Q3 2021 Lucid Group Inc Earnings Call

November 15, 2021

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Ladies and gentlemen, thank you for standing by and welcome to the Lucid third quarter 2021 earnings Conference call.

Operator: Ladies and gentlemen, thank you for standing by, and welcome to the Lucid Q3 2021 Earnings Conference Call. At this time, all participants are in listen-only mode. After the speaker presentation, there will be a question-and-answer session. To ask the question during this session, you will need to press star then one on your telephone. Please be advised that today's conference is being recorded. If you require any further assistance, please press star then zero. I would now like to turn the conference over to your speaker for today, Lauren Sloane, Investor Relations for Lucid. You may begin.

At this time all participants are in a listen only mode. After the speaker's presentation. There will be a question and answer session to ask a question. During this session you will need to press Star then one on your telephone.

Please be advised that today's conference is being recorded if you require any further assistance. Please press star then zero.

I would now like to turn the conference over to your speaker for today, Lauren Sloane Investor Relations for Lucid you may begin.

Welcome to lucid group's third quarter fiscal year, 2021 earnings call.

Lauren Sloane: Welcome to Lucid Group Q3 fiscal year 2021 Earnings Call. Thank you for joining us today. On the call, we have Peter Rawlinson, our CEO and CTO, and Sherry House, our CFO. Our quarterly report on Form 10-Q for the Q2 ended 30 September 2021, was filed with the SEC and the related earnings press release was issued after a close of market earlier today. Both are posted on our website. Before we get started, we want to emphasize that some of the statements on this call, particularly those regarding the future financial performance of the company, production and delivery volume, macroeconomic and industry trends, company initiatives, and other future events, are based on the information that we have as of today and include forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995.

Thank you for joining us today.

On the call, we have Peter Robinson, our CEO, and CTO and Sherry House our CFO.

Our quarterly report on Form 10-Q for the second quarter ended September 32021 was filed with the SEC and the related earnings press release was issued after close of market earlier today, both are posted on our website.

Before we get started we want to emphasize that some of the statements on this call, particularly those regarding the future financial performance of the company production and delivery volume macroeconomic and industry trends company initiatives and other future events are based on the information that we have as of today.

And include forward looking statements within the meaning of the private Securities Litigation Reform Act of 1995.

Forward looking statements are subject to numerous risks uncertainties and other factors that could cause actual results to differ from expectation and.

Lauren Sloane: Forward-looking statements are subject to numerous risks, uncertainties, and other factors that could cause actual results to differ from expectations. We refer you to the cautionary language included in risk factors in our quarterly report on Form 10-Q for the quarter ended 30 September 2021, as well as other documents filed or to be filed with the SEC for a fuller discussion of such risks, uncertainties, and other factors. Forward-looking statements made during today's call speak only as of the time they are made, and we are under no obligation and expressly disclaim any obligation to update, alter, or otherwise revise any forward-looking statements, rather, as a result of new information, future events, or otherwise, except as required by law. You are cautioned not to place undue reliance on these forward-looking statements. In addition, management will make reference to non-GAAP financial measures during this call.

And we refer you to the cautionary language included in the risk factors in our quarterly report on Form 10-Q for the quarter ended September 32021, as well as other documents filed or to be filed with the SEC for a fuller discussion of such risks uncertainties and other factors.

Forward looking statements made during today's call speak only as of the time. They are made and we are under no obligation and expressly disclaim any obligation to update alter or otherwise revise any forward looking statement.

Whether as a result of new information future events or otherwise, except as required by law.

You are cautioned not to place undue reliance on these forward looking statements.

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 currently available in our earnings press release issued earlier this afternoon as well as in the Investor deck available in the Investor Relations section.

Lauren Sloane: A discussion of why we use non-GAAP financial measures and information regarding reconciliation of our GAAP versus non-GAAP results is currently available in our earnings press release issued earlier this afternoon, as well as in the investor deck available in the investor relations section of our website at ir.lucidmotors.com. Now I'd like to turn the call over to Lucid CEO and CTO Peter Rawlinson. Peter, please go ahead.

Of our web site at IR that lucid motors dotcom.

And now I'd like to turn the call over to lucid CEO and CTO Peter Robinson Peter Please go ahead.

Thank you Lauren.

Peter Rawlinson: Thank you, Lauren. We are very excited to welcome stakeholders to Lucid's inaugural earnings call. We have achieved a tremendous amount over the course of 2021, we're excited to lay out our vision and priorities for the company. We look forward to continuing to work with investors and analysts to build long-term relationships with our stakeholders. Now, for those of you who are new to Lucid stories, we were originally founded as Atieva back in 2007. At that time, we were focused on advancing our battery technology, logging over 20 million miles in real-world driving data. Armed with everything we learned as Atieva, we then turned our efforts to creating the best car in the world as Lucid, rethinking from the ground up every single aspect of the vehicle, from design to engineering to manufacturing.

Really excited to welcome stakeholders, who loses inaugural earnings call.

We've achieved a tremendous amount over the course of 2021.

So like Coolio television and COO.

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We look forward to continuing to work with investors and analysts to grow long term relationships with all stakeholders.

Now for those of you who are new to the story. We were originally founded as a T that back in 'twenty.

Hum.

But we were focused on advancing our battery technology.

Looking over 20 million miles.

Real world driving data.

And armed with everything we learned as a teaser.

We then turn to honestly to creating the best coal in the world.

As Lucy.

Everything from the ground up every single aspect because the vehicle from design to engineering to manufacturing.

The initial results of that effort is listed.

Peter Rawlinson: The initial result of that effort is Lucid Air, which carries with it the means to accelerate the adoption of electrification while redefining luxury in the automotive market. 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 US 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.

Which carries with it the means to accelerate adoption of electrification whoa redefining luxury.

Automotive market.

Although we continue to bring at least today, it's a market.

Clear the opportunity we have in front of us is a massive.

Because the market opportunity is not just the electric vehicles, it's vehicles a rule.

Currently there's only about 2.5% penetration.

Penetration into the U S vehicle market for release, and only about 2% penetration into the global vehicle market, we see the luxury car market expanding and so the new rate of about 5% over the next few years and ultimately reaching.

$100 billion of global sales near the middle of this decade.

We believe that the growing customer sentiment for electric vehicles.

Peter Rawlinson: 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. Lucid is uniquely positioned to capture this opportunity, driven by our key differentiators, namely our technology innovation and the people who work here. Now, first off, we believe that our technology is worlds apart from even the current market leaders. For example, no one expected Lucid to achieve even 400 miles of range, and now we have an EPA certification of 520 miles of range for the Lucid Air Dream Edition R. We've created this technology with an eye towards an ability to manufacture it at scale, which is where true innovation lies.

With the government mandates encouraging their reduction.

Significant support for the EV industry overall.

Pellucid position within it.

Lucid is uniquely positioned to capture this opportunity driven by our key differentiators.

Namely a technology innovation and the people who work here.

Yeah first off we believe that all technologies will depart from even the current market leaders.

For example, no one expects you lose it to achieve even 400 miles of range.

And now we have an E. P. A certification of 520 miles of range through the lucid Dream edition.

And we've created this technology with an eye towards an ability to manufacture it.

Scale, which is where true innovation lies.

Furthermore, we have a growing needs to continue innovating, which is why we've been able to support even our early range estimates.

Peter Rawlinson: Furthermore, we have a drive to continue innovating, which is why we've been able to surpass even our early range estimates. As another example, our technology powers every car in Formula E, the world's premier electric motorsport series. Indeed, it changed the sport. Our battery packs have enabled Formula E cars to complete full race distances on a single charge. What we learn from every race car at every race goes directly into the battery technology powering Lucid Air. As media and early customers have learned, our vehicles are truly the fusion of hardware and software, made possible by one of the best teams in the industry. We have auto industry veterans, including members of my former Tesla Model S team, working with former executives from Apple and learning from their consumer electronics experience, along with so many other standouts from automotive and tech industries.

Another example, our technology powers every car in Formula E. The world's premiere electric motor Sport series.

And indeed.

The sport.

Battery packs are enabled formula E costs to complete pool race distances on a single charge.

And what we learn from every risk and every life goes directly into the battery technology.

During lucid.

As a media and early customers have learned how vehicles are truly the fusion of hardware and software.

Made possible by one of the best teams in the industry.

We have auto industry veterans, including members of my former Tesla model S team working with former executives from Apple and learning from their customer electronics experience.

With so many other standouts from automotive and Tech industries.

We plan to leverage our team's abilities to continue to improve vehicle function and features.

Peter Rawlinson: We plan to leverage our team's abilities to continue to improve vehicle function and features even after customers take delivery via over-the-air updates. Before we update you on some of our substantial achievements during the most recent quarter, I would be remiss in not highlighting some of our most recent achievements outside of Q3. That's because these are quite significant. First off, we started delivering vehicles to customers at an event at our Silicon Valley HQ just two weeks ago on 30 October. This preceded an increasing number of deliveries nationwide slated for this month and next, including more than two dozen deliveries to paying customers that occurred just this past weekend. You may have already witnessed your first sighting of Lucid Air in the wild.

Even after customers take delivery via over the air updates.

Well before we update you also have a substantial achievements during the most recent quarter.

I would be remiss in not highlighting some of our most recent achievements.

Side of Q3, and that's because these are quite significant.

Well first off we started delivering vehicles to customers actually are entitled Silicon Valley H Q, just two weeks ago on October 30th.

This preceded an increasing number of deliveries nationwide slated for this month and next including more than two dozen deliveries to paying customers.

Just this past weekend.

So you may have already witnessed your first pricing I believe today in the wild.

We actually have a full report on customer deliveries during our Q4 call. So watch this space for more.

Peter Rawlinson: We actually have a full report on customer deliveries during our Q4 call, so watch this space for more. Next, just this morning, Lucid Air was officially announced as MotorTrend's 2022 Car of the Year. Now, this is arguably the most prestigious award in the motor industry, seeking out true innovation and groundbreaking vehicles. For a new brand and a new company to win, well, to my knowledge, that's only been done once before, and I should know, I was there. Getting back to the matter at hand, in Q3, we secured a number of certifications required to sell the vehicle ahead of those customer deliveries as I just mentioned. This includes full FMVSS, CARB, FCC, and FDA safety certifications, all of which further establish our credibility and cleared the way for the ramp-up of Lucid Air deliveries.

Next just this morning lucid.

Michelin announced multiple friends 2022 car of the year.

Hello. This is arguably the most prestigious award in the motor industry.

Truly innovation and ground breaking vehicles.

For a new brand and a new company to win well to my knowledge, that's only been done once before.

And I should know it was there.

Getting back to the matter at hand in Q3, we secured a number of certifications required to sell the vehicle.

All of those customer deliveries as I just mentioned.

This includes full F N B S S K.

Cobb FCC and F D. A safety certifications all of which further establish our credibility and cleared the way for the ramp up of lucid and deliveries.

But what I'm most proud of is the official EPA rating of 520 miles range.

Peter Rawlinson: What I'm most proud of is the official EPA rating of 520 miles range, and because we achieved this landmark through our world-leading in-house technology, not by simply installing an oversized battery pack or off-the-shelf parts. Our Lucid Air Grand Touring has an official EPA-rated range of 516 miles, and it achieves that with a 112 kilowatt-hour battery pack, giving it an industry-leading efficiency of 4.6 miles per kilowatt hour. Taking a step further, we have six Lucid Air variants in the top six positions of EPA range ratings for EVs. Unlike many other EV companies, we design, develop, and build our powertrain and core EV technology components in-house with an emphasis upon efficiency. Now, we view this as a strategic competitive advantage for Lucid as we look ahead.

And because we achieved this landmark through our world leading in house technology.

Not by simply installing an oversight battery pack or off the shelf parts.

Lucid Grand touring.

Has an official E P a rated range.

516 models and it achieves that with a 112 kilowatt hour battery pack.

Giving us an industry leading efficiency.

Pool 0.6 miles.

Kilowatt hour.

Taking a step two of them we have six solutia their variance in the top six positions of the EPA range ratings for Evs.

And unlike many other EV companies.

We design develop and build our powertrain and cool EV technology components in house with an emphasis upon efficiency.

Now we view this as a strategic competitive advantage pellucid as we look ahead.

Next.

Peter Rawlinson: Next, after securing the EPA rating, we officially commissioned our factory in Casa Grande, Arizona, and started production of Lucid Air. At a factory event on 27 September, we hosted our customers, media, and guests, all of whom had the opportunity to drive Lucid Air. The reactions and feedback from this experience could not have been better, including a broad validation from important media. You know, I rather like when reporters call Lucid Air jaw-dropping and the future of cars. Now, the fantastic experiences customers and media have had with the Lucid Air to date have only increased interest in the brand.

After securing the EPA racing, we officially commissioned a factory in Casa Grande Arizona.

And started production of lucid.

And our factory event on September 27th we hosted customers media and guests.

All of them have the opportunity to really elusive to Pat.

The reaction and feedback from this experience could not have been better.

Including broad validation from important media.

You know I'd, rather like when reports as cool looks today jaw dropping.

And the future of Chas.

Now those are fantastic experiences customers immediately had we believe today to date have only increased interest in the brand.

Peter Rawlinson: The result is an accelerated pace of new reservations, currently at 17,000 and climbing quickly, which has also spurred us to increase the total production quantity of the Dream Edition to 520, both to accommodate demand and also to recognize the landmark EPA 520 miles achievement. Lastly, I'll highlight that the customer journey has also been an area of focus for us this past quarter. We now have 16 Lucid Studios and service centers across North America, but this is only the beginning, and I'll talk more about our plans for expansion shortly. I wanted to look ahead to our near-term strategic priorities, which will see a continued focus on achieving progress against our existing activities. As I mentioned earlier, last month, we started delivering Lucid Air Dream Edition models to our reservation holders, and we're currently ramping up customer deliveries.

