Electric vehicle maker Lucid Group (LCID -0.51%) reported on Nov. 15 that it lost $524.4 million in the third quarter, or $0.43 per share, as it ramped up the start of production of its first vehicle. Revenue was just $232,000; Lucid didn't begin deliveries of its vehicles until after the end of the quarter.
While that was a wider loss than Wall Street had expected, the stock rose sharply in after-hours trading after the news was released. Analysts polled by Thomson Reuters had expected Lucid to report a loss of $0.25 per share on revenue of $1.25 million.
Highlights of Lucid's third-quarter report
Lucid said that it spent much of the quarter refining its manufacturing quality and preparing for the official start of production of the Air luxury sedan, its first product, which happened in late September. It hit several key milestones along the way.
- The Air received the highest range ratings of any electric vehicle (so far) under the U.S. Environmental Protection Agency (EPA) testing standard. All versions of the Air (there are six trim levels) have an EPA-certified range of at least 450 miles; top-trim versions have over 500.
- Production of the Air began in late September at Lucid's factory in Casa Grande, Arizona. (Deliveries began in October, after the quarter ended.)
- Lucid plans to expand its Casa Grande factory in stages as needed to meet demand. Right now, it can build about 34,000 vehicles per year. Lucid began construction of the next stage during the third quarter; when complete, in 2023, the expanded factory will be able to build about 90,000 vehicles per year.
- Lucid expanded its distribution network to 13 U.S. locations in the quarter. It plans to expand into Canada during the current quarter, into Europe and the Middle East next year, and into China in 2023.
- Lucid had about 13,000 reservations for the Air as of the end of the third quarter. (It now has over 17,000, CEO Peter Rawlinson said during Lucid's earnings call.)
- Lucid ended the quarter with about $4.8 billion in cash.
In a separate development on Monday, the Air was named Car of the Year by Motor Trend magazine.
What Lucid's CEO had to say
Rawlinson began the earnings call by outlining what he sees as the opportunity for electric vehicles, and for Lucid's luxury-level positioning within the EV universe.
As we continue to bring Lucid Air to market, it's clear that the opportunity we have in front of us is massive -- because the market opportunity is not just for electric vehicles, it's for vehicles overall.
Currently, there's only about 2.5% penetration into the U.S. vehicle market through EVs, and only about 4% penetration into the global vehicle market. We see the luxury car market expanding at an annual rate of about 5% over the next few years, and ultimately reaching over $700 billion of global sales near the middle of this decade.
We believe that the growing customer sentiment for electric vehicles, coupled with the government mandates encouraging their adoption, provides significant support for the EV industry overall and for Lucid's position within it.
Looking ahead: Lucid's production target for 2022
Rawlinson reiterated Lucid's goal of producing 20,000 vehicles in 2022, but said that electric vehicle investors should note that "this target is not without risk given ongoing challenges facing the automotive industry, with global disruptions to supply chains and logistics."
He said that Lucid is taking steps to mitigate those risks, however, and that the company is currently on track to launch lower-level trims of the Air in 2022, as expected.
CFO Sherry House added that Lucid has ample cash to fund its expansion plan at least through next year.