Lucid’s Gravity SUV arrives with excessive expectations, and massive dangers

Lucid Motors will get rave evaluations from critics. But it surely’s sorely missing clients.

That is an issue the corporate cannot afford.

The Arizona-based EV maker has top-shelf tech, deep-pocketed backers, and extremely praised automobiles. Nonetheless, it has struggled to satisfy manufacturing targets, and has been unable to steal the highlight away from established luxurious manufacturers with century-old pedigrees.

Lucid is ramping up manufacturing of its high-end, three-row, Gravity SUV, although it has bought just a few hundred items thus far in 2025. The Gravity’s manufacturing ramp has confronted a slew of challenges, primarily provide chain shortages.

But the corporate already has plans for one more car aimed extra on the center of the market, the place it might compete with the top-selling Tesla Mannequin Y SUV. And it is investing in self-driving automobiles for shoppers whereas engaged on a robotaxi fleet with Uber and self-driving tech maker Nuro.

Within the course of, Lucid is burning by some huge cash. The corporate’s third-quarter outcomes had been worse than Wall Avenue anticipated, with a web lack of near $1 billion.

“Their gross revenue has been getting form of worse,” stated Tom Narayan, an analyst at RBC Capital Markets. “Lots of people are doing the maths. How lengthy can the corporate maintain dropping money?”

Including to its challenges is a more durable setting for all EV producers. Demand has fallen wanting expectations, and plenty of automakers are pulling again. EVs have misplaced key help from the federal authorities, together with a $7,500 tax credit score, funding for charging, and restrictions on state degree applications that incentivize automakers to supply zero-emission autos.

A ‘improbable automotive’

Lucid’s first car, a sedan name the Air, is the most well-liked car in its phase, in line with Cox Automotive. Via the third quarter, it was the third best-selling full-size luxurious sedan, and the highest promoting electrical one, in line with the corporate. The Air is incessantly a “critic’s choose.” No different EV can contact the 512-mile vary of the Air Grand Touring, one in every of its prime trim ranges.

Final 12 months, Lucid delivered 10,241 autos, the vast majority of which had been Air sedans, a 71% improve from 2023. U.S. EV chief Tesla delivered 1.8 million.

Sadly, sedans have constantly in comparison with SUVs, crossovers, and pickups–which now all however dominate the roads. Of the highest 10 best-selling fashions within the U.S., seven are from these three segments, in line with Edmunds.

“It was a improbable automotive,” stated Sam Abuelsamid, vice chairman of market analysis for Telemetry. “It nonetheless is a improbable automotive. But it surely got here to market at form of the fallacious time.”

In 2023, Tesla’s Mannequin Y was the best-selling car on the earth, in line with JATO Dynamics. It bought greater than 265,000 items within the U.S. by the third quarter of 2024, in line with Cox Automotive, about 100,000 greater than the Mannequin 3 sedan. Amongst EVs, the Mannequin 3 is unusually well-liked for a sedan. Behind the 2 Tesla Fashions, the three autos that spherical out the highest 5 are crossovers — Chevrolet Equinox, Ford Mustang Mach-E and Hyundai Ioniq5.

The Mannequin S, the Air’s closest Tesla competitor when it comes to measurement, efficiency, and worth, bought simply over 4,500 items in the identical interval.

The very best quantity EVs, such because the Mannequin Y, are additionally inexpensive than the Air, which begins simply above $70,000 and runs as much as a couple of quarter of 1,000,000 {dollars}. The Mannequin 3 is almost half that. The typical EV transaction worth in November was simply above $59,000, in line with Cox Automotive.

“There’s simply not sufficient of a marketplace for these premium electrical sedans proper now,” Abuelsamid stated.

Lucid bought barely greater than 300 Gravity SUVs within the US by the third quarter of 2025, in line with Cox Automotive. Just like the Air, the Gravity has a excessive price ticket. Nonetheless, the corporate has stated the Gravity stands to draw six instances as many purchasers because the Air.

“We’ll see if that is the case,” stated Narayan. “The most recent numbers I’ve seen present it form of equalizing the gross sales of sedans.”

Lucid interim CEO Mark Winterhoff instructed CNBC in an interview that the corporate has seen “an excellent uptick in demand in terms of the Gravity as in comparison with the Air.” He added that the majority clients are configuring the automotive in ways in which run the value up above $100,000.

Manufacturing bother

Demand is likely to be robust, however Lucid additionally has to get the car into clients’ fingers. Gravity’s launch earlier in 2025 was beset by shortages of key supplies like magnets, aluminum, and chips, Winterhoff stated on the corporate’s third-quarter earnings name.

“We have not been in a position to produce as many as we needed up till this level,” Winterhoff instructed CNBC. “We’re very assured proper now that we solved these issues.”

Deliveries have risen for seven straight quarters, culminating in a 47% p.c soar over the third quarter of 2024. Lucid has added a second shift to the ultimate meeting part of its manufacturing facility to satisfy demand.

The corporate stated demand has been resilient regardless of worries the EV market is stalling after the federal EV incentive ended on Sept. 30.

“In October, our supply numbers went up,” Winterhoff stated. “Whereas in lots of different pure EV gamers and even EVs for incumbent gamers that even have [internal combustion] autos, the deliveries dropped down drastically.”