The result is an accelerated pace of new reservations.

Currently at 17000 and cleaning quickly.

We should also spud is to increase the total production quantity of the Dream edition.

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So to recognize the landmark E P. Eight 520 miles achievement.

Lastly, I'll highlight that the customer journey has also been an area of focus for us this past quarter.

We now have 16 lucid studios in service centers across North America, but.

But this is only the beginning and I'll talk more about our plans for expansion shortly.

Now I want you to look ahead to our near term strategic priorities, which will see a continued focus on achieving progress against our existing activities.

As I mentioned earlier last month, we started delivering lucid dream additions models tour reservation holders and we are currently ramping up customer deliveries.

Peter Rawlinson: We will soon start to deliver Lucid Air Grand Touring models, followed by Touring and Air Pure next year. With such demand across the Lucid Air lineup, we felt it critical to accelerate the expansion of our advanced manufacturing plant or our AMP One factory in Arizona, essentially investing in our capabilities to mitigate future business risks. This process started in Q3, with progress well underway on the addition of 2.85 million sq ft of manufacturing space to our Arizona factory. This expansion will allow for a significant increase in production capacity for Lucid Air and enable production of the Gravity SUV in 2023. Speaking of expansion, our retail footprint grew significantly this year, including our first location outside of the US in Vancouver, Canada, which we opened last month.

We will soon start to deliver lucid Grand touring models, followed by Turing and appeal next year.

With such demand across the lucid and lineup we felt it critical to accelerate the expansion of our <unk>.

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Essentially investing in our capabilities to mitigate future business risks.

This process started in Q3, we progress well underway on the addition of $2 8 million.

Millions square feet of manufacturing space to our Arizona factory.

This expansion will allow for a significant increase in production capacity for lucid hat.

And to enable production of the gravity SUV in 2023.

And speaking of expansion on a retail footprint grew significantly this year include.

Including our first location outside of the U S inventories of Canada, which we opened last month.

And we plan to have 20 studios and service centers.

Peter Rawlinson: We plan to have 20 Studios and service centers open by the end of this year. You can see acceleration as a theme in the second half of 2021. We also continue to increase our service footprint across the US, not just with physical service centers, but also with the rollout of our mobile service program. We expect service centers to continue opening in North America, and we anticipate hiring a significant number of additional service technicians as we expand our capabilities. We're optimistic about these goals, even in a challenging environment as COVID-19 continues to present numerous obstacles for the auto industry and supply chain. Lucid is no stranger to this, but we have continued to deliver against our timeline and with the highest standard of quality.

By the end of this year.

You can see acceleration.

In the second half of 2021.

We also continue to increase our service footprint across the U S. Not just with physical service centers, but also with the rollout of our mobile service program.

We expect service centers to continue opening in North America, and we anticipate hiring a significant number of additional service technicians as we expand our capabilities.

We're optimistic about these goals even in a challenging environment as COVID-19 continues to prevent numerous obstacles for the auto industry and supply chain.

Lucid is most stranger to this but we have continued to deliver against our timeline.

And with the highest standard of quality.

And I would like to commend the company's employees, who worked relentlessly and tirelessly to help lucid progress and grow during these recent periods of uncertainty.

Peter Rawlinson: I would like to commend the company's employees who work relentlessly and tirelessly to help Lucid progress and grow during these recent periods of uncertainty. Lastly, I would like to spend some time providing an overview of our longer-term strategic focus areas, as well as upcoming major milestones. Lucid continues to grow its operations in the US, but as part of our growth strategy, and more specifically, our international strategy, we intend to expand our sales, maintenance, repair services, and manufacturing activities outside of the US, again, with the goals of mitigating business risk and charging future growth. On the retail and service front, we're looking to expand our footprint in Europe and the Middle East, and we expect to enter these markets in 2022.

Lastly, I would like to spend some time, providing an overview of our longer term strategic focus areas as well as upcoming major milestones.

Lucid continues to grow its operations in the U S. But it's part of our growth strategy and more specifically our international strategy, we intend to expand our sales maintenance repair services and manufacturing activities outside of the U S again with the goals.

A mitigating business risk and charging future growth.

On the retail and service fronts, we're looking to expand our footprint in Europe and the middle East.

And we expect to enter these markets in 2022.

There has been continued expansion of the team in both regions with key additions to leadership.

Peter Rawlinson: There has been continued expansion of the team in both regions with key additions to leadership and the employee base, and we're excited by the prospects of these key regions. We believe this will help establish Lucid as a global brand and address untapped market demand in these regions on an entirely new level, while also taking action to address climate change through sustainable mobility. Moving to our Air lineup, the longer view will see production expanding to include Touring and Pure models, as well as future variants. With our in-house technology establishing Lucid Air as the new bank benchmark for EV efficiency, we will be quick to maximize this potential.

The employee base and we are excited by the prospects of these key regions. We believe this will help establish lucid as a global brand and address untapped market demand in these regions on an entirely new level.

Oh, so taking action to address climate change through sustainable mobility.

Moving to our air lineup the longer view, we'll see production expanding to include touring and pure muscles as well as future variance.

Our in house technology, establishing lucida as the new benchmark for EV efficiency, we will be quick to maximize this potential.

Because if we can achieve at least 116 miles with just 112 kilowatt hour battery pack, it's easy to imagine a smaller pack and the way to cost savings afforded by age which would allow for much more time to believe it can still achieve 300.

Peter Rawlinson: If we can achieve 516 miles with just a 112 kWh battery pack, it's easy to imagine a smaller pack and the weight and cost savings afforded by it, which would allow for a much more attainable EV that can still achieve 300+ or 400+ miles of range. Finally, we're excited to launch additional vehicles over the coming decade, including Project Gravity, a luxury SUV that leverages the Air's platform and that we expect will elevate the SUV to a new level with extraordinary performance and category-defining interior space. We look forward to sharing more details about the Gravity next year ahead of expected production in 2023. With that, I would like now to hand the call over to our CFO, Sherry House, who's been a tremendous addition to the Lucid team.

Our 400 plus miles of range and I'm. Finally, we're excited to launch additional vehicles over the coming decade, including project gravitate, a luxury SUV that leverages the <unk> platform and that we expect will elevate the SUV to a new level, we'd exclude link performed.

And category defining interior space.

Look forward to sharing more details about the gravity next year ahead of expected production in 2023.

So with that I would like now to hand, the call over to our CFO Sherry has who has been a tremendous addition to the leasing team.

Peter Rawlinson: Her experience and background have been truly invaluable. I could not have asked for a better partner to work with me on the next phase of this very exciting journey. Sherry?

Experienced some background who have been truly invaluable.

Could not with us for a better partner to work with me on the next phase of this very exciting journey.

Sherry.

Thank you very much Peter I'd like to start by expressing how pleased I am to be speaking to all of you today for Lisa its inaugural earnings call covering the third quarter at 2021, just six months ago I joined this fantastic team, which Peter has assembled and I've witnessed firsthand what is possible when you put a passionate and persevering team on.

Sherry House: Thank you very much, Peter. I'd like to start by expressing how pleased I am to be speaking to all of you today for Lucid's inaugural earnings call covering Q3 at 2021. Just 6 months ago, I joined this fantastic team, which Peter has assembled, and I've witnessed firsthand what is possible when you put a passionate and persevering team on task to set a new standard in vehicle electrification. This has been a very active quarter for the company, highlighted by external validation of Lucid's many technological and design feats, and even marked by a number of industry firsts, such as first EV to reach and exceed 500 miles of range on a single charge. On the finance front, on 23 July, we completed our reverse merger de-SPAC transaction with Churchill Capital Corp IV, and our PIPE investors to form Lucid Group, Inc.

Path to set a new standard in vehicle electrification. This has been a very active quarter for the company highlighted by external validation of Lucent, many technological and design seats and even marked by a number of industry firsts, such as first phebe to reach and exceed 500 miles of range on a single charge.

On the finance front on July 23rd we completed a reverse merger beef back transaction with Churchill Capital Corp, poor and our pipe investors to form Lucid Group Inc.

This transaction brought approximately $4 4 billion of net cash and balance sheet.

Sherry House: This transaction brought approximately $4.4 billion of net cash onto Lucid's balance sheet. On 26 July, we further raised our public profile and access to capital through our public listing on the Nasdaq as LCID. These events significantly bolstered Lucid's balance sheet and de-risked the near-term execution of Lucid's forward plan. This capital will increase the production capacity and vertical integration at our production facilities in Casa Grande, Arizona, and support the readiness of our global supply chain. Second, this capital will enable our commercialization and globalization efforts by expanding our studio and service center footprint and planning for the future localization of manufacturing. Finally, this investment will fund R&D efforts to enhance and grow the technological moat that Lucid has established.

On July 26th we further raised our public profile and access to capital through our public listing on the NASDAQ is L. B I D.

These events significantly bolstered loose its balance sheet and derisk, the near term execution of leases forward plan.

This catheter will increase the production capacity and vertical integration at our production facilities in Casa Grande, Arizona and support the readiness of our global supply chain.

This capital will enable our commercialization and globalization efforts by expanding our studio and service center footprint and planning for the future localization of manufacturing.

And finally, this investment will fund R&D efforts to enhance and grow the technological moat that lucid is established.

Sherry House: Specifically, the dollars will advance the development and launch of new variants of the Lucid Air and the Gravity SUV, as well as future vehicle programs and other technologies. I'd now like to turn your attention to our Q3 results. To put the quarter in context, you'll observe two primary themes throughout our financials. First will be the strengthening of our financial position, which we just discussed, and second will be the transformation of our company as we ready ourselves for large-scale vehicle production. In our Q3 results, you'll see costs associated with our start of production in September. However, you will not see vehicle revenues until Q4, given that customer deliveries began on 30 October. In Q3, Lucid recognized revenue of $232,000, predominantly related to the use of our battery packs in the Formula E race series.

Typically the dollars will advance the development and launch of new variance at the lucid air and the gravity SUV as well as future vehicle program and other technologies.

I'd now like to turn your attention to our third quarter results.

To put the quarter in context, if there are two primary themes throughout our financial.

First it will be the strengthening of our financial position, which we just discussed and second will be the transformation of our company as we ready ourselves for large scale vehicle production.

And our Q3 results, you'll see costs associated with our startup production in September. However, you will not see vehicle revenues until Q4, given that customer deliveries began on October 30th.

In Q3 listed recognized revenue of 232000 predominantly related to the use of our battery packs and the Formula E Racing series.

There is seasonality of this revenue stream in similar to 'twenty 'twenty, we expect to see the lion's share of battery pack revenue in Q4.

Sherry House: There is seasonality of this revenue stream, and similar to 2020, we expect to see the lion's share of battery pack revenue in Q4. The cost of revenue was $3.3 million and includes cost of goods sold related to the start of production at AMP One that occurred in September. Engineering, research, and development expenses have grown by about 72% year-to-date compared with the same period in 2020, predominantly driven by the investment in talent, prototype expenses related to the testing and certification processes that Peter referenced earlier, as well as the production quality validation fleet that we produced at AMP One. On the SG&A side, expenses increased by approximately $400 million for the nine months ending 30 September versus the same period in 2020.

The cost of revenue was $3 3 million and includes cost of goods sold related to the startup production at Amp one that occurred in September.

Engineering research and development expenses have grown by about 72% year to date compared with the same period in 2020 predominantly driven by the investment in talent prototype expenses related to the testing and certification processes that Peter referenced earlier as well as the production.

And quality validation fleet that we produced sitting up one.

On the SG&A side expenses increased by approximately 400 million for the nine months ending September 30th.

Versus the same period in 2020.

A key driver of SG&A expenses, and head count growth related to the Buildout of the sales and service network as we prepare for additional deliveries in the fourth quarter.

Sherry House: A key driver of SG&A expenses is headcount growth related to the build-out of the sales and service network as we prepare for additional deliveries in Q4. We also invested in people, processes, and systems on the G&A side of the house in order to not only support Lucid as a publicly traded company, but also to support the globalization of our business. There was an increase quarter-over-quarter in stock-based compensation across both R&D and SG&A. This increase is attributed to a cumulative catch-up on employee grants. Accounting treatment required the merger to close before 2021 grants could be recorded as stock-based compensation.

We also invested in people processes and systems on the G&A side of the house in order to not only support lucid is a publicly traded company.

But also to support the globalization of our business.

Lastly, there was an increase quarter over quarter and stock based compensation across both R&D and SG&A.

This increase is attributed to a cumulative catch up unemployed grants.

Accounting treatment required the merger to close before 2021 grants could be recorded as stock based compensation.

Transitioning to our balance sheet and cash flow at the end of the third quarter lucid had a cash position of approximately $4 8 billion, reflecting the $4 4 billion from the Bakken pipe plus the cash on balance sheet at the time of the close.

Sherry House: Transitioning to our balance sheet and cash flows at the end of Q3, Lucid had a cash position of approximately $4.8 billion, reflecting the $4.4 billion from the SPAC and PIPE, plus the cash on balance sheet at the time of the close. We also added $173 million from the exercise of public warrants prior to the notice of cashless redemption, which occurred on 8 September. The cashless redemption provided investors who had purchased the LCIDW warrants with access to the stock without the burden of making an upfront cash investment. As of the close of our public warrant program, that decision resulted in the exercise of nearly all of our outstanding public warrants. The cashless exercise also reduced dilution by enabling a 0.4458 to 1 ratio on the issuance of shares to public warrants exercised.

We also added $173 million from the exercise of public warrants.

Prior to the notice of cashless redemption.

[noise] occurred on September eight.

The cashless redemption provided investors, who had purchased the LC I D. W wine with access to the stock without the burden of making an upfront cash investment.

After the close of our public warrant program that decision resulted in the exercise of nearly all of our outstanding public warrants.

