Lucid sees disappointing 2023 EV production as orders slump

Lucid on Wednesday forecast 2023 production well short of analysts' expectations and reported a major drop in orders during the fourth quarter amid weakening demand, sending the electric carmaker's shares down 11% after hours.

The Newark, California-based company, which was already battling supply chain and logistics issues and struggling to deliver cars, was hit by aggressive price cuts sparked by Tesla that lured consumers away from its luxury cars amid rising interest rates and soaring inflation.

“There's a lot more competition than a year ago ... a lot more EVs becoming available at lower price points than the Lucid Air vehicle,” said Garrett Nelson, an analyst at CFRA Research. “There's probably a lot of frustration from customers having to wait for so long to get the vehicles they ordered.”

Lucid said it expects to produce 10,000 to 14,000 luxury electric vehicles this year. Analysts on average expected the company to make 21,815 cars, according to Visible Alpha.

The company, backed by Saudi Arabia's sovereign wealth fund, Public Investment Fund, delivered 4,369 cars last year, far below the 7,180 units it produced.

“We've gotten past the major bottlenecks limiting manufacturing, but this had some impact on the demand we generated early on, and this has been exacerbated by the challenging macroeconomic environment,” Lucid CEO Peter Rawlinson said on a call with analysts, after the company reported fourth-quarter revenue that missed expectations.

Price cuts by Tesla and Ford have made it harder for rivals such as Rivian and Lucid to grab share in an industry competing for shrinking consumer wallets.

Lucid said it had more than 28,000 orders as of February 21, down 6,000 reservations from the second quarter, after it delivered about 1,900 vehicles and saw cancellations. That was despite Lucid's offering a discount of $7,500 (R136,697) on February 9 for purchases of certain variants of the Air sedan before March 31.

Finance chief Sherry House said Lucid would not publish quarterly reservation numbers going ahead.

This year, the company will focus on improving production and deliveries, and will take a “vigorous and comprehensive” look at driving down operating and manufacturing costs.

House said Lucid would incur capital expenditures of between $1.5bn (R27.3bn) and $1.75bn (R31.9bn) in 2023. That's a 40% jump from 2022, but well below analysts' expectations of $2.24bn (R40.8bn). 

Lucid reported a cash balance of $1.74bn (R31.7bn) in the fourth quarter, after raising $1.52bn (R27.7bn) in December. At the end of the third quarter, it had $1.26bn (R23bn) in cash reserves.

Revenue rose to $257.7m (R4.7bn) in the quarter ended December 31 from $26.4m (R481.2m) a year earlier. Analysts on average had expected sales of $302.6m (R5.5bn) , according to IBES data from Refinitiv.

The company's net loss narrowed to $472.6m (R8.6bn), or 28c per share, from a loss of $1.05bn (R19.1bn) , or 64c per share, a year earlier.

Shares of Lucid fell as much 10.6% in extended trading. The stock fell 82% last year after Lucid halved its production forecast due to supply chain issues.