Q1 2022 Lucid Group Inc Earnings Call
Please continue to stand by your program will be beginning shortly.
[music].
Yes.
Ladies and gentlemen, thank you for standing by and welcome to the Lucid Group first quarter 2022 earnings Conference call. Please be.
Today's conference is being recorded later, we will conduct a question and answer session. If you have a question. Please press the star and one on your Touchtone phone.
I would now like to turn the conference over to your speaker for today may not.
Senior director of Investor Relations. Please go ahead Sir.
Thank you and welcome to loosen group's first quarter 2022 earnings call. Joining me today are Peter <unk>, our CEO and CTO and Sherry House, our CFO before handing the call over to Peter Let me remind you that some of the statements on this call.
Particularly those regarding the future financial performance of the company production and delivery volumes macroeconomic and industry trends company initiatives supply chain dynamics expansion of our studios and manufacturing facilities and other future events are based on the information that we have as of today and constitute forward looking statements within the meaning of the private security.
Litigation Reform Act of $19 95 forward looking statements are subject to numerous risks uncertainties and other factors that could cause actual results to differ from expectations and we refer you to the cautionary language included in risk factors in our quarterly report on Form 10-Q for the quarter ended March 31, 2022 as well as other.
<unk> filed or to be filed with the SEC for a full 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 whether as a result of <unk>.
New information future events or otherwise, except as required by law and 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.
Discussion of why we use non-GAAP financial measures and information regarding reconciliation of our GAAP versus non-GAAP results is available in our earnings press release issued earlier this afternoon as well as in the Investor deck available on the Investor Relations section of our website at IR that lucid motors Dot com.
With that I'd like to turn the call over to loosen CEO and CTO Peter Robinson.
Peter Please go ahead.
Thank you.
In Q1, we delivered 360 vehicles to customers.
Nearly tripling the 125 cars delivered in Q4 of 2021.
Furthermore, in April alone, we delivered well over 300 vehicles, demonstrating our accelerated production ramp.
And this growth progression keeps us nicely on track for our 12 to 14000 production targets.
Sheri will tell us more about shortly.
We're pleased with the demand, we're seeing and now we have more than 30000 reservations as of today.
Note that this 30000 figure does not include the recent let's say 100000 current deal with the government of Saudi Arabia, which is entirely incremental.
I'd like to thank the entire leasing team for their dedication and hard work.
To a great start.
Just beginning.
We have a lot of hard work ahead of us.
Up to the challenge and we're on track for some great milestones this year.
In just two short quarters since we started deliveries we've garnered many industry accolades, reaching out some very well established luxury car brands.
Lucy that is now used in the same breath as some of the best known luxury car.
Luminaries in the market and Thats truly amazing if you think about it.
In the first quarter lucid and was named the best luxury electric car by U S News and we'll report it.
He was named luxury electric vehicles by Comstock Com.
Best countered by 2022 by Green call reports.
Everyone's very recently reported.
<unk> 505 miles in the real World EV range test, although lucid dream.
A new record.
But most importantly, its our customers.
Truly delighted with lucid.
I believe as we get more of our vehicles into our customers' hands and as we expand our test drive program.
Momentum will just continue to build.
We're nearing completion of deliveries of lucid Dream edition and commence deliveries of Grand touring in the first quarter.
So having announced the new AG Grand touring performance model in April .
The dual motor Grand touring performance delivers 1050 horsepower, making it the most powerful electric vehicles currently available in North America combined with an exceptional EPA estimated 446 miles range.
The <unk> Grand touring with up to 516 miles of EPA risks to 90 day range has an unprecedented efficiency.
<unk> six miles per kilowatt hour.
And I would like to spend related to on this because I don't believe the importance of EV efficiency is well understood today.
In order to drive widespread adoption, we must address the cost of making evs.
The really fundamental question is how much does the battery cost per se.
The dollars per kilowatt hour, but Moreover, how much does it cost to endow on EV.
Given the amount of range.
For example, how much does it cost to create an EDI, we'd say 200 miles range of 300 miles range or a 400 mile EV.
In this context it is crucial to compare which is the better route to achieve this goal.
Reduction in battery cost all in increase in efficiency.
Well with say a 10% increase in efficiency. It is possible to achieve the same range within 10% smaller and therefore, 10% less expensive pantry.
For example, we believe we can endow lucid a pure.
