Lucid Group Inc Q3 2024 Earnings Call Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: John Murphy - BofA Securities - Analyst : Just's a first question is your working through sort of the greater proportion of mix being pure and taking some price action on the Air, what lessons are you learning as to sort of price elasticity of demand. And it's really kind of interesting that you might be taking a slightly more conservative view or favorably from the consumer side on the grand touring on the Gravity because it's about $15,000 or less than the Grand Touring on the Air. So it just seems like you're learning some lessons and coming a little bit further down in the price point to unlock some demand. So just kind of what lessons you're learning there. And what could that mean for the Gravity ramp as opposed to what happened with the Air?

Question: John Murphy - BofA Securities - Analyst : And then maybe I could ask a second question, and I apologize for skipping over the Gravity to some degree and trying to get to the midsize but when you think about the commonality between the Air, the Gravity and then whatever the name will be on the midsize, what are the reuse potential there and as you think about sort of in general in the organization. How much of your resources from a human capital perspective and actual capital -- dollar capital perspective, is now being focused on that midsize? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. NOVEMBER 07, 2024 / 10:30PM, LCID.OQ - Q3 2024 Lucid Group Inc Earnings Call

Question: Andres Sheppard-Slinger - Cantor Fitzgerald & Co - Analyst : I'm wondering if -- I know it might be a bit early, but curious to see if you have a sense or an idea what kind of unit mix are you anticipating for next year with the Gravity ramping up in terms of the Air and the Gravity? Just curious what is the better way to think about that for next year.

Question: Andres Sheppard-Slinger - Cantor Fitzgerald & Co - Analyst : Got it. That's super helpful. I appreciate that color. And maybe just as a quick follow-up. I want to touch on the customer agreements with the government of Saudi Arabia for the up to 100,000 vehicles. I believe in the past, you had alluded to the fact that the vast majority of the deliveries for this contract will actually be the Gravity in the midsized platform. So I guess, a, I wanted to confirm that and, b, wondering if in light of you now ramping up the Gravity next year, do you foresee a significant ramp-up in deliveries to Saudi Arabia. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. NOVEMBER 07, 2024 / 10:30PM, LCID.OQ - Q3 2024 Lucid Group Inc Earnings Call

Question: Andres Sheppard-Slinger - Cantor Fitzgerald & Co - Analyst : Wonderful. Congrats on the quarter. I'll pass it on.

Question: Stephen Gengaro - Stifel, Nicolaus & Company, Incorporated - Analyst : So I think two for me. One is sort of following up on the prior question. But when we think about the Gravity and the production ramping at the Gravity in 2025 over the next several quarters. How should we think about the gross margin impact? I mean I imagine at the beginning, it would be a headwind, but then you start to get volume. How do we think about just the progression of gross margin as the Gravity ramps?

Question: Stephen Gengaro - Stifel, Nicolaus & Company, Incorporated - Analyst : Okay. Great. And the other question -- just kind of a high level, when you think about your capital needs and timing of capital, like you did the recent capital raise and I was just curious about how you choose kind of when to do it versus need because it felt like you had a longer runway. And I know it creates confidence to have the sort of thinking about how you balance that out.

Question: Stephen Gengaro - Stifel, Nicolaus & Company, Incorporated - Analyst : Great. No, that's good color.

Question: Steven Fox - Fox Advisors - Analyst : I had two questions as well. I guess, first of all, just to follow through on all the conversation about cost and the similarities from a technical standpoint with the Gravity. What are the working capital implications for next year as you ramp Gravity if there are any? And then secondly, as you think about success for next year and into '26 towards a midsized vehicle. I'm just trying to understand what has to happen in order for that ramp to go ahead given where the financial position of the company is right now.

Question: Steven Fox - Fox Advisors - Analyst : Yes. Well, before we go into that, I'm just trying to understand the dollars of working capital that might go out the door next year versus this year as you ran. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. NOVEMBER 07, 2024 / 10:30PM, LCID.OQ - Q3 2024 Lucid Group Inc Earnings Call

Question: Steven Fox - Fox Advisors - Analyst : Okay. And then I'm just trying to understand like what are the thresholds that have to be crossed with two models out there, two different types of vehicles out there in order to have confidence in ramping a third type of vehicle? Or is it just you'll do it as long as the funding is there for the third vehicle.

Question: Steven Fox - Fox Advisors - Analyst : Great. That's helpful, Peter. I appreciate that.

Question: Tobias Beith - Redburn (Europe) Limited - Analyst : I have two, please, which I'll ask separately. Firstly. Gagan, the charge to write down inventory was, call it, flat sequentially and more unfinished inventory was purchased in the period. That chain of logic suggests that the new -- or the value of new stock purchase was impaired less, i.e., underlying vehicle profitability was better. I was wondering if, firstly, you can confirm if this is correct? And secondly, can you expand on the cost efficiency comments in your prepared remarks?

Question: Tobias Beith - Redburn (Europe) Limited - Analyst : Okay. And I guess, just a small follow-up to that. The theme of kind of reaping cost savings from logistics bill of materials cost damage, it's been said for quite a number of quarters now, in fact, and non your predecessor, Sherry was talking about it. And I just wondered whether you could perhaps place me on a timeline. How far are we away from all of the cost savings being realized for things like freight and cost savings and where you need to take, I guess, some more difficult actions to actually remove cost from the Air. And then I have one for Peter, if that's okay.

Question: Tobias Beith - Redburn (Europe) Limited - Analyst : I think I'm following Peter, I wondered if you could explain what you mean when you say that the Gravity uses a different platform to Air. If I'm correct, both vehicles have nearly identical wheel bases, and LEAP is a modular platform, which would allow for differentiation by our top hat design. So I just want to kind of understand a little bit what got mean by Gravity's the different platform.

Question: Tobias Beith - Redburn (Europe) Limited - Analyst : Okay. How do you think this has impacted the cost? So I guess when I hear things like that they're not actually just a different top happen it has me a little bit.