of principal.

That would be me. And yes, it would be a serious legal problem for Lucid if they increased production of the DE beyond the stated 520. It doesn’t have to be a “promise” to be misleading or a Deceptive Trade Practice. The DE was significantly more expensive than the lower models in part because it is a limited edition. Removing the limits would remove the added value, causing all DE owners to suffer a loss. Lucid is not that dumb.

 

[Bbq9]

Strikes me the Dream Edition is the First Edition. It is a limited run that comes with cache and exclusivity.
they could legitimately create more - but they will never be the first edition.

 

[manitou202]

Strikes me the Dream Edition is the First Edition. It is a limited run that comes with cache and exclusivity.
they could legitimately create more - but they will never be the first edition.

Exactly. They might offer a performance upgrade that has the same horsepower as the Dream Edition, but call it a Grand Touring Performancevor something. They originally talked about a tri-motor option as well, so this will probably be available at some point. They might be other limited edition runs (just like Porsche always does), but none will be the Dream Edition.

 

[HC_79]

we know they’ve had fit and finish issues, we know people paid for deliveries and all of a sudden those cars got caught up in the halted deliveries. No one has shown us DE numbers in the 400’s (said yes, but not shown)

If they produced more than the 520 then 400+ DE numbers would’ve shown up a while ago so let’s end this false hype over nothing.

 

[MidwestLucidDude]

That would be me. And yes, it would be a serious legal problem for Lucid if they increased production of the DE beyond the stated 520. It doesn’t have to be a “promise” to be misleading or a Deceptive Trade Practice. The DE was significantly more expensive than the lower models in part because it is a limited edition. Removing the limits would remove the added value, causing all DE owners to suffer a loss. Lucid is not that dumb.

It depends on what the definition of "Limited" is. There is no implied fixed number to the word. At best, "Limited" means that once they stop making them there will be no more made. How many cars out there have a "Limited" badge on their trunk? Many car makers use the word Limited in various ways. In some cases it is meant as a model that has fewer made than their other models. All of which would fit for the Dream Edition even if they made 1,500 of them. I believe anyone with a lawsuit would end up with a directed verdict. Someone who bought a Dream would have to show in their purchase agreement or window sticker that the manufacture has promised that no more than 520 will be made. Lucid would be foolish to do that so I doubt that wording is in there. The reason the Dream is more expensive is because it has the best range, the biggest battery, the most horsepower, and the fastest 0-60 times compared to the other current models they are offering. There is an actual quantifiable reason it cost more. It goes beyond just a special paint color or wheels. You would have a weak argument that the reason the Dream is worth more is because it was supposed to be limited to 520. Now, Lucid may keep to the 520 so they can move on to making the Grand Touring model so those buyers don't have to wait too long. Time will tell. However if they do make more than 520, I wish you the best with your lawsuit.

Additionally, you might have to demonstrate an actual harm. You might have to show that the extra units made reduced the value below what you paid. Currently the reports I've read online is that used ones are being listed at over $200,000. If Lucid makes 750 Dreams, and they are still selling used above what you paid, you have not been harmed. Just my opinion based on what I know from the couple of the law classes I took in business school. Certainly not legal advice.

 

[mnewber1]

we know they’ve had fit and finish issues, we know people paid for deliveries and all of a sudden those cars got caught up in the halted deliveries. No one has shown us DE numbers in the 400’s (said yes, but not shown)

If they produced more than the 520 then 400+ DE numbers would’ve shown up a while ago so let’s end this false hype over nothing.

Here is the Twitter for the guy who has #458: https://twitter.com/TravisMMorgan

FWIW he was a GT reservation holder on the waitlist for DE and was moved up. Got a VIN in late January, so he likely received a DE that was not able to be delivered to an original dream edition holder.

He is in Las Vegas, so 1PM PT, 3PM CST, 4PM EST.

 

[idiot900]

That would be me. And yes, it would be a serious legal problem for Lucid if they increased production of the DE beyond the stated 520. It doesn’t have to be a “promise” to be misleading or a Deceptive Trade Practice. The DE was significantly more expensive than the lower models in part because it is a limited edition. Removing the limits would remove the added value, causing all DE owners to suffer a loss. Lucid is not that dumb.

