Image source: The Motley Fool.

Date

Wednesday, Nov. 5, 2025 at 5:30 p.m. ET

Call participants

  • Interim Chief Executive Officer — Marc Winterhoff
  • Chief Financial Officer — Taoufiq Boussaid

Need a quote from a Motley Fool analyst? Email [email protected]

Risks

  • Chief Financial Officer Taoufiq Boussaid stated that "the supply chain remains challenging, not just for us, but across the industry," and noted that the company "can't completely rule out further volatility."
  • Gross margin was negatively impacted by inventory impairment, as Boussaid detailed: "the real reason behind this flat, or lack of improvement is mainly related to the increase of inventory and the impairment associated with that."
  • Boussaid noted ongoing industry effects from the "tapering of incentives and the expiration of certain US tax credits, which pulled some demand forward in Q3," and flagged this as a temporary demand dynamic.
  • The company will need to "refinance" the September 2026 convertible note maturity, separate from its delayed draw term loan facility, according to Boussaid.

Takeaways

  • Revenue -- $337 million in revenue for Q3 2024, a 68% year-over-year increase, driven by higher deliveries and Gravity mix.
  • Deliveries -- 4,078 vehicles delivered, a 47% year-over-year increase, marking the seventh consecutive quarterly record.
  • Production -- 3,891 units produced and over a thousand additional vehicles readied for final assembly in Saudi Arabia.
  • Gross margin -- Improved approximately six percentage points sequentially due to favorable mix and cost actions, though still below long-term targets.
  • Adjusted EBITDA -- Adjusted EBITDA was negative $718 million, reflecting higher sales and marketing costs plus continued R&D investment in the midsize, Atlas, and autonomy initiatives.
  • Liquidity -- Ended the period with $4.2 billion in liquidity, including $3 billion in cash and investments and $1.2 billion in credit facilities; subsequently increased the delayed draw term loan with PIF from $750 million to approximately $2 billion, which remains undrawn.
  • Average selling price (ASP) -- Average selling price increased, driven by Gravity mix and a greater proportion of high-value configurations.
  • Organizational changes -- New appointments: Imar Dalla as Senior Vice President of Engineering and Digital, Erwin Raffaele as Senior Vice President of Revenue, and Money Levergood as Senior Vice President of Quality.
  • Brand awareness -- US brand awareness among EV intenders increased eight points month over month, attributed to new campaigns starring Timothee Chalamet and prominent campaign impressions exceeding one billion.
  • Strategic partnerships -- Closed a $300 million strategic investment from Uber for Robotaxi deployment; announced Nvidia partnership to develop and implement Level 4 autonomy for B2C and B2B markets.
  • Production outlook -- Total year-end 2025 production is expected to be around 18,000 units, per updated guidance.
  • Capital expenditure (CapEx) guidance -- 2025 CapEx planned at $1 billion to $1.2 billion, with an emphasis on scaling, automation, midsize development, and cost reduction.
  • Atlas drive unit -- On track for class-leading efficiency, fewer parts, lower BOM costs and weight, and a variant utilizing rare earth-free technology.

Summary

Lucid Group (LCID +2.61%) reported sequential and year-over-year revenue gains for Q3 2025, buoyed by record deliveries and a favorable product mix. The majority of Q4 2025 production is expected to consist of Gravity vehicles, signaling a planned inflection in product composition and potential margin impacts. Organizational restructuring was announced to accelerate decision-making, streamline operations, and fortify accountability across key functions. The company expanded its liquidity runway into 2027 by increasing a delayed draw term loan facility with its majority shareholder, Public Investment Fund. Strategic alliances with Uber and NVIDIA have been established to advance recurring revenue streams in Robotaxi and Level 4 autonomy, supporting both capital efficiency and technological differentiation.

  • Boussaid stated, "Demand once again exceeded our production," supporting guidance for continued delivery growth.
  • Management reiterated that internal targets for breakeven remain undisclosed but plans for an Investor Day early next year to outline short-term plans, strategy, and the roadmap toward cash generation.
  • European orders increased year over year. October test drives and showroom traffic in North America remained solid, according to call commentary.
  • The chief financial officer clarified that inventory impairment was the principal cause of sequentially flat adjusted gross margin (non-GAAP) when excluding tariff impact.
  • Negotiated bill of materials costs for the 2026 midsize platform are currently trending below internal expectations as of 2025, with suppliers providing price relief for other models in connection with midsize awards.
  • The company is delivering vehicles to Saudi Arabia per a government contract, with higher deliveries to Saudi Arabia linked to Gravity and future midsize vehicles.
  • Management confirmed ongoing localization planning for US midsize vehicle production at the Arizona plant, with most capital investments already in place and prudent sequencing for any future expansions.
  • Boussaid confirmed that the September 2026 convertible maturity will require separate refinancing efforts, with plans in progress and not directly related to the undrawn delayed draw term loan.

