Q2 2022 Lucid Group Inc Earnings Call

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The conference will begin shortly.

As Johan during Q&A, you can dial star one one.

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Good day and thank you for standing by welcome to the elusive groups second quarter 2022 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.

Ask the question during the session you will need to press star one one on your telephone.

I would now like to hand, the conference over to your speaker for today Ma'am you may begin.

Thank you and welcome to lucid group's second 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 in 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 1095 forward looking statements are subject to numerous risks uncertainties and other factors that could cause actual.

Our results to differ from expectations.

I refer you to the cautionary language and the risk factors in our quarterly report on Form 10-Q for the quarter ended June 32022, as well as other documents 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.

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 result.

<unk> 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 Dot lucid motors dot com with that I'd like to turn the call over to lucid CEO and CTO of Peter Robinson Peter. Please go ahead.

You may not.

In Q2, we continued to see strong customer demand for our vehicles with over 37000 customer reservations as of today.

An increase of more than 7000 in the quarter.

From a 30000 reservations as we reported last quarter.

Now.

37000 figure does not include our agreement with the government of Saudi Arabia to purchase up to 100000 vehicles, which is entirely incremental.

R&D does it include potential reservations for our forthcoming SUV project gravity, nor even potential reservation Seleucid.

In markets outside of North America, Middle East and Europe .

As such we are very pleased with the reaction from customers.

The excitement surrounding lifted out.

And we believe that as we get more of our vehicles into our customers' hands and expand our test drive program.

Momentum will just continue to build.

We're also pleased to report that <unk> continues to garner many in this industry accolades besting some very well established luxury car brands.

For example, we debuted the 1060 horsepower lucid Grand touring performance in June .

First of all speed in the U K, which featured some of the worlds fastest vehicles.

Lucid at Grand touring performance recorded a goodwill till time decline of 57 nine seconds and issue to apps and that's the fastest time of Amy production rate at the event.

And the 12 fastest time overall, which included mainly wasting counts.

Now to be clear.

Only racing cars with faster at the event and in many of the racing cars, we're not as fast.

Now this demonstrable performance advantage lies in elusive in house EV powertrain technology.

<unk> designs develops.

And manufacturers.

For our core <unk> technology in house.

Vertical integration differentiate solicited from virtually every car manufacturer it today.

However, with all positive moment.

I do have to say that this quarter has proven to be a very challenging period.

And whilst we have experienced supply chain and logistics challenges along with the entire industry.

The limitations of our logistics system have compounded the challenge.

And although we continue to face supply chain constraints. The resolution of some earlier gates and component supply issues allowed us to push towards increasing the production rate.

And as we have attempted to push full of the right.

We found that our logistics constraints prevented us from scaling meaningfully this past quarter.

For example, our ability to feed the correct path to align at the correct time.

Our each car is built with thousands of pumps and do this whilst maintaining a high lucid quality build standards.

So with that let me walk you through our first half and Q2 production and delivery figures to prove.

Provide a little context.

In the first half of 2022, we produced 1405 vehicles.

These refractory gated vehicles and this means that they are completed and ready for delivery to customers.

But in Q2, we also made a significant number of vehicles that we did not factory gate instead.

Instead, electing to hold them back in order to ensure that these cars.

The highest standard of quality.

Remember quality must take a priority over volume.

Sri breath, and I'll touch on quality a little bit later.

From a production standpoint, we had both planned and unplanned pauses in the quarter that resulted in approximately two and a half weeks, where we have no daily production at the factory in.

In addition to causes but more transient in nature related to supply chain and logistics issues.

A production pause due to installation of bullish shell assembly equipment and robotics for the lucid a pure was pre planned.

The equipment has been successfully installed and we're on track for the start of pure before the end of the year.

Do you expect to be hugely significant for us as a company.

At the same time, we did also experienced some unplanned production causes primarily in order to improve our logistics processes, which as I stated earlier it became more apparent.

As we started to scale.

So.

As a result.

We are reducing our 2022 production guidance to a range of six to 7000 vehicles.

Revised outlook guidance for the year reflects the logistic challenges I described as we begin scaling which exposed the immaturity of our logistics processes.

But I do believe we've identified the primary bought Lynx and have already taken steps to begin to remedy the situation.

We have made a significant decision to bring our logistics operations in house.

We've made key hires to the executive team.

We've restructured our logistics and manufacturing organizations accordingly.

We accelerated access to our logistics center as part of our phase two expansion in Arizona.

And within a couple of months, we expect to have a logistics center on site at A&P one.

Which should help mitigate and begin to eliminate the logistics bottlenecks as well as reduce costs of shipping and handling of pumps.

Furthermore, we are overhauling.

Our logistics processes and introducing a series of improvements to simplify the system.

Make it more efficient and robust.

I am pleased to announce that David Steven David has joined <unk> as senior Vice President of operations Steve.

Stephen will report to me and will be based in Arizona at the center of our critical manufacturing and logistics operations.

In this newly created role Stephen will lead global operations, including oversight for the expansion of <unk> one.

As well as future operational centers.

The business leaders of supply chain logistics manufacturing quality will now report directly to Steven ensuring we execute in tighter alignment across these business units.

Stephen's wealth of experience in manufacturing and operations will be tremendous assets to lucid.

Most recently he was head of components operations is still MTS responsible for business operations, including P&L for two companies within the organization and.

And before that statements certainly a variety of leadership positions at Fiat Chrysler automobiles, including Vice President of manufacturing and engineering manufacturing for Asia Pacific.

Stephen has expensive and in depth experience in the automotive arena.

I'm also delighted to welcome Walter Ludwig Vice President of Global logistics to our executive team, who will be reporting <unk>.

Steven.

Walter brings over 28 years of automotive experience and joins us from Mercedes Benz, where he held various roles, including head of operations head of quality and.

Recently head of Central logistics.

For the last 20 years. His main management focus has been ramping up and stabilizing the manufacturing plants in Germany, China, Russia, Argentina, and the United States.

Walter provide operational leadership in developing and implementing best practices in automotive logistics and Pops management.

Cereal planning as well as other areas.

Now moving onto those deliveries last quarter I highlighted that.

We delivered well over 300 vehicles in the month of April .

In Q2, we delivered 679 vehicles to customers.

Our decision to prioritize quality had an effect on our deliveries and quality is an organizational priority.

I think working with the team to make sure that nothing leaves our house without meeting our high standards.

Now in fact, I am joining todays Q2 earnings conference call directly from.

M P. One factory right here in Arizona.

Sure on the frontline.

I've been spending the vast majority of my time here right hand on the shop floor.

Have I believe it's Maria responsibility.

As the CEO to be here resolving issues and helping to onboard the new executives.

And I feel particularly as home on and around the production line, where I am personally and directly engaged in helping solve problems.

It is right here.

Witness the passion and the camaraderie of the lucid employees in the factory and.

Kelly a much valued associates, who are engaged in this process and this is very real.

They are so engaged because just like me they really want to build the world's best cows, and just slightly we wanted to do that in volume.

And believe me, we are working tirelessly to make that happen and so I'd like to personally. Thank all of our employees for their shared dedication and for working alongside me shoulder to shoulder right here in the factory.

Now we've also made enhancements to our quality processes that are yielding improvements.

Quality of the cars that were factory gating now excellent.

And we are working to make sure that this excellence in quality.

Consistent with the scale of the line again quality simply murph take priority over volume as we establish our brand reputation.

In the quarter, we aligned manufacturing quality and field quality under Nick mean Leo.

<unk> president of global quality and that is already yielding improvements.

We also brought in some honeymoon.

Global head of supply of quality some high joins us from LG electronics vehicle components solutions company, where she was the vice president of the steel quality and customer support responsible for leading all aspects of field quality performance.

Customer support and after market for products.

Prior to LG, some high surface powertrain quality director for General Motors International operations in Asia.

Along with the team have already identified areas for further improvement and implementation has been underway and these combined with existing planned process improvements give me confidence in our ability to ramp significant production volumes.

On a positive note our ability to produce count has not limited by our ability to manufacture our electric powertrain.

Advanced technology, which truly differentiates us is manufactured in house by attendance plea advanced processes.

And these are largely all going pretty well.

When you consider just how advanced the <unk> systems.

As part of the story is really quite an achievement.

Yeah.

And from a product perspective as I noted earlier, we're already started deliveries of the 1050 horsepower Grand touring performance.

We're on track for additional version of <unk> for later this year followed by the start of project gravity SUV production in the first half of 2024.

We also expect to ship the very first lucid adds into Europe , and Saudi Arabia by yearend. So we see lots of opportunity ahead of us.

Yeah.

Now I also want to provide an update on our formula E relationship.

As we approach the completion of four successful seasons supplying the standard battery pack to the theories.

I am proud to say that we have had a 100% safety record to date with just two races remaining in this the final series season for the generation two race cars.

With the advent of the all new generation of discrete Formula E Racing cars for next season lucid is proud to announce that we will be the sole provider of front drive units for the series.

