Lucid Motors has achieved what every automotive startup dreams of – reaching production. One of the most challenging things to do is start a car company from scratch and see-through deliveries of customer vehicles. Few industries require such high amounts of capital and manpower. The sad reality is, of the dozens of EV startups to emerge in the past few years only a small handful will actually make it. Even well-backed firms such as Byton and Faraday Future are stumbling at the final stages despite having had hundreds of millions of dollars invested in them.
Back in 2018 things weren’t looking good for Lucid Motors either. They were struggling to raise funds to build their Arizona plant and continue development and testing of the Air sedan. However, Saudi Arabia’s sovereign wealth fund saved the day with a $1 billion investment. From there, things became easier. Lucid now had the necessary capital to build their factory and finish developing the Air.
Nevertheless, by early 2021 more funds were needed to see through production. Lucid therefore went public via a SPAC merger with Churchill Capital Corp IV (CCIV) and raised some $4.4 billion. With money no object, Lucid then announced plans to more than triple the size of their Arizona plant (which had opened in December 2020). Air Production commenced in late September 2021 meanwhile first customer deliveries took place in October.
However, production targets for this year remain remarkably low. Lucid says it intends to build only 520 cars for the rest of 2021. That’s less than half the number of vehicles fellow startup Rivian aims to make this year, despite both firms having started production in September. That said, Lucid does intend to rapidly ramp things up in 2022 with a production target of 20,000 units, meanwhile 2023’s aim is 49,000. 2023 in particular will be a key year for Lucid, both due to the launch of the Gravity SUV and planned expansions to other markets in Europe, the Middle East and Asia.
Whether or not Lucid can sustain their current run and reach those goals is questionable. The Air sedan is statistically brilliant thanks to a range of up to 520 miles per charge and breathtaking performance figures, however it’s also incredibly expensive. Currently only the $169,000 Dream Edition and $139,000 Grand Touring are in production. Next year the less powerful $95,000 Touring and $77,400 Pure variants will arrive. Lucid claims it has 17,000 Air reservations, but of course not all of those represent guaranteed sales.
Many potential Air buyers could also be attracted to the new electric offerings from traditional and trusted luxury manufacturers such as Mercedes-Benz and BMW. Mercedes intends to launch its EQS sedan in the US soon, with the EQS offering fantastic comfort and (provided you equip the Hyperscreen setup) a much more unique and futuristic interior than that of the somewhat dull Air. Equally, BMW plans on releasing the i7 next year. With the 7-Series being one of the best luxury sedans on sale, its electric equivalent could undoubtedly steal many potential Lucid Air buyers.
Lucid intends to “eventually” make 365,000 cars a year thanks to planned additional factories in China and the Middle East, however the only way they can ever reach that goal is surely by offering more affordable cars. The Gravity SUV appears to be a $100,000 full-sized Rivian R1S rival and is unlikely to sell in big numbers. Hence Lucid will have to offer cheaper vehicles if they are to sustain their momentum and continue to grow at the levels they aspire to. They will, in essence, have to launch their own Tesla Model 3. And doing so could be remarkably difficult. Developing a great yet affordable vehicle is much harder than developing a great yet expensive one.
When it first went into production in 2017, the Tesla Model 3 cost more to make than it sold for. Equally, Tesla had to axe plans for a cheaper $35,000 version on numerous occasions. The Model 3’s development was Elon Musk’s “version of hell”. Making a more affordable car required new materials, a new production process and a new mindset. Yet this is something Lucid must do if they are to be successful long-term and come anywhere near that targeted 365,000 figure.
Mainstream, not exclusive, luxury vehicles could push Lucid into the realm of the automotive elite. After all, the higher-volume, affordable vehicles that are the Tesla Model 3 and Y made Tesla a $1 trillion company – not the first-gen Roadster, Model S or Model X. High-end, low-volume vehicles could be an important stepping stone for Lucid, but they must push forward with more affordable options as well if they are to be truly successful – no matter what the cost.