Industry glossary

  • Gravity: Lucid Group's electric SUV platform, referenced as a major driver of volume and mix in current and future production plans.
  • Atlas drive unit: Lucid Group's next-generation proprietary propulsion system, designed for improved cost structure, reduced parts, increased efficiency, and rare earth element reduction.
  • Level 4 autonomy (L4): Vehicle automation allowing unmanned driving under defined conditions, with no driver intervention required during operation.
  • NACS Boost Charging Drive: Lucid Group's proprietary charging system compatible with the North American Charging Standard, referenced as uniquely impacted by supply chain disruptions.
  • BOM (Bill of Materials) cost: The total expense incurred for all parts and components used to manufacture a vehicle.
  • Delayed draw term loan (DDTL): A type of loan facility allowing the borrower to access funds incrementally over a specified period, providing flexible liquidity.

Full Conference Call Transcript

Marc Winterhoff, our Interim CEO, and Taoufiq Boussaid, our CFO. Before handing the call over to Marc, let me remind you that some of the statements on this call include forward-looking statements under federal securities law. These include, without limitation, statements regarding the future financial performance of the company, production and delivery volumes, vehicles and products, studios and service networks, financial and operating outlook and guidance, macroeconomic policy and industry trends, tariffs and trade policy, company initiatives, and other future events. These statements are based on various assumptions, whether or not identified in this communication, and on the predictions and expectations of our management as of today.

Actual events or results are difficult or impossible to predict and may differ due to a number of risks and uncertainties. We refer you to the cautionary language and the risk factors in our annual report on Form 10-K for the year ended 12/31/2024, subsequent quarterly reports on Form 10-Q, current reports on Form 8-K, and other SEC filings, and the forward-looking statements on Page two of our quarterly earnings presentation available on the Investor Relations section of our website at ir.lucidmotors.com. We undertake no obligation to revise or update any forward-looking statement for any reason except as required by law. In addition, management will make reference to non-GAAP financial measures during this call.

A discussion of why we use non-GAAP financial measures and information regarding reconciliation of our GAAP versus non-GAAP results is available in our earnings press release issued earlier this afternoon as well as in the earnings presentation. With that, I'd like to turn the call over to Lucid's Interim CEO, Marc Winterhoff. Marc, please go ahead. Thank you, Nick, and thank you everyone for joining us.

Marc Winterhoff: First, I want to acknowledge all our employees, customers, and partners. We appreciate your commitment and support. Secondly, I'm pleased to point out that in Q3, despite all of the headwinds, we delivered our seventh consecutive quarter of record delivery numbers. With that in mind, I would like to reiterate the near-term priorities we are focused on, which we laid out earlier this year: disciplined execution and scaling production, building our brand and further driving consumer demand, and advancing our technology leadership. And this has not changed. We remain focused on designing and delivering the best cars, period. This is the core of our business, and in a moment, I will review our progress against these near-term priorities.

But before I talk about the near-term priorities, I'd like to share how our strategy has evolved from the beginning of the year and how we have been executing that strategy with intention. Beyond expanding our core business, we are pushing hard on what will be our next chapter, a push into new markets and high-value adjacencies. So before reviewing the quarter with you, I want to explain to you a bit about the next stage of our strategic evolution. We have already been working hard, building block by building block toward the future of robotaxis, level four autonomy, and new opportunities for revenue. Our vehicles are not only awesome driving machines, but built on industry-leading EV technology.

They are also a platform for the delivery of new customer service and next-generation customer experience. We're starting with autonomy. As you all know, we announced in September that we closed a $300 million strategic investment from Uber as part of our partnership to deploy 20,000 robotaxis or more. We already reached a first milestone with successfully delivering the first batch of robotaxi engineering vehicles to Neuro. Neuro is now finalizing their integration and will begin further testing activities. And we announced last week that the San Francisco Bay Area has been chosen as the first location for deployment planned in 2026.

Uber is a global leader in ride-sharing, and their scaled brand and global reach help position Lucid Group, Inc. at the forefront of the B2B level IV market. Their strategic investment in Lucid Group, Inc. validates our highly advanced technology platform and aligns with our strategy. But we don't stop at robotaxis. Because we believe demand for high levels of autonomous driving will grow as consumers have the opportunity to experience this technology. And that they will not only choose vehicles that have these capabilities over those that don't, but also are willing to pay for this capability.

That's why we are very excited about our collaboration with NVIDIA to deliver full Level four eyes, hands, and mind of point-to-point autonomous driving capabilities to our consumers. We are playing to win. We plan to leverage our agility and focus to be the first to bring full Level four capabilities to the B2C market, and we couldn't ask for a better partner than NVIDIA. Lucid Group, Inc.'s vehicle platforms and safety architectures combined with the world's AI computing leader will result in a vehicle with formidable performance and intelligence. We will jointly develop L4 capabilities drawing on years and millions of miles of data, continuously updating software as technology improves, to remain at the forefront of the industry.