It's brand New Lucid front drive unit has been custom developed to provide ultra high performance with <unk>.

<unk> metric and volumetric powered entity.

These drive units are capable of 469 horsepower yet remarkably are approximately half the weight of the lucid Android units.

That position in the nose of the electric rates come in front of the dry this feat will drive shelf connecting outlet to the front wheels.

Make no mistake. This is impressive next level of technology.

And just as our learnings from our racing battery program, providing technological transfer into our road travel we see that.

I think this brand new lucid Hi Tech racing drive unit is probably a good point to a potentially smaller yet powerful road car drive unit in our future.

As far as on the web we are one of only two Oems car companies that are vertically integrated through the design development and manufacturing of our own technology and I am confident that as this technology rate plays out loose.

<unk> will continue to spend that.

And we continue to garner strong industry escalates.

Technology in our design in Q2, we won the 2022 wards 10, best interiors and UX better.

Award validates one of the founding principles of lucid at which is the looser. Despite concept in fact I recently filmed elusive Tech talk all of the space concept, whilst chief engineer, Eric Bob presented.

Latest tech talk on the vulnerable bonanni directional charger, which you can find on our Investor Relations website.

The software team continues to work hard with 19 over the air updates to that but since the beginning of the year.

We added a number of features including an enhancement to lucid as ability to identify traffic signs and inform the driver of speed limit changes and other important information.

A major upgrade to navigation as well as the other.

Customer requested features.

A major software upgrade coming later this year.

Now.

Although I'm delighted by the strength of demand, we see for our accounts.

And renovations is received.

Conspicuously aware that the true value of having what is now widely recognized as a truly exceptional.

Can only be achieved by producing it in a meaningful volume.

And that is why my laser focus and develop lucid team is right here in Arizona unlocking the path to our volume ramp up.

Make no mistake.

Although frustrating. This is this phase of our growth as a company that we will power through.

And that one we will pass through with a steely determination.

We have a product we go lamented our workforce.

And we are improving our processes to enable this to happen.

Now Furthermore.

As we increase the number of the former road I believe we will see further demand growth as the awareness of lucid.

And of the lucid brands Proliferates.

I'm also excited about the potential reservation demand for project gravity SUV, which we are now considering just how to debut and when precisely to open reservations.

Longer term in order to have a more meaningful impact on deployments, we recognize that we need to be in the more affordable higher volume segments of the market and we will be doing just that with a midsized vehicle platform around mid decade, which I believe we will.

Further demonstrate the value of our efficiency through our in house EV technology.

In short I remain very excited about our future and the broad roadmap ahead, whilst right now we are taking steps to resolve our currency constraints at the same time, we are driving forward with a sense of urgency.

Our incredible vehicles to market and indeed on that note I'm very hopeful you will see the fruits of these lasers in the coming months and quarters.

And with that let me turn it over to Sherry for an update on our financials and an additional perspective on our business Sherry.

Thank you Peter and thank you for taking the time to join US today I want to Echo Peter's excitement about our future product and technology roadmap and customer demand. We remain incredibly excited to bring new versions that are listed there.

Eric to customers this year and I put the reservation number of over 37000 in context. This represents potential future revenue of approximately $3 5 billion and net before including the up to 100000, DSL deal with Saudi Arabia, and the future reservations for the gravity since we have not.

Open the order books for our upcoming SUV or.

Our future reservation taken together with our growing customer base brand awareness and number of industry accolades gives us the conviction to continue to invest in the rapid expansion of our business.

Turning to our second quarter financial results.

Second quarter revenue was $97 3 million, which represented a quarter over quarter increase of 69%. This included $96 1 million in automotive revenue from the delivery of 679 CFO .

We also recorded other revenue of approximately $1 $2 million, which includes sales to Formula E. As Peter mentioned the Formula E. Drivetrain agreement is the natural next step in our relationship.

True Testament to our advanced technology differentiation.

Cost of revenue with $292 3 million.

Similar to last quarter. This expected increase was primarily related to personnel and overhead costs as we ramp up production.

Offset by lower freight costs quarter over quarter due to our ability to shift the vast majority of our international shipments from air to Ocean freight.

We recorded an impairment charge of $81 7 million in the second quarter, primarily as a result of these increased costs being capitalized into inventory. This is Steve.

Early typical on initial production ramps and just as we saw a decline from Q1 to Q2 and this impairment charge, we expect that the impact should lessen over time as we ramp up production volumes toward our planned manufacturing capacity.

Moving to operating expenses.

We're still in the growth stages of our company and investing behind our strategic priority, but I want to be clear. It were queuing this in a prudent and methodical manner.

Instilling a culture of cost consciousness, and we're working with our talented team members across the company to identify and execute on cost efficiency opportunities.

To illustrate this point I'd like to add on to Peter's earlier comments around the importance of quality getting quality right and getting it right early on in the factory helps to reduce downstream costs and improve throughput.

And to building the brand and customer loyalty, there's also tangible financial benefits to a quality first approach.

Now turning to research and development R&D expense totaled $204 million. The seven 7% increase sequentially was primarily related to prototype material engineering design and testing services offset partially by lower stock based compensation expense.

SG&A expense was $163 8 million down 26, 6% from the first quarter, primarily due to lower stock based compensation expense.

In Q2, we added five new studios for a total of 29 studios in service centers across the U S, Canada and Europe .

Proud to have added new studio locations in Boston, Massachusetts, Manhasset, New York, Denver, Colorado, Seattle, Washington, and our first European studio in Munich, Germany.

We will continue to strategically open new locations globally, as we scale the business and grow our presence.

We're also increasing our fleet of mobile vans any of a total of 29 in North America as of quarter end.

<unk> service dance can perform over 80% of the service procedures that can be done in a service center and it's an important element in ensuring high customer satisfaction and lower cost approach to providing services to fleet up listed vehicles growth.

Stock based compensation in the quarter was $94 4 million.

$10 4 million within cost of revenue.

$39 $2 million within research and development and $44 8 million within SG&A.

In other income we recognized a noncash gain of approximately $335 million related to the mark to market value of private warrant.

The value of the warrants can be influenced quarter to quarter by a number of factors, including listed groups end of quarter share price.

Now moving to the balance sheet.

We ended the quarter with $4 6 billion in cash cash equivalents and investments, which we expect will fund us well into 2023.

During the quarter, we also announced new ABL asset based loan credit facility with initial committed capital of up to $1 billion and the availability is based on the value of certain eligible asset.

It terms also provide for incremental revolving commitments of up to an additional 500 million subject to obtaining lender commitments.

We had no outstanding borrowings under the ABL credit facility in Q2.

The importance of this facility is that it provides boosted with incremental liquidity and demonstrates the vote of confidence from our world class syndicated global banks.

All of which have been true with us through multiple transactions as we scale our business.

I'd also highlight that this is a typical part of the capital structure of mature businesses and reflects the further development of listed as a growing global company.

In Q2, we activated a working capital loan under the Gulf International Bank facility agreement in the amount of approximately $6 7 million U S dollars related to early work to build our factory in Saudi Arabia, we have approximately $86 6 million U S.

Currently available under the working capital facility and an additional $173 2 million U S dollars under a bridge facility.

It's demonstrated through the series of actions, we are committed to working proactively and opportunistically to ensure that our balance sheet remains an area of company strength.

In Q2, we continued to invest in our technology platform, the scaling of our global business and the manufacturing infrastructure Buildout catheter.

Capital expenditures related to these activities were $309 8 million in the second quarter.

You can see from the photos, we shared in our Q2 earnings presentation, our phase two expansion at our Casa Grande, Arizona factory is progressing when complete we expect our installed capacity to increase to 90000 units per year by early 2023.

Mid decade, we expect to reach an annual installed capacity of 350000 units in Arizona and 150000 annual units of installed capacity in Saudi Arabia, and that gets you to an annual installed capacity of 500000 shortly after mid decade.

In Q2, we announced our initial launch plans into the European market with the Lucid Air Dream edition R, which is optimized for an estimated 900 kilometers of range and that Dream addition, key which features 1111 horsepower.

We have not yet begun to accept orders in Europe , but we did reach out to our existing reservation holders to gauge interest in Dream addition, and we immediately saw strong demand.

Moving to some of the other major milestones in the quarter.

We launched lucid financial services in June and all new digital platform offering a flexible fast and transparent financing process.

Many looser their customers have been asking for flexible financing option with a preference for a 100% digital experience and we've delivered on that ask.

Loan products are available to U S customers in all 50 states and lease products in 38 states and growing through a seamless process designed specifically for the customers.

We believe this helps open up the market, yes, it's estimated that over 65% of OEM customers seek out loan or lease financing.

This also enables us to continue to build direct relationships with our customers throughout their ownership journey.

Now it is highly unusual for an auto company to rollout. This type of service is early in the growth cycle.

Truly amazing and great work by the team.

Another proud milestone in the quarter with our.