The cashless exercise also reduced dilution by enabling a 0.4458 to one ratio on the issuance of shares to public warrants exercised.

We observed a significant amount of goodwill with our retail investor base due to this cashless provision and our decision to extend the warrant redemption window through October 29th which about some who missed the initial redemption window to still exercise per shares.

Sherry House: We observed a significant amount of goodwill with our retail investor base due to this cashless provision and our decision to extend the warrant redemption window through 29 October, which allowed some who missed the initial redemption window to still exercise for shares. We wanna reiterate how much we appreciate everyone who exercised their warrants and are so pleased to have such a diverse and supportive investor base. Lastly, I'd like to comment on CapEx to close out our balance sheet highlights. We increased our net property, plant, and equipment by over $250 million from the prior year. As I mentioned, this PP&E growth is related to the build-out of AMP One, investments in machinery, tooling, and equipment, and the expansion of our retail studio and service center footprint throughout the United States and internationally.

We want to reiterate how much we appreciate everyone, who exercised their warrants and herself who used to have such a diverse and supportive investor base.

And lastly, I'd like to comment on Capex to close out our balance sheet highlights.

We increased our net property plant and equipment by over $250 million from the prior year.

As I mentioned, that's P. P. Any growth is related to the build out of Amp one.

Investments in machinery tooling and equipment and the expansion of our retail studio in service center footprint throughout the United States and internationally.

Looking onwards to the fourth quarter. We are incredibly excited about the road ahead, we expect to ramp up production and continue to increase customer deliveries of the lucid air we're seeing increasing interest in the lucid air with over 17000 current reservation.

Sherry House: Looking onward to Q4, we are incredibly excited about the road ahead. We expect to ramp up production and continue to increase customer deliveries of the Lucid Air. We're seeing increasing interest in the Lucid Air with over 17,000 current reservations. Heading into 2022, we remain committed to our plan to achieve 20,000 units in the calendar year. However, this plan is not without risk, given the extraordinary supply chain and logistics challenges that the automotive industry has been facing. Financially, we're proud to have strengthened Lucid's balance sheet as we commence production of customer vehicles heading into Q4. We believe that we are well-positioned to fund the exceptional growth opportunities in front of us as we move through 2022.

Heading into 2022, we remain committed to our plan to achieve 20000 units in the calendar year.

However, the plan is not without risk given the extra ordinary supply chain and logistics challenges that the automotive industry has been facing.

Financially, we're proud to strengthen the balance sheet.

Commenced production of customer vehicles heading into the fourth quarter.

And we believe that we are well positioned to fund the exceptional growth opportunities in front of us as we move through 2022.

In closing I'd like to thank all of you for joining our third quarter earnings call, a recording of which will be posted on our investor Relations website.

Sherry House: In closing, I'd like to thank all of you for joining our Q3 earnings call, a recording of which will be posted on our investor relations website. I'd also like to thank our talented employees for their hard work and dedication across our headquarters and facilities, retail stores, and manufacturing plants. It's because of your collective effort and the effort of our partners that Lucid can create value for our investor base and drive our ultimate mission to bring sustainable energy technologies to the world. I'm personally optimistic about the future of Lucid and the value that we will deliver to all stakeholders, customers, suppliers, partners, and investors. Before we transition to analyst questions, I'd like to note that we are exploring additional methods to ensure that our broad and growing investor base can participate in the Q&A, and we hope to have that implemented in early 2022.

I also like to thank our talented employees for their hard work and dedication across our headquarters in facilities retail stores and manufacturing plants, it's because of your collective effort and the effort of our partners that loosely can create value for our investor base and drive our ultimate mission to bring sustain.

Paul Energy technologies to the World I'm personally optimistic about the future of lucid and the value that we will deliver to all stakeholders customers suppliers partners and investors.

Before we transition to analyst questions I'd like to note that we are exploring additional methods to ensure that our broad and growing investor base can participate in the Q&A.

We hope to have that implemented in early 2022.

Sherry House: With that, we'd like to open the call to questions. Operator?

With that we'd like to open the call to questions operator.

Operator.

Thank you, ladies and gentlemen, as a reminder to ask a question you would need to press Star then one on your telephone.

Operator: Thank you. Ladies and gentlemen, as a reminder, to ask the question, you will need to press star, then 1 on your telephone. To withdraw your question, press the pound key. Again, that's star 1 to ask the question. Please stand by while we compile the Q&A roster. Our first question comes from the line of John Murphy with Bank of America. Your line is open.

Withdraw your question press the pound key.

Again, Thats star one to ask a question please.

Please standby, while we compile the Q&A roster.

Our first question comes from the line of John Murphy with Bank of America. Your line is open.

Good evening and good afternoon, everybody and congrats on your first quarter as a public company that that's an achievement onto its own dish and everything else are getting done here.

John Murphy: Good evening and good afternoon, everybody, congrats on your Q1 as a public company. That's an achievement unto its own, in addition to everything else you're getting done here. You know, first question for you, Peter, and maybe Sherry, you can chime in on the second part of this. You know, as you think about what you're doing here and the success of the Lucid Air and what theoretically will come here with the Gravity, 90,000 units capacity by 2023 seems a little bit pedestrian, right? Meaning that your demand may far exceed that. I'm just curious, you know, Peter, as you think about what your volume goals or aspirations are over time, if you could, you know, elucidate those or just tell us where you're headed.

First question for you Peter and maybe Jerry you can chime in on the second part of this.

As you think about what you're doing here and the success of the air and what theoretically will come here with a gravity 90000 units of capacity by 2023 seems a little bit pedestrian right, meaning that your demand may far.

It exceed that.

Curious you know Peter as you think about what your volume goals or aspirations are over time, if you could elucidate goes or just tell us where you are headed and then also just thinking about what's going on with the stock and the availability of low cost capital.

John Murphy: Also just thinking about what's going on with the stock and the availability of low-cost capital, you know, Sherry, would you consider, or you Peter as well, obviously, you know, doing a greater issuance, you know, sooner rather than later to raise capital to maybe accelerate this 90,000 units capacity in 2023 and hopefully maybe grow even faster than what you've been talking about?

Sure would you consider our new Peter as well, obviously, you know doing greater issuance sooner rather than later to raise capital to maybe accelerate this 90000 units of capacity in 2023, and hopefully maybe grow even faster than what you're what you've been talking about.

Well, it's an interesting point John right now, we're laser focused as a company and the whole management team under my direction and scaling what we've got laser focused on growing the scale towards 20000 units next year than 50000, but we're planning on five.

Peter Rawlinson: Well, it's an interesting point, John. Right now, we're laser-focused as a company and the whole management team under my direction in scaling what we've got. Laser-focused on growing the scale towards 20,000 units next year, then 50,000. You know, we're planning on 500,000 units by the end of the decade. We have a plan in place to expand Casa Grande to that level. You know, we've also got localization of manufacturing. We've got incredible high value in our manufacturing as well because we manufacture the entire technology suite, the battery, the motor, the inverter, the whole electric powertrain in-house. We're not just buying in parts here and just adding value that way. There's a whole lot of inbuilt value add to the cars that we've got.

<unk> thousand units by the end of the decade, we have a plan in place to expand Casa Grande to that level.

And we've also got localization of manufacturing, we've got incredible value in our manufacturing as well because we manufacture the entire technology suite.

Battery mode to the incurred.

The whole electric powertrain in house. So we're not just Boeing in parts here I'm, just adding value that way, there's a whole lot of inbuilt value add to the cars that we've got we've got a Catholic Grande capacity plan.

Peter Rawlinson: We've got a Casa Grande capacity planned out to 365,000 units. Of course, we also plan plants in other parts of the world, the Middle East and in China. This is gonna be part of our global expansion plan. I think we're very ambitious in terms of the scope. Make no mistake, this is a technology play, and this is a technology race. As a tech company, it's our technology which we are confident will put us in this preeminent position. As you know, we've designed this technology to be truly mass manufacturable. I think scaling our volume is well within our sights.

Planned out to 365000 units, but of course, we also plan.

In other parts of the world.

The middle East and in China.

And so this is going to be part of our global expansion plan I think we're very ambitious in terms of the scope and make no mistake. This is a technology play and this is a technology race and as a tech company. It's our technology, which we are confident will put us in this pre eminent position but.

As you know we designed this technology to be truly mess manufacturable.

Scaling our volume is well within our sights.

And in China, well, great to have you with US first and then I can take the second part of your question, where you're talking about balance sheets, and all such as deployment of capital. So we're sitting in a terrific place today with a $4 8 billion as of September 30th that's going to get us well through 2022, you're going to see a large capex.

Sherry House: Well, great to have you with us first, John. I can take the second part of your question where you're talking about just balance sheets and also just deployment of capital. We're sitting in a terrific place today with the $4.8 billion as of 30 September. That's gonna get us, you know, well through 2022. You're gonna see a large CapEx increase happening next year. Actually, multiples of CapEx are gonna be deployed next year versus this year. We're already doing that acceleration. In June, we announced that we were gonna be bringing forward $350 million of planned CapEx investment from future periods into the 2021 to 2023 period, and also increasing overall between 2021 and 2026 by 6% to 7%.

Increase happening next year actually multiples the capex are going to be deployed next year versus this year. So we're already doing that acceleration and in June we announced that we were going to be bringing forward $350 million of planned capex investment from future periods into the 2021% to 2023 peer.

And also increasing overall between 2021 and 2026 by 6% to 7%. So we are going to be as a company accelerating our ability to deploy capex and if the opportunity presents itself you might recall that our prior versions of our model. It suggested that you know kind of <unk>.

Sherry House: We are gonna be, as a company, accelerating our ability to deploy CapEx. If the opportunity presents itself, you might recall that our prior versions of our model have suggested that, you know, kinda 2024 and beyond, that we might start to step down our CapEx. If that opportunity is there for, you know, continued expansion and we are ready for it, you know, we will certainly go after it. We do think that there is increasing availability of capital, you know, to us today from a lot of different sources. You'll note that we still haven't even taken debt on, so, you know, we have the opportunity to provide, you know, terrific loan-to-value there if we chose to take on debt.

24, and beyond that we might start to step down our capex, but if that opportunity is there for continued expansion and we are ready for it we will certainly go after it we do think that there is increasing availability of capital to us today from a lot of different sources.

Note that we still haven't even taken dead on so we have the opportunity to provide a terrific loan to value.

There if if we chose to take on that and then with the fat price increasing it gives us a lot of other opportunities as well. So we're feeling really good about what we could do and we feel like we are increasing.

Sherry House: With the stock price increasing, it gives us a lot of other opportunities as well. We're feeling really good about what we could do, and we feel like we are increasing, you know, the company's ability to deploy capital efficiently and quickly.

Company's ability to deploy capital efficiently and quickly.

Okay, and then just a second question Peter I mean, obviously with.

John Murphy: Okay. Then just a second question, Peter. I mean, obviously with Air, you have a knockout product, with best-in-class range, you know, arguably one of the best, if not the best EV on the planet. When you think about Gravity, that's the product to follow. Gravity is following that. You know, how do you view Gravity's differentiation in the market? I mean, presumably it's just given the form factor, it's not gonna have quite as good a range as Air. I mean, what's the real, no pun intended, pull for the Gravity to the consumer in the market?

Are you you haven't knockout products with best in class range arguably one of the best if not the best E V on the on the planet.

When you think about gravity.

Back to follow so Ravi its Bali is following that.

How do you view gravities differentiation in the market I mean, presumably it just given the the form factor, it's not quite as good a range as.

Air, but I mean, what's the real.

No pun intended pull for the gravity to the consumer in the market.

I'm. So glad you asked me that we've made a whole bunch of.

Peter Rawlinson: I'm so glad you asked me that. We've made a whole bunch of advances with Gravity project. It's very close to my heart. We're getting it ready for production late 2023. I think it's gonna be equally as disruptive in the SUV space as Air is in its sedan space. We're gonna deploy the space concept, the miniaturization of the electric powertrain, incredible range for its class. It's gonna have one or two really beguiling unique features as well. I am super excited about Gravity.

Advances with gravity project, it's very close to my house, we're getting it ready for production late 'twenty, three and I think it's going to be equally as disruptive in the SUV space.

<unk> is in its sedan space, we're going to deploy displaced concept minutes realization electric powertrain incredible range for its class and it's going to have one or two really dialing unique features as well.

Super excited about gravity.

Okay, and then lastly, sorry, just a housekeeping question Sherry how much stock comp was in SG&A and R&D specifically in each each line item. If you could just give it give us that.

John Murphy: Okay. Lastly, sorry, just a housekeeping question, Sherry. How much stock comp was in SG&A and R&D, specifically in each line item? If you could just Give us that if you have it.

Sherry House: I can tell you across the two, it was $235 million, and that's roughly double what it might have otherwise been. You have this cumulative effect that I mentioned, and that's, it's really just related to... It has like a double trigger, and you have to actually have the merger happen before you can put it up on your accounting statements.

I can tell you across the two with $235 million and Thats roughly double what it might have otherwise spent the chip is cumulative effects that I mentioned and yes.

It's really just related to it it has like a double trigger and you have to actually pay.

The merger happen before you can put it up on your accounting statement.

Plus the stock is performing very well so that's always that's always a good high class problem that.

John Murphy: The stock is performing very well, so that's always, you know, a good, you know, a high-class problem to have. Thank you very much, guys. I appreciate it.

Thank you very much guys I appreciate it.

Yeah, Yeah no of course, it was more of that is the cumulative facts then it was the stock price that it felt right.

Sherry House: Yeah. You know, of course. It was more that it's a cumulative effect than it was the stock price itself, right?

Okay, great. Thank you very much guys.

John Murphy: Okay.

Sherry House: Yeah.

John Murphy: Great. Thank you very much, guys.

Thank you.