Be clear, while we are pushing for L4 with this partnership, we plan to provide significant upgrades to our advanced driving assist functionality beyond what we're already doing in-house as early as the end of next year. For decades, cars have been a symbol of freedom to go anywhere at any time. With autonomy, this freedom expands by being able to be productive during your commute or being driven home safely after dinner with friends. Of course, with Lucid Group, Inc.'s exceptional driving feel, you always have the option to experience the thrill of driving your Lucid yourself whenever you choose.

So in a nutshell, we continue to develop the best driving vehicles, providing the most advanced EV technology, significantly advancing our autonomous driving capabilities, and using the experience, expanding into new businesses and optimizing our operations to become leaner and more efficient. Now, maybe there's a question about developing autonomous technology fully in-house versus working with partners. Well, Lucid Group, Inc.'s strategy here is clear and very intentional. We're doing both. Developing higher levels of autonomy, especially true for L4, requires enormous investments.

While some of our peers spend vast sums for in-house development to provide the functionality to their customers, our focus is to provide a high level of autonomy to our customers as soon as possible, with optimized CapEx spend. Our partnerships are enabling us to do exactly that. Having said that, we are continuing our in-house development but with a smart and resource-efficient approach. In early Q3, we already rolled out hands-free highway driving for the Lucid Air via OTA. And we will bring the same to the Gravity soon. Fully developed in-house, the verdict is still out on whether owning autonomous driving technology in-house will be a sustainable differentiator or will become commoditized in the long run.

Working with our partners allows us to monitor how the technology develops and make focused insourcing decisions once the future path becomes clear, and avoid costly investments. I hope this gives you some insight into where Taoufiq and I, the leadership team, plan to take Lucid Group, Inc. We are fully committed to technology leadership and innovation, but at the same time, are committed to efficient and smart capital allocation. Now, let's turn back to progress on near-term priorities. First, let's talk about our operational execution. As mentioned in the beginning, we achieved a seventh consecutive record quarter for deliveries.

I've said before that our delayed ramp-up of the Gravity is mainly due to a small number of suppliers not able to ramp as expected. On top of that, we had to cope with a number of extraordinary external headwinds that threatened to shut our production down several times throughout the year. That's why we are not where we want to be. Let me elaborate a bit on this to give you a flavor of what our teams are working through each day. Over the last six months, we have contended with three consecutive industry-wide supply chain crises: magnets, aluminum, chips. These are crises that set even far bigger competitors on their heels.

However, thanks to our vertical integration, and our team's agility and resourcefulness, we have been able to problem-solve our way through each one to limit impact. First, the magnet shortage in Q2. The magnets we were able to get were incompatible with our unique NACS Boost Charging Drive units for Gravity. Hence, we had to temporarily shift our production plan from the Grand Touring trim for North America to the Touring trim for export to Saudi Arabia until magnet availability improved. Unfortunately, that impacted our Q3 production and numbers simply because of the additional transport time needed.

After we successfully crossed that bridge, a fire at our aluminum supplier's plant shut other OEMs down, but we were once again able to minimize the impact. And right after this, chip supply threatened the whole industry. While once again our team is on the job, and we are still working through it. I hope this gives you some insight into what our teams are able to navigate on a daily basis, and I'm very proud of what they have been able to accomplish and continue to accomplish. Having said that, I want to assure you that we hold ourselves to a high standard and constantly evaluate how we can improve as an organization.

So today, we are making some key organizational changes to streamline decision-making, enhance accountability, and accelerate growth as the company scales globally. To support these objectives, we are making the following organizational changes. Imar Dalla has been appointed Senior Vice President of Engineering and Digital. In addition to leading the powertrain organization, he will now oversee all product development functions, including vehicle engineering, digital systems, and software. In his expanded role, he will continue to drive Lucid Group, Inc.'s technology leadership, lead vehicle development, improve cost efficiency and manufacturability, and advance Lucid Group, Inc.'s software-defined vehicle architectures. Imar has made remarkable contributions to Lucid Group, Inc.'s technology leadership over the last ten years.

We expect this leadership will have a similar impact on vehicle development. Yes, he will now have end-to-end responsibility. Erwin Raffaele has been elevated to Senior Vice President of Revenue with expanded oversight of Lucid Group, Inc.'s global operations. Since Erwin has been at Lucid Group, Inc., he has driven consecutive record results every quarter. He will now lead Global Sales and Services, operations, driving accountability for revenue and customer experience, as Lucid Group, Inc. expands further into new consumer markets worldwide. We are also appointing a new seasoned quality leader to our executive team.

Money Levergood is appointed Senior Vice President of Quality and will lead efforts to ensure Lucid Group, Inc. delivers vehicles that meet the highest standard of quality and craftsmanship. Working in close concert with engineering and manufacturing. She previously held quality and manufacturing roles at Scout Motors, Stellantis, and Magna. Levergood succeeds Jerry Ford, who is retiring after more than thirty-five years in the automotive industry. We thank Gerri for her service to Lucid Group, Inc. These organizational changes are designed to capitalize on opportunities to strengthen our business, and we are confident that they will help drive the results we need moving forward.

