EV startup Lucid aims to nearly double production by 2023

Electric vehicle manufacturer Lucid Group Inc.

said Wednesday it plans to produce up to 14,000 vehicles this year, a goal that business leaders say reflects the economic uncertainties facing the industry.

The figure, which fell short of analysts’ expectations, was intended to be conservative, CEO Peter Rawlinson said. “We chose to go for a range that I think is representative of the level of uncertainty in the market,” he said.

Rising interest rates are raising concerns in the auto industry that cars and trucks are becoming too expensive.

“We recognize the difficult market environment, particularly the impact that higher interest rates and market uncertainty are having on consumers’ propensity to buy, and we are taking action,” said Sherry House, Lucid‘s

LCID 0.81%

Finance Director. Those actions include reducing shipping and parts costs, as well as delaying some expenses for the expansion of the company’s production facility in Casa Grande, Ariz.

Electric vehicle startups like Rivian, Lucid, Fisker, Canoo and Lordstown must adapt to the realities of making vehicles in a harsh economy. WSJ’s George Downs explains some of the challenges they face and why some are even at risk of bankruptcy. Photo composite: George Downs

The production plan would nearly double last year’s figure, but falls short of analyst expectations of 21,000 units, according to FactSet. Lucid executives cited a number of reasons for the production figure in addition to concerns about the health of the economy, including parts limitations for some high-demand versions of the Lucid Air.

Lucid shares fell 9.3% to $9.05 in after-hours trading.

Lucid said it had 28,000 reservations for its vehicle as of Feb. 21, up from 34,000 at the end of September. Analysts have raised concerns that dwindling reservations and shorter vehicle wait times have been a sign of declining demand for Lucid EVs, which start at $87,000 but can cost more than $100,000.

Ms House said Lucid would no longer report reservations on a quarterly basis in the future as they were intended to be replaced by actual production and delivery figures.

Mr Rawlinson said he believed demand for different versions of the Lucid Air remained strong, including the lower-cost Air Pure. But he said early production problems that led the company to cut production plans last year led some early reservation holders to cancel. Lucid has begun offering discounts on some vehicle configurations, further fueling analyst concerns about declining demand for the company’s vehicles.

Lucid declined to set a time frame for when it would begin generating profits, but said losses had started to ease. The company reported that its net loss shrank to $2.56 billion in 2022 from $4.75 billion in 2021.

The company said revenue for the period was $608.2 million, compared to $27.1 million in 2021 when the EV startup went public through a merger with a dedicated acquisition company. Revenue for the fourth quarter was $257.7 million compared to $26.4 million in the year-ago quarter.

Lucid reported $1.74 billion in cash and cash equivalents, compared to $3.86 billion at the end of September. The company said in November it would raise up to $1.5 billion, with the lion’s share coming from its majority shareholder, Saudi Arabia’s public investment fund.

The Newark, California-based company said it had enough cash to fund operations in the first three months of 2024.

Lucid plans to take reservations for its next model this year, an SUV called Gravity, and Mr Rawlinson said the company was on track to begin production in 2024. Lucid has a deal to sell up to 100,000 vehicles to the Saudi government.

The key to success this year, said Mr. Rawlinson, was figuring out how to sell more cars. “We have the very best car in the world and not enough people know about it,” he said.

Write to Sean McLain at sean.mclain@wsj.com

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