Addition to the Russell Russell 1000 Index Russell.

Russell indices are widely used by investment managers and institutional investors for index funds and as benchmarks for active investment strategies.

Our inclusion in the rest of the 1000 index.

Another significant milestone for lucid and should help broaden our awareness in the institutional investment community.

Now turning to the outlook.

Peter outlined some of the supply chain and logistics challenges as well as the actions we're taking to address the near term production bottlenecks are experiencing.

Bringing our logistics operations entirely in house and accelerating access to our logistics center onsite at our Arizona factory will help reduce complexity cut down lead time and reduce various costs.

Lead these decisive actions as well as the addition of leadership across logistics process transformation and supplier quality will help us unlock this bottleneck.

However, it is unlikely we will be able to make up the anticipated loss volume in 2022. Consequently, we are adjusting our 2022 production guidance to 6% to 7000 unit from 12000 to 14000 units.

Now turning to our cash guidance, we ended the quarter with $4 6 billion in cash cash equivalents and investments, which we continue to believe is sufficient liquidity to fund us well into 2023.

So we are investing fully in accordance with our forward plan.

As a reminder, we also have the KSA debt facility and the ABL with significant untapped capacity.

I'm also confident we will have options for additional funding as needed and our strong balance sheet allows us the flexibility to be opportunistic in the market.

Moving to Capex.

Capex in the first half of 2022 with $494 9 million, while the timing of Capex outflows can shift quarter to quarter. We continue to expect capital expenditures for the year of approximately $2 billion.

This fund facilities as well as machinery and equipment in Arizona.

Retail and service Center development.

Early investment in our presence in Saudi Arabia, and other capex associated with vehicle and component development.

In terms of our product roadmap guidance, we're on track for deliveries of additional versions of <unk> later, this year, including the Grand Air Grand touring performance.

The <unk> the touring and for production of project gravity SUV in the first half of 2024.

In closing despite our immediate challenges I am proud of what our team has been able to accomplish collectively with our business partners. We have enabled financings. We've continued important infrastructure build out and launched award winning products. We welcome the new leadership team members and look forward to the capabilities that they bring if we work together to restore.

Solve issues and capture the tremendous opportunities ahead of us.

Following Peter's closing remarks, so we'll begin the Q&A portion of today's call. Today's Q&A will feature questions from some of our retail investors and important constituency of our shareholder base through the <unk> technology platform with that I'd like to turn it over to Peter for closing remarks. Thank you.

Thank you Sherry.

I want to close by thanking all our employees for their dedication and hard work.

Customers and investors, who put their trust in us.

Our suppliers and partners.

Tirelessly, helping us on our journey.

Im more convinced than ever that this is a technology race and that we are well positioned with our in house developed advanced technology.

But all I want to be clear that right now.

<unk> focus is with this great team right here in Arizona.

And helping resolving all logistics challenges and ramping up production.

I remain confident that we show overcome these near term challenges with a relentless tenacity and steely determination.

And in so doing put in place appropriate processes and methodologies that will serve us well for the future.

Make no mistake that future is hugely exciting.

Because right now more than ever the world needs for new music products and technology advancements that we havent yet to bring to market.

And with that let me turn it back to me not to get to your questions.

Thank you Peter we will now start the Q&A portion of the call before I take questions from those on the phone we want to pose some questions from our retail investors something through the safe technology platforms. The first question straight to it we all want to know is there a possibility for a partnership with Apple in the future and we also have another related question regarding partners that we.

I'll include witches since Hertz went with Tesla with lucid think about something like a partnership with car rental companies to get the brand out there.

Thanks, Maynard so we don't have anything to announce today regarding any new partnerships that.

Third we recognize the attractiveness of our products and tech platform for other companies and we're keenly open to discussing partnership option.

With regard to fleets rental cars, specifically our vehicles aligned very strongly with the operational and financial metrics at these operators care about for instance, we are industry, leading and efficiency, which is measured in miles per unit of energy and hence miles per dollar or charge time and range are also leading the market which track.

The higher vehicle uptime, which both customers and fleet operators desire and we can also enable fleet operators to manage and run predictive analytics on our fleet and communicate with the fleet given we've installed an OTA enabled software platform in every car that we sold and then Sherry.

Sure Ethan.

From a I guess from a vehicle architecture perspective.

<unk> based concepts for there is additional room for luggage ocado or in the case of an autonomous vehicle ride sharing fleets, which are configured with.

Extra computer hardware and equipments, we have more room for the equipments in the batteries.

Power the equipments so.

I think for many of these characteristics and attributes.

Potentially make us a fantastic partner for one of these these groups today and frankly, even more I guess over time as we introduce more affordable models in the future such as the appeal.

The variance.

Well look we've got the perfect platform for such opportunities I guess.

Great we'll move to the next question any plans for an EV in the 40000 $50000 range to compete with other evs in that price range and there is another question related which is will lucid offer cheaper models for a broader market. Yes. This is good.

<unk>.

So it kind of a popular sort of widespread.

That lucid only wants to be playing in the high end luxury segment of the market and that's simply not true.

In order to have a more meaningful impact to the claim that we just need to be in the higher volume segments of the market. That's how we are going to really make that impact.

One of those steps I see pure as a stepping stone to a more affordable and that's why I'm, so passionate about releasing their appeal.

I mean looking a little further ahead, you will see Amit size vehicle platform, just mid decade, which is going to be a further development in our technology and efficiency story.

I just want to explain we deliberately chose to start off at the high end, because we're defining our brand and the Super cool.

Brian .

From its Californian DNA and this is just the starting position I mean, we start off by correcting Eurotech flagships, such as lease today and gravity first and we focused on the technical efficiency, we set new benchmarks and then we're going to make more affordable.

Products and Thats, what really excites me remember that we designed redevelopment manufacturer.

Powertrain.

Our factory in Arizona.

And we think we can become even more efficient and that's going to drive down cost of easy ownership and accelerate and capitalized widespread adoption, which is my passion.

And we'll move to the next question because lucid plans to pay out dividends in the future.

We don't currently have plans to do so, but let me give you a little bit of perspective, we believe that our <unk> technology platform is amongst the best in house developed technology available in the market today and so our primary focus is to continue investing behind the strength and the growth of that platform. So that we can fulfill our <unk>.

<unk>, which is is to bring a sustainable technologies to the world. Therefore, we don't anticipate paying a cash dividend in the foreseeable future.

And our next question from the same platform as lucid currently working with Apple to implement the new car play with iOS 16 that will be released in 2023 to utilize all lucid cockpit displays.

That's a very specific question I guess.

Maybe allow me to explain this more broadly perhaps.

If I can speak for Apple's future product line here.

But we're always evaluating new technologies as they come to market.

We will continue to do so look we've got an awesome.

From a hardware and mechanical perspective.

And what I can talk about some very exciting software updates coming throughout the year.

And really sort of match the debt the prowess from the hardware side and we will continue to provide new features via over the air software.

Thanks.

And specifically with regards to comp play we're actually in a beta testing phase and validation right now and actually we plan to release. The final version in the near future So stay tune and wait for that.

Our next question how is lucid planning to combat inflation in a potential recession in the short term.

Or will this affect the gravity SUV, that's coming out in 2023 and potentially a 50000 dollar EV in 2025 and sharing maybe you can take the first part.

You can take the second.

Thanks Maynard.

The entire industry has been experiencing inflationary cost environment, and we're certainly not immune from that I mean with respect to the actions that we've specifically taken in June we increased the prices that are listed there and that was the first time that we announced.

The first time that we announced prices back in September 2020.

We're not going to see a material impact from that action until 2023, given that we honor the prior price on the reservations made through May 31, and orders to the Grand touring which were confirmed in June .

As I've mentioned in the prepared remarks, we're still in the growth stages of our company and investing behind our strategic priorities. So large scale blanket cost cutting initiatives arent necessarily appropriate in our case.

I wanted to be clear that we're allocating capital in a very prudent and methodical manner and we're instilling a culture of cost consciousness are working side by side with our talented team members to identify and then execute on cost efficiency opportunities.

Takes time to get processes to be best in class and efficiency. So there is definitely more work that we can do to rein in costs.

Others in the industry, we're running at various downside scenarios and we will act accordingly based on market conditions.

Yes, I think the second part of the question was is everything on track for gravity release.

As we stated our project gravity SUV is on track for start of production in the first half of 2024 and actually we're currently in the process of releasing engineering data for a prototype build so I'm hugely excited about that and are being closely.

<unk>.

Interacting with that whole process.

And we also have to mention that our mid sized platform of course is on track for pumps mid decade as well.

Now of course, it's important to recognize that to sync with the strong production of gravity approvals, but at the same time, we're readying our factory through to phase two here of A&P one month.

In Arizona in particular.

We're expanding the north end of the body shop ready for project gravity and the sell side of the building the New Assembly holds where it will run both.

And gravity down that line.

Now we have customers asking us all the time for an SUV.