Before I hand over to Taoufiq, I'd like to share a few points on our efforts to boost awareness and strengthen our brand. In Q3, we accelerated our focus on building the Lucid Group, Inc. brand and increasing awareness among luxury EV intenders. And we are already seeing results. In the United States, brand awareness jumped eight points month over month among consumers who plan to purchase an EV. This improvement was driven by the launch of our new brand campaign titled "Driven," starring our first global brand ambassador, Timothee Chalamet, and directed by Academy Award-nominated director James Mangold.

"Driven" is now the most successful brand campaign in Lucid Group, Inc.'s history with more than 7.2 million views on YouTube, and over a billion total impressions in the US. Lucid Group, Inc.'s cultural relevance continues to grow. In October, we launched the "We Write for New York" campaign featuring NBA All-Stars Jaylen Brunson and Josh Hart with billboards across New York City, and a global extension in Abu Dhabi during the Knicks preseason game. And we're just getting started. Stay tuned for more to come. We also received another award our whole Lucid Group, Inc. team is especially proud of.

The Lucid Air Sapphire was selected as this year's German performance car of the year by 30 leading German motor journalists. Let this sink in for a moment. The German performance car of the year is designed and built in America. To my dear fellow countrymen, sorry to rub that in, but you probably can imagine how proud the Lucid Group, Inc. team feels about that. Last but certainly not least, on midsize. SOP of the first variant of our all-important midsize remains scheduled for 2026, and I can share that we are very pleased with the progress of sourcing and cost structure the team is able to achieve.

And on our Atlas Drive unit family, it is on track with again class-leading efficiency, much fewer parts, lower BOM costs, lower weight, and it will include also a rare earth-free variant. With that said, we are entering a new phase and looking forward to a very exciting year ahead. One where Lucid Group, Inc.'s award-winning vehicles, our leading technology, thoughtful partnerships, brands, and focus on execution come together to define the next generation of mobility. Thank you for your continued support and confidence in Lucid Group, Inc. With that, I'll turn over the call to Taoufiq to discuss our financial results and outlook.

Taoufiq Boussaid: Thanks, Marc. Good afternoon, everyone. Q3 for Lucid Group, Inc. was really about progress, preparation, and stabilization in what continues to be a complex and volatile environment. We pushed through those headwinds and kept the plan moving. Revenue was up 30% sequentially and 68% year over year, which is a strong result. Just as important, we strengthened our balance sheet. Today, I will cover the strategic actions we took and why they matter, how the quarter played out, and how we're thinking about the months ahead. On strategy, Marc already touched on our partnership with Uber, Neuro, and NVIDIA. These collaborations are important because they reshape our financial model in a very meaningful way.

They give us a capital-efficient path to growth and open the door to new recurring revenue streams in advanced driver assistance, software, and data services. At the same time, they help us optimize costs through smarter manufacturing and operational efficiencies. These partnerships are a key part of our midterm plan to strengthen our path to profitability and deliver long-term shareholder value. Expect them to improve margins, support scalable growth, and drive returns aligned with disciplined capital deployment. Now we all know the industry and geopolitical headwinds are real. But what matters is execution, and our team is delivering. We hit record deliveries, improved our product mix, and set new highs for average selling prices.

Production rates picked up towards the end of the quarter, which is especially important in a context where the rest of the industry is reporting major headwinds. On top of that, we expanded internationally and built strong consumer awareness ahead of next year's midsize launch. All of this puts us on a solid trajectory for Q4, and here is the big milestone. For the first time, Lucid Gravity is expected to make up the majority of our production in Q4. And the momentum is already here. October deliveries are climbing, especially for Gravity, and that gives us confidence that this quarter is going to be a turning point for Lucid Group, Inc.

We also announced today that we strengthened our liquidity subsequent to quarter-end through an increase of our delayed draw term loan facility, with our majority shareholder, the Public Investment Fund, from $750 million to approximately $2 billion, all of which remains undrawn. This increase lengthens our runway into 2027 and provides Lucid Group, Inc. with stable access to liquidity. This underscores PIF's ongoing support of Lucid Group, Inc. and their strong commitment to our business and confidence in our long-term strategy. We are committed to maintaining a healthy liquidity position and will continue to evaluate all financing and liquidity options, including in the public markets, when the appropriate conditions materialize. Now moving to our business performance in the third quarter.

Demand once again exceeded our production. We delivered 4,078 vehicles, our seventh straight quarterly record and a 47% increase year over year. ASP moved higher with gravity mix and more high-value configurations. On the production side, we built 3,891 produced over a thousand additional vehicles for final assembly in Saudi Arabia. During the first March, we produced 9,966 vehicles just short of 10,000 units excluding additional vehicles in transit to Saudi Arabia for final assembly. Our second shift that came online in October is expected to further accelerate our production growth. Our exit rate improved late in the quarter, and we plan to carry that momentum into Q4.