With over 400 miles range with a battery pack size of less than 90 kilowatt hours.
<unk> battery downsize, and therefore cost saving and commercial advantage over the competition.
Good efficiency also drives other very important benefits.
Unlike a gasoline car, where the benefits of efficiency is only films, but cost of pillar at the gas station.
And efficient EV is a fundamentally superior product in many ways influencing weight agility range ending serious space and comfort.
Reducing battery cost, although not to be dismissed fundamentally only really benefits the cost of manufacturer, whereas we expect increasing efficiency benefits not only the cost to manufacture.
But also the lifetime running costs, plus the lifetime environmental footprint, both through energy consumption and through raw material usage.
This final advantage is not to be disbursed slightly because in a world where the potentially limited raw material supply chain efficiency becomes the enabler for the manufacturer of more electric cars.
So our first step has been to deliver a vehicle with a longer range than anyone else in the market and on next steps later this year will be to deliver vehicles with a range of over 400 miles but to achieve this with a smaller battery pack from the competition and this is elusive.
Commercial advantage.
Now only able to do this because we design develop and manufacture our own technology in house.
The combination of our proprietary ultra compact powertrain state of the art high voltage inverter.
The only directional 900 volt one of the box.
Actual aerodynamic design and scalable and modular battery pack, which is based on our extensive formula E racing experience.
I'm aware of only one of two.
Has the technology vertical integration we do.
You simply cannot achieve this but buying off the shelf components.
And I'm proud to say that our efficiency is industry, leading among commercially available passenger vehicles.
While others will try to catch up to where we are today, we're not standing still we're improving on our technological advancements and will drive more innovation and efficiency to remain ahead of the competition.
We also continued to make great strides in our software and developed 11 over the air software updates in Q1.
We hear our customers and we're delivering on their constructive feedback many through over the air update.
<unk>.
We design our vehicles from a clean sheet to be one of the most advanced in the market.
With World Class technology that will enable us to deliver more features and enhancements without customers having to bring their vehicles into service.
We have the capability to control even the smallest of the details in the <unk> software with our software defined vehicles, we can change everything from how the door handles function to increasing key Fob battery life, and we will continue to strive to meet the highest standards of our customers by making them loose it's better and.
Better over time.
So we think we're extremely well positioned in the technology race, but.
But we need to get the lucid as into the hands of more customers and ramping production of quality vehicles is my top priority.
We have over 30000 customer reservation holders as of today, demonstrating growing interest in lucid and rising demand, even as new competitors arrive.
So we're intently focused on production as well as our expansion.
And as you can see from the photo in the shareholder presentation. The A&P factory expansion in Arizona is seeing tremendous progress.
Once complete we will have an additional two 8 million square feet.
Function footprint.
And increase annual production capacity in Arizona to 90000 vehicles per year.
We're also very excited to be breaking ground on a new factory in Saudi Arabia soon and very shortly we'll have Glenn the opening of our music studio.
Signaling the arrival of lucid to the EU market.
More on this next week, when we will debut our EU plans.
So our global expansion plans on track.
Now, having said that I do want to highlight of supply chain dynamics.
Very fluid and the Covid lockdowns in China, that's impacting others in the industry are also resulting in some bottlenecks for us.
But our team is doing an incredible job mitigating this to keep us on track.
We also announced today that were increasing prices on vehicles that will go into effect at the beginning of June .
The World has changed dramatically from the time, we first announced lucid back in September 2020.
I want to assure our existing reservation holders that we will be honoring current pricing for all existing customers as well as new reservations made before the end of the month.
In order to ensure fairness and prioritization, we will be reaching out to reservation holders to facilitate order configurations in order to lock in pricing as specified in model becomes available.
Lastly, I want to highlight a landmark agreement, we made with the government of Saudi Arabia on April 20th.
But governments have undertaken purchase.
100000 lucid vehicles.
This is one of the single largest electric vehicle purchases that I'm aware of and we're delighted to be supporting Saudi Arabia in achieving eight sustainability goals and net zero ambitions.
Our advanced luxury Evs to Saudi Arabia.
Sheri will go into more details on this momentarily.
So in closing I believe the electric vehicle market is still in the very early days of secular growth and I've never been more excited than I am today about our technology.
Products, our team and our future.
Normally believes this is a technology rice that is set to play out over the coming years at all I'm highly confident that we are well placed to be a leader with our state of the art in house developed technology.