Our hope is that gravity can do for the TV market shifts were added to the luxury sedan market I'm going to take the same space concept the range the efficiency, but technology and design and performance.

All great stuff.

On SUV and.

I think probably doesn't surprise a little bit on a multi <unk> SUV.

But this finally is the SUV for me, it's actually going to happen.

Finally met via CVR Love and lets project gravity.

Great. Thank you so now we'd like to take a few questions from the phone lines to wonder can we take the first question.

Thank you.

As a reminder, ladies and gentlemen, you will need to press star one on your telephone.

One moment wall first question.

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

Good afternoon, and good evening guys.

I just have three quick ones.

First Peter you mentioned that there were finished vehicles that were.

Were held at the factory and not fabricated in order. It is finished I'm just curious how many those were and how many of those are close to being finished second as we think about the logistics center being brought on site cost Grande.

What the incremental cost for that would be and does that have any impact.

On capacity and then the third question Sherri.

What is the ABL borrowing base Thats backstopping the $1 billion.

The new $1 billion loan.

El facility.

And you mentioned that might be upsized, what other assets could be pledged for that ABL.

Thank you John Peter here.

The first question was the the calls that we held back a century.

We did that to really ensure that the coffee was just perfect and.

It was just fitting finish adjustments on what we call slush in gap.

<unk> to the spending.

Just put the finer points of missing that you would expect feed shows and the quality commensurate with our luxury automobile and although many of those customers were missing some of the standards and quality team obviously the decision.

Our rig up again.

These laws that were actually releasing a lot of it is current with Brookfield group to our service centers right now and then following.

There were two customers, having have attendance love and attention and care and I think there'll be delighted with.

Our best efforts to make them.

Perfect because they can be the you also asked about the logistics centric Casa Grande now this was permanent.

This was preplanned pulse, although the massive $2 8 million.

Million.

Route expansion does include several hundred square feet, and 1000 square feet of logistics space. What we're doing is just accelerating that very.

Very modest.

Outlay, just getting them a little bit quicker.

As the close so we can bring.

Buffer soften the materials turn baloney that too.

To create more efficient flow of material.

Our own house. So this is nothing new it's just an acceleration.

Already plan, yes.

Yes, right, so no real incremental costs to speak of with respect to that outlook.

You asked about the ABL in and we're just delighted to have put that in place with its world class group of banks, and our syndicate and a borrowing base. The initial committed part of it is $1 billion. Okay. And then we can borrow up to about a quarter of that $1 billion right now based on eligible assets.

We will grow into more over time as inventory goes up as other of our assets go up and so that is something that is going to be available to us on a growing basis at.

As we move forward and mature as a company the neat feature about the ABL lets it also has an accordion feature so although the second part of it the accordion part is not committed yet.

It is up to an additional $500 million thats going to be available for that.

Thank you.

Please standby for our next question.

Our next question comes from the line of.

<unk> with Citi. Your line is open.

Great. Thanks, Doug good afternoon, everybody.

Also three questions quick ones from me first.

It sounds like on the logistics issues you've identified.

The problems with team is in place, hoping just you can elaborate more the level of confidence in the second half of the year, maybe talk about what you expect production split between Q3 and Q4.

Confidence you have in to growing that for next year and then secondly, I was hoping you could also comment on the rate of reservations that you saw after the June price hike just curious on what you saw for demand there and lastly share you maybe you could comment on the minimum cash balance you'd like to have as you kind of put out liquidity into 2023.

Oh, Hi, advertise pizza here, all I think it's a really excellent question.

We've.

Sure.

We faced.

Going.

Based upon a mindset, which is liza.

Julie optimistic Jimmy pessimistic, a very balanced approach and we've taken a very comprehensive and very thorough and holistic approach to the risks and opportunities.

We see and which confirm to us.

This is <unk>.

Perfect Science and emphasize.

But the entire executive.

Annualized this very thoroughly and we have a very high degree of concurrence.

Collective thinking which has led to this revised guidance.

So let me talk to the reservations question. So as you can expect when we announced in May at our May earnings release that we were going to keep the prices the oil prices in effect through the end of May and not have them go into effect until June one that could bring bring forward. Some reservation. So we had.

A very large spike that happened in May you see that as we went from 30000 to 37000 Thats the largest growth that we've ever had in a three months period before but that did happen as expected I would say that the pull ahead, a little bit more pure in it than others, which you also would find us being an <unk>.

Is that the lower price points might be a little bit more price sensitive so looking to lock in that rate now what's really interesting is as we move ahead. The next couple of quarters. It we looked at the reservations that have come in in June and July .

We take that June and July base that we've had and then we add to it the increase over normalized increase that we got in May We're still way ahead of where we would typically be if we were just normalized through June and July so that pull ahead, we're seeing.

Really might have been a bit of a bump up just kind of like a marketing event. Almost if you will the other thing that was interesting is we booked at the June and July reservations that are coming in is that they continue to be allocated across the same mixed allocations that we saw pre <unk>.

<unk> hike, so youre still seeing pure highest followed by Grand touring and then touring the Grand touring continues to be above touring as well so we're seeing.

What I would say is very encouraging.

Sponsored reservations following similar patterns and when you take the bump in May with the reduction we've seen in June and July we're sitting in a really great place.

Okay.

Thank you and then third I think you had a question about.

Minimum cash balance so that was interesting there is a lot of different ways to model. This.

Because the way we are looking at the $4 6 billion and when I talk about.

Growing when I talk about being well into 2023, I'm talking about growing in accordance to our full plan, which is in SaaS and Saudi Arabia investing in all of our vehicle variance investing at this swift pace that we have chosen to do we have some options there right. So when.

You think about the minimum balance you could stretch that out if you want so.

Not really going to provide any guidance with respect to how much cash we want in the bank, but I just want you to know that youre going to continue to see from US. The same type of proactive kind of opportunistic behavior that you've seen all along every quarter, we're coming to you and we're telling you about something interesting that we've done in the capital markets.

Yes, we did the convertible bond offering now we've done the ABL, we put in place the $3 4 billion in Saudi Arabia, I think youre going to continue to feed that kind of action taking place from us.

Monitoring the market and making sure that we're doing what is prudent on behalf of all investors.

We'll take the next question please.

Thank you.

Our next question comes from the line of Charles <unk> with Redburn. Your line is open.

Hi, Thanks for taking my questions I've also got three please so firstly again, sorry on the production.

I'm wondering can you help reassure us that a little bit on the ramp up.

By giving us an idea of what your weekly production rates exited Q2.

What it is today.

My second question on order insight.

Sorry, you just mentioned that that if you smoothed out the last three months.

Actually ahead of what you expected.

But if I look at it I think I'm right in saying that you've averaged about 70 or 78 orders a day and the last area since you updated us.

And then the three month period before that.

Which is March.

Basically the same as that so I'm wondering is this sort of explanation that were constellations instead of gross order intake significantly above where maybe the expectation is that the order intake which slowed.

And thirdly.

Sorry, I think.

Was $1 4 billion.

Purchase of Securities in Q2 can you just.

Tell us what that is and whether or not we should treat that as being as liquid as cash when it comes to your funding requirements. Thank you.

Yeah.

Marcelo it's Peter here.

I'm really look to provide guidance on two production rates and this is.

Because it can be seen misleading.

A whole host of things too if we.

We can delay production a little bit to put in.

Two nine points to deploy which for example can improve ROIC in the future.

We saw cherry picking specifically weekly production rates.

Dangerous territory.

I think.

We've proven with <unk>.

The most broad.

Broad and only.

Good.

Ability to help reduce costs through this program.

And ongoing.

<unk>.

Seven.

For the year I believe is a very balanced.

Our real estate.

<unk> for the future.

<unk>.

The other thing is willing to submit to give you a weekly production rate right now.

Yes, let me cover off a couple of your questions as well you were asking about the short term and long term investments. So you are right. We took some of our cash and we parked in short term and long term investments in separately managed funds and we did this because we didn't need access to all the cash right now and we wanted to be.

We're able to get a little bit higher return on our money. Those dollars are accessible to us at any time that we don't intend to use them right away and we plan to let them mature and garner the interest rates, which is the purpose why we put them there, but they are absolutely acceptable to us I don't want people to get confused when there.

I see the cash balance the cash line on the balance sheet going down quarter over quarter. Some of that was moved into short term and monitor investments our assets are still there. It wasn't that we spent all of that and I definitely don't want there to be confusion on that point.

Daryl you.

You asked a bit about just the the reservations when we booked at that normalized curve I was talking about we did exactly what you said I look back three months I look back six months nine months and I kind of looked at what does that normalization book like we are definitely well above that when you look at May June and July kind of taken two.

Together.

Cancellations came down slightly.

So we've actually seen some improvement there as well, but what you are going to see as we go forward as the deliveries are going to be increasing substantially. So yes, I don't know youre going to continue to see that kind of growth because youre going to have a lot of deliveries coming out of that number now we will be opening up the gravity order book at some point and we expect we're in.