Now as Marc mentioned earlier, the supply chain remains challenging, not just for us, but across the industry. We're working through issues one by one, but we can't completely rule out further volatility. On the financials, revenue came in at $337 million, up 68% year on year and roughly 30% sequentially, driven by deliveries growth and gravity mix. Gross margin improved about six points sequentially as mix improved and productivity and cost actions took hold. Margins are still below our long-term goals as we work through tariffs and input costs. Adjusted EBITDA was negative $718 million reflecting our increased sales and marketing effort. An ongoing investment in our midsized platform, the Atlas powered platform, and our autonomy initiatives.

Free cash flow improved to negative $955 million on tighter working capital and execution discipline. On liquidity, we ended the quarter with $4.2 billion, $3 billion of cash and investment, and $1.2 billion of credit facilities. That includes the $300 million strategic investment from Uber. After the quarter closed, and as disclosed earlier today, we agreed to increase our delayed draw term loan with the PIF from $750 million to about $2 billion. It's undrawn and extends our runway into 2027. This again underscores PIF's ongoing support and strong commitment to our business and confidence in our long-term strategy.

We are committed to maintaining a healthy liquidity position and will continue to evaluate all financing and liquidity options, including in the public markets when the appropriate conditions materialize. Now on the outlook, We are entering Q4 with stronger visibility and a solid foundation for growth. Over the past quarters, we made real progress refining processes, tightening quality controls, and ensuring supplier readiness. We exited Q3 with a higher production run rate, and in October, we successfully launched a second shift that we trained during the third quarter. We also have units already in transit to Saudi Arabia for final assembly, along with the vehicles produced so far this month.

Assuming no unexpected disruption from supply chain factors, we expect total production at year-end to be around 18,000 units. This is in the range of our guidance and it's a strong outcome given the complexity of the macro environment. Looking ahead, while the industry expects a continuation of the effects on the demand related to the tapering of incentives and the expiration of certain US tax credits, which pulled some demand forward in Q3, We do see this as a temporary dynamic, and we expect significant delivery growth in Q4. We anticipate demand to normalize in early 2026, supported by expanded marketing campaigns and the broader availability of Lucid Gravity across multiple streams.

In October, while US EV sales in general have dropped, our deliveries and market share have increased, showing strong demand for Lucid Group, Inc. vehicles. While other OEMs are slowing down EV investments, we believe we can turn the current challenges into an opportunity, continue to grow market share, capturing shares from other luxury makers. We are already seeing encouraging signals. European orders are up year over year, and North American traffic and test drives in October were solid compared to historical levels. Gravity orders becoming a larger portion of total order intake will help to drive higher ASPs and revenue.

These trends are confirming the strength of our brand and position us well to capture growth as the market stabilizes. We believe the steps we've taken this year, including operational improvements, disciplined incentive management, and strategic product expansions, are setting the stage for sustainable growth and margin improvement. As the Gravity Touring launches and our marketing reach expand, we expect to unlock new demand opportunities globally reinforcing our long-term trajectory. For 2025 CapEx, we are planning $1 billion to $1.2 billion. We will continue to focus on scaling production, midsize development, automation, and cost reduction initiatives. We intend to lower capital intensity per unit as we move through the year. Directionally, the goal is clear.

Move towards breakeven as mix, scale, and cost actions compound. To close, Q3 showed that we can grow, derisk, and strengthen liquidity at the same time. Orders and delivery reached record levels, mix improved, quality and exit rate moved the right way despite higher complexity, and we extended the runway with an undrawn facility that takes us into the first half of 2027. Our focus remains the same, compound liquidity, derisked ramp, and improve unit economics every quarter. I want to thank our teams for their execution, and our customers, investors, and partners for their continued support. With that, I will hand the call back over to Nick.

Nick Twerk: Thanks, Taoufiq. We'll now start the Q&A portion of the call. Before we take questions from those on the phone, I want to pose some of the questions that our retail investors send in through the Say technology platform. The first one comes from Patrick M. Please share Lucid Group, Inc.'s plan to increase the market cap and shareholder value within the next twelve months.

Taoufiq Boussaid: We appreciate the question, Patrick. What would drive cap and shareholder value is profitability and cash generation. Short term, it's about executing against our plan to reduce cash usage, and improve profitability. This relies on the gravity and next year launching and ramping the midsize with the right focus on capital allocation and spend. Midterm, we want to further accelerate our cash generation. Marc has laid out some of the foundations of how we can achieve that. Technology and software will be key as they will allow us to maximize return in a repeatable model and with a low capital intensity. There are many exciting developments in the pipeline.

I strongly believe that if we continue to make progress against this strategy we laid out, the results of these efforts will be reflected in the share price and the shareholders' return.

Nick Twerk: Our next question comes from Minh. Any updates on the Robotaxi partnership with Uber?