With that let me turn it over to Sherry for an update on our financials Sherry.
Thank you Peter.
Ongoing supply chain disruption, we continue to see terrific progress in that business. This was largely due to the perseverance and acute problem solving capabilities at the lucid team across manufacturing logistics supply chain and engineering. We're also grateful to our global supply base, who worked tirelessly with us.
Find real time solutions, you are very complicated and fluid supply chain situation.
We're very pleased with the reservation momentum were experiencing were seeing excellent increasing traffic transistor studios as well as visits to our website and our award winning vehicle can thank you Ranga all indicating accelerating interest in the brand.
I'd now like to turn our attention to our first quarter financial results.
Our Q1 revenue was $57 7 million, which represents a quarter over quarter increase of 113%.
We remain committed to scaling our business and expect to see significant growth in revenue.
Livery volume ramp across GT touring and care model.
Cost of revenue in the first quarter with approximately $246 million.
This expected increase was primarily related to personnel and overhead costs as we ramp up production as well as higher logistic costs and expedited freight due to ongoing supply chain disruption.
As a result of these increased costs, we recorded an impairment charge of $96 4 million in the first quarter to reduce inventory to their net realizable value.
As noted last quarter, we expect increased freight and overhead, resulting impairment charges, which will negatively impact cost of revenue in 2020, Q. So we expect this impact to lessen over time.
R&D expense was $186 1 million in line with our expectation.
Peter talked about how our efficiency is driven by the in house design development and manufacturing of our own proprietary technology and we continue to focus on pushing the technology envelope.
Specifically, we are investing in state of the art battery and powertrain equipment and facilities.
Software advancement and World class talent.
SG&A expense of $223 2 million with comprised in part.
And then just related to growing our retail <unk> and service network, along with investments to build out our systems and personnel globally.
We opened four additional studios and service centers and continue to prepare for growth in North America, Europe , and the Middle East This year.
Stock based compensation in the quarter with approximately $175 million $116 million of this amount within SG&A.
Within research and development and the balance of $8 5 million within cost of revenue.
In other income we recognized non cash gain of approximately $523 million related to the mark to market value of private Warren.
The value of the warrants can be influenced quarter to quarter by a number of factors, including boosted group end of quarter share price.
Moving to the balance sheet.
We ended the quarter with close to $5 4 billion of cash on hand, which we expect well funded well into 2023.
We have multiple options for additional funding to further solidify our position, which will enable us to continue to be opportunistic in the market.
Capital expenditures were $185 million in Q1, and we expect capex for the year to be around 2 billion as we continued to invest in the incredible opportunity ahead.
Our 2022, Capex will be used for facility in machinery and equipment expansion in Arizona.
Service Center development.
Early investment in Saudi Arabia, and other capex associated with vehicle and component development.
We remain committed to scaling our business and are executing against our strategic objectives.
<unk> production is a high priority to fulfill growing demand if we're selling every vehicle we can make.
As Peter indicated earlier, we successfully delivered 360 cars to our customers in Q1 and in April alone, we delivered over 300 vehicles, demonstrating our accelerated production ramp.
Total reservations grew to 30000 as of today, which doesn't include the additional 100000 units from the agreement with the government of Saudi Arabia and.
And we believe interest will continue to increase with the number of <unk> on the road grows and as more consumers are able to experience luxury and performance in person.
We continue to build out our physical presence through our expanding retail studio and service footprint. We added four new locations in Toronto, New Jersey, Arizona, and Southern California in the first quarter for a total of 24 and more recently opened a location in Boston.
We have additional new locations planned for 2022, including the Grand opening of our first European studio in Munich, Germany next week.
In the first quarter, we started deliveries of the Grand touring Air and in April we announced the Grand Slam performance.
We announced pricing for the Grand touring performance at 179000, reflecting our appreciation for our early look to their dream purchasers, but also reflecting cost increases in the commodity supply chain and logistics end markets.
Your line is fluid market dynamics for announcing price increases.
Airline.
As of June 1st the new pricing will be 154000 for Grand touring 107400 for touring and 87400 per peer.
And as Peter said, we will honor current pricing for all existing customer reservation as well as new reservation may before the end of the month as long as potential customers convert their reservations to order within 30 days of the opening of the order system.