Operator: Thank you. As a reminder, ladies and gentlemen, we ask you that you limit yourself to one question and one follow-up. Our next question comes from the line of Adam Jonas with Morgan Stanley. Your line is open.

As a reminder, ladies and gentlemen, we ask that you limit yourself to one question and one follow up.

Our next question comes from the line of Adam Jonas with Morgan Stanley. Your line is open.

Hi, good evening, everybody and congrats on the motor trend car of the year Award that's incredible.

Adam Jonas: Hi, good evening, everybody, congrats on the MotorTrend Car of the Year award. That's incredible, especially considering it's your first car, well done.

Considering it's your first car so well done.

Alright, Thanks, Peter I had a question on the Delta of reservations from the 13 at the end of the quarter to the over 17 now can you give us a little.

Peter Rawlinson: Thank you.

Adam Jonas: Thanks, Peter. I had a question on the delta of reservations from the 13 at the end of the quarter to the over 17 now. Can you give us a little? My understanding is you opened up reservations to international, so I'd be curious what the like for like is of North American reservations within that delta. Maybe within international, how much it was Saudi versus non-Saudi or any color there would be helpful.

My understanding is you opened up reservations to international so I'd be curious what the like for like is.

North American reservations.

And that Delta and then maybe within international how much of a saudi versus non Saudi or any any color there would be helpful.

We don't conduct international reservations before we announce a 13000.

Peter Rawlinson: We'd opened up the international reservations before we announced the 13,000. Also, I mean, the bulk of reservations is our home market, US, and we haven't even opened up the big market in the future, which is China.

I mean, the bulk reservations is our home market.

Yes.

And we haven't even opened the big market in the future, which is which is China, but yes, absolutely Saudi is great because it's our second biggest.

Adam Jonas: Yep

Peter Rawlinson: ... absolutely, Saudi is great because it's our second biggest market by number of reservations. That's really heartening that, you know, that the country which has gained its wealth based upon its carbon economy is so forward-looking and sees the Air as such an attractive product.

Market by number of reservations and Thats really heartening.

The country, which has gained as well based upon carbon economy is so forward looking.

And such an attractive product.

Okay, Peter I'll leave it to you whether you want to disclose that or not but just for my second question.

Adam Jonas: Okay, Peter, I'll leave it to you whether you wanna disclose that or not, but just for my second question, on your distribution strategy, can you remind us why the advantages of going direct to consumer and why you are not using a franchise model? I don't believe you're considering using a franchise model. I just wanted to confirm that. Thanks.

On your distribution strategy can you remind us why.

The advantages of going direct to consumer and why you are.

Are not using our franchise model and I don't believe you're considering using a franchise model, but just wanted to confirm that thanks.

Peter Rawlinson: That's correct, Adam. Well, I think, you know, the important thing here is that we are creating a new brand. It's not just about the product. The product defines the brand, but there's more here than just Lucid Air. A luxury brand and, you know, the consumer experience and the consumer journey is too precious to delegate to third party, we need to choreograph the consumer's journey through discovery, through inquiry, through purchase, and ownership. How better than to do it directly?

Correct, Kevin well I think the important thing here is that we are.

Creating a new brand is not just about the product.

<unk> defines the Brian.

There's more than just lucid.

Our luxury brand.

The consumer experience and the consumer journey is too precious to.

Delegate the third party, we'd need to choreograph the.

Consumers' journey through.

Discovery through inquiry through purchase and ownership and how better.

Directly.

You can also just driving consistency and messaging as well youre not working with independent franchises and dealership.

Sherry House: You can also just drive, you know, consistency in messaging as well. You're not working with independent franchises and dealerships, and it just really allows a lot more control in pricing. There's a lot of benefits that we see in this direct relationship.

It just really allows us a lot more control controlling pricing.

A lot of benefits that we see in a direct relationship.

Thank you Sherri Thanks Peter.

John Murphy: Thank you, Sherry. Thanks, Peter.

Thank you.

Peter Rawlinson: Thank you.

Thank you.

Operator: Thank you. Our next question comes from the line of Itay Michaeli with Citi. Your line is open.

Our next question comes from the line of I'd tell you, Mike Kelly with Citi. Your line is open.

Great. Thank you hi, everybody.

Itay Michaeli: Great, thank you. Hi, everybody. Just a first question, first going back to the reservation growth up to 17,000. With the momentum you're seeing in reservation, you know, how are you thinking about when to, I guess, more formally unveil Gravity and even open up the reservation book there?

Just a first question first going back to the reservation growth up to 17000, you went with the momentum Youre seeing in reservations. How are you thinking about went to I guess more formally unveil gravity and even open up the reservation book there.

Oh gosh.

Peter Rawlinson: Oh, gosh. Well, I guess that will all things in good time. I'd like to have Gravity to a level of greater substance that we can actually show a car, possibly later next year, I would say. Right now, I've got such laser focus on Air. The reservations are growing, you know, increasing. I'll tell you something else. I'm really particularly happy about the split in those reservations. We've got a really nice blend. I mean, we're sold out of Dream Edition, as you know. We've expanded that to 520 units to reflect our 520 EPA rating and the growing demand. We've got a really nice blend of reservations for Grand Touring, and Pure, very much reflecting the sort of split that we will manufacture over the next 15 months or so.

Yes that will all things in good time.

Like to have gravity to a level of greatest subsystems that we can actually show a car.

Suddenly later next year, I would say, but right now I've got.

Laser focus on the reservations are growing.

And I'll tell you something else.

I'm really particularly happy about the split in those reservations, we got a really nice blend I mean, it was so low.

In addition, as you know we've expanded that to 520 units to reflect five 'twenty EPA rating and the growing demand, but we've got a really nice blend of reservations for grand touring and touring and pure very much reflecting the sort of split.

We will manufacture over the next 15 months and in fact, when you look at September 30th.

Sherry House: In fact, when you look at 30 September numbers, we had talked about the 13,000 reservations, and we also had talked about that reflects an order book in revenues of about $1.3 billion. You can do the MSRP math from there, and it gives you a good sense of where that mix lies. You can see we're not over indexed on Pure. It's just a really nice balance. We're happy with where it is and, you know, we'll keep watching it as we go forward. We're also gonna be enjoying, you know, decreasing, you know, costs over time and improving margins. We feel like we'll be in a really good position as, you know, some of these other products now pick up.

We had talked about the 13000 reservations and we also had talked about that that reflects an order book and revenues of about $1 3 billion. So you can do the MSRP math from there and it gives you a good sense of where that.

Mix wise and so you can see we're not over index on pure it's just a really nice balance. So we're happy with where it is and we'll keep watching it as we go forward and we're also going to be enjoying decreasing.

Cost over time, and improving margins and so we feel like we'll be in a really good position as some of these other products pick up.

That's all but that's very helpful. And then just maybe secondly, I'm, hoping you can update us on your latest thoughts on the Dream drive software strategy in terms of our partners versus what you might look to do in house.

Itay Michaeli: That's, that's very helpful. Just maybe secondly, hoping you can update us on your latest thoughts on the DreamDrive software strategy in terms of, you know, partners, versus what you might look to do in-house.

Yes, yes.

Peter Rawlinson: Yeah. Well, our strategy to date has been, of course, a key focus on creating the very best electric vehicle in the world with the most advanced electric powertrain. Endowing that car with the core foundations of hardware suite. 32 sensor suite, 14 cameras with solid state, 120 degree lidar, and a whole host of long-range radar and closely knit radar. That's been the step one of the plan: create the most advanced foundations for the house in terms of that hardware and have software which is broadly competitive in the marketplace. Now we've achieved that, the next step will be to advance that software. Now we're planning as a default to do that in-house, and we're building the team.

Our strategy today has been of course, a key focus on creating the very best electric vehicle in the world with the most advanced electric powertrain and the.

In doing the call with a cool.

<unk> a hard way suites, 32 census week 14 cameras with solid state 120 degree lineup and a whole host of.

Long range radar and placing it radar so that that's been the.

One of the plan correct. The most advanced presentations for the house in terms of the hardware and software, which is broadly competitive in the marketplace.

Now now we've achieved that the next step will be to advance that software now we are planning as a default to do that in house and we're building the team, but as you know I'm very open here in Silicon valley to potential partnerships in terms of the software, but I see that.

Peter Rawlinson: As you know, I'm very open here in Silicon Valley to potential partnerships in terms of the software. I see that as a potential bonus. I think the default position is gonna be develop that software now and take that to world-class standard based upon the hardware suite we've got and to develop that in-house.

As a potential bonus I think the default position is going to be developed that software and I will take that to world class standards.

Based upon the hardware, we've got and to develop that in house.

Perfect Thats all Thats all very helpful. Thank you.

Itay Michaeli: Perfect. That's, that's all very helpful. Thank you.

Thank you.

Peter Rawlinson: Thank you.

Thank you.

Operator: Thank you. As a reminder, ladies and gentlemen, that's star one to ask the question. Our next question comes from the line of James Southerland with Pickering Energy Partners. Your line is open.

As a reminder, ladies and gentlemen that star one to ask the question.

Our next question comes from the line of Stan Chapman second dinner with Pic Pickering energy.

Line is open hi, Thanks for taking my question and congratulations on the new vehicle launch.

James Southerland: Hi. Thanks for taking my question. Congratulations on the new vehicle launch. Can you speak to a little bit what degree of gross margin variability you have across the different versions of the Air and how over time, if you take a point of view that to drive volumes over time you'll have a greater proportion of Pure sales, what are the implications for that in terms of trend to gross margin as that mix shifts over time?

James Southern: Hi. Thanks for taking my question. Congratulations on the new vehicle launch. Can you speak to a little bit what degree of gross margin variability you have across the different versions of the Air and how over time, if you take a point of view that to drive volumes over time you'll have a greater proportion of Pure sales, what are the implications for that in terms of trend to gross margin as that mix shifts over time?

Could you speak to a little bit of what degree of March gross margin variability across the different versions of the air and how over time, if you take a point of view that to drive volumes over time Youll have a greater proportion of pure sales of how what are the implications for that in terms of trying to gross margin.

That mix shifts over time.

Yeah. Thanks, so much for your question so we're expecting.

Sherry House: Yeah. Thanks so much for your question. We're expecting to have competitive growth margins by the time we reach mid-decade. You're gonna see that our growth margins are not gonna be there initially because we're activating depreciation expense, we're training new employees, we're gonna be driving efficiency, you know, within the manufacturing arena over the next, you know, year, especially a year and a half. Then you're gonna see as the volume increases, just growth margins improving overall as that absorption improves.

To have competitive gross margins by the time, we reach mid decade, and youre going to see that our gross margins are not going to be there initially because we're activating depreciation expense or training new employees, we're gonna be driving efficiency within the manufacturing.

Arena over the next year, especially a year and a half and then youre going to see as the volume increases just gross margins improving overall is that absorption improves.

Sherry House: You know, with respect to your question about how are we thinking about, you know, the higher priced models versus the Pure, we're just in such a unique advantaged position because of our technology that it's gonna enable us to go from, you know, this tremendous machine of our Dream Edition and still be able to produce with the Pure over 400 range, 400-mile range, as well as over 500 horsepower. We can do that while reducing cost by reducing one of our motors. We also can reduce the battery pack, and we have a lot of trim features that can be activated or deactivated to basically make a bespoke product, you know, exactly to what the customer is seeking. Those are the enablers that we have.

With respect to your question about how are we thinking about the higher priced models.

Here, we're just in such a unique advantaged position because of our technology that is going to enable us to go from the.

Tremendous machine of our Dream edition.

They'll be able to produce with the pure over 400 range 200 mile range. It's almost over 500 horsepower and we can do that while reducing costs by reducing one of our motors. We also can reduce the battery pack and we have a lot of friends features that can be.

Activate or deactivate it basically make a bespoke product exactly to what the customer is seeking so those are the enablers that we have that's.

Peter Rawlinson: That's absolutely right. Right now we're using our extraordinary efficiency to achieve range, to create a technological tour de force to define the brand as a range king. In the future, 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, be it 300mi, 400mi, whatever, but with a commensurately smaller, proportionately smaller battery pack than the competition because our technology is inherently more efficient. Because of that, because the battery pack is the single most expensive item in an electric car, this will affect the margin, and therefore it has a direct bearing upon our viability, our commercial viability as a company.

Absolutely right.

Right now, we're using our extraordinary efficiency to achieve range to create a technological two to force to defining the brand. There's a range King books in the future will we use that technological advance as a commercial enabler. It means that we will be able to provide a color.

Which is competitive with range, we'd be at 300 miles 400 miles forever, but with a commence shortly smaller proportionately smaller battery pack than the competition because our technology is a more efficient and because of that because the battery pack is.

The single most expensive electric car this will affect the margin and therefore have a direct bearing upon.

Liability or commercial viability as a company.

The other thing I would just stay there too it's just.

Sherry House: The other thing I would just say there too is just, we have an amazing team. We've got a terrific supply chain team. We have a terrific manufacturing team. They've done it before. They've done it at Audi, they've done it at Tesla, and they've not just gotten the plants up and running and efficient, but they've brought the costs down. All of that experience is coming to bear on our product and our factory. That's another important point that I wanted to make sure I left you with.

We have an amazing team, we've got a terrific supply chain team had a terrific manufacturing team they've done it before they send it at Audi they've done it at Tesla in it not just gotten the plants up and running an efficient that they brought the cost down and all of that experience is coming to bear on our product and our factory.

So that's another important point that I wanted to make sure I left you with yes. It is always the factory in a modular manner with cost down and mindful of the future. So the call is designed that way.

Peter Rawlinson: Yeah. We've designed the battery in a modular manner with cost down in mind for the future. The car is designed that way.

Thanks, So just a follow up.

James Southerland: Thanks. Just to follow up. Earlier you mentioned that you have a fairly balanced order book between the different four versions of the Lucid Air. Can you give us a little bit of a sense of when next year that we could expect to see shipments of the Pure to begin?

