Lucid today makes what seems to be one of the most compelling electric luxury sedans available in the US, yet in spite of rave reviews and mostly satisfied owners, the company’s future is far from assured. Tesla’s Elon Musk has made many remarks in the past questioning Lucid, its business model and its prospects, but today he tweeted that “they are not long for this world.”
This new comment definitely has something to do with the news that Lucid is desperate not to lose any more reservations, after it recently announced that the number of reservations for the Air sedan had dropped compared to last quarter and that it was not just because they actually delivered customer cars - people cancelled their orders.
The company is now reportedly desperate to not lose any more reservations and considers (as per a recent internal email) that “every cancellation a failure.” They are even reportedly offering discounts, like 10 percent off for the price of an Air Grand Touring if the reservation holder goes through with the purchase.
Back in June, Elon Musk said that he thought both Lucid and Rivian were headed for bankruptcy “unless something changes significantly,” referring to how quickly the companies were burning through funds. Lucid, which is mostly funded by the Saudi Arabia-based PIF (Public Investment Fund), which is one of the largest sovereign wealth funds in the world, reportedly has enough money to stay afloat for another year and the prospect of it turning a profit until then doesn’t seem likely.
Even so, the PIF isn’t wavering on its financial support of Lucid, and it’s not like the fledgling automaker isn’t making money - it just isn’t making enough money yet. It did bring in almost $200-million in revenue in the third quarter of 2022, although it actually twice as much to build all of them, so profit doesn’t look like it will show itself over the horizon any time soon, unless something changes.
Lucid needs to find ways to make the Air for less, this while it tries to ramp up production with no prior experience in manufacturing automobiles. It also plans to introduce its second model, the Gravity SUV in 2023-2024, and that will put additional pressure on the company, which will have to work even harder with two models (although the SUV may hold the promise of higher profit margins than the sedan, so that could potentially help with the money problems).