Get another large spike again, right, so theres going to be some dynamic nature to these reservation numbers going forward and we'll be sure to be as transparent as we can about that in future earnings call.

Thanks, and we'll close out with the last question from the Se platform, which is what is the plan for growth how do you plan to take more market share in the EV market.

Well I mean first of all I have to say this.

There is no such thing.

The market for EV market for cars.

So we're not competing for this sort of artificial construct of EV market share I think that's a fantasy we're competing for the rest of the marketplace, which is huge the white space, which is currently occupied by outdated gasoline cars.

And that's what we're competing with.

Integration into that market, but I would also say that this is a technology race.

<unk> and Mrs yet to plant.

Not all <unk> are created.

Created equal.

I'd also like to add I mean with looser that we're addressing.

Specific issues that have been sort of resistance points, I guess too to customer adoption with evs in the past I mean, we've got the longest range the fastest time to charge incredible spacing interior design.

We leveraged <unk> so much more than just an easy it is to leverage all of those advantages that electrification can provide.

And I think we can sell more because we address these key resistance points.

But.

Furthermore, I guess is ambiguous yet stay tuned.

I'm glad you asked the question because it.

Allows them to address please.

The world's pushes battery materials are really scarce and our technology allows us to make more calls.

Batteries and this is a point that's really missed because we can make more with.

With less resources.

We can go server for given the massive energy because we've got more efficiency.

For example, we believe we can elucidate.

Elusive they appear with over 400 miles range with battery packs.

Monte kilowatt hour, that's what's going to make lucid.

Pure really awesome.

Similar range, but few about trees than compared with evs for others.

Is the future that is the consequence of being in the tank right.

Great. Thank you and I think Thats, a great way to end.

This concludes <unk> first quarter 2022 earnings conference call. Thank you all for joining US today and you may now disconnect.

[music].

[music].

[music].

Good day and thank you for standing by welcome to the elusive groups second quarter 2022 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 a question during the session you will need to press star one one on your telephone.

I would now like to hand, the conference over to your speaker for today Ma'am you may begin.

Thank you and welcome to loosen group's second quarter 2022 earnings call. Joining me today are Peter <unk>, our CEO and CTO and Sherri <unk>, 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 coming in 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 1095.

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 and the risk factors in our quarterly report on Form 10-Q for the quarter ended June 32022, as well as other documents filed or to be filed with the SEC for a full year.

Such risks uncertainties and other factors.

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 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 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 Dot lucid motors dot com with that I'd like to turn the call over to lucid CEO and CTO Peter Robinson Peter Please go ahead.

Thank you.

In Q2, we continued to see strong customer demand for our vehicles with over 37000 customer reservations.

Today, that's an increase of more than 7000 in the quarter up from the 30000 reservations as we reported last quarter.

Now 37000 figure does not include our agreement with the government of Saudi Arabia.

Which is up to 100000 vehicles, which is entirely incremental.

No. Indeed does it include potential reservations for our forthcoming SUV project gravity.

So even potential reservation solution in.

In markets outside of North America, Middle East and Europe .

As such we are very pleased with the reaction from customers.

The excitement surrounding lifted.

And we believe that as we get more of our vehicles into our customers' hands and expand our test drive program.

Momentum will just continue to build.

We're also pleased to report that <unk> continues to garner many in this industry accolades best thing some very well established luxury car brands.

For example, we debuted the 1050 horsepower lucid Grand touring performance in June .

First of all state in the U K, which featured some of the worlds fastest vehicles.

Well the lucid at Grand touring performance recorded a goodwill till time decline of 57 nine seconds and the shoe to apps and that's the fastest time Amy production rate at the event.

The 12th fastest time overall, which included mainly wasting counts.

Now to be clear.

Only racing cars were faster at the event and in many of the racing cars, we're not as fast.

Now this demonstrable performance advantage lies in elusive in EV powertrain technology.

Lucid design was developed.

And manufacturers.

All of our core EV technology in house.

Vertical integration differentiates lucid from virtually every car manufacturer today.

However, with all that positive momentum.

You have to say that this quarter has proven to be a very challenging period.

Whilst we have experienced supply chain.

And logistics challenges along with the entire industry.

The limitations of our logistics system have compounded the challenge.

And although we continue to face supply chain constraints. The resolution of some earlier gates and component supply issues allowed us to push towards increasing the production rate.

And as we attempted to push full of the right.

We found that our logistics constraints prevented us from scaling meaningfully this past quarter.

For example, our ability to feed the correct path to align at the correct time and cadence our each car is built with funds into accounts and do this whilst maintaining a high lucid quality build standards.

So with that let me walk you through our first half and Q2 production and delivery figures to prove.

I'll add a little context.

In the first half of 2022, we produced 1405 vehicles.

Factory gated vehicles and this means that were completed and ready for delivery to customers.

But in Q2.

<unk> made a significant number of vehicles that we did not factory gate in.

Instead electing to hold them back in order to ensure that these cars met the highest standard of quality.

Remember quality must take a priority over volume as a luxury brand and I'll touch on quality a little bit later.

From a production standpoint.

Both planned and unplanned pauses in the quarter that resulted in approximately two and a half weeks, where we have no daily production at the factory.

In addition to pause is of a more transient in nature related to supply chain and logistics issues.

A production pause due to installation of bodyshell assembly equipment and robotics for the lucid appeal was pre planned.

The equipment has been successfully installed.

We are on track for the start of pure before the end of the year, which we expect to be hugely significant for us as a company.

At the same time, we did also experienced some unplanned production causes.

They're really in order to improve our logistics processes, which as I stated earlier it became more apparent as we started to scale.

So.

As a result.

We are reducing our 2022 production guidance to a range of six to 7000 vehicles.

Our revised outlook guidance for the year reflects the logistic challenges I described as we begin scaling which exposed the immaturity of our logistics processes.

But I do believe that we've identified the primary book links and have already taken steps to begin to remedy the situation.

We have made a significant decision to bring our logistics operations in house.

We've made key hires to the executive team.

And we've structured all logistics and manufacturing organizations accordingly.

We accelerated access to our logistics center as part of our phase two expansion in Arizona.

And within a couple of months, we expect to have a logistics center.

At A&P one.

Which should help mitigate and begin to eliminate the logistics bottlenecks as well as reduced costs of shipping and handling as pumps.

Furthermore, we're overhaul.

Overhauling, our logistics processes and introducing a series of improvements to simplify the system.

And make it more efficient and robust.

I am pleased to announce that David Steven David has joined lucid as senior Vice President of operations.

Stephen will report to me and will be based in Arizona at the center of our critical manufacturing and logistics operations.

In this newly created role Stephen will lead global operations, including oversight for the expansion of A&P, one as well as future operational centers.

The business leaders of supply chain logistics manufacturing quality will now report directly to Steven ensuring we execute in tighter alignment across these business units.

Stephens a wealth of experience in manufacturing and operations will be tremendous assets to lucid.

Most recently he was head of components operations is still MTS responsible for business operations, including P&L for two companies within the organization.

And before that Steven served in a variety of leadership positions at Fiat Chrysler automobiles, including Vice President of manufacturing and engineering manufacturing for Asia Pacific.

Steven is expensive and in depth experience in the automotive arena.

I'm also delighted to welcome will also Ludwig Vice President of global logistics to our executive team, who will be reporting to Steven.

Walter brings over 28 years of automotive experience and joins us from Mercedes Benz, where he held various roles, including head of operations head of quality and that most recently head of central logistics.

For the last 20 years. His main management focus has been ramping up and stabilizing the manufacturing plants in Germany, China, Russia, Argentina, and the United States.

Walter provided operational leadership in developing and implementing best practices in automotive logistics and Pops management.

Cereal planning as well as other areas.

Now moving on to the deliveries last quarter I highlighted that we.

We delivered well over 300 vehicles in the months of April .

In Q2, we delivered 679 vehicles to customers.

Our decision to prioritize quality had an effect on our deliveries and quality is an organizational priority.

<unk> been working with the team to make sure that nothing Liza House without meeting our high standards.

Now in fact, I am joining todays Q2 earnings conference call directly from <unk>.

M P. One factory right here in Arizona, I'm rideshare on the frontline.

And I've been spending the vast majority of my time here right hand on the shop floor.

I believe it's malia responsibility.

As the CEO to begin resolving issues and helping to onboard the new executives.

And I feel particularly as home on and around the production line, where I am personally and directly engaged in helping solve problems.

It is right here.

Witness the passion and the camera run rate of the lucid employees in the factory and.

Julie.

<unk> valued associates, who are engaged in this process and this is very real.

They are so engaged because just like me they really want to build the world's best cows, and just slightly we wanted to do that in volume.

And believe me, we are working tirelessly to make that happen and so I'd like to personally. Thank all of our employees for their shared dedication and for working alongside my shoulder to shoulder right here in the factory.

Now we've also made enhancements to our quality processes that are yielding improvements.

