After closing its merger with special-purpose acquisition company (SPAC) Churchill Capital IV last week, Lucid Group (NASDAQ: LCID) debuted on Monday as a publicly traded company with a new ticker. As part of closing the transaction, Lucid has now secured the $4.4 billion in net proceeds, which consists of $2.1 billion from the SPAC and another $2.5 billion from PIPE (private investment in public equity) investors, with $168 million going toward transaction expenses.

In celebrating the deal, Lucid also provided another important disclosure for investors: Vehicle reservations have now topped 11,000.

Three Lucid Air vehicles driving on a road.

Image source: Lucid Motors.

Reservations keep climbing

In the months since the deal was officially announced in February, Lucid and Churchill Capital IV had provided periodic updates on its total reservation count as it started to build brand awareness. In addition to ramping up its marketing efforts and opening new studio locations, investors have spotted many prototypes being tested on public roads. Lucid is entering the final stretch before deliveries, and the company notes that it is conducting the final quality validation checks.

Here's a timeline of the reservation disclosures that Lucid has offered.


Total Reservations

Potential Sales

Feb. 19


$650 million 

Feb. 28


$700 million

May 13 


$800 million

June 22


$900 million 

July 26


Not disclosed

Data sources: Lucid Motors and SEC filings.

Keep in mind that Lucid has not yet delivered any electric cars and deposits are fully refundable, so potential sales can evaporate if the company fails to execute or if customers have a change of heart.

There are four trims for the Air, and the company will start by delivering the $170,000 Dream Edition before moving its way downmarket with more affordable versions. Eventually, the goal is to start selling the $70,000 Air Pure about 18 months after the first cars hit the road. (Both of the aforementioned vehicle prices are after federal tax credits.)

The implied average transaction price (ATP) that Lucid has used to calculate potential sales has consistently hovered in the $85,000 to $90,000 range, so 11,000 reservations could translate into $935 million to $990 million in potential sales depending on the product mix.

Warrants can soon be exercised

There was some confusion last week where retail investors thought that one of the proposals up for vote would be dilutive to existing shareholders. Once executives dispelled the myth, shareholders approved the proposal and paved the way for the transaction to close.

However, there is a dilutive event on the horizon. Churchill Capital IV's public warrants will soon become exercisable. Those derivatives can be exercised 30 days after its merger is completed or one year after the SPAC's IPO, whichever is later. Churchill Capital IV went public on July 30, 2020, so the relevant date here for warrant investors will be Aug. 25, 2021.

Once the warrants are exercisable, the company may choose to redeem them for $0.01 per warrant. Opting to do so will effectively push warrant holders to exercise, buying Lucid shares at a strike price of $11.50, or else lose all of the value. Most companies that complete de-SPAC transactions redeem their warrants in order to simplify their capital structure, raise capital, and eliminate the accounting hassles recently imposed by the SEC.

Exercising warrants is dilutive since the company issues new shares to satisfy the exercise, unlike exchange-traded options where investors purchase existing shares from another market participant. But the company is also able to raise fresh capital, and Lucid is going to need that cash to enter and compete in the global auto industry.