James Southern: Thanks. Just to follow up. Earlier you mentioned that you have a fairly balanced order book between the different four versions of the Lucid Air. Can you give us a little bit of a sense of when next year that we could expect to see shipments of the Pure to begin?

Earlier, you mentioned that you have a fairly balanced order book between the different four versions of the lucid there.

Could you give us a little bit of a sense of when next year that we could expect to see shipments of the pure to begin.

I think it's suddenly in the latter part of next year when fuel comes out.

Peter Rawlinson: I think it's in the, in the latter part of next year when Pure comes out. You know, my passion is Pure. I wanna get the cost down. I want to, you know, fulfill our mission, which is the mass adoption of electric vehicles.

But Mike.

My passion is pure I won't get the cost down I want to.

Fulfill our mission, which is the mass adoption of electric vehicles.

Great. Thank you very much.

James Southerland: Great. Thank you very much.

James Southern: Great. Thank you very much.

Thank you.

Operator: Thank you. Ladies and gentlemen, this concludes our question and answer session. I would now like to turn the call back over to Peter for closing remarks.

Ladies and gentlemen, this concludes our question and answer session I would now like to turn the call back over to Peter for closing remarks.

Thank you so much.

Peter Rawlinson: Thank you so much. Now, as you can see by what we've achieved in Q3 and by future plans, there is a tremendous amount of exciting activity here at Lucid. Supported by our industry-leading technology, our ongoing investments in cutting-edge manufacturing, and the outstanding team we have assembled, we believe there are sizable opportunities for shareholder value creation ahead of us. I would again like to thank our employees for getting us here. We have a truly unrivaled team. I am proud of what we've accomplished, and I'm optimistic about the opportunity ahead of us. We look forward to speaking with you regularly and keeping you updated on the progress we are making. We aim to be transparent in our approach and look forward to engaging with you. Thank you so much for joining us here today.

As you can see by what we have achieved in Q3.

And by future plans.

A tremendous amount of exciting activity here at lucid.

Supported by our industry leading technology.

One ongoing investments in cutting edge manufacturing and the outstanding team. We have assembled we believe the refiners are all opportunities for shareholder value creation ahead of us.

I would again like to thank our employees for getting US here, we have a truly unrivaled team.

I'm proud of what we've accomplished and I'm optimistic about the opportunity ahead of us.

We look forward to speaking with you regularly and keeping you updated on the progress we are making.

We aim to be transparent in our approach and look forward to engaging with you.

Thank you so much for joining us here today.

Yeah.

Ladies and gentlemen, this concludes today's conference call. Thank you for your participation you may now disconnect.

Operator: Ladies and gentlemen, this concludes today's conference call. Thank you for your participation. You may now disconnect. Ladies and gentlemen, thank you for standing by, and welcome to the Lucid Q3 2021 Earnings Conference Call. At this time, all participants are in a listen only mode. After the speaker's presentation, there will be a question-and-answer session. To ask the question during this session, you will need to press star then 1 on your telephone. Please be advised that today's conference is being recorded. If you require any further assistance, please press star then 0. I would now like to turn the conference over to your speaker for today, Lauren Sloane, investor relations for Lucid. You may begin.

[music].

Ladies and gentlemen, thank you for standing by and welcome to the loose at third quarter 2021 earnings Conference call.

Please be advised that today's conference is being recorded if you require any further assistance. Please press star then zero.

Now like to turn the conference over to your Speaker for today, Lauren Sloane Investor Relations for Lucid you may begin.

Welcome to lucid group's third quarter fiscal year, 2021 earnings call.

Lauren Sloane: Welcome to Lucid Group's Q3 Fiscal Year 2021 Earnings Call. Thank you for joining us today. On the call, we have Peter Rawlinson, our CEO and CTO, and Sherry House, our CFO. Our quarterly report on Form 10-Q for the Q2 ended 30 September 2021, was filed with the SEC and the related earnings press release was issued after a close of market earlier today. Both are posted on our website. Before we get started, we want to emphasize that some of the statements on this call, particularly those regarding the future financial performance of the company, production and delivery volume, macroeconomic and industry trends, company initiatives, and other future events are based on the information that we have of as of today and include forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995.

Thank you for joining us today.

On the call, we have Peter Robinson, our CEO, and CTO and Sherry House, our CFO or COO.

Quarterly report on Form 10-Q for the second quarter ended September 32021 was filed with the SEC and the related earnings press release was issued after close of market earlier today, both are posted on our website.

Before we get started we want to emphasize that some of the statements on this call, particularly those regarding our future financial performance of the company production and delivery volumes.

So economic and industry trends.

Company initiatives and other future events are based on the information that we have a path of today and include forward looking statements within the meaning of the private Securities Litigation Reform Act of 1995.

Forward looking statements are subject to numerous risks uncertainties and other factors that could cause actual results to differ from expectations.

Lauren Sloane: Forward-looking statements are subject to numerous risks, uncertainties, and other factors that could cause actual results to differ from expectations. We refer you to the cautionary language included in risk factors in our quarterly report on Form 10-Q for the quarter ended 30 September 2021, as well as other documents filed or to be filed with the SEC for a fuller discussion of such risks, uncertainties, and other factors. Forward-looking statements made during today's call speak only as of the time they are made, and we are under no obligation and expressly disclaim any obligation to update, alter, or otherwise revise any forward-looking statements, rather as a result of new information, future events, or otherwise, except as required by law. You are cautioned not to place undue reliance on these forward-looking statements. In addition, management will make reference to non-GAAP financial measures during this call.

We refer you to the cautionary language included in our risk factors in our quarterly report on Form 10-Q for the quarter ended September 32021, as well as other documents filed or to be filed with the SEC for a fuller discussion of such risks uncertainties and other factors.

As a result of new information future events or otherwise, except as required by law.

You are cautioned not to place undue reliance on these forward looking statements.

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 currently available in our earnings press release issued earlier this afternoon as well as in the Investor deck available in the Investor Relations section of our website at IR that lucid Motors dotcom.

And now I'd like to turn the call over to lucid CEO and C. T O Peter Robinson Peter Please go ahead.

Thank you Lauren we are really excited to welcome they told us to loosen inaugural earnings call.

Peter Rawlinson: Thank you, Lauren. We are very excited to welcome stakeholders to Lucid's inaugural earnings call. We have achieved a tremendous amount over the course of 2021, and we're excited to lay out our vision and priorities for the company. We look forward to continuing to work with investors and analysts to build long-term relationships with our stakeholders. Now, for those of you who are new to Lucid stories, we were originally founded as Atieva back in 2007. At that time, we were focused on advancing our battery technology, logging over 20 million miles in real-world driving data. Armed with everything we learned as Atieva, we then turned our efforts to creating the best car in the world as Lucid, rethinking from the ground up every single aspect of the vehicle, from design, to engineering, to manufacturing.

We've achieved a tremendous amount over the course of 2021 and we're excited to lay on television and priorities for the company.

We look forward to continuing to work with investors and analysts to build long term relationships with our stakeholders.

For those of you who are new to loosen story, we were originally founded as a T that back in 27.

Hum.

But we were focused on advancing our battery technology logging over 20 million miles in real world driving data.

And armed with everything we learned as a T that we then turn to honestly to creating the best car in the world at lucid.

Thinking from the ground up every single aspect of the vehicle from design to engineering to manufacturing.

The initial results of that effort is listed.

Peter Rawlinson: The initial result of that effort is Lucid Air, which carries with it the means to accelerate the adoption of electrification while redefining luxury in the automotive market. 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 US 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.

Which carries with it the means to accelerate the adoption of electrification whoa redefining luxury in the or.

Automotive market.

Although we continue to bring leased it as a market.

Clear that the opportunity we have in front of us is a massive.

The market opportunity is not just for electric vehicles.

The vehicles are rule.

Currently there's only about 2.5% penetration into the U S vehicle market release, and only about 2% penetration into the global vehicle market, we see the luxury car market expanding that's what the new rate of about 5% over the next few years and ultimately.

Reaching <unk>.

$700 billion of global sales near the middle of this decade.

We believe with a growing customer sentiment for electric vehicles.

Peter Rawlinson: 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. Lucid is uniquely positioned to capture this opportunity, driven by our key differentiators, namely our technology innovation and the people who work here. First off, we believe that our technology is worlds apart from even the current market leaders. For example, no one expected Lucid to achieve even 400 miles of range, and now we have an EPA certification of 520 miles of range for the Lucid Air Dream Edition R. We've created this technology with an eye towards an ability to manufacture it at scale, which is where true innovation lies.

Coupled with the government mandates encouraging their reduction provides significant support for the EV industry overall.

Pellucid position within it.

Lucid is uniquely positioned to capture this opportunity driven by our key differentiators, namely our technology innovation and the people who work here.

Now first off we believe that our technology is will depart from even the current market leader.

For example, no one expects you lucid to achieve even 400 miles of range.

We have an E P. A certification of 520 miles of range for the lucid.

Dream edition.

And we've created this technology with an eye towards an ability to manufacturing at scale, which is where true innovation lies.

Furthermore, we have a growing need to continue innovating, which is why we've been able to support even our early range estimates.

Peter Rawlinson: Furthermore, we have a drive to continue innovating, which is why we've been able to surpass even our early range estimates. As another example, our technology powers every car in Formula E, the world's premier electric motorsport series. Indeed, it changed the sport. Our battery packs have enabled Formula E cars to complete full race distances on a single charge. What we learn from every race car at every race goes directly into the battery technology powering Lucid Air. As the media and early customers have learned, our vehicles are truly the fusion of hardware and software, made possible by one of the best teams in the industry. We have auto industry veterans, including members of my former Tesla Model S team, working with former executives from Apple and learning from their customer electronics experience, along with so many other standouts from the automotive and tech industries.

As another example.

Technology powers every car in Formula E. The world's premiere electric motor Sport series.

And indeed, it shrink the sport Oh battery packs are enabled formula E cards to complete pool race distances on a single charge.

And what we learn from every risk and every race goes directly into the battery technology powering lucid.

As a media and early customers have learned a lot.

The of course accruing diffusion of hardware and software.

Made possible by one of the best teams in the industry.

We have auto industry veterans, including members of my former Tesla model S team working with former executives from Apple.

Learning from their customer electronics experience.

Along with so many other standouts from automotive and Tech industries.

We plan to leverage our team's abilities to continue to improve vehicle function and features even after customers take delivery.

Over the air updates.

Updates.

Well before that you also have a substantial achievements during the most recent quarter.

It would be remiss in not quite like think some of our most recent achievements outside of Q3 and that's because these are quite significant.

Well first off we started delivering vehicles to customers actually went out of Silicon Valley H Q, just two weeks ago on October 30th.

Now this preceded an increasing number of deliveries nationwide slated for this month and next including more than two dozen deliveries to paying customers. They could just this past weekend.

So you may have already witnessed your first cycling I believe today in the wild.

Peter Rawlinson: We actually have a full report on customer deliveries during our Q4 call. Watch this space for more. Next, just this morning, Lucid Air was officially announced as MotorTrend's 2022 Car of the Year. Now, this is arguably the most prestigious award in the motor industry, seeking out true innovation and groundbreaking vehicles. For a new brand and a new company to win, well, to my knowledge, that's only been done once before, and I should know, I was there. Getting back to the matter at hand, in Q3, we secured a number of certifications required to sell the vehicle ahead of those customer deliveries as I just mentioned. This includes full FMVSS, CARB, FCC, and FDA safety certifications, all of which further establish our credibility and cleared the way for the ramp-up of Lucid Air deliveries.

We actually have a full report on customer deliveries during our Q4 call. So watch this space for more.

Next just this morning, lucid was officially announced as most trends 2022 car of the year.

Now this is arguably the most prestigious award in the motor industry seeking out truly innovation and ground breaking vehicles.

For our new brand and a new company to win well to my knowledge, that's only been done once before.

And I should know what was there.

Getting back to the matter at hand and COO.

Q3, we secured a number of certifications required to sell a vehicle head all of those customer deliveries as I just mentioned this.

This includes full F N B S S co.

Cobb FCC and ft as safety certifications, all of which further established our credibility and cleared the way for the ramp up of lucid ad deliveries.

But what I'm most proud of is the official EPA rating of 520 miles range.

Peter Rawlinson: What I'm most proud of is the official EPA rating of 520 miles range, and because we achieved this landmark through our world-leading in-house technology, not by simply installing an oversized battery pack or off-the-shelf parts. Our Lucid Air Grand Touring has an official EPA-rated range of 516 miles, and it achieves that with a 112 kilowatt-hour battery pack, giving it an industry-leading efficiency of 4.6 miles per kilowatt hour. Taken a step further, we have six Lucid Air variants in the top six positions of the EPA range ratings for EVs. Unlike many other EV companies, we design, develop, and build our powertrain and core EV technology components in-house with an emphasis upon efficiency. Now, we view this as a strategic competitive advantage for Lucid as we look ahead.

And because we achieved this landmark through our world leading in house technology.

Not by simply installing an oversight battery pack or off the shelf pumps.

I listed a grand touring.

Has an official E P. A rates at a range of 516 models and it achieves that with a 112 kilowatt hour battery pack.

Giving us an industry leading efficiency.

4.6 miles per kilowatt hour.

Taking a step further we have six solicitor variance in the top six positions of the EPA range ratings for Evs.

And unlike many other EV companies.

We design develop and build our powertrain and cool EV technology components in house with an emphasis upon efficiency.

Now we view this as a strategic competitive advantage for lucid as we look ahead.

Next.

Peter Rawlinson: Next, after securing the EPA rating, we officially commissioned our factory in Casa Grande, Arizona, and started production of Lucid Air. At a factory event on 27 September, we hosted our customers, media, and guests, all of whom had the opportunity to drive a Lucid Air. The reactions and feedback from this experience could not have been better, including a broad validation from important media. You know, I rather like when reporters call Lucid Air jaw-dropping and the future of cars. The fantastic experiences customers and media had with the Lucid Air to date have only increased interest in the brand.