Quality of the cars that were factory gating now excellent.

And we are working to make sure that this excellent quality.

Consistent with the scale of the line again quality simply must take priority over volume as we establish our brand reputation.

In the quarter, we aligned manufacturing quality and field quality under Nick mean Leo.

<unk> president of global quality and that is already yielding improvements.

We also brought in some honeymoon.

Global head of supply of quality some high joins us from LG electronics vehicle components solutions company, where she was the vice president of steel quality and customer support responsible for leading all aspects of field quality performance.

Customer support and after market for products.

Prior to LNG, some high surface powertrain quality director for General Motors International operations in Asia.

Along with the team have already identified areas for further improvement and implementation has been underway and these combined with existing planned process improvements give me confidence in our ability to ramp significant production volumes.

On a positive note our ability to produce health is not limited by our ability to manufacture our electric powertrain.

Advanced technology, which truly differentiates us is manufactured in house by attendance plea advanced processes.

These are largely all going pretty well.

When you consider just how advanced the systems.

This part of the story is really quite an achievement.

And from a product perspective as I noted earlier, we're already started deliveries of the 1050 horsepower Grand touring performance and we're on track for additional version of Alicia There for later this year followed by the start of project gravity SUV production in the first.

Half of 2024.

We also expect to ship the very first lucid as into Europe , and Saudi Arabia by yearend. So we see lots of opportunity ahead of us.

Now I also want to provide an update on our formula E relationship.

As we approach the completion of four successful seasons supplying the standard battery pack to the series.

To say that we have had a 100% safety record to date with just two races remaining in this the final series season for the generation two race cars.

With the advent of the all new generation and discrete Formula E raised cost for next season lucid is proud to announce that we will be the sole provider of front drive units for the series.

It's brand New Lucid front drive unit has been custom developed to provide ultra high performance.

<unk> metric and volumetric powered entity.

These drive units the cake.

169 horsepower, yet remarkably are approximately half the weight of the lucid and drive units.

That position in the nose of the electric rates kind of front of the dry this feat will drive shelf connecting outlet to the front wheels.

Make no mistake. This is impressive next level of technology.

And then just as our learnings from our racing battery program, providing technological transfer into our road travel lucid at.

I think that this brand new lucid Hi Tech racing drive unit is probably a good point to a potentially smaller yet powerful road car drive unit in our future.

As far as I'm aware, we are one of only two Oems telling companies that are vertically integrated through the design development and manufacturing of our own technology.

I am confident that as this technology rate plays out lucid will continue to spend that.

And we continue to garner strong industry accolades driven technology in our design in Q2, we won the 2022 wards 10, best interiors and UX.

This award validates one of the founding principles of lucid App, which is dilutive slates concept in fact, I recently filmed elicit tech talk all of the space concept, whilst chief engineer Erik Boch presented our latest tech.

Look on the vulnerable Boeing directional charger, which you can find.

Investor Relations website.

The software team continues to work hard with 19 over the air updates delivered since the beginning of the year.

We added a number of features including an enhancement to lucid as ability to identify traffic signs and inform the driver of speed limit changes and other important information.

A major upgrade to navigation as well as other.

Customer requested features.

Have a major software upgrade coming later this year.

Now.

Although I'm delighted by the strength of the demand we see for our accounts.

Renovations have received.

All I am conspicuously aware that the true value of having what is now widely recognized as a truly exceptional.

Can only be achieved by producing it in a meaningful volume.

And that is why my laser focus and develop lucid team is right here in Arizona unlocking the path to our volume ramp up.

Make no mistake.

Although frustrating this is a phase of our growth as a company that we will palace theatre.

And that one we will pilot through with a steely determination.

We have the products, we go mentioned our workforce.

And we are improving our processes to enable this to happen.

Now Furthermore.

As we increase the number of the former road I believe we will see further demand growth as the awareness of lucid.

And our diluted brands proliferates.

I'm also excited about the potential reservation demand for project gravity SUV, which we are now considering just how to debut and when precisely to open reservations.

Longer term in order to have a more meaningful impact on deployments, we recognize that we need to be in the more affordable higher volume segments of the market and we will be doing just that with a midsized vehicle platform around mid decade, which I believe we will.

Further demonstrate the value of our efficiency through our in house EV technology.

In short I remain very excited about our future and the broad roadmap ahead, whilst right now we're taking steps to resolve our current constraints at the same time, we are driving forward with a sense of urgency.

To get our incredible vehicles to market and indeed on that note I'm very hopeful you will see the fruits of these lasers in the coming months and quarters.

And with that let me turn it over to Sherry for an update on our financials and an additional perspective on our business Sherry.

Thank you Peter and thank you Tal thanks for taking the time to join US today I want to Echo Peter's excitement about our future product and technology roadmap and customer demand. We remain incredibly excited to bring new versions that are listed Eric to customers. This year and I put the reservation number of over 37000 in context.

This represents potential future revenue of approximately $3 5 billion and that's before including the up to 100, DSO deal with Saudi Arabia, and the future reservations for the gravity since we have not yet opened the order book for our upcoming SUV or.

Our future reservations taken together with our growing customer base and brand awareness and number of industry accolades gives us the conviction to continue to invest in the rapid expansion of our business.

Turning to our second quarter financial results, our second quarter revenue was $97 3 million, which represented a quarter over quarter increase of 69%. This included $96 1 million in automotive revenue from the delivery of 679 vehicles.

We also recorded other revenue of approximately $1 $2 million, which includes sales to Formula E. As Peter mentioned the Formula E. Drivetrain agreement is the natural next step in our relationship and it's a true Testament to our advanced technology differentiation.

Cost of revenue with $292 3 million.

Similar to last quarter. This expected increase was primarily related to personnel and overhead costs as we ramp up production.

Set by lower freight costs quarter over quarter due to our ability to ship the vast majority of our international shipments from air to Ocean freight.

We recorded an impairment charge of $81 7 million in the second quarter, primarily as a result of the increased costs being capitalized into inventory. This is fairly typical in initial production ramps and just as we saw a decline from Q1 to Q2 and this impairment charge, we expect that the impact should lessen.

Her time, if we ramp up production volumes toward our planned manufacturing capacity.

Moving to operating expenses.

Given the growth stages of our company and investing behind our strategic priority.

I want to be clear that we're doing this in a prudent and methodical manner.

Doing a culture of cost consciousness, and we're working with our talented team members across the company to identify and execute on cost efficiency opportunities.

To illustrate this point I would like to add on to Peter's earlier comments around the importance of that quality.

Getting quality right and getting it right early on in the factory helps to reduce downstream costs and improve throughput so in.

And to building the brand and customer loyalty, there's also tangible financial benefits to a quality first approach.

Now turning to research and development R&D expense totaled $204 million. The seven 7% increase sequentially was primarily related to prototype material engineering design and testing services.

Partially by lower stock based compensation expense.

SG&A expense was $163 8 million down 26, 6% from the first quarter, primarily due to lower stock based compensation expense.

In Q2, we added five new studios for a total of 29 studios in service centers across the U S, Canada and Europe .

Proud to have added new studio locations in Boston, Massachusetts.

The New York, Denver, Colorado, Seattle, Washington, and our first European studio in Munich, Germany.

We continue to strategically open new locations globally, as we scale the business and grow our presence.

We're also increasing our fleet of mobile Dan and have a total of 29 in North America as of quarter end.

Our mobile service stands can perform over 80% of the service procedures that can be done in a service center and it's an important element in ensuring high customer satisfaction and lower cost approach to providing service as the fleet up listed vehicles growth.

Stock based compensation in the quarter was $94 4 million.

$10 4 million within cost of revenue.

$39 $2 million within research and development and $44 8 million what's in SG&A.

In other income we recognized a noncash gain of approximately $335 million related to the mark to market value of private warrant.

The value of the warrants can be influenced quarter to quarter by a number of factors, including listed groups end of quarter share price.

Now moving to the balance sheet.

We ended the quarter with $4 6 billion in cash cash equivalents and investment, which we expect will fund us well into 2023.

During the quarter, we also announced new ABL asset based loan credit facility with initial committed capital of up to $1 billion and the availability is based on the value of certain eligible asset.

It terms also provide for incremental revolving commitments of up to an additional 500 million subject to obtaining lender commitments.

We had no outstanding borrowings under the ABL credit facility in Q2.

The importance of this facility is that it provides listed with incremental liquidity and demonstrates the vote of confidence from our world class syndicated global banks.

Many of which have been through with us through multiple transactions as we scale our business.

I'd also highlight that this is a typical part of the capital structure of mature businesses and reflects the further development of listed as a growing global company.

In Q2, we activated a working capital loan under the Gulf International Bank facility agreement in the amount of approximately $6 $7 million related to early work to build our factory in Saudi Arabia, we have approximately $86 6 million U S.

Currently available under the working capital facility and an additional $173 2 million U S dollars under a bridge facility.