While we are and always will be intently focused on finding ways to lower the cost of making our vehicle and providing value to our loyal customer base. We also need to be mindful of the changing industry dynamics and will continue to be vigilant and take action as necessary.
Peter also mentioned, we entered into a landmark agreement with the government of Saudi Arabia, where they will undertake to purchase up to 100000 vehicles over a 10 year period.
The initial commitment is to purchase 50000 vehicle with an option to purchase up to an additional 50000 vehicles.
Deliveries will start no later than 2023.
<unk> orders will range from one mid 2000 vehicles annually.
And increased to 4000 to 7000 vehicles starting in 2025.
The purchase price the vehicles will be determined based on the lower of the standard retail price.
The applicable vehicle in Saudi Arabia.
The standard retail price for the applicable vehicle in United States.
Plus the logistics and importation cost and other cost of delivery and Homologation vehicles to meet the regulations with Saudi Arabia.
We're also excited to announce that we'll be breaking ground very shortly on our previously announced manufacturing facility in Saudi Arabia, which should enable us to meet the growing demand for these products over time.
On our last earnings call, we announced agreements with the Ministry of investment in Saudi Arabia.
Saudi investment development fund and the King Abdullah economic study.
We're honored to be a part of the country vision that transformation and their commitment to advancing the automotive ecosystem and the manufacturing of sustainable transportation in the country.
Moving to our production outlook.
Similar to many companies in our industry, we continue to face global supply chain and logistics challenges, including Covid related factory shutdowns in China.
We are working closely with our suppliers to mitigate the impact of disruption.
Well any extended disruption could result in an impact to our production forecast today, we are reiterating our 12000 to 14000 vehicle production guidance for 2022 based on the information we have at this point combined with our mitigation plan.
We're also reiterating our capex of roughly $2 billion in 2022 and continue to believe our current cash on hand is sufficient for thunder scaling well into 2023.
From a product perspective, we're excited to start delivering to air Grand touring performance in June in the air touring and <unk> later this year with project gravity SUV remaining on target to begin production in the first half of 2024 and much more to come.
In closing I want to thank our dedicated and talented employees and our partners and suppliers, who are working to bring our award winning products to the global marketplace.
Confident that our in house technology, coupled with our investments in our manufacturing sales and service footprint will enable us to meet our growing customer demand and provide substantial benefit for all of our stakeholders.
Following Peter's closing remarks, we'll begin the Q&A portion of today's call.
Q&A will feature questions from some of our retail investors and important constituency of our shareholder base through the same technology platform with that I'd like to turn it over to Peter for closing remarks.
Thank you Sherry.
We're intensely focused on ramping production this year to get more of our award winning vehicles into customers' hands.
This is a top priority and we are pushing hard.
Our geographic expansion plans are progressing as planned and I believe our product roadmap is second to none with the Grand touring performance Grand touring pure and project gravity on schedule for their respective time lines.
And we will have more to share with you in the future.
And with that let me turn it back to my knowledge to get to your questions.
Good.
Thank you Peter will now start the Q&A portion of the call we'll start by taking questions from our retail investors something to the <unk> platform before we take questions from the phone and close out with a couple more investor questions.
Our first question is.
How do you intend to compete with both Tesla and <unk>, given current supply chain and market constraints.
We are highly confident that we can compete against the very best based upon on EV technology leadership.
We compete on our technology differentiation.
Unprecedented efficiency.
In house vertical integration.
I talked about.
<unk> deficiency in my prepared remarks.
This is only possible because we design develop and manufacture.
Our own technology in house, we truly vertically integrated.
You cannot achieve its just look buying off the shelf components.
We also differentiate ourselves by having a luxury brand mindset.
Focus on quality and having a customer centric approach.
Our direct to consumer experience.
We want our brand to reflect not only the best TV in the market, but also the experience of that customers.
But the EV market is not a zero sum game today.
We compete in a global comment market and unless not forget our primary competition is gasoline cars and also the <unk>.
I've said before I don't believe there's such a thing.
The market for Evs, there's a market for Gov.
Okay.
The EV market penetration is very low today.
We believe the share will come at the expense of gasoline cost so.
I am incredibly optimistic I see a tremendous amount of runway ahead of us sharing yes, I'd also add that in my prepared remarks, I spoke about the supply chain challenges that are impacting the entire automotive industry now we've been able to mitigate some of these issues because of our vertical integration and our in house design capabilities.