After securing the EPA rating, we officially commissioned a factory in Casa Grande Arizona.

And started production of lucid.

At a factory event on September 27th we hosted customers media and get all of them have the opportunity to really elusive at.

The reaction and feedback from this experience could not have been better.

Including broad validation from important media.

You know I'd, rather like when reporters cool links today jaw dropping.

And the future of cars.

Now that's a fantastic experiences customers. The media had we believe today to date have only increased interest in the brand and the result is an accelerated pace of new reservations.

Peter Rawlinson: The result is an accelerated pace of new reservations, currently at 17,000 and climbing quickly, which has also spurred us to increase the total production quantity of the Dream Edition to 520, both to accommodate demand and also to recognize the landmark EPA 520 miles achievement. Lastly, I'll highlight that the customer journey has also been an area of focus for us this past quarter. We now have 16 Lucid Studios and service centers across North America, but this is only the beginning, and I'll talk more about our plans for expansion shortly. Now, I wanted to look ahead to our near-term strategic priorities, which will see a continued focus on achieving progress against our existing activities. As I mentioned earlier, last month, we started delivering Lucid Air Dream Editions models to our reservation holders, and we're currently ramping up customer deliveries.

Currently at 17000 and cleaning quickly.

Which has also spurred us to increase the total production quantity of the Dream edition.

520, both to accommodate demand and also to recognize the landmark E. P. A 520 miles achievement.

Lastly, I'll highlight that the customer journey has also been an area of focus for us this past quarter.

We now have 16 lucid studios in service centers across North America.

But this is only the beginning.

I'll talk more about our plans for expansion shortly.

Now I wanted to look ahead to our near term strategic priorities, which will see a continued focus on achieving progress against our existing activities.

As I mentioned earlier last month, we started delivering lucid dream additions models tour reservation holders and we are currently ramping up customer deliveries.

We will soon start to deliver lucid Grand touring models, followed by Turing and pure next year.

Peter Rawlinson: We will soon start to deliver Lucid Air Grand Touring models, followed by Touring and Lucid Air Pure next year. With such demand across the Lucid Air lineup, we felt it critical to accelerate the expansion of our advanced manufacturing plant or our AMP One factory in Arizona, essentially investing in our capabilities to mitigate future business risks. This process started in Q3 with progress well underway on the addition of 2.85 million sq ft of manufacturing space to our Arizona factory. This expansion will allow for a significant increase in production capacity for Lucid Air and enable production of the Gravity SUV in 2023. Speaking of expansion, our retail footprint grew significantly this year, including our first location outside of the US in Vancouver, Canada, which we opened last month.

With such demand across the lucid air lineup, we felt it critical to accelerate the expansion of our advanced manufacturing plant or a M. P. One factory in Arizona Sn.

Essentially investing in our capabilities to mitigate future business risks.

This process started in Q3 with progress well underway on the addition of $2 8 million.

A million square feet of manufacturing space to our Arizona factory.

This expansion will allow for a significant increase in production capacity for lucid head.

And to enable production of the gravity SUV in 2023.

And speaking of expansion of our retail footprint grew significantly this year include.

Including our first location outside of the U S inventory for Canada, which we opened last month.

And we plan to have 20 studios and service centers.

Peter Rawlinson: We plan to have 20 studios and service centers open by the end of this year. You can see acceleration as a theme in the second half of 2021. We also continue to increase our service footprint across the US, not just with physical service centers, but also with the rollout of our mobile service program. We expect service centers to continue opening in North America, and we anticipate hiring a significant number of additional service technicians as we expand our capabilities. We're optimistic about these goals, even in a challenging environment as COVID-19 continues to present numerous obstacles for the auto industry and supply chain. Lucid is no stranger to this, but we have continued to deliver against our timeline and with the highest standard of quality.

By the end of this year.

So you can see acceleration.

In the second half of 2021.

We also continue to increase our service footprint across the U S. Not just with physical service centers, but also with the rollout of our mobile service program.

We expect service centers to continue opening in North America, and we anticipate hiring a significant number of additional service technicians.

As we expand our capabilities.

We're optimistic about these goals even in a challenging environment as COVID-19 continues to prevent numerous obstacles for the auto industry and supply chain.

Lucid is no stranger to this but we have continued to deliver against our timeline and with the highest standard of quality.

And I would like to commend the company's employees, who work relentlessly and tirelessly to help lucid progress and grow during these recent periods of uncertainty.

Peter Rawlinson: I would like to commend the company's employees who work relentlessly and tirelessly to help Lucid progress and grow during these recent periods of uncertainty. Lastly, I would like to spend some time providing an overview of our longer-term strategic focus areas, as well as upcoming major milestones. Lucid continues to grow its operations in the US, but as part of our growth strategy, and more specifically our international strategy, we intend to expand our sales, maintenance, repair services, and manufacturing activities outside of the US, again, with the goals of mitigating business risk and charging future growth. On the retail and service front, we're looking to expand our footprint in Europe and the Middle East, and we expect to enter these markets in 2022.

Lastly, I would like to spend some time, providing an overview of our longer term strategic focus areas as well as upcoming major milestones.

Lucid continues to grow its operations in the U S, but it's part of our growth strategy and more specifically.

It's a national strategy, we intend to expand our sales maintenance repair services and manufacturing activities outside of the U S again with the goals of mitigating business risk and charging future growth.

On the retail and service front, we're looking to expand our footprint in Europe and the middle East.

And we expect to enter these markets in 2022.

There has been continued expansion of the teams in both regions with key additions to leadership and employee base and we are excited by the prospects of these key regions. We believe this will help establish lucid is a global brand and address untapped market demand in these regions.

Peter Rawlinson: There has been continued expansion of the team in both regions with key additions to leadership and the employee base, and we're excited by the prospects of these key regions. We believe this will help establish Lucid as a global brand and address untapped market demand in these regions on an entirely new level. While also taking action to address climate change through sustainable mobility. Moving to our Air lineup, the longer view will see production expanding to include Touring and Pure models as well as future variants.

It's an entirely new level, while also taking action to address climate change through sustainable mobility.

Moving to our air lineup the longer view, we'll see production expanding to include clean touring and pure muscles as well as future variants.

Peter Rawlinson: With our in-house technology establishing Lucid Air as the new bank benchmark for EV efficiency, we will be quick to maximize this potential because if we can achieve 516 miles with just a 112 kilowatt-hour battery pack, it's easy to imagine a smaller pack and the weight and cost savings afforded by it, which would allow for a much more attainable EV that can still achieve 300+ or 400+ miles of range. Finally, we're excited to launch additional vehicles over the coming decade, including Project Gravity, a luxury SUV that leverages the Air's platform, and that we expect will elevate the SUV to a new level with extraordinary performance and category-defining interior space. We look forward to sharing more details about the Gravity next year ahead of expected production in 2023.

Our in house technology, establishing lucida as the new benchmark for EV efficiency, we will be quick to maximize this potential.

Because if we can achieve 516 miles with just 112 kilowatt hour battery pack, it's easy to imagine a smaller pack and the way to cost savings afforded by it which would allow for much more time to believe we can still achieve 300.

First of all 100 plus miles of range.

And finally, we're excited to launch additional vehicles over the coming decade.

Including a project gravitate, a luxury SUV that leverages, the <unk> platform and that we expect will elevate the SUV to a new level with extraordinary performance and category defining interior space.

Look forward to sharing more details about the gravity next year ahead of expected production in 2023.

So with that I would like now to hand, the call over to our CFO Sherry has who has been a tremendous addition to the lucid team.

Peter Rawlinson: With that, I would like now to hand the call over to our CFO, Sherry House, who's been a tremendous addition to the Lucid team. Her experience and background have been truly invaluable. I could not have asked for a better partner to work with me on the next phase of this very exciting journey. Sherry.

Her experience and backgrounds have been truly invaluable.

No to the us for a better partner to work with me on the next phase of this very exciting journey.

Sure.

Thank you very much Peter I'd like to start by expressing how pleased I am to be speaking to all of you today for lucid inaugural earnings call covering the third quarter of 2021, just six months ago I joined the fantastic team, which Peter has assembled and I've witnessed firsthand what is possible when you put a passionate and personal <unk>.

Sherry House: Thank you very much, Peter. I'd like to start by expressing how pleased I am to be speaking to all of you today for Lucid's inaugural earnings call covering Q3 2021. Just 6 months ago, I joined this fantastic team, which Peter has assembled, and I've witnessed firsthand what is possible when you put a passionate and persevering team on task to set a new standard in vehicle electrification. This has been a very active quarter for the company, highlighted by external validation of Lucid's many technological and design feats, and even marked by a number of industry firsts, such as first EV to reach and exceed 500 miles of range on a single charge. On the finance front, on 23 July, we completed our reverse merger de-SPAC transaction with Churchill Capital Corp IV and our PIPE investors to form Lucid Group, Inc.

On path to set a new standard and vehicle electrification. This has been a very active quarter for the company.

Divided by external validation of their said, many technological and design feed and even marked by a number of industry firsts, such as first DB to reach and exceed 500 miles of range on a single charge.

On the finance front on July 23rd we completed a reverse merger beef back transaction with Churchill Capital Corp, poor and our pipe investors to form Lucid Group Inc.

This transaction brought approximately $4 4 billion of net cash and balance sheet.

On July 26th we further raised our public profile and access to capital through our public listing on the NASDAQ is else the I D.

These events significantly bolstered loose its balance sheet and derisk the near term execution of lucid forward plan.

This capital will increase the production capacity and vertical integration at our production facilities in Casa Grande, Arizona and support the readiness of our global supply chain.

Second this capital will enable our commercialization and globalization effort by expanding our studio and service center footprint and planning for the future localization of manufacturing.

And finally, this investment will fund R&D effort to enhance and grow the technological moat that lucid is established.

Sherry House: Specifically, the dollars will advance the development and launch of new variants of the Lucid Air and the Gravity SUV, as well as future vehicle programs and other technologies. I'd now like to turn your attention to our Q3 results. To put Q3 in context, you'll observe two primary themes throughout our financials. First will be the strengthening of our financial position, which we just discussed, second will be the transformation of our company as we ready ourselves for large scale vehicle production. In our Q3 results, you'll see costs associated with our start of production in September. However, you will not see vehicle revenues until Q4, given that customer deliveries began on 30 October. In Q3, Lucid recognized revenue of $232,000, predominantly related to the use of our battery packs in the Formula E race series.

Typically the dollars will advance the development and launch of new variance at the lucid air and the gravity SUV as well as future vehicle program and other technologies.

I'd now like to turn your attention to our third quarter results.

To put the quarter in context, there are two primary themes throughout our financial.

First it will be the strengthening of our financial position, which we just discussed.

Second will be the transformation of our company as we ready ourselves for large scale vehicle production in our Q3 results, you'll see costs associated with our startup production in September. However, you will not see vehicle revenues until Q4, given that customer deliveries began on October 30th.

In Q3, Miss the recognized revenue of 232000 predominantly related to the use of our battery pack and the Formula E Racing series.

There is seasonality of this revenue stream in similar to 2020, we expect to see the lion's share of battery pack revenue in Q4.

Sherry House: There is seasonality of this revenue stream, similar to 2020, we expect to see the lion's share of battery pack revenue in Q4. The cost of revenue was $3.3 million, includes cost of goods sold related to the start of production at Amp One that occurred in September. Engineering, research, and development expenses have grown by about 72% year-to-date compared with the same period in 2020, predominantly driven by the investment in talent, prototype expenses related to the testing and certification processes that Peter referenced earlier, as well as the production quality validation fleet that we produced at Amp One. On the SG&A side, expenses increased by approximately $400 million for the 9 months ending 30 September versus the same period in 2020.

The cost of revenue was $3 3 million and includes cost of goods sold related to the startup production at Amp one that occurred in September.

And quality validation fleet that we produced at Amp one.

On the SG&A side expenses increased by approximately 400 million for the nine months ending September 30th.

Versus the same period in 2020.

A key driver of SG&A expenses, and head count growth related to the build out of the sales and service network as we prepare for additional deliveries in the fourth quarter.

Sherry House: A key driver of SG&A expenses is headcount growth related to the build-out of the sales and service network as we prepare for additional deliveries in Q4. We also invested in people, processes, and systems on the G&A side of the house in order to not only support Lucid as a publicly traded company, but also to support the globalization of our business. Lastly, there was an increase quarter-over-quarter in stock-based compensation across both R&D and SG&A. This increase is attributed to a cumulative catch-up on employee grants. Accounting treatment required the merger to close before 2021 grants could be recorded as stock-based compensation.

We also invested in people processes and systems on the G&A side of the house in order to not only support lucid is a publicly traded company.

But also to support the globalization of our business.

Lastly, there was an increase quarter over quarter and stock based compensation across both R&D and SG&A.

This increase is attributed to a cumulative catch up unemployed grants.

Counting treatment required the merger to close before 2021 grants can be recorded is stock based compensation.

Transitioning to our balance sheet and cash flow at the end of the third quarter lucid had a cash position of approximately $4 8 billion.

Sherry House: Transitioning to our balance sheet and cash flows at the end of the Q3, Lucid had a cash position of approximately $4.8 billion, reflecting the $4.4 billion from the SPAC and PIPE, plus the cash on balance sheet at the time of the close. We also added $173 million from the exercise of public warrants prior to the notice of cashless redemption, which occurred on 8 September. The cashless redemption provided investors who had purchased the LCIDW warrants with access to the stock without the burden of making an upfront cash investment. As of the close of our public warrant program, that decision resulted in the exercise of nearly all of our outstanding public warrants. The cashless exercise also reduced dilution by enabling a 0.4458 to 1 ratio on the issuance of shares to public warrants exercised.