It's demonstrated through the series of actions, we are committed to working proactively and opportunistically to ensure that our balance sheet remains an area of company strength.

In Q2, we continued to invest in our technology platform, the scaling of our global business and the manufacturing infrastructure build out capital expenditures related to these activities were $309 8 million in the second quarter.

As you can see from the photos, we shared in our Q2 earnings presentation. Our phase two expansion at our Casa Grande, Arizona factory is progressing when complete we expect our installed capacity to increase to 90000 units per year by early 2023.

We exit mid decade, we expect to reach an annual installed capacity of 350000 units in Arizona and 150000 annual units of installed capacity in Saudi Arabia, and that gets you to an annual installed capacity of 500000 shortly after mid decade.

In Q2, we announced our initial launch plans into the European market with the Lucid Air Dream edition R, which is optimized for an estimated 900 kilometers of range and the Dream addition, key which features 1111 horsepower.

We have not yet begun to accept orders in Europe , but we did reach out to our existing reservation holders to gauge interest in Dream addition, and we immediately saw strong demand.

Moving to some of the other major milestones in the quarter, we launched lucid financial services in June and all new digital platform offering a flexible fast and transparent financing process.

Many looser their customers have been asking for flexible financing option with a preference for a 100% digital experience and we.

We've delivered on that ask.

Loan products are available to U S customers in all 50 states and lease products in 38 states and growing <unk>.

Seamless process designed specifically for the customers. We believe this helps open up the market, yes, it's estimated that over 65% of OEM customers seek out loan or lease financing.

This also enables us to continue to build direct relationships with our customers throughout their ownership journey.

Yes. It is highly unusual for an auto company to rollout the type of service is early in the growth cycle.

Truly amazing and great work by the team.

Another proud milestone in the quarter with our.

Addition to the Russell Russell 1000 Index Russell indices are widely used by investment managers and institutional investors for index funds and as benchmark.

For active investment strategies are.

Our inclusion in the rest of the 1000 index.

Is another significant milestone for lucid and should help broaden our awareness in the institutional investment community.

Now turning to the outlook.

Peter outlined some of the supply chain and logistics challenges as well as the actions we're taking to address the near term production bottlenecks were experiencing <unk>.

In our logistics operations entirely in house and accelerating access to our logistics center onsite at our Arizona factory will help reduce complexity cut down lead time and reduce various costs. We believe these decisive actions as well as the addition of leadership across logistics process transfer.

Formation and supplier quality will help us unlock this bottleneck <unk>.

However, it is unlikely we will be able to make up the anticipated loss volume in 2022. Consequently, we are adjusting our 2022 production guidance of 6% to 7000 units from 12000 to 14000 units.

Now turning to our cash guidance, we ended the quarter with $4 $6 billion in cash cash equivalents and investments, which we continue to believe is sufficient liquidity to fund us well into 2023.

<unk> sales, we are investing fully in accordance with our forward plan.

As a reminder, we also have the KSA debt facilities and.

The ABL with significant untapped capacity.

I'm also confident we will have options for additional funding as needed and our strong balance sheet allows us the flexibility to be opportunistic in the market.

Moving to Capex.

Capex in the first half of 2022 with $494 9 million, while the timing of Capex outflows can shift quarter to quarter. We continue to expect capital expenditures for the year of approximately $2 billion.

This fund facilities as well as machinery and equipment in Arizona.

Palin Service Center development early investment and our presence in Saudi Arabia, and other capex associated with vehicle and component development.

In terms of our product roadmap guidance, we're on track for deliveries of additional versions of lucid Air later this year, including the Grand Air Grand touring performance.

The <unk> the touring and for production of project gravity SUV in the first half of 2024.

In closing despite our immediate challenges I am proud of what our team has been able to accomplish collectively with our business partners. We have enabled financings. We've continued important infrastructure build out and launched award winning products. We welcome the new leadership team members and look forward to the capabilities that they bring as we work together to resolve.

The issues and capture the tremendous opportunities ahead of us.

Following Peter's closing remarks, so we'll begin the Q&A portion of today's call. Today's Q&A will feature questions from some of our retail investors and important constituency of our shareholder base through the <unk> technology platform with that I'd like to turn it over to Peter for closing remarks. Thank you.

Thank you Sherry.

But I want to close by thanking all our employees for their dedication and hard work, our customers and investors who have put their trust in us.

And our suppliers and partners, who have tirelessly, helping us on our journey.

I am more convinced than ever that this is a technology race and that we are well positioned with our in house developed advanced technology.

But all I want to be clear that right now.

<unk> focus is with this great theme right here in Arizona.

And helping resolving all logistics challenges and ramping up production.

I remain confident that we show overcome these near term challenges with a relentless tenacity and steely determination.

<unk> put in place appropriate processes and methodologies that will serve us well for the future.

Make no mistake that future is hugely exciting.

Because right now more than ever the world needs, the new lucid products and technology advancements that we have yet to bring to market.

And with that let me turn it back to me.

Get to your questions.

Peter will now start the Q&A portion of the call before I take questions from those on the phone we want to pose some questions from our retail investors sent them through the safe technology platforms. The first questions straight to it we all want to know is there a possibility for a partnership with Apple in the future and we also have another related question regarding partners that will end.

<unk>, which has since Hertz went with Tesla with lucid think about something like a partnership with car rental companies to get the brand out there.

No. Thanks, Maynard so we don't have anything to announce today regarding any new partnership.

That said, we recognize the attractiveness of our products and tech platform for other companies and we're keenly open to discussing partnership option.

With regard to fleets rental cars, specifically our vehicles aligned very strongly with the operational and financial metrics at these operators care about for instance, we are industry, leading and efficiency, which is measured in miles per unit of energy and hence miles per dollar or charge time and range are also leading the market, which tran.

Place, the higher vehicle uptime, which both customers and fleet operators desire and we can also enable fleet operators to manage and run predictive analytics on the fleet and communicate with the fleet given we've installed in OTA enabled software platform in every car that we sold and then Sherry even from a.

I guess from a vehicle architecture perspective.

Our risk based concepts for there is additional room for luggage ocado in the case of an autonomous vehicle ride sharing fleets, which are configured with.

Xtra competes in hardware and equipments, we have more room for that equipment in the batteries.

Power the equipments so.

I think for many of these characteristics and attributes.

Potentially make us a fantastic partner for one of these these groups today and frankly, even more I guess over time as we introduce more affordable models in the future such as the a pure.

Another variance.

I kind of say well look we've got the perfect platform for such opportunities I guess.

Great we'll move to the next question any plans for an EV in the 40000 $50000 range to compete with other evs in that price range and there is another question related which is will lucid offer cheaper models for a broader market yes.

I think there is.

So we're kind of a popular sort of widespread.

Lucid only wants to be.

And the high end luxury segment of the market that's simply not true.

In order to have a more meaningful impact on the climate, we just need to be in that higher volume segment of the market. That's how we are going to really make that impact.

One of those steps I see pure as a stepping stone to a more affordable and that's why I'm. So passionate about elicit a pure.

I mean looking a little further ahead, you will see a mid sized vehicle platform just mid decade, which is going to be a further development in our technology and efficiency story.

I just want I just want to explain we deliberately chose to start off at the high end because we're defining our brand is super cool.

Brian .

From its Californian DNA.

Is just the starting position.

We start off by creating Eurotech flagships, such as lease today and gravity first and we focused on the technical efficiency, we set new benchmarks and then we're going to make more affordable products and Thats, what really excites me remember that we we design develop and manufacture.

Our powertrain.

Our factory in Arizona.

And we think we can become even more efficient and that's going to drive down cost of easy ownership and accelerate and capitalized widespread adoption, which is my passion.

And we'll move to the next question does lucid plans to pay out dividends in the future.

We don't currently have plans to do so, but let me give you a little bit of perspective, we believe that our <unk> technology platform is amongst the best in house developed technology available in the market today and so our primary focus is to continue investing behind the strength and the growth of that platform. So that we can fulfill our mission.

Which is to bring a sustainable technologies to the world. Therefore, we don't anticipate paying a cash dividend in the foreseeable future.

Thanks, Sherri next question can say platform as lucid currently working with Apple to implement the new car play with iOS 16 that will be released in 2023 to utilize all lucid cockpit displays.

That's a very specific question I guess.

Maybe allow me to explain this more broadly perhaps.

If I can I'll speak for Apple's future product line here.

But we're always evaluating new technologies as they come to market.

Of course, we will continue to do so look we've got an awesome.

From a hardware and mechanical perspective.

And while I can talk about some very exciting software updates coming throughout the year.

Really sort of match the prowess from the hardware side and we will continue to provide new features via over the air software.

<unk>.

And specifically with regards to car play we're actually in a beta testing phase of validation right now and actually we plan to release. The final version in the near future. So stay tuned and wait for that.

Grapes, our next question, our lucid planning to combat inflation in a potential recession in the short term how will this affect the gravity SUV, that's coming out in 2023 and potentially a $50000 EV in 2025 and sharing maybe you can take the first part and Peter you can take the second.