I find this concept really interesting as it’s totally out of my area of expertise. Could you ballpark guesstimate the damages and expected recovery?

 

[Mountain Man]

I find this concept really interesting as it’s totally out of my area of expertise. Could you ballpark guesstimate the damages and expected recovery?

This is all theoretical, but sure: let’s say that a year from now Lucid announces an additional run of 1000 more Dream Edition Airs. Some (all?) of the 520 original DE owners would be pissed because their DE Airs are no longer quite so exclusive. So, someone calls a class action or mass tort law firm (not mine, as I would be opposed to damaging Lucid and I would also be a potential class member!), who would then round up additional original DE owners to either file individual “mass tort“ lawsuits, or file a single class action lawsuit on behalf of all 520 DE owners. (Remember, of course, that Lucid is also forcing DE owners to sign an arbitration agreement, so any of those who have not opted out of the arbitration would be unable to participate in an individual lawsuit or be a class member in a class action.) The claim would be based on some kind of consumer protection claim such as false advertising, misrepresentation, or deceptive trade practices, depending on the state. I’m not saying the claim would be valid or not, just saying what it would possibly be. Damages in a case like that are always established by expert opinion testimony. This would involve testimony from automotive experts, specializing in collectible automobiles. Evidence of the market sales of DE Airs would weigh into the equation. For example, there are several DE airs for sale on eBay currently for approximately $50,000 more than the original sales price. That perhaps tells us they are already worth more in the collectible market than they were originally sold for. Or, when collectible DE Airs begin to hit auction circuits such as Barrett-Jackson, what will their price be in relation to non-DEs, and how much of that increase is due to exclusivity? And then, adding another 1,000 cars to the market - how much does that reduce the value of the existing cars? Supply/demand dictates that it would significantly harm the value of existing Airs (hence the reason all limited run Ferraris are drastically pricier down the road, in theory).

The defense to all of this, of course, is that Tesla also sold its signature series Model S (Founder) for more than the subsequent MSs , but those have not held any higher value than normal MSs, primarily because the founders series were not better cars, faster, bigger batteries, etc. than the subsequent cars. In fact quite the opposite: MSs improved dramatically throughout the run, so the original ruby red founder series are crap compared to the Plaid.

At the end of the day, I disagree that any court would direct a verdict on this issue – a DV requires that the pleading does not state a claim for which relief could be granted - very unlikely. Summary judgment, a more likely threat, is a question of whether there is a legitimate fact dispute, which there certainly would be because the experts would disagree as to the diminished value (if at all) of the original 520 DEs.

 

[MidwestLucidDude]

we know they’ve had fit and finish issues, we know people paid for deliveries and all of a sudden those cars got caught up in the halted deliveries. No one has shown us DE numbers in the 400’s (said yes, but not shown)

If they produced more than the 520 then 400+ DE numbers would’ve shown up a while ago so let’s end this false hype over nothing.

I know this is a minority opinion, but the only fit and finish issues I've read about are on the Social Media.



Just thinking this through. They delivered 30 Dreams in October. Then we know they delivered 24 more November 13-14 based on what Peter said during their earnings call. Fit and finish issues are typical fixed by that point in production before you start ramping up. I'm more inclined to believe supply issues, or software issues. Lucid hired experienced factory execs and they've bragged about their state-of-the art greenfield plant. It would be bad to have any cars leaving the factory with fit and finish issues...but then there’s Tesla so you never know!