When you design your own package just allow wish you an increased level of flexibility and control.
For example, because we designed many of our own printed circuit boards, we've been able to redesign qualify and even source of different ship directly from our existing semiconductor supply base that we have direct relationship with.
Other situations as I mentioned last quarter, we've been buying ahead in the spot market and we continue to work really closely with our supply base to mitigate impact and look at risks ahead of time, but in some cases, we have had to switch suppliers and we have even in source, where it made engineering and financial sense.
Our next question is the Investor presentation. In July 2021 mentioned that prototype energy storage system progressing well how is the entered lucid energy storage system progressing now and when do you expect production for the lucid esf's to begin.
Yes.
We're primarily focused on vehicles today, but we do fully recognized.
The law is extensible to other growth markets that we can help drive sustainable.
Sustainability mission.
We analyze different monkeys to understand where our could give us a unique advantage to compete with him.
And one of the most promising ones, we called out was with energy storage or Esa.
Now our first prototype has validated the capability of our technology, it's running on US here at our headquarters here in Silicon Valley is attached to a solar field of array and its working well and we.
We've installed a significant solar array A&P one factory in Arizona.
And readiness to connect and integrate till second prototype.
At the factory and this is currently in the development phase.
Yes and to put this in context, it's a small amount of our people and financial resources today, but we see a lot of future potential here, we've been examining and we are examining multiple end markets, including residential commercial industrial and utility to see where it might be best for us to play today.
But right now we're focused firstly and laser focused on our vehicle market, but we'll be sure to keep you apprised as we have any more to say on that topic and as development.
Fourth.
Our next question is with the report of Saudi Arabia by upwards of 100000 cars from the company do you think that will drive more buyers from other areas of the world or are there other big orders such as that that arent just that just aren't public.
Thanks, Maynard, yes, we're seeing many.
Legislation from a number of other countries towards achieving our goal of zero emission and that aligns with the mission of our company to bring sustainable technologies to the world and we're thrilled that Saudi Arabia shown such vision and commitment to our company. The government undertook to purchase up to 100000 lucid vehicles and we believe they are buying.
Best PV Tech there is in a purchase price of the vehicles will be based on our standard retail prices as we shared in our earlier announcement, yes.
Just to put this in context. This is one of our single largest electric vehicle purchases that we're aware of and we're delighted to be to support Saudi Arabia, and achieving our sustainability goals and net zero ambition.
I also want to highlight that in connection with the King Abdullah economics at Eds idea for the meet the agreements that we signed in February we expect to receive up to $3 4 billion in financing and incentives with respect to Capex and operations for our manufacturing factory in KSA and this includes financing provided by.
S IDF loan and that's disclosed in our 10-Q.
In addition, we recently secured a revolver facility from Golf International Bank, which is also disclosed in our subsequent event section if you want more detail.
We also expect that the unprecedented efficiency that we have outlined very strongly with what fleet operators care about and there is many benefits also to our bidirectional technology.
Going to announce today, but we think our efficiency and our bidirectional technology or it can be a really important part of the value proposition to the side of a potential cut.
Customers.
Our next question is what is <unk> plan for a charging network.
Obviously have the advantage over the EV market right now with their network of Chargers with lucid be mirroring a similar solution or will there be an adapter to utilize other charging networks.
Well first.
Customer alone multiple efficiency and range of lucid.
I mean, you can replace range anxiety would arrange confidence you can go further in the first place.
We also have an advantage because we have the fastest charging Cohen the world we've.
Australia is up to 300 miles range in about 22 minutes.
To perform commercial and technology advantage is simply charge less when you have greater efficiency and the longest usual range.
And Theres also I believe that we have a significant second mover advantage, we've got a 900 volt vehicle others.
200 votes, and we have a much faster charging vehicles.
And when do you need to charge you can change your lucid virtually anywhere in North America and using.
<unk> solar combined charging system the Ccs plug the current standards, that's super important open source.
And then Amit can blend as one of the books Bruce charge. It can automatically recognize you.
Justin coming voltage and boost brokerage for the quickest possible charge, so its gone boost voltage capability.
This means makes charging easier at home.
Amy Public station and you can also charge, but plugging the included lucid mobile charging cable into a typical household outlets or NEMA 14, 54 funds duration charge.
Now.
As Ive said, along with astonishing range you can also benefit from our partnership with Electrify America. The most extensive network of ultra funds public charging stations nationwide.