Marc Winterhoff: Yeah. Thanks, Minh. This is Marc. Yeah. There's a lot of updates. There's a lot of progress being made between the teams at Lucid Group, Inc. and at Neuro. And we successfully delivered the first batch of the vehicles of the engineering vehicles to Neuro during the quarter for testing. We also announced that San Francisco is the first city where we are working towards launching in 2026, subject to regulatory approvals. And we closed the $300 million equity investment from Uber during the quarter, which speaks to their level of confidence in Lucid Group, Inc. as a partner.

Nick Twerk: Okay, our third question comes from Obadula D. When will the company become profitable?

Taoufiq Boussaid: Well, we have an internal roadmap and stage gates against which we are executing. This plan is the north star for the company and our teams in everything we do. We haven't yet publicly communicated the timing for breakeven, but as a management team, we are continuously working towards this goal through a disciplined focus on executing our short-term plans and midterm strategy. We have a pathway mapped out and we continue to make significant progress on both short and midterm plans. As Marc has explained, we are confident that in the short term, the combination of gravity and midsize will lower to achieve the scale needed to become profitable.

Midterm, Marc has explained some of the strategies and plans we are executing against to further consolidate the cash generation capabilities of the company. One last information, we are planning to organize an Investor Day early next year, which will give us the opportunity to explain our short-term plans and strategy as well as our roadmap towards cash generation.

Nick Twerk: Okay. Our next question comes from Nicholas A. What is the timeline of an affordable entry-level vehicle for Lucid Group, Inc.?

Marc Winterhoff: Thanks, Nicholas. The first variant of our midsized platform remains scheduled for 2026. Nothing has changed, and we're working towards that goal.

Operator: All right. Now we'd like to take questions from the phone lines. Operator?

Operator: Thank you. To withdraw your question, press 11 again. And our first question will come from the line of Ben Callow with Baird. Your line is open.

Ben Callow: Hi. Good evening, and thanks for taking my questions. Maybe let's can we start with just where you are with choosing suppliers for the midsized vehicle? And then if you could talk about any kind of overlap that can be leveraged from the air gravity suppliers, and then I have a follow-up as well.

Marc Winterhoff: Yeah. Yeah, Ben. This is Marc. I can take this. So, we are well underway with all of our sourcing for the midsize, so fully on track with where we wanted to be at this point in time. And I also want to point out that we are very pleased with the BOM cost that we're currently seeing that it looks like we can achieve. As a matter of fact, in many instances, we are coming in below our own Schutz cost calculations, which is very, very good and speaks to our suppliers wanting to work with us.

And your second question is also something that we see and it's very positive that many of the suppliers we are already working with for the air and the gravity are now also giving us relief on our pricing for the air and the gravity because of being awarded the programs for midsized. So all in all, that is a very, very encouraging development right now, and we're very pleased with the results.

Ben Callow: Great. Thank you for that. Could you just talk about maybe about how you guys are prioritizing capital between what the work you're doing in autonomy and then also, you know, pushing forward with your technology manufacturing just how you prioritize and or if it's if you don't look at it that way, then I'd love to hear that too.

Marc Winterhoff: Yeah. Absolutely. I mean, that's that goes very much in line with, you know, our partnerships that we have announced. I mean, they are CapEx efficient. We don't have to spend a lot of CapEx. That's exactly why we're doing it. We want to be able to provide really a leading-edge capability and features to our customers without having a very big CapEx outlay right now. That's why we did the Uberneuro partnership for our B2B market, but also now the NVIDIA partnership when it comes to the autonomy for consumer vehicles.

So, yeah, I mean, that's exactly what we are planning to do, and while we're doing that, we are monitoring also where it makes sense for us to, in the future, invest capital. But at this point right now, given the, you know, it costs a lot of money and very big numbers of investments in order to do this completely in-house, and that's why we chose that path.

Ben Callow: Great. Thank you guys very much. One moment for our next question.

Operator: And that will come from the line of Itay Michaeli with TD Cowen. Your line is open.

Itay Michaeli: Great. Thank you. Good afternoon, everybody. Maybe just to start, a couple of questions on the L4 announcement with NVIDIA. Can you maybe roughly share how you're thinking about the timeline for achieving level four on consumer-owned vehicles? And then for the midsize, do you expect that the L4 hardware will be standard on the vehicle? And if so, does that have any impact on the projected price of the vehicle? Thank you.

Marc Winterhoff: Yeah. So on the L4 side, I don't think that we have right now, you know, the number, actually we have internally, obviously, a plan, but I would like to communicate that once we are a little bit further down the road in the project and we have the first dots on the board. What I can tell you is that the first result that we want to roll out of that partnership is basically an L2 plus version for GRAVITY and also for the launch of midsize by the end of next year. So that's the first step. And from there, we will then roll out, via OTAs additional updates.