This is all theoretical, but sure: let’s say that a year from now Lucid announces an additional run of 1000 more Dream Edition Airs. Some (all?) of the 520 original DE owners would be pissed because their DE Airs are no longer quite so exclusive. So, someone calls a class action or mass tort law firm (not mine, as I would be opposed to damaging Lucid and I would also be a potential class member!), who would then round up additional original DE owners to either file individual “mass tort“ lawsuits, or file a single class action lawsuit on behalf of all 520 DE owners. (Remember, of course, that Lucid is also forcing DE owners to sign an arbitration agreement, so any of those who have not opted out of the arbitration would be unable to participate in an individual lawsuit or be a class member in a class action.) The claim would be based on some kind of consumer protection claim such as false advertising, misrepresentation, or deceptive trade practices, depending on the state. I’m not saying the claim would be valid or not, just saying what it would possibly be. Damages in a case like that are always established by expert opinion testimony. This would involve testimony from automotive experts, specializing in collectible automobiles. Evidence of the market sales of DE Airs would weigh into the equation. For example, there are several DE airs for sale on eBay currently for approximately $50,000 more than the original sales price. That perhaps tells us they are already worth more in the collectible market than they were originally sold for. Or, when collectible DE Airs begin to hit auction circuits such as Barrett-Jackson, what will their price be in relation to non-DEs, and how much of that increase is due to exclusivity? And then, adding another 1,000 cars to the market - how much does that reduce the value of the existing cars? Supply/demand dictates that it would significantly harm the value of existing Airs (hence the reason all limited run Ferraris are drastically pricier down the road, in theory).

The defense to all of this, of course, is that Tesla also sold its signature series Model S (Founder) for more than the subsequent MSs , but those have not held any higher value than normal MSs, primarily because the founders series were not better cars, faster, bigger batteries, etc. than the subsequent cars. In fact quite the opposite: MSs improved dramatically throughout the run, so the original ruby red founder series are crap compared to the Plaid.

At the end of the day, I disagree that any court would direct a verdict on this issue – a DV requires that the pleading does not state a claim for which relief could be granted - very unlikely. Summary judgment, a more likely threat, is a question of whether there is a legitimate fact dispute, which there certainly would be because the experts would disagree as to the diminished value (if at all) of the original 520 DEs.

Thank you for your insights and I do appreciate your view and engaging in a civilized discussion. I do think it depends how many more, if any, Dream Editions Lucid might hypothetically make. They already increased it from 500 to 520 when the EPA results came out. What if they increased it from 520 to 550? Or from 520 to 1,000. At what point does it become a problem? What started me thinking of this is the waiting list that Lucid still has available on their website if you reserve a Grand Touring today. If Lucid is not making any more, they're going to disappoint a lot of people. Surely they have more than enough on the waitlist to cover any anticipated cancelations. Then there is the number of Dreams still coming out of the factory and on their lot. Are they going back in to be fixed or are they shipping out to customers. I see everyone has a point of view on this. We'll know in a couple of weeks and am happy to take all the online heckling on the chin if it turns out they stuck with the 520 number! Whatever the news is, I really hope their stock starts moving in the right direction again. That I think we all can agree on!

 

[Mountain Man]

If I were a Lucid exec, I would release more DEs, under a different name. That solves the problem, fills the demand, keeps the DEs “exclusive.” Lamborghini has done this repeatedly over the years, ie keeping the Sian “limited” by changing it slightly and releasing a different limited edition, the new Countach.

 

[hmp10]

Don't forget that Lucid has a tri-motor sedan in development.

Having a next-generation Dream variant along with a tri-motor Air would eat into potential sales of each and would add complexity to a factory line that is trying to get more mass-appeal cars into production, such as the Gravity SUV and the less-expensive cars that Rawlinson has said are down the road.

Mercedes and BMW stuff two up-performance cars onto the top of their large sedan lineups: the AMG65 12-cylinder and AMG63 8-cylinder lineage for Mercedes, and the M760i 12-cylinder and B7 Alpina 8-Cylinder for BMW. Despite Naples' crawling with high-end cars, you almost never see a 12-cylinder Mercedes or BMW on the road (and even fewer Alpinas).

And this is Mercedes and BMW we're talking about -- manufacturers with high-volume sales and lengthy model lineups. I just don't see tiny newcomer Lucid trying -- or needing -- to keep two ultra-high-performance sedans in production.

 

[steveairgt]

FYI. In one of the Lucid Investors Facebook groups I’m in someone posted that they were in a studio and one of the advisers/reps told him that Lucid delivered 220 vehicles in 2021.