Hello all,
I watched the full Lucid LCID investor day presentation, 3.5 hours, and included my summary below.
But what I am wondering is what the bull case is for Lucid? After watching the presentation I am left with serious doubts about the viability of the company. Leadership totally punted on the question of how they get the funds to profitability which they predict late this decade (I understood 2029 or 2030, hopefully). They bluntly said they wouldn't talk about how to fund operations past mid 2027 but that they know what they need and have a plan for it. That was the one question I watched the whole thing for, and was glad was asked.
Is the only hope that the Saudi's fund it or take it private?
I have about 5,000 shares or so at about 10.10 average per share. Bought as a flyer hoping that investor day would have brought more confidence in the stock for me. It did the opposite.
Below are my personal notes that I personally typed for the Investor Day presentation that's available on YouTube if you want a human summary: recorded Thursday 12 March.
3h 34m
* Aiming towards gross profit profitability by end of this decade
* Growing production in Arizona and Saudi Arabia
* Top selling luxury EV sedan in the US
* Gravity is doing well, second luxury SUV to Tesla X which was discontinued
* Won many awards
* Looking to continue Air and Gravity, start midsize, expand on services, move into autonomy
* Midsize will help Gravity costs reduce by about a third by 2028
* Currently have reduced costs to build 25%, increased production 98%, reduced warranty costs by 85%
* CarPlay and AA in Air and Gravity
* Plans to partner with autonomy vs doing it in house to reduce capital expenditures
* Using direct sales in US, Canada, and KSA. In Europe using sales partners to increase speed and decrease costs.
* Looking to grow other revenue by 1B by 2030 by increasing energy, connectivity, and driver assist (54%), service (26%), and other.
* I don’t know that I see the first category being that big of a revenue driver.
* They do say their current take rates of ADAS is 40% Air and 65% Gravity
* Midsize will be the next step with volume and profitability. 3 variants. Novel designs, great efficiency, excellent space. Went over this in detail.
* Talked about AI. I feel like AI is a distraction.
* Did an AI demo which they say is planned for all vehicles. Similar to Rivian’s demo. Adjusted temp, seat heat, and found nearby activities on the map.
* Talk about technology, being one of the most efficient vehicles in class, and stellar motor technology across many variables.
* I do think this is true and helps the company stick around at least for this technology, even if it’s for other companies at worst case. But I don’t think that is worth what it’s trading at currently.
* New Atlas drive unit is smaller, cheaper, lighter, and class leading efficiency
* Efficiency of cost, weight, and such were focused on the midsized through the whole platform. Walked through 5 main examples (battery, frame, wiring, drive unit, software).
* All of these efficiencies results in a lower cost BOM than even a leading Chinese competitor
* Would like to license hardware and software for autonomous driving. Is selling some vehicles to be outfitted by other companies for autonomy which are currently being tested.
* They say they currently deliver vehicles fully L4 capable to fleet owners, has hardware already attached to the roof.
* Say Lucid efficiency and fast charging can bring a lot of value to fleet owners.
* Planning to spend on 500 million on L4 autonomy due to collaboration, lower costs. Many others spend billions.
* Planning 70-200 a month of autonomy subscriptions in the future based on achieving L3 and L4 goals.
* I don’t buy that they can get a 40-65% take rate at those prices.
* Uber President / COO Andrew Macdonald came on.
* Believes shared, electric, autonomous is the future of vehicles. Thinks his own kids may never even get their licenses.
* They believe all OEMs require L4 autonomy to survive.
* They want to work with all companies who supply autonomy. Uber is working closely with Lucid to develop the future of autonomy, with Lucid building and creating a compelling vehicle and platform that is suited for ride share.
* Still needs cost to come down and volume up.
* Planning a dedicated robo taxi, 2 seat.
* CFO to cover financials
* Been spending a lot and hoping company is about to turn to getting the return on the investments
* Mid term, looking to get gross margin profitable and continue scaling, late this decade aiming for decent profits and growth
* Plan to spend 1.2-1.4B this year. 35 new locations across the globe.
* Aiming for 100,000 units a year production by end of 2028 with strong growth in midsize. Currently around 25,000.
* Aiming to reduce costs by about half in next few years.
* Most of the large CapEx should be done by end of 2026 and be much lower as a percent of revenue going forward.
* Aiming for positive free cash flow by end of decade, large chunk from midsize, smaller from robotaxi and other cost improvements. Aiming for positive gross margin sooner, in the midterm.
* Sees multiple risks, one being capital availability. They say they are cognizant of that by reducing spend.
* Q and A
* Planning to build midsize first in Saudi Arabia, then later in US.
* Early versions are for North America. Also has a contract to the SA government.
* Late decade positive margin, volumes required.
* 100,000 units, with positive gross margin sooner.
* Cost reductions. The midsized is already sourced so that contribution is very confident. Plan to go back to Air and Gravity to reduces costs where can, but focusing efforts on midsized first.
* Attach rate modeling with higher costs. Assume company will stay where it’s at right now.
* 199 cost is for L4 eyes and hands off and later.
* Robotaxi: is RD in the financial plan and rollout. It’s not in the financial plan. The one with Uber is.
* Why 3 top hats of the mid size: to broaden appeal in look, feel, appeal, function. Also has a common underlying platform, 95% shared platform and parts, super cost effective to do.
* Also a lot of competition and need more options for consumers. One size fits all will not work as consumers want variety.
* Battery costs, and charging / density improvements. Midsize is getting amongst the best battery that is available. Getting a very competitive battery cost. Tariffs force some decisions on sourcing.
* Liquidity, had a 12 month runway. How to get to the late decade cash flow positive. Has not updated 4.6B to get into the second half of 2027, but won’t be giving the late decade and plans past 2027. Has a plan and figure, knows the needs, but won’t speak on it.
* Autonomy and software back to Air and Gravity. 90% of software is carried over, and plans to bring the upgrades back to Air and Gravity.
* Software challenges from Gravity and reducing going forward. Increasing speed of fixes and customers are noticing.
* Existing cars for autonomy upgradability, what is software and hardware. Current cars can get to L2++, hands free highway and city. L4 is disruptive with compute and sensors, and in 2028 plans L4 tech, not backward compatible.
* Licensing / partnering. Yes, open to it. And making the cars capable because robots taxi’s will need vehicles. Thinks autonomy will be bigger than cars in the future.
* My Qs: how will they stay funded for gross profitability late this decade? How will they stay around?
* This was punted in the Q and A and the reason I watched. After watching I just don’t see the stock viability. I do think the tech is good. Just don’t have any clearer idea how they stay around as a company.
* Maybe the investment thesis is that they go private or Saudi Arabia funds more of it. Their punt of how they get the money is a huge failure.
* Think Lucid has about a 50% chance of going to zero without Saudi Arabia.
* Do think the 3 top hats is a solid strategy. Just need to be able to survive.