Thanks Maynard.

The entire industry has been experiencing an inflationary cost environment and we're certainly not immune from that I mean with respect to the actions that we've specifically taken in June we increased the prices of the lucid air and that was the first time that we announced.

The first time that we announced prices back in September 2020.

We're not going to see a material impact from that action until 2023, given that we honored the prior prices on the reservations made through May 31, and orders to the Grand touring which were confirmed in June .

As I've mentioned in the prepared remarks, we're still in the growth stages of our company and investing behind our strategic priorities. So large scale blanket cost cutting initiatives arent necessarily appropriate in our case.

I wanted to be clear that we're allocating capital in a very prudent and methodical manner and we're instilling a culture of cost consciousness are working side by side with our talented team members to identify and then execute on cost efficiency opportunities.

Takes time to get processes to be best in class and efficiency. So there is definitely more work that we can do to rein in costs like others in the industry, we're running at various downside scenarios and we'll act accordingly based on market conditions.

Yes, I think the second part of the question will be is everything on track for gravity release.

As we stated all project gravity SUV is on track for start of production in the first half of 2024 and actually we're currently in the process of releasing engineering data for a prototype builds and I'm hugely excited about that and are being closely.

Interacting with that whole process.

And we also have as I mentioned of our mid sized platform of course is on track for just pumped mid decade as well.

Now of course, it's important to recognize that to sync with the strong production of gravity approvals.

Same time, we are readying our factory through to phase two here of A&P.

In Arizona in particular.

We're expanding the north end of the body shop ready for gravity and the sales side of the building the New Assembly holds where it will run both.

And gravitate down that line.

Now we have customers off Gainesville accounting for an SUV.

Our hope is that gravity can do for the SUV market shifts will air date for the luxury sedan market I'm going to take the same space concept the range the efficiency, but technology and design and performance.

All great stuff.

In SUV and.

I think probably doesn't surprise a little bit on a months ago SUV.

But this finally is the SUV for me, it's actually going to happen.

Finally, the CVR alone and as project gravity.

Great. Thank you so now we'd like to take a few questions from the phone lines to wonder can we take the first question.

Thank you.

As a reminder, ladies and gentlemen, you will need to press star one on your telephone.

One moment, while first question.

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

Good afternoon, and good evening guys.

Three quick ones.

First you mentioned that there were finished vehicles that were.

Were held at the factory and that aggregate in order. It is finished I'm just curious how many those were and how many of those are close to being finished second as we think about the logistics center being brought on site cost Grande.

What the incremental cost for that would be and does that have any impact on capacity.

And then the third question Sherri.

What is the ABL borrowing base Thats backstopping the $1 billion.

The new $1 billion loan.

El facility.

And you mentioned there might be upside so what other assets could be pledged for that ABL.

Thank you John Peter here.

The first question was.

<unk> that we held back sorry, Q2 factory.

We did that to really ensure that the quality was just perfect.

It was just fitting finish adjustments or what we call slush in gap.

<unk> to the spending.

Just look at the business planning their points within this thing that you would expect features and the quality commensurate with our luxury automobile and although many of those were missing some of the standards.

Quality team.

Our original up again.

These laws that were actually releasing a lot of it is comp with residents who are servicing because right now.

That find.

There were two customers having have the attendance, we love and attention and care and I think there'll be delighted with.

Our best efforts to make them.

Perfect as they can be the you also asked about the logistics centric Casa Grande now this was.

This was pre planned calls, although the massive $2 8 million.

Million.

<unk> expansion does include several hundred square feet under a thousand square feet of logistics space. What we're doing is just accelerating that very.

A very modest.

Outlay, just getting them a little bit quicker.

As the close so we can bring.

Buffer soften the materials timber line that is key to creating a more efficient flow.

Using our own house. So this is nothing new it's just an acceleration.

We already planned.

Yes, right, so no real incremental costs to speak of with respect to that <unk> see you asked about the avionic. We're just delighted to have put that in place with its world class group of banks and our syndicate.

Owing base. The initial committed part of it is $1 billion. Okay. And then we can borrow up to about a quarter of that $1 billion right now based on eligible assets.

We will grow into more over time as the inventory goes up as other of our assets go up and so that is something that is going to be available to us on a growing basis at justice as we move forward and mature as a company. The neat feature about the ABL lets it also has an accordion feature so although the.

Second part of it the accordion part is not committed yet.

It is up to an additional $500 million thats going to be available for that.

Okay.

Thank you.

Please standby for our next question.

Our next question comes from the line of.

<unk> with Citi. Your line is open.

Great. Thanks, Doug good afternoon, everybody.

Also.

Two quick ones from me first.

Looks like on the logistics issues you've identified.

Problems and the team is in place, hoping just you can elaborate more on the level of confidence in the <unk>.

Second half of the year, maybe talk about what you expect production split between Q3 and Q4 a degree of confidence you have into growing that for next year and then secondly, I was hoping you can also comment on the rate of reservations that you saw after the June price hike just curious on what you saw with demand there and lastly, sharing maybe you could comment on.

The minimum cash balance you'd like to have as you kind of plan out liquidity into 2023.

Oh, Hi, outlier pizza here.

It's a really excellent question.

We've.

Sure.

We faced a gallon.

Based upon a mindset, which is neither.

Julie optimistic Jimmy pessimistic, a very balanced approach and we've taken a very comprehensive and very thorough and holistic approach to the risks and opportunities.

We see and which confronted.

Business.

Perfect Science and emphasize.

Thus the entire executive.

Annualized based very thoroughly and we have a very high degree of concurrence.

Our collective thinking which has led to this revised guidance.

So let me talk to the reservations question. So as you can expect when we announced in May at our May earnings release that we were going to keep the prices the oil prices in effect through the end of May and not have them go into effect until June one that could bring bring forward. Some reservation. So we had.

A very large spike that happened in May you see that as we went from 30000 to 37000 Thats the largest growth that we've ever had in a three months period before so that did happen as expected I would say that the pull ahead, a little bit more pure in it and others, which you also would find us being in Q.

Is that the lower price points might be a little bit more price sensitive so looking to lock in that rate now what's really interesting is as we move ahead. The next couple of quarters.

Get the reservations that have come in in June and July .

We take that June and July base that we've had and then we add to it the increase over normalized increase that we got in May We're still way ahead of where we would typically be if we were just normalized through June and July so that pull ahead, we're seeing.

Really might have been a bit of a bump up just kind of like a marketing event. Almost if you will the other thing that was interesting is we booked at the June and July reservations that are coming in is that they continue to be allocated across the same mix of allocations that we saw pre <unk>.

<unk> hike, so youre still seeing pure highest followed by Grand touring and then touring the Grand trade continues to be above touring as well so we're seeing.

What I would say is very encouraging.

Sponsored reservations following similar patterns and when you take the bump in May with the reduction we've seen in June and July we're sitting in a really great place.

Yeah.

Thank you and then third I think you had a question about in a minute.

Minimum cash balance so that was interesting there is a lot of different ways to model. This.

Because the way we are looking at the $4 6 billion and when I talk about.

Growing when I talk about being well into 2023 I'm talking about growing in accordance to our full plan, which is in SaaS Zain in Saudi Arabia investing in all of our vehicle variance investing at the Swift pace that we have chosen to do we have some options there right. So when you.

Think about the minimum balance you could stretch that out if you want.

I mean, not really going to provide any guidance with respect to how much cash we want in the bank, but I just want you to know that youre going to continue to see from US. The same type of proactive kind of opportunistic behavior that you've seen all along every quarter, we're coming to you and we're telling you about something interesting that we've done.

And the capital markets, Yes, we do.

The convertible bond offering now we've done the ABL, we put in place to $3 4 billion in Saudi Arabia, I think youre going to continue to see that kind of action taking place from us monitoring our markets and making sure that we're dealing what is prudent on behalf of all investors.

We'll take the next question please.

Thank you.

Our next question comes from the line of Charles <unk> with Redburn. Your line is open.

Hi, Thanks for taking my questions I've also got three please so firstly again sorry of the production.

I'm wondering can you help reassure us a little bit on the ramp up by giving US an idea of what youll see production rates exited Q2, and what it is today.

My second question on order insight sorry.

Sorry, you just mentioned that that if you smooth out the last three months.

Actually ahead of what you expected.

But if I look at it I think I'm right in saying that you've averaged about 70 or 78 orders per day and the last area since you updated us on.

And then the three month period before that.

Which is March.

To say that so I'm wondering is this sort of explanation that were cancellations and so the gross order intake significantly above where maybe the expectation is that the order intake which slowed.

Thirdly.

Sorry, I think that was.

$1 4 billion.

Purchase of Securities in Q2 can you just.

Tell us what that is and whether or not we should treat it as being as good as cash when it comes to your funding requirements. Thank you.

I'll ask Peter here.

I'm really look