Ever since Lucid Group (LCID 1.90%) started delivering its first car, Air Dream Edition that beat the longest-range Model S from Tesla (TSLA 3.78%) by more than a 100 miles, all eyes were on Lucid first detailed quarterly report since it went public in July. Yet while the market was fixated on the electric-vehicle (EV) stock's earnings release -- primarily its reservation and production numbers -- the real scoop could be found in Lucid's third-quarter earnings conference call that revealed a lot more about the company's future.
Here are the five biggest takeaways from Lucid's earnings conference call that every Lucid investor, or potential investor, must know.
Expect to see Lucid Air revenues from Q4
Lucid's Q3 earnings release didn't give out any revenue number, but management revealed during the conference call that Lucid had generated roughly $232,000 in revenue during the quarter, primarily from Formula E.
This might come as a surprise to many, but Lucid has been building EV battery systems and powertrains for years, and supplies battery packs for the Formula E race series cars. And, it's the same technology that's powering Lucid Airs, which might explain the Air Dream Edition's unbeatable range rating of 520 miles. CEO Peter Rawlinson stressed during the call how Lucid's battery packs powered every car in Formula E, enabling the premier electric motorsports cars to complete "full race distances on a single charge."
Lucid expects strong revenue from Formula E battery packs in the fourth quarter. More importantly, investors should also start to see some revenues from Lucid Air appearing fourth quarter onwards. That's because Lucid started delivering its first Dream Edition cars only on Oct. 30, and should therefore start recognizing revenues from Q4.
The first revenue numbers from an EV start-up are critical as they reflect the company's commercial viability, and specifically what to expect going forward based on Lucid's reservation numbers. The company already gave a hint, for that matter.
All four of Lucid Air models are gaining attention
One of the biggest arguments against Lucid's success potential is pricey cars -- the Dream Edition carries a hefty price tag of $169,000 per unit.
Yet, Lucid had secured more than 17,000 reservations across all models by Nov. 15, but also said it'll deliver only 520 Dream Edition cars before moving on to the other models. That begs the question, what models comprise those reservations? For perspective, Lucid's lowest-priced Air Pure is priced at $77,400 a car, followed by Air Touring at $95,000 and Air Grand Touring at $139,000 per unit. Dream Edition is the top model.
During its Q3 earnings call, Lucid said its order book of 13,000 cars as of the end of September was worth around $1.3 billion in revenue. That translates into a price point of around $100,000 per car, representing roughly the mid-point of prices of all four models.
In short, Lucid appears to be building a pretty balanced order book across all versions, which is hugely encouraging for a company just starting out in the hot EV space. Lucid is already preparing to deliver more and more cars in the coming years.
Lucid's big growth plans
During Lucid's earnings call, Rawlinson emphasized how Lucid is currently "laser-focused" on ramping up production to 20,000 units in 2022 and 50,000 in 2023. By the end of the decade though, Lucid sees production capacity at its Casa Grande facility in Arizona expanding to 500,000 units.
The more interesting part was Rawlinson revealing Lucid's next big plan. He explained how Lucid, after having already created an advanced hardware process in-house (in terms of an entire product suite of battery systems, motor, inverter, and the whole electric powertrain), will now focus on building software in-house.
Interestingly though, Rawlinson also revealed how he's open to potential partnerships for software, though he'd consider that as a "bonus" and still prefers building software for now. High-end software can be a differentiator for an electric vehicle company, so it's a well-thought plan that Lucid has in place.
For now, Lucid has the money to launch new models and build what it wants to.
No cash crunch, no share dilution
When it comes to investing in start-ups, many investors are wary of share dilution, or companies issuing stock to raise additional funds.
Fortunately, that's not the case with Lucid -- at least not for now. As of the end of September, Lucid had nearly $4.8 billion in net cash, which should be enough to see it through 2022. I expect Lucid to invest a major chunk of the cash on capacity expansion and upcoming models, specifically its all-electric SUV, Gravity.
Rawlinson even called project Gravity close to his heart, and revealed Lucid is preparing to start production by late-2023. He sees Gravity to be as disruptive to the electric SUV space as Air is in sedans given all the powerful features Lucid plans to pack into the SUV, including top-notch range for its class.
Having all that cash also means Lucid doesn't have to make a secondary offering of shares to raise funds for now, and that's hugely encouraging for an investor in a start-up. Even more intriguing for investors in Lucid, though, should be Rawlinson's eventual plan for the EV market.
Rawlinson's mission for Lucid
Among all the things that Rawlinson said during Lucid's Q3 conference call, here's one that caught my attention:
Right now, we're using our extraordinary efficiency to achieve range to create a technological tool to force, to define the brand as the range king. But, in the future where we use that technological advance as a commercial enabler, it means that we will be able to provide a car which is competitive with range.
In other words, while Lucid might be selling pricey cars now, it eventually wants to build cars for the masses that run on its powerful in-house battery systems.
That, I believe, could be a game-changer for Lucid in an industry with cut-throat competition, especially since battery packs are also the most expensive component of electric cars and Lucid may already have the technology to build smaller yet more powerful battery packs than competition.
In fact, Rawlinson stated his mission without mincing words during the call: "I want to get the cost down. I want to fulfill our mission, which is the mass adoption of electric vehicles."
That's something Rawlinson has oft-repeated lately -- in a recent interview with the New York Times, he said, "I'm not here to sell ultra-luxury cars. I want to mass-industrialize electric cars."
After diving deep into Lucid's earnings call -- and Rawlinson's plans for the company -- I'm somehow even more convinced that Lucid could not only be one of the hottest EV stocks a decade from now, but also emerge one of the top winning growth stocks in the coming years.