<unk> the $4 4 billion from the Bakken pipe plus the cash on balance sheet at the time of the close.

We also added $173 million from the exercise of public warrants.

Prior to the notice of cashless redemption.

Which occurred on September eight.

The cashless redemption provided investors, who had purchased the LCI VW, one with access to the Doc without the burden of making an upfront cash investment.

As of the close of our public warrant program that decision resulted in the exercise of nearly all of our outstanding public warrants.

A cashless exercise also reduce dilution by enabling a 0.4458 to one ratio on the issuance of shares to public warrants exercised.

We observed a significant amount of goodwill with our retail investor base due to the cashless provision and our decision to extend the warrant redemption window throughout tober, 29th which about some who missed the initial redemption window to still exercise for shares.

Sherry House: We observed a significant amount of goodwill with our retail investor base due to this cashless provision and our decision to extend the warrant redemption window through October 29th, which allowed some who missed the initial redemption window to still exercise for shares. We wanna reiterate how much we appreciate everyone who exercised their warrants and are so pleased to have such a diverse and supportive investor base. Lastly, I'd like to comment on CapEx to close out our balance sheet highlights. We increased our net property, plant, and equipment by over $250 million from the prior year. As I mentioned, this PP&E growth is related to the build-out of Amp-1, investments in machinery, tooling, and equipment, and the expansion of our retail studio and service center footprint throughout the United States and internationally.

We want to reiterate how much we appreciate everyone who exercised their warrants and are so pleased to have such a diverse and supportive investor base.

And lastly, I'd like to comment on Capex to close out our balance sheet highlights.

We increased our net property plant and equipment by over $250 million from the prior year.

As I mentioned, that's PP&E growth is related to the Buildout of Amp, one investments in machinery tooling and equipment and the expansion of our retail studio in service center footprint throughout the United States and internationally.

Sherry House: Looking onward to Q4, we are incredibly excited about the road ahead. We expect to ramp up production and continue to increase customer deliveries of the Lucid Air. We're seeing increasing interest in the Lucid Air with over 17,000 current reservations. Heading into 2022, we remain committed to our plan to achieve 20,000 units in the calendar year. However, this plan is not without risk, given the extraordinary supply chain and logistics challenges that the automotive industry has been facing. Financially, we're proud to have strengthened Lucid's balance sheet as we commence production of customer vehicles heading into Q4, and we believe that we are well-positioned to fund the exceptional growth opportunities in front of us as we move through 2022.

Heading into 2022, we remain committed to our plan to achieve 20000 units in the calendar year. However, this plan is not without risk given the extra ordinary supply chain and logistics challenges that the automotive industry has been facing.

Financially, we're proud to strengthen its balance sheet.

We commenced production of customer vehicles heading into the fourth quarter.

And we believe that we are well positioned to fund the exceptional growth opportunities in front of us as we move through 2022.

In closing I'd like to thank all of you for joining our third quarter earnings call, a recording of which will be posted on our investor Relations website.

I'd also like to thank our talented employees for their hard work and dedication across our headquarters in facilities retail stores and manufacturing plants, it's because of your collective effort and the effort of our partners that lucid can create value for our investor base and drive our ultimate mission to bring sustain.

Annabelle energy technologies to the World I am personally optimistic about the future of lucid and the value that we will deliver to all stakeholders customers suppliers partners and investors.

Before we transition to analysts' questions I'd like to note that we are exploring additional methods to ensure that our broad and growing investor base can participate in the Q&A and we hope to have that implemented in early 2022.

Sherry House: With that, we'd like to open the call to questions. Operator?

With that we'd like to open the call to questions.

Operator.

Thank you, ladies and gentlemen, as a reminder to ask a question you would need to press Star then one on your telephone.

Operator: Thank you. Ladies and gentlemen, as a reminder, to ask a question, you will need to press star then 1 on your telephone. To withdraw your question, press the pound key. Again, that's star 1 to ask the question. Please stand by while we compile the Q&A roster. Our first question comes from the line of John Murphy with Bank of America. Your line is open.

Or withdraw your question press the pound key.

Again, Thats star one to ask a question please.

Please stand by while we compile the Q&A roster.

Our first question comes from the line of John Murphy with Bank of America. Your line is open.

Good evening and good afternoon, everybody and congrats on your first quarter as a public company and that achievement onto its own dish and everything else are getting done here.

John Murphy: Good evening, good afternoon, everybody, and congrats on your first quarter as a public company. That's an achievement unto its own, in addition to everything else you're getting done here. You know, first question for you, Peter, and maybe Sherry, you can chime in on the second part of this. You know, as you think about what you're doing here and the success of the Air and what theoretically will come here with the Gravity, 90,000 units capacity by 2023 seems a little bit pedestrian, right? Meaning that your demand may far exceed that. I'm just curious, you know, Peter, as you think about what your volume goals or aspirations are over time, if you could, you know, elucidate those or just tell us where you're headed.

First question for you Peter and maybe Jerry you can chime in on the second part of this.

As you think about what you're doing here and the success of the air and what theoretically will come here with the gravity 90000 units of capacity by 2023 seems a little bit pedestrian right, meaning that your demand may four.

It exceed that I.

Just curious Peter as you think about what your volume goals or aspirations are over time, if you could elucidate those or just tell us where you are headed and then also just thinking about what's going on with the stock.

And the availability of low cost capital.

Sure. He would you consider or you Peter as well obviously.

Greater issuance sooner rather than later to raise capital to maybe accelerate 90000 units of capacity in 2023, and hopefully maybe grow even faster than what you're what you've been talking about.

Well, it's an interesting point John right now, we're laser focused as a company.

Peter Rawlinson: Well, it's an interesting point, John. Right now, we're laser-focused as a company and the whole management team under my direction in scaling what we've got. Laser-focused on growing the scale towards 20,000 units next year, then 50,000. You know, we're planning on 500,000 units by the end of the decade. We have a plan in place to expand Casa Grande to that level. You know, we've also got localization of manufacturing. We've got incredible high value in our manufacturing as well because we manufacture the entire technology suite, the battery, the motor, the inverter, the whole e-electric powertrain in-house. We're not just buying in parts here and just adding value that way. There's a whole lot of inbuilt value add to the cars that we've got.

The whole management team under my direction and scaling what we've got laser focused on growing the scale towards 20000 units next year than 50000.

But we're planning on 500000 units by the end of the decade, we have a plan in place to expand Casa Grande to that level.

And we've also got localization of manufacturing, we've got incredible value in our manufacturing as well because we manufacture the entire technology suite.

Battery the moats are incurred.

The whole electric powertrain in house, so we're not just Boeing in part skewed.

Adding value that way, there's a whole lot of infill value add senior to cause that we've got we've got our Casa Grande capacity plan.

<unk> down to 365000 units, but of course, we also plan.

In other parts of the world.

The middle East and in China.

Technology, which we are confident will put us in this pre eminent position, but as you know we designed this technology to be truly mass manufacturable. So I think scaling our volume is well within our sights.

And in China, well, great to have you with US first and I can take the second part of your question, where Youre talking about just balance sheets at all such as deployment of capital. So we're sitting in a terrific place today with a $4 8 billion as of September 30, that's going to get us well through 2022, you're going to see a large capex.

Sherry House: John, well, great to have you with us first. I can take the second part of your question, where you're talking about just balance sheets and also just deployment of capital. We're sitting in a terrific place today with the $4.8 billion as of 30 September. That's gonna get us, you know, well through 2022. You're gonna see a large CapEx increase happening next year. Actually, multiples of CapEx are gonna be deployed next year versus this year. We're already doing that acceleration. In June, we announced that we were gonna be bringing forward $350 million of planned CapEx investment from future periods into the 2021 to 2023 period, also increasing overall between 2021 and 2026 by 6% to 7%.

Increase happening next year actually multiples that capex are going to be deployed next year versus this year. So we're already doing that acceleration and in June we announced that we were going to be bringing forward $350 million of planned capex investment from future periods into the 2021% to 2023 period.

It also increasing overall between 2021 and 2026 by 6% to 7%. So we are going to be as a company accelerating our ability to deploy capex and if the opportunity presents itself you might recall that our prior versions of our modeling suggested that kind of 20%.

Sherry House: We are gonna be, as a company, accelerating our ability to deploy CapEx. If the opportunity presents itself, you might recall that our prior versions of our model have suggested that, you know, kind of 2024 and beyond, that we might start to step down our CapEx. If that opportunity is there for, you know, continued expansion and we are ready for it, you know, we will certainly go after it. We do think that there is increasing availability of capital, you know, to us today from a lot of different sources. You'll note that we still haven't even taken debt on, so, you know, we have the opportunity to provide, you know, terrific loan-to-value there if we chose to take on debt.

Q4, and beyond that we might start to step down our capex, but if that opportunity is there for continued expansion and we are ready for it we will certainly go after it we do think that there is increasing availability of capital to us today from a lot of different sources, you'll note that we still haven't even.

Taken dead on so we have the opportunity to provide a terrific loan to value.

There if we chose to take on that and then with the fat price increase and it gives us a lot of other opportunities as well. So we're feeling really good about what we could do and we feel like we are increasing the company's ability to deploy capital efficiently and quickly.

Okay, and then just a second question Peter I mean, obviously with.

John Murphy: Okay. Just a second question, Peter. I mean, obviously, with Air, you have a knockout product with best-in-class range, you know, arguably one of the best, if not the best, EV on the planet. When you think about Gravity, that's a tough act to follow. Gravity is following that. You know, how do you view Gravity's differentiation in the market? I mean, presumably it, just given the form factor, it's not gonna have quite as good a range as Air. I mean, what's the real, no pun intended, pull for the Gravity to the consumer in the market?

Are you you haven't knockout products with best in class range.

One of the best if not the best E V on the on the planet.

Think about gravity, that's tough act to follow so Ravi its Bali is following that.

How do you view gravities differentiation.

In the market I mean, presumably it just given the the form factor, it's not quite as good a range as.

At air, but whats the real.

No pun intended pull for the gravity to the consumer in the market.

Peter Rawlinson: I'm so glad you asked me that. We've made a whole bunch of advances with Gravity project. It's very close to my heart. We're getting it ready for production late 2023, and I think it's gonna be equally as disruptive in the SUV space as Air is in its sedan space. We're gonna deploy the space concept, the miniaturization of the electric powertrain, incredible range for its class, and it's gonna have one or two really beguiling unique features as well. I am super excited about Gravity.

Im glad you asked me that we'd made a whole bunch of.

Advances with gravity project, it's very close to <unk>, we're getting it ready for production late 'twenty, three and I think it's going to be equally as disruptive in the SUV space.

It is in its sedan space, we're going to deploy displaced concept minutes realization electric crane incredible range for its class and it's going to have one or two really dialing unique features as well.

Im Super excited about gravity.

Okay, and then lastly, sorry, just a housekeeping question Sherry how much stock comp was in SG&A and R&D specifically in each each line item. If you could just give it give us that.

John Murphy: Okay. Then lastly, sorry, just a housekeeping question, Sherry. How much stock comp was in SG&A and R&D, specifically in each line item? If you could just give us that, if you have it.

Sherry House: I can tell you across the two, it was $235 million, and that's roughly double what it might have otherwise been. You have this cumulative effect that I mentioned, and it's really just related to, it has, like, a double trigger, and you have to actually have the merger happen before you can put it up on your accounting statements.

I can tell you across the two it was $235 million and that's roughly double what it might have otherwise spent the campus cumulative effect that I mentioned and that it's really just related to it. It has like a double trigger and you have to actually.

Sherry House: I can tell you across the two, it was $235 million, and that's roughly double what it might have otherwise been. You have this cumulative effect that I mentioned, and it's really just related to, it has, like, a double trigger, and you have to actually have the merger happen before you can put it up on your accounting statements.

Have the merger happen before you can put it up on your accounting statement.

Plus the stock is performing very well. So that's always that's always a good high class problem to have.

John Murphy: Plus, the stock is performing very well, so that's always, you know, a good, you know, a high-class problem to have. Thank you very much, guys. I appreciate it.

Thank you very much guys I appreciate it.

Yeah, Yeah, no of course, and it was more of it is accumulative factor than it was the stock price, but it's about right.

Sherry House: Yeah. You know, of course. It was more that it's a cumulative effect than it was the stock price for the folks, right?

Okay, great. Thank you very much guys.

John Murphy: Okay.

Sherry House: Yeah.

John Murphy: Great. Thank you very much, guys.

Thank you.

As a reminder, ladies and gentlemen, we ask that you limit yourself to one question and one follow up.

Our next question comes from the line of Adam Jonas with Morgan Stanley. Your line is open.

Hi, good evening, everybody and congrats on the motor trend car of the year Award that's incredible.

Adam Jonas: Hi. Good evening, everybody. Congrats on the MotorTrend Car of the Year award. That's incredible, especially considering it's your first car. Well done. Thanks, Peter. I had a question on the delta of reservations from the 13 at the end of the quarter to the over 17 now. Can you give us a little? My understanding is you opened up reservations to international. I'd be curious what the like for like is of North American reservations within that delta. Maybe within international, how much it was Saudi versus non-Saudi or any color there would be helpful.

Considering your first car so well done.

Alright, Thanks, Peter I had a question on the Delta of reservations from the 13 at the end of the quarter to the over 17 now can you give us a little.

My understanding is you opened up reservations to international so I'd be curious what the like for like is.

North American reservations.

And that Delta and then maybe within international how much of a saudi versus non Saudi or any any color there it would be helpful.

We don't conduct international reservations before we announce the 13th.

Peter Rawlinson: We'd opened up the international reservations before we announced the 13,000. Also, I mean, the bulk of reservations is our home market, US. We haven't even opened up the big market in the future, which is China.