We will also already have all the hardware changes being made, but we will then roll out additional updates in order to get to L4 eventually. But I, you know, reserve the right now not to say it's the end of next year or next year, but rather come with a date when we are very confident that we can hit it. But at the same time, both NVIDIA and ourselves have very ambitious targets. That's why, you know, we did this together. With our, let's say, accelerated engineering approach, and their, let's say, firepower when it comes to, you know, running the larger models and calculations, we are confident that we can do this sooner rather than later.

Itay Michaeli: Terrific. That's very helpful. And then just, as a follow-up maybe just on the outlook. With the uptick in production in Q4, how should we think about just the deliveries in relation to that production level? As well as maybe the impact on kind of COGS per unit as you ramp production? And of course ramp the gravity as well?

Marc Winterhoff: Yeah. I can take it, and maybe afterwards you can also chime in, Taoufiq. But I mean, when it comes to deliveries, we're not guiding deliveries, but obviously we are expecting a significant ramp-up of the deliveries in Q4 and the majority being the GRAVITY. And when it comes to COGS, I mean, obviously, you know, the more volume we have in our installed factories with what we have there, the lower the COGS will become, but Taoufiq maybe you can...

Taoufiq Boussaid: No. I think you hinted at the key point. So it's really, I mean, when you think about the COGS, I mean, directionally we have a plan and the plan is to continue progressing and reduce COGS per unit compared to the performance from last year. So that was the plan. Directionally, we gave a direction when it comes to the gross margin, which is a good proxy to assess where the COGS will land. We didn't assume some of the headwinds that we had to deal with, like the tariffs, which are obviously impacting the COGS this year.

But directionally, the combination of the incremental volume resulting from the ramp of the gravity and some of the volume projections that we are currently assessing for next year, plus the benefits that we're getting from the bill of material and our suppliers that Marc has touched on, will help us crystallize some of these improvements that we're aiming at in terms of COGS per unit in the short term.

Itay Michaeli: Terrific. That's all very helpful. Thank you.

Operator: And one moment for our next question. And that will come from the line of Andres Sheppard with Canaccord. Your line is open.

Andres Sheppard: Hey, everyone. Good afternoon. Congrats on the quarter, and thanks for taking our questions. Marc, I was hoping to maybe get a sense of how the contract with the government of Saudi Arabia, you know, the one up for 50,000 plus another option for 50,000. If you can maybe give us an update on kinda where that stands. I think in the past, we've said most deliveries to that agreement will be the gravity and then the upcoming midsize. So I know you're not guiding anything for 26, but should we expect some deliveries to that region next year? Or will that likely come after the completion of the IM2 facility? Thank you.

Marc Winterhoff: Yeah. Thanks for the question, Andres. Well, absolutely. I mean, as of now already, we are delivering vehicles to Saudi Arabia as part of that arrangement. And it was always planned to be on a certain level, lower level when we only have the air, then we're adding to the deliveries when the gravity becomes available. I would say the big increase versus this agreement, the 50,000 that we have already will, though, come with the midsize. But we will have higher deliveries to the government now in 2026, with a ramp-up of the gravity, absolutely.

Andres Sheppard: Got it. Okay. That's helpful. And then maybe one for Taoufiq. You know, so you've extended your capital runway, it looks like, into 2027 now. I'm curious if you can maybe refresh us on near-term capital needs. Does that extension now in the draw facility, does that account for the maturity in September of 26? How should we think about that? Thanks.

Taoufiq Boussaid: No. That's two separate things. So the maturity, I guess, you're referring here to the convert. So the convert will need to be refinanced, and we have a plan for that. So, it's not directly related to the DDTL.

Andres Sheppard: Got it. Okay. Helpful. Thank you so much. I'll pass it on.

Operator: One moment for our next question. That will come from the line of James Picariello with BNP Paribas. Your line is open.

James Picariello: Hey, guys. This is Jake on for James. So first, I just wanna follow-up on the NVIDIA partnership. Obviously, you guys set a pretty ambitious goal, being the first company to roll out consumer level four capability. Virtually, every major automaker has some form of advanced ADAS program. And after billions of dollars invested, no one's really been able to move past level two plus. So can you just provide some color on why you think you'll be able to succeed where everyone else has failed?

Marc Winterhoff: Yeah. James, maybe I can take that? Well, I guess, obviously, a lot of things have changed in the, I would say, the recent year or so when it comes to approach to autonomy. I mean, and that's actually a good point that you're saying, because if we would have there was a question earlier about capital investments around this topic. If we would have done what others have done earlier, you know, like five years ago, we would have probably invested billions and nothing to show for. But the technology with the end-to-end models and the compute power in the meantime has drastically changed.

And the way, you know, both end-to-end models can be trained, this is now completely different than how it was, you know, two years ago. And so that makes us confident with everything that we are seeing right now, and obviously in our conversations and our testing, with NVIDIA, we see a path now to get there. And why we think we can be among the first? I mean, obviously, we cannot guarantee this. We can only say that we are together with NVIDIA doing everything to be the first.

