Lucid Motors Stock Sinks after Q4 2022 Earnings: Key Takeaways

Lucid Motors (NYSE: LCID) stock is trading sharply lower in US premarket price action after it reported its earnings for the fourth quarter of 2022. Here are the key takeaways from the company’s earnings report.

Lucid Motors reported revenues of $257.7 million in the quarter. The metric however fell short of the $303 million that analysts were expecting. The company posted a per-share loss of 28 cents in the quarter.

LCID produced 3,493 cars in the fourth quarter and 7,180 in the full year. The full-year production was higher than what the company had forecast in its most recent guidance.

Lucid Motors gave a 2022 delivery guidance of between 6,000-7,000 cars. It had originally planned to produce 20,000 cars in the year. However, it cut the guidance twice.

Lucid Motors provided 2023 production guidance

Lucid Motors expects to produce between 10,000-14,000 cars in 2023. The guidance is even lower than its original 2022 guidance. Also, it would imply a production run rate similar to the fourth quarter of 2022.

Lucid Motors said that while it does not generally provides granularity on the production breakdown in every quarter, in 2023, it expects Q1 production “to be down significantly on a sequential basis.” The company took a downtime in January due to a planned inventory count.

It also added that “due to supply chain challenges, we were unable to deliver on the popular stealth look option resulting in a reduction of buildable configurations heading into Q1, and so we made a strategic decision to moderate some production as we transition to buildable configuration.”

Lucid Motors’ reservation dipped yet again

Lucid Motors had a total reservation of over 28,000. During the Q3 2022 earnings call, the company said it has 34,000 reservations while the figure was 37,000 in the previous quarter. LCID’s reservations have now dropped for two consecutive quarters.

The company would also now stop providing the reservation number and said that the current reservations are a revenue opportunity of $2.7 billion. Here it is worth noting that the reservations do not include the upto 100,000 vehicles that Saudi Arabia could order from the company.

Demand concerns weigh heavy on LCID stock

During the earnings call, Lucid Motors’ CEO Peter Rawlinson emphasized multiple times that the company is no longer constrained by production unlike in 2022 when supply chain bottlenecks took a toll on its production.

The company also stressed that it has the capacity to produce more cars in the year. Lucid Motors guidance meanwhile baffled many analysts as despite having reservations twice its guidance’s upper end, the company is not scaling up production.

Lucid Motors said that firstly the reservations are not binding and secondly it is being prudent with the guidance considering the macroeconomic slowdown. The company’s CFO Sherry House added, that some of “the reservation holders are “waiting for us to offer their very specific configurations in volume.”

Lucid Motors said that it has begun deliveries to Europe, Saudi Arabia, and Canada and expects to scale up in 2023.

LCID is working on growth and cutting costs

Lucid Motors listed growth and cost-cutting as the focus areas for 2023. The company said that it needs to increase its brand awareness. Rawlinson said, “we need to amply focus now away from production to amplifying customer awareness that we’ve got this amazing car with unprecedented range technology efficiency, incredible driving machine, a great driver’s car.”

He added, “We need to amplify that message and broaden the awareness, which in turn will drive sales. And that is the focus right now.”

On costs, House said, “There are 2 areas of cost that we are zeroing in on. The first is driving down the cost per vehicle. The second is cost optimization of operating expenses.”

Lucid Motors on Saudi Arabia buyout

Lucid Motors raised $1.5 billion cash by selling stocks in Q4 2022. Of this, an affiliate of Saudi Arabia’s PIF (public investment trust) invested $915 million taking its total investment in the company to $3.6 billion. PIF is the largest stockholder of Lucid Motors.

During the earnings call, House said, “The public investment fund of Saudi Arabia has been a committed investor and a strategic partner for Lucid for many years, and we’re so grateful for their partnership and support.”

In response to a question on whether Saudi Arabia was considering taking Lucid Motors private, House said, that as “a policy, Lucid does not comment on market rumors, and so we don’t have anything to say specific to this question.”

She repeated her prepared remarks about the Saudi investment and added, “PIF has not only been a committed investor but also a strong strategic partner, and we’re very grateful for the partnership.”

LCID stock soared on Saudi buyout rumors

Notably, LCID stock soared on rumors that Saudi Arabia was considering taking the company private. Notably, the rumors came at a time was facing a class action suit over ist 2018 tweet where he talked about taking Tesla private.

Musk eventually won the case. Previously, the billionaire had settled the case with the SEC and paid a $20 million fine. Tesla too separately paid a $20 million fine and Musk resigned as the company’s chairman as part of the deal.

Incidentally, Musk was also banking on Saudi Arabia to finance his acquisition. The deal never went through and eventually the kingdom invested in Lucid Motors.

Lucid Gravity is on track for 2024 production

Meanwhile, during the earnings call, Lucid Motors said that it would begin the production of its second model Gravity SUV in 2024. Rawlinson said, “Gravity is a further evolution of Lucid’s core DNA of luxury, spaciousness and efficiency through its in-house technology, setting itself apart from the competition with a previously unattainable combination of supercar performance and seating for up to 7 adults.”

Meanwhile, just like the Air sedan, the Gravity SUV might also not qualify for the $7,500 EV tax credit. Recently, Lucid offered a $7,500 credit to buyers of select Air models in an apparent bid to spur sales.

With the EV competition rising gradually, companies would face a tough ride ahead in achieving the desired margins as the price war might only intensify.