Also I mean, the bulk of the reservations is our home market.

Yes.

And we haven't even opened the big market in the future, which is which is China.

Adam Jonas: Yep.

Peter Rawlinson: Absolutely, Saudi is great because it's our second biggest market by number of reservations. That's really heartening that, you know, that the country which has gained its wealth based upon its carbon economy is so forward-looking and sees the Air such an attractive product.

Absolutely Saudi is great because it's our second biggest.

Market.

Number of reservations and Thats really heartening.

The country, which has gained as well based upon carbon economy is so forward looking.

And so it's an attractive product.

Okay, Peter I'll leave it to you whether you want to disclose that or not but just for my second question.

Adam Jonas: Okay, Peter, I'll leave it to you whether you wanna disclose that or not, but just for my second question. On your distribution strategy, can you remind us why the advantages of going direct to consumer and why you are not using a franchise model? I don't believe you're considering using a franchise model. I just wanted to confirm that. Thanks.

On your distribution strategy can you remind us why.

The advantages of going direct to consumer and why you are.

Are not using our franchise model and I don't believe you're considering using our franchise model, but just wanted to confirm that that's.

Thats correct Thats correct, Kevin well I think the important thing here is that we are.

Peter Rawlinson: That's correct, Adam. Well, I think, you know, the important thing here is that we are creating a new brand. It's not just about the product. The product defines the brand, but there's more here than just Lucid Air. A luxury brand and, you know, the consumer experience and the consumer journey is too precious to delegate to third party. We need to choreograph the consumer's journey through discovery, through inquiry, through purchase, and ownership, and how better than to do it directly.

Craig.

New brands, it's not just about the product.

Product defines the Brian.

There's more here than just lucid and.

And our luxury brand.

The consumer experience.

Assume it journey is too precious to.

Two.

<unk> deferred policy, we need to coordinate a graph.

The consumer's journey through.

Discovery through inquiry through purchase and ownership and how better to do it.

Directly.

You can also just driving consistency and messaging as well youre not working with independent franchises in dealership.

It just really allows us a lot more control controlling pricing so there's.

A lot of benefits that we see in a direct relationship.

Thank you sure thanks Peter.

Adam Jonas: Thank you, Sherry. Thanks, Peter.

Thank you.

Peter Rawlinson: Thank you.

Operator: Thank you. Our next question comes from the line of Itay Michaeli with Citi. Your line is open.

Thank you.

Our next question comes from a line of Mike Kelly with Citi. Your line is open.

Great. Thank you hi, everybody.

Itay Michaeli: Great, thank you. Hi, everybody. Just a first question, first going back to the reservation growth up to 17,000. With the momentum you're seeing in reservations, you know, how are you thinking about when to, I guess, more formally unveil Gravity and even open up the reservation book there?

Just a first question first going back to the reservation growth up to 17000 and with the momentum Youre seeing in reservations. How are you thinking about went to I guess more formally unveil gravity and even open up the reservation book there.

Oh gosh.

Yes that will all things in good time.

I'd like to have gravity to a level of greatest substance that we can actually show a car.

Sure.

Possibly later next year I would say, but right now I've got a laser focus on.

The reservations are growing.

Increasing and I'll tell you something else.

I'm really particularly happy about the splitting those reservations, we've got a really nice blend I mean, we're so losses. Dream addition, as you know we've expanded that to 520 units to reflect 520, EPA rating and the growing demand, but we've got a really nice blend already.

Innovations for Grand touring and touring and pure very much reflecting the sort of split that we will.

Manufacturing over the next 15 months or so in fact, when you look at September 30th numbers, we had talked about the 13000 reservations and we also had talked about that.

Sherry House: In fact, when you look at 30 September numbers, we had talked about the 13,000 reservations. We also had talked about that that reflects an order book and revenues of about $1.3 billion. You can do the MSRP math from there. It gives you a good sense of where that mix lies. You can see we're not over-indexed on Pure. It's just a really nice balance. We're happy with where it is. You know, we'll keep watching it as we go forward. We're also gonna be enjoying, you know, decreasing, you know, costs over time and improving margins. We feel like we'll be in a really good position as, you know, some of these other products pick up.

<unk> order book and revenues of about $1 3 billion. So you can do the MSRP math from there and it gives you a good sense of where that mix wise and so you can see we're not over index on pure it's just a really nice balance. So we're happy with where it is and we'll keep watching it as we go forward and we're also going to be enjoying decreasing.

Cost over time, and improving margins and so we feel like we'll be in a really good position as you know.

Some of these other products now pick up.

That's very helpful. And then just maybe secondly.

So you can update us on your latest thoughts on the Dream drive software strategy in terms of our partners about versus what you might look to do in house.

Yes, yes.

Peter Rawlinson: Well, our strategy to date has been, of course, a key focus on creating the very best electric vehicle in the world with the most advanced electric powertrain, and endowing that car with the core foundations of hardware suite. 32 sensor suite, 14 cameras with solid state, 120 degree lidar, and a whole host of long-range radar and closely knit radar. That's been the step one of the plan. Create the most advanced foundations for the house in terms of the hardware and have software which is broadly competitive in the marketplace. Now we've achieved that, the next step will be to advance that software. Now, we're planning as a default to do that in-house, and we're building the team.

Our strategy today has been of course, a key focus on creating the very best electric vehicle in the world with the most advanced electric powertrain.

Yeah.

In doing our call with a cool.

Issuance of hardware suites, 33 sensor suite 14 cameras with solid state 120 degree lineup and a whole host of.

Long range radar and placing it radar.

That's that's been.

One of the plan.

The most advanced presentations for the house in terms of the hardware and software, which is broadly competitive in the marketplace.

Now now we've achieved that the next step will be to advance that software now we're planning as a default to do that in house and we're building the team, but as you know I'm very open here in Silicon valley to potential partnerships in terms of the software, but I see that.

Peter Rawlinson: I'm, as you know, very open here in Silicon Valley to potential partnerships in terms of the software. I see that as a potential bonus. I think the default position is gonna be develop that software now and take that to world-class standard based upon the hardware suite we've got and to develop that in-house.

As a potential bonus I think the default position is going to be developed that software and I'll take that too will pump expanded.

Based upon the hardware, we've got and to develop that in house.

Perfect Thats all Thats all very helpful. Thank you.

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

Thank you.

Peter Rawlinson: Thank you.

Thank you.

As a reminder, ladies and gentlemen that star one to ask the question.

Okay.

Our next question comes from the line of Stan Chapman second dinner with ticket Pickering energy.

Line is open hi, Thanks for taking my question and congratulations on the new vehicle launch.

James Southerland: Hi. Thanks for taking my question, and congratulations on the new vehicle launch. Can you speak to a little bit of what degree of gross margin variability you have across the different versions of the Air and how over time, if you take a point of view that to drive volumes over time, you'll have a greater proportion of Pure sales? What are the implications for that in terms of trend of gross margin as that mix shifts over time?

James Southern: Hi. Thanks for taking my question, and congratulations on the new vehicle launch. Can you speak to a little bit of what degree of gross margin variability you have across the different versions of the Air and how over time, if you take a point of view that to drive volumes over time, you'll have a greater proportion of Pure sales? What are the implications for that in terms of trend of gross margin as that mix shifts over time?

Could you speak to a little bit.

Three of March gross margin variability across the different versions of the air and how over time, if you take a point of view that to drive volumes over time, you will have a greater proportion of pure sales of how what are the implications for that in terms of trying to gross margin as that mix shifts over time.

Yes. Thanks, so much for your question so we're expecting.

Sherry House: Yeah. Thanks so much for your question. We're expecting to have competitive growth margins by the time we reach mid-decade. You're gonna see that our growth margins are not gonna be there initially because we're activating depreciation expense, we're training new employees, we're gonna be driving efficiency, you know, within the manufacturing arena over the next, you know, year, especially a year and a half. You're gonna see as the volume increases, just growth margins improving overall as that absorption improves.

To have competitive gross margins by the time, we reach mid decade, and youre going to see that our gross margins are not going to be there initially because we're activating depreciation expense or training new employees, we're going to be driving efficiency within the manufacturing.

Arena over the next year, especially in a year and a half and then youre going to see as the volume increases just gross margins improving overall is that absorption improves.

Sherry House: You know, with respect to your question about how are we thinking about, you know, the higher price model versus the Pure, we're just in such a unique advantaged position because of our technology that it's gonna enable us to go from, you know, this tremendous machine of our Dream Edition and still be able to produce with the Pure over 400 range, 400-mile range as well as over 500 horsepower. We can do that while reducing cost by reducing one of our motors. We also can reduce the battery pack, and we have a lot of trim features that can be activated or deactivated to basically make a bespoke product, you know, exactly to what the customer is seeking. Those are the enablers that we have.

With respect to your question about how are we thinking about the higher priced models.

Here, we're just in such a unique advantaged position because of our technology. It is going to enable us to go from that.

Tremendous machine of our Dream edition and still be able to produce with the pure over 400 range 400 mile range. If all worth over 500 horsepower and we can do that while reducing costs by reducing one of our motors. We also can reduce the battery.

How can we have a lot of trend features that can be activated or deactivated basically make up the spoke product exactly to what the customer is seeking so those are the enablers that we have.

Peter Rawlinson: That's absolutely right. Right now we're using our extraordinary efficiency to achieve range to create a technological tour de force to define the brand as a range king. In the future, 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, would be at 300 miles, 400 miles, whatever, but with a commensurately smaller, proportionately smaller battery pack than the competition because our technology is inherently more efficient. Because of that, because the battery pack is the single most expensive item in an electric car, this will affect the margin, and therefore it has a direct bearing upon our viability, our commercial viability as a company.

Absolutely right.

Right now, we're using our extraordinary efficiency to achieve range to create a technological two to force to define the brand as a range king.

In the future will 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, we'd be at 300 miles 400 miles forever.

But with a commence shortly smaller proportionately smaller battery pack than the competition because our technology is a more efficient and because of that because the battery pack is the single most expensive electric car this will affect the margin and therefore.

It has a direct bearing upon.

Vulnerability our commercial viability.

As a company.

And the other thing I would just stay there too it's just.

Sherry House: The other thing I would just say there too is just, we have an amazing team. We've got a terrific supply chain team. We have a terrific manufacturing team. They've done it before. They've done it at Audi. They've done it at Tesla. They've not just gotten the plants up and running and efficient, but they've brought the costs down. All of that experience is coming to bear on our product and our factory. That's another important point that I wanted to make sure I left you with.

We have an amazing team, we've got a terrific supply chain team had a terrific manufacturing team they've done it before they started at Audi they've done it at Tesla and it's not just gotten the plant up and running an efficient they brought the cost down and all of that experience is coming to bear on our product and our factory.

That's another important point that I wanted to make sure I left you with.

Peter Rawlinson: Yeah. We've designed the battery in a modular manner with cost down in mind for the future. The car is designed that way.

As always the battery in a modular manner with cost down and mindful of the future. So the call is designed that way.

Thanks, So just a follow up.

James Southerland: Thanks. Just to follow up, earlier you mentioned that you have a fairly balanced order book between the different four versions of the Lucid Air. Can you give us a little bit of a sense of when next year that we could expect to see shipments of the Pure to begin?

James Southern: Thanks. Just to follow up, earlier you mentioned that you have a fairly balanced order book between the different four versions of the Lucid Air. Can you give us a little bit of a sense of when next year that we could expect to see shipments of the Pure to begin?

Earlier, you mentioned that you have a fairly balanced order book between the different four versions of the loser there.

Can you give us a little bit of a sense of when next year that we could expect to see shipments of the pure to begin.

I think it's only in the latter part of next year when fuel comes out.

Peter Rawlinson: I think it's in the latter part of next year when Pure comes out. You know, my passion is Pure. I wanna get the cost down. I want to, you know, fulfill our mission, which is the mass adoption of electric vehicles.

Martin My passion is pure I won't get the cost down I want to.

Fulfill our mission, which is the mass adoption of electric vehicles.

Great. Thank you very much.

James Southerland: Great. Thank you very much.

James Southern: Great. Thank you very much.

Thank you.

Operator: Thank you. Ladies and gentlemen, this concludes our question and answer session. I would now like to turn the call back over to Peter for closing remarks.

Ladies and gentlemen, this concludes our question and answer session I would now like to turn the call back over to Pedro for closing remarks.

Thank you so much.

Peter Rawlinson: Thank you so much. As you can see by what we've achieved in Q3 and by future plans, there is a tremendous amount of exciting activity here at Lucid. Supported by our industry-leading technology, our ongoing investments in cutting-edge manufacturing, and the outstanding team we have assembled, we believe there are sizable opportunities for shareholder value creation ahead of us. I would again like to thank our employees for getting us here. We have a truly unrivaled team. I am proud of what we've accomplished, and I'm optimistic about the opportunity ahead of us. We look forward to speaking with you regularly and keeping you updated on the progress we are making. We aim to be transparent in our approach and look forward to engaging with you. Thank you so much for joining us here today.

As you can see by what we have achieved in Q3 and by future plans.

Tremendous amounts of exciting activity here at lucid.

Supported by our industry leading technology.

<unk> investments in cutting edge manufacturing.

And the outstanding team, we have assembled we believe the responsible opportunities for shareholder value creation ahead of us.

I would again like to thank our employees for getting US here, we have a truly unrivaled team I am proud of what we've accomplished and I'm optimistic about the opportunity ahead of us.

We look forward to speaking with you regularly and keeping you updated on the progress we are making.

We aim to be transparent in our approach and look forward to engaging with you.

Thank you so much for joining us here today.

Ladies and gentlemen, this concludes today's conference call. Thank you for your participation you may now disconnect.

Operator: Ladies and gentlemen, this concludes today's conference call. Thank you for your participation. You may now disconnect.

Q3 2021 Lucid Group Inc Earnings Call

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