At first glance, luxury electric vehicle maker Lucid Group's (LCID -1.39%) first-quarter earnings report, delivered after the markets closed on May 6, was a mixed bag.
While its revenue beat Wall Street estimates, it lost more money than expected. It still has a decent amount of cash on hand, but its capital expenditures were huge. And over 30 months after production of Lucid's much-acclaimed Air sedan began, sales still aren't anywhere near the levels the company and its investors originally hoped to see.
Lucid's sales should get a boost when the big Gravity SUV arrives late in 2024. But lower cost models are still over two years away. Image source: Lucid.
What does all this mean for the investment case? Let's take a look.
Revenue was up as deliveries grew
Lucid's first-quarter revenue of $172.7 million was up almost 10% from the fourth quarter of 2023. That was better than the $156.9 million that Wall Street analysts expected.
The increase was driven by deliveries: Lucid delivered 1,967 Airs in the first quarter, 239 more than it produced. How'd that happen? Lucid built up a significant inventory of Airs last year, when it produced 8,428 Airs while delivering just 6,001 to customers. That gap between production and deliveries was almost certainly a drag on the stock, especially once Lucid cut prices to get things moving.
While those price cuts weren't popular with investors, they seem to be helping. The fact that Lucid is now selling down some of that inventory is a good thing for the longer-term investment case. And while Lucid's stated 2024 production target of about 9,000 isn't exactly huge, the company confirmed that it's on track to meet the goal -- and that it plans to deliver all those cars, and likely more from inventory, by year-end.
Lucid Air Pure is the company's lowest-priced vehicle. But with a starting price just under $70,000, it's still out of reach for many EV buyers. Image source: Lucid Group.
Lucid still has enough cash, at least for now
Lucid had about $4.62 billion in cash as of March 31 -- or about $5 billion in total liquidity including the undrawn balances on its existing credit lines. That's enough to fund the launch of Lucid's next model and its ongoing operations into the second quarter of 2025, the company said.
It's also up a bit from the $4.32 billion in cash it had at the end of 2023, thanks to a $1 billion private sale of convertible preferred stock to Lucid's biggest shareholder, the Saudi Public Investment Fund (PIF), during the quarter. PIF currently owns about 60% of the Arizona-based automaker.
That isn't as much cash as investors would like to see -- it's considerably less than Rivian has, for example -- but it's enough for now.
The Gravity SUV is still on track to land this year
Lucid confirmed that its next model, a big luxury SUV called the Gravity, is still on track for a production start before the end of this year. That's good news: While the Gravity, like the Air, is a large and expensive EV, the addressable market for a luxury SUV is quite a bit bigger than the market for a large luxury sedan.
Whether the Gravity will increase Lucid's overall sales or just cannibalize existing sales of the Air remains to be seen. But Lucid needs an SUV, and the Gravity has the potential to be a very good one.
More affordable Lucids are on the way, but not soon
Lucid is developing what it calls a "midsize platform," one size down from its current architecture, which will underpin smaller and less-expensive Lucid models when it arrives. The company hopes those midsize Lucids will drive significant growth -- enough to carry Lucid to profitability, which would presumably lead to a nice reward for investors.
Patience will be required, though. During the earnings call, Lucid confirmed that its midsize platform is currently on track for a start of production in late 2026 -- meaning that the bottom-line impact of any new models won't be seen until well into 2027,
(If this plan sounds familiar, it might be because Rivian is following a similar strategy. But Rivian is well ahead of Lucid: It's gearing up to launch its midsize R2 platform in mid-2026, and we've already seen the first two R2-based models.)
Not all of the news from Lucid's Q1 report was good, however.
Lucid's loss was wider than expected
Lucid lost 30 cents per share in the first quarter despite cost-reduction efforts that seem to be bearing fruit. That was wider than Wall Street's expected 25 cent per-share loss. While PIF seems to be willing to fund Lucid's cash burn for now, it shows that Lucid is still a long way from breaking even.
And while Lucid is on track to meet its modest 2024 deliveries guidance, the reality is that it produced fewer than 1,800 vehicles in the quarter. And with the Gravity production ramp-up underway, Lucid's capital expenditures in the first quarter exceeded its revenue, which obviously isn't sustainable.
Did Lucid's Q1 report change anything for investors?
I don't think it did. Lucid's sales are on track to meet its 2024 targets and the company isn't in immediate danger of bankruptcy thanks to PIF, but we knew that.
But Lucid investors -- including, presumably, PIF -- are still waiting for the big growth phase to drive the stock sharply higher. While Gravity will probably provide an incremental boost to Lucid's deliveries total, it probably won't be enough. Right now, signs suggest those investors may be waiting three years or more from here to see the big returns -- if that growth phase ever arrives at all.