They have <unk>.
750 stations and.
Over 3300 charges I believe across the U S.
And plan to have more by the end of the year.
And don't forget when you reserve NAR by June 30 of 2020 soon Youll get complimentary access to up to 350 kilowatt charging for three full years in the USA.
The next question is are you planning on releasing a new vehicle. This year. If so when do you think it would come out.
Thanks, Maynard, yes, so the answer to that is yes, and our outlook section of the shareholder presentation also in my prepared remarks, we said we would have the air Grand touring performance in June and that's going to be sequentially, followed by the air touring in the ear peer later this year and of course, we still have the production of the project gravity <unk>.
Starting in the first half of 2024.
Yes.
Thank you, we'll now take some questions from the phone lines, David can we take the first question. Please.
Thank you.
You are using a speakerphone. Please pick up your handset before pressing star one to ensure your signal reach their equipment.
Question has been answered and you wish to remove yourself from the queue. Please press the pound key.
Yeah.
And we'll take our first question from the site of <unk>.
Kelly with Citi. Please go ahead your line is open.
Great. Thanks, Hi, everybody.
First was hoping you could share.
The production numbers in Q1, I apologize if I missed it earlier and also.
You were in April and I know you talked about deliveries for the quarter and production for the full year were hoping give us a sense of where you are on the production ramp up.
Yeah, sure Hey, great to have you with us by the way.
We had 360 deliveries in Q1, and then ask for production vehicles in Q1, we had nearly 700.
Perfect.
Early update on Q2, maybe in April number.
Well.
We actually delivered over 300 vehicles to customers in April and this is a very interesting progression almost a geometric progression. We're seeing here because in Q1 of this year, we delivered 362 customers I'm.
Very nearly triple what we delivered to customers of 125 in Q4 of last year, and then with over 300 customer deliveries in April and so easy to do sort of invalid massive people take a quarter and I multiply before and come to the wrong answer for the year. This is a progression.
It's almost a geometric progression that we're seeing unfolding.
So Andy as we said in our prepared remarks, we are reiterating our 12% to 14000 guidance for the balance of the year. So long as the supply chain logistics disruptions arent material in our mitigation plans are effectively and we've been watching the China Lockdown situation really closely we have had a little bit of impact. There. We had a couple of days that we did shut down.
And we did have a little bit of flowing for about a week and a half in April but we have mitigation plans in place we're able to get access to some warehouses, we were able to move production to another area of China in one case and so as long as things continue to progress and really where it is.
Solved through the course of May we're feeling comfortable with what we've stated.
We are reiterating we are reiterating our 12 to 14000 vehicle production forecast for 'twenty, two and Thats based on the information we have at this point combined with our current mitigation plans.
Great. That's very helpful. And then just a quick follow up on the price increase I think you alluded to it a bit before is that all reflective of higher input costs.
Can you talk a little bit more detail about specific cost increases youre seeing kind of what what sort of in there. They are trying to kind of cover for it.
Yeah sure let me provide some context, there well first of all on the pricing actions that will be effective June one small start to impact our financials in a meaningful way likely until 2023, there might be some slight positive impact in 2022, our raw material exposures have been ranging in all its five to 10.
Percent of our Bom cost depending on the vehicle variant and these actions will help to offset those inflationary pressures throughout this year.
Which are typically delay to the way the contracts are written usually the indices move and then we pay either the quarter or semiannually. Following that we do have other exposure, so including expedited, which had been very high due to the supply chain disruptions and record freight prices. We also had a little bit.
Of exposure on steel and construction cost a lot of that's locked in for our phase two but we do have a little bit of exposure on the backend with respect to steel.
So looking ahead I would say our current belief is that cost will stay elevated or slightly higher than they are today for the next couple of quarters and then we are expecting some stabilization might occur.
Great. Thanks, that's very helpful. Thank you.
Sure.
David we'll take our next question please.
Of course, we will take our next question from Charles <unk> with Redburn. Please go ahead. Your line is open.
Hi, Thanks for taking my questions.
My first one again just on the price rises that you've announced today.
So I think it's the price rises of between eight and 13%.
And.
If I look at some of your competition I note that <unk> raises prices on average by 18% back in March.
It's raised the price by 25% over the last 12 months. So do you think that the.
The room for raising the prices.
You have on the loose to that.