It has also a little bit to do with, you know, our vehicle cycle, where are we with the development versus others that are further out until they even can do something like that. So, yeah. But given the drastic change in AI, technology and approach to autonomy, that's what makes us confident that it's achievable now.

James Picariello: Thank you. And then can you just provide some color on the new vehicle order trends you've been seeing since the expiration of US EV tax credits in October? Obviously, you know, the air and the gravity weren't eligible for the 30D credit. But it looks like roughly 65% of your US sales in the third quarter were from leases, where people were able to take advantage of the 45W credit. Thank you.

Marc Winterhoff: Yeah. Well, I mean, what I can definitely say is that actually our delivery numbers in October, meaning the first month of the fourth quarter, actually went up. And so that is a very encouraging trend. Compared to many of our, let's say, competitors that have EVs and ICE, there are several ones that reported I think, a drop-off of about 50%. Our numbers went up and so did our market share. And we credit basically our vehicles, in particular now, you know, the gravity becoming more and more available with us ramping up the production with that. So we believe we are in a very good spot when it comes to sustaining the demand and then therefore, the deliveries.

And we also believe that this is a passing phase, meaning we think that by the beginning of next year, the demand will normalize compared to what we are seeing right now or what others are seeing right now.

James Picariello: Thank you.

Operator: Thank you. As a reminder, if you have a question, please Our next question will come from the line of Tobias Beith with Rothschild. Your line is open.

Tobias Beith: Hi. Good evening. Thanks for your time. I've got three questions, if that's okay. First one is for Taoufiq. The gross margin rate when I adjust it for income from emission credit trading and depreciation, improved by eight points quarter over quarter and was possibly flat on a pre-tariff impact basis. My question is why wasn't leverage on the volume and the impact of product mix visible?

Taoufiq Boussaid: So the thing is that if you look at the production of Q3, the impact from mix was not as big as what we wanted it to be, because we're still in a ramp-up phase for the gravity. Numbers are improving versus Q2, but they are still at a meaningful level where they can significantly impact the volume. But the real reason behind this flat, or lack of improvement is mainly related to the increase of inventory and the impairment associated with that. So, we have increased inventories in preparation for the ramp-up in Q4. We are in a loss-making situation. And we needed to impair these inventories and this is hitting the gross margin.

Tobias Beith: I see. Understand. Thank you. Marc, what is Lucid Group, Inc.'s plan regarding the localization of production of the midsized platform, if at all? I appreciate that global automotive trade is in flux at the moment, but even an expansion of Ampond's capabilities would probably have a lead time of at least a year.

Marc Winterhoff: Well, I mean, we have already made preparations for that to build the midsize in M1. So I actually thought that we talked about this some time ago, but maybe we did not. I mean, the M1 in Arizona is planned to produce the midsize as well. It's not only the power plant in KSA, M1 is also already being prepared. We will have still to make some investments, but it's actually not that much. Much of the investments that are needed in order to produce the vehicle are already there. So that's the plan. I mean, we're more talking about, okay, when would we have to expand that?

But for that, we want to be very prudent, and we want to see how everything goes before we pull the next phase. But, yeah, it is definitely planned to be also built here in M1.

Tobias Beith: I see. Okay. And last question. The PowerPoint shows for the first time, I believe, a detailed view of the Atlas propulsion system. It visually very impressive. Seems to show that there's a new inverter, redesigned thermal management system, and I know that the ATLAS propulsion system was mentioned in your prepared remarks, Marc. But I wondered if I could ask for even more of an update on the Atlas, please, given its importance.

Marc Winterhoff: Yeah. Well, I mean, what I can say is definitely that it's totally on track. So that's why we are now starting to leak or not leak, actually, a little bit of information. But, I mean, it's coming out actually really great. I mean, it's from a cost perspective, it's a material change, we will also share soon probably at the investors day that we are planning, the details how far below of our current generation the cost is. We have much fewer parts, highly integrated as you mentioned, the inverter in everything. So weight is lower, efficiency is even higher from what we have right now. So we are very, very, very pleased with that.

And we also have different versions, where we have also versions of the Atlas that doesn't need any rare earth. So, I mean, we're really very, yeah, very convinced that this is a big step forward for us.

Tobias Beith: Can I ask why not do all of the Atlas without rare earth given it has caused problems for Lucid Group, Inc. and the broader industry for the last six months or so?

Marc Winterhoff: Yeah. That will be, let's say, the long-term plan, but certain applications, certain power requirements for certain trims require at this time still permanent magnets. But that is the goal that we obviously, you know, try to figure that out. And again, maybe in the investor day that we are planning, I mean, Imar will definitely be there and he can probably tell you in short explanation for over about two hours, what exactly we are doing there. But, yeah, I mean, happy to provide further insights on that.

Tobias Beith: Okay. Great. I'd like that, and I'm sure other people would too. Great to chat. Thank you.

Marc Winterhoff: Mhmm. Thank you.

Operator: Thank you. As I'm showing no further questions in the queue at this time, this concludes today's program. Thank you all for participating. You may now disconnect.