Nonetheless, analysts say it is a more durable time to make EVs than it was when Tesla was ramping up the Mannequin 3 and Mannequin Y.

“They had been the one recreation on the town,” Narayan stated. “So there wasn’t competitors there. In addition they benefited from battery costs falling considerably. And so they acquired numerous authorities help. Right now we’re in a really completely different world.” 

If gross revenue does maintain getting worse, the corporate will finally should return to buyers, Narayan stated. Lucid is at present about 55% owned by the Saudi Public Funding fund, in line with FactSet.

Within the third quarter, Lucid and the PIF agreed to extend a delayed draw time period mortgage credit score facility from $750 million to roughly $2 billion. A DDTL is a mortgage the corporate can draw on over time, relatively than unexpectedly. That brings its whole liquidity to $5.5 billion. The corporate has stated it has sufficient to get by the primary half of 2027.

“Thus far, the Saudis have put many billions of {dollars} into Lucid, they usually’ve been very affected person by Lucid’s struggles as they attempt to ramp up manufacturing and gross sales,” stated Abuelsamid. “It is unclear how lengthy they may proceed to be affected person.”

The corporate additionally obtained a $300 million funding from Uber in September to develop a platform for robotaxis with a 3rd accomplice, autonomous driving tech developer Nuro. On prime of that, Uber plans to purchase 20,000 Gravity autos for the self-driving fleet.

Individually, Lucid has a partnership with Nvidia to develop what it calls the “the primary true eyes-off, hands-off, and mind-off (L4) shopper owned autonomous car.” L4 means Stage 4, almost the best degree of autonomy within the present system devised by the Society for Automotive Engineers.

“You must make investments first and then you definately reap the advantages in a while,” Winterhoff stated. “And due to this fact now we have to do numerous issues in parallel.”

Smaller SUV on the way in which

Regardless of Gravity’s manufacturing challenges, the corporate is already at work on its subsequent car — a mid-size crossover priced nearer to the trade common of about $50,000.

This might increase volumes, however deepen losses.

“If gross revenue is adverse at a car transacting round $100,000 or extra on common, what Lucid’s Air and Gravity are at present going for, what’s going to it seem like when the corporate is promoting a car that’s nearer to half of that?” Narayan stated.

“One reply could possibly be, effectively, it is a a lot larger scale, so you might have higher working leverage,” Narayan stated. The argument, he stated, is that Lucid’s know-how allows it to squeeze much more vary out of a battery than rivals.

“Our autos are far more environment friendly by 30% to 40% than the competitors, which implies smaller battery use smaller battery to realize the identical vary,” stated Emad Dlala, senior vice chairman of engineering and digital at Lucid. “Which means a decrease [bill of materials] price. Which means higher margins.”

Dlala stated the Lucid Air Pure has a battery measurement of a Tesla Mannequin Y, however has a variety of 420 miles, a couple of hundred miles greater than the Tesla Mannequin Y.

Lucid says the cash it is spending goes to creating an array of applied sciences and manufacturing processes which might be onerous to repeat.

“Lucid has about over 10 years of powertrain historical past,” Dala stated. “This did not come in a single day. There’s a number of IP patented applied sciences throughout powertrain, car and software program,” which result in “beneficial properties in effectivity throughout the board,” he stated.

That even extends to the way in which the automobiles are made.

“We use manufacturing processes right here that nobody else within the trade makes use of in powertrain,” stated Adrian Worth, senior vice chairman of operations at Lucid.

“Lucid may be very extremely vertically built-in,” he stated, which means it brings a lot of the car-making course of in home. “We’ve much more of our personal subassemblies. That is additionally how we get the efficiency that different folks do not. Quite a lot of that engineering is outsourced by different main automakers. Not solely can we do the engineering, however we additionally do the manufacturing, and we will management a number of the Lucid secret sauce by doing it in-house.”

One space the place Lucid seems to lag rivals is model consciousness.

“Lots of people do not know what Lucid is,” Narayan stated. “That is the largest, I believe, hurdle that they’ve.”

The corporate has given extra thought to advertising, and elevating its profile within the luxurious market, the place it is going up in opposition to names like Mercedes-Benz, Porsche, and BMW.

“The customer of a luxurious model, sometimes, they like issues like heritage,” Narayan stated. “The model issues. So, you recognize, how do you create that from scratch?”

“We’re very well-known and have tons of accolades within the motor press, Winterhoff stated. “So everyone who’s focused on automobiles is aware of about it. However that is not the vast majority of car consumers.”

So, it has begun a brand new advertising and promoting technique for the Gravity, with Hollywood actor Timothee Chalamet as its first “international model ambassador.”

“We’re shifting from specializing in our autos, in regards to the capabilities of our autos, to what does it imply to personal a Lucid and what does it say about you?” Winterhoff stated.

Winterhoff stated he is assured the corporate can efficiently ramp the Gravity, whereas constructing and finally delivering its mid-size car.

“That’s the level the place I believe it is a sustainable enterprise going ahead,” he stated. “We’ve a transparent plan additionally to profitability.”

Watch the video to get an unique inside take a look at Lucid’s Gravity manufacturing and to seek out out what’s subsequent for the automaker.