Specially given the quality of the product as you mentioned.
Yes, I think here's what I would say about that and you could be happy with US here today I'd say, we don't know for certain the situation is very fluid. We are actively monitoring and we will act as required.
Pushing ahead also though with many engineering changes and cost reduction initiatives that are aimed at lowering lowering our cost basis for the vehicles. So that is helping to offset some of this as well, but if we do have to raise further one of the things that we're comforted by is we know that we offer a very unique value proposition.
Customers and we believe there is no other vehicle on the market that offers the same combination of efficiency.
<unk> range space and design that we have.
So like other companies, we are experiencing Israel increases in commodities and we're just going to have to balance the benefits that we provide to all our stakeholders, whether it be our customers our suppliers our investors, but we believe the action. We're taking right now best Optimizes and then ask for future. We're just going to have to watch and see.
Charles I think Sherri raises the really salient point, Sharon not recognized sufficiently.
Efficiency advantage becomes a commercial advantage, we can provide it with.
Competitive range for smaller battery pack and that helps it.
Our cost structure.
Great. Thank you and my second question on the batteries can you just remind us what your current battery cell.
Supplier relationships.
Structured.
And the extent to which higher raw material input costs.
In 2022, or whether or not it's sort of delay to 2023 and beyond and finally how.
How much battery capacity is already locked in with your suppliers and until when.
Sure. So we have long term contracts with two of the major global suppliers of LG and Samsung those are multiyear in nature. We also have some state side production, that's going to be coming on board as well on the raw material side. We are exposed like most companies are to that raw.
<unk> and the batteries, but we are.
And then we can leverage the buying power of LG and Samsung their access to these raw materials <unk> forward now as for our availability. We are covered fully through this year and we also have most of our coverage for the next couple of years, but we are working with both elg.
And Samsung as well as another company that we are in the process of validating Paul that we expect will come on board with them. Either later this year or early next year and we're working with these three groups in order to supply the balance of what we need but right now things are looking.
Yes.
<unk> at this point David.
Okay.
Great. Thank you.
David we'll take our next question please.
As a reminder, if you'd like to ask a question. Please press the star and <unk> on your telephone keypad.
Our next question from John Murphy with Bank of America. Please go ahead. Your line is open.
Good afternoon everybody.
Okay.
Next question.
Thanks.
$179000.
Yes.
And at some level.
So that's just.
Thank you.
Thank you.
Thank you.
Got it.
Okay.
Sure.
Good morning.
Correct.
How much opportunity.
Yes.
Okay.
Maybe over time.
Performance.
Got it.
Okay.
Thanks.
Okay. So there was a lot of static in the line John but I think we got some of that I think you were asking about the GTP. The GT performance pricing Youre right. There is 179000.
Above the new pricing that we've just launched for the GTE, which will be 154000 effective June one.
<unk> was $1 39, and we'll stay on the GT and will stay that through May 31, now I think you were asking a little bit about like our revenue generation capability and maybe the ability of this product Peter if you could talk maybe a bit about how you see customer.
<unk> desire for this product and data.
Sherri I mean, what happened was that we were oversubscribed very significantly over subscribed.
Green addition, and customers who are asking well hey, we want.
We have a thousand horsepower people going crazy.
Crazy here.
The sales in Hong Kong.
So we quickly turned around and were very responsive with Tech company, we put it and we try to achieve.
Performance at 1050 horsepower now that price reflects our commitment to Dream addition customers great.
Commitments and faith in us.
I think they go about it.
Okay.
Thanks.
Robert.
Thank you.
Good morning.
Thanks, Chris.
Okay.
Thank you.
Thank you.
Very difficult to do.
St. John Cleese, asking about some of the ability to do more of these in the future I think there's always an opportunity I think world.
I mean this is this is showing the power of the brand and ensuring that.
The product defines the brand we are being considered as a brand that can command this sort of position in the market against the traditional brand remarks already because of the premise of our product.
The other thing I think you may have touched on was just the mix generally so let me give you a little bit of context there.
Similar to last quarter, we continue to see the demand for the GT products exceeding that of Turing.
Building the <unk> product now will then be building a touring than the pure as we're exiting the year youre going to continue to see very strong mix throughout this year slightly decreasing sequentially bring on these other products that are priced slightly lower and that's really healthy position for us because as we're ramping.
Carefully maintaining the quality is great for us that we can sell higher end products through that ramp up and don't have to transition to a more affordable products point, yes, yes, absolutely right Peter because the absorption costs will start to increase over time as the volume.
Increases as we get through the next couple of quarters and into next year, So youre going to start to see some.
Elyse on what Youre seeing happening right now in a negative gross margin.
I would say.
The greater level of production comes on board, we are seeing in reflected in the 30000 orders that we've now got the reservation 30, 30000 reservations are very healthy mix between GC touring and pure.
Okay.
Got it.
Thank you.
Okay.
Sure.
Okay.
Good morning.
Okay.
Okay.
Yes.
Okay.
Thank you.
Thanks.
Yes.
Thanks.
Okay.
Sure sure So hey, Rick ball from call International Bank that is in addition to the $3 4 billion of financing and incentives that we had mentioned now in it.
10-Q, and the notes you can go to note six you've got a note 19 in 'twenty, you're going to see some detail in there about the <unk> loan structure.
Also see mentioned to the CIB and Theyre the Gulf.
<unk> International Bank revolver, the $267 million of Hs reference you'll also see in their information about our lease that we're getting through the King Abdullah economic city, and you'll be able to see some of the dollars associated with that as well. So that's giving you some of the tools you need to be able to under.
Beyond the financing that is available to us and then additionally, there is incentives now we decided to proactively adopt a new government assistance.
Standard disclosure standard as of January 1st of this year, so as any of these incentives or any of these.
Loan items from our board on our balance sheet and impact we will be showing there in the financial statements through notes and disclosure so youll be able to get information fairly real time with respect to that now you were breaking up a little bit I think you were asking about the $5 4 billion of cash on hand.
We continue to feel really good about our ability to be well into 2023, and the addition of some of these financing packages has continued to strengthen our liquidity situation and our access to financing. We did have some of that baked into our forward model, but this.
<unk> to Derisk that for us.
Yeah.
Great David will take the next question.
And there are no further questions on the phone at this time I will turn the call back to you may not.
Thank you. So we will take we will now take our last retail investor question before concluding the call on the last question is what is elusive five year plan.
I think it was in my favorite question, where do we didn't we didn't.
Yes.
It's about product product product Domino engineered product is king and a great brand is built by having the best products and is actually defined by those products on line six obviously, we're going to do a pure project gravity SUV and <unk>.
<unk> technology innovation, we have a roadmap.
Tank roadmap to coupon advancing now.
Really what we've done so far step one was to establish lucid as a global luxury brand and creates a vehicle with incredible range through efficiency.
We've done that.
Now step two is even more interesting because that has to scale globally into the premium segment.
Commercial vehicles that use smaller battery packs with competitive range versus other vehicles in the market and I have already noted that ramping productions my top priority, we're making really good strides here.
Again sufficient efficiency is our key USP now beyond that I'm aiming for mid sized platform.
Decade.
Really enthusiastic about that we could only do this by starting off by creating a technology flagships and gravity first but <unk> seen the technical deficiency and setting a new EV benchmarks, and then making more affordable products remember we deserve.
Ooh EV powertrain enhanced we developed it.
Many factory tool in a special factory in Arizona, and we think we can become even more efficient over time and that will translate well into our product roadmap sharing sure and if you look at our current manufacturing plans, we expect to have capacity for 500000 vehicles.
Annually as we crossed the mid decade environment. So to break that down we are going from 34000 capacity in Arizona to 90000 with our phase two expansion as we complete the amp one phase two expansion will move directly into phase three and we believe that can get us.
So about 350000 annual vehicle capacity in Arizona, then you add the 150000 vehicle capacity from Saudi Arabia, and that gets you to about 500000 by just after mid decade.
And then to remind investors, we do have to five 4 billion on the balance sheet as we just spoke with John Murphy. We do also have access to this financing in the Kingdom and we believe that this funds us well into 2023 exactly Sherri. So I mean, we are very focused on product product product in our long term plan near term.
Focus on ramping production and getting more of those vehicles into customers' hands.
I have to say in closing I have never been more excited than I am today about our tech our products our team.
Sure.
Electric vehicle market is still in its very early days.
Secular growth and I believe our focus on product technology quality and service will put us in.
Enviable market position.
Thank you Peter This concludes lucid first quarter 2022 earnings conference call. Thank you all for joining US today and you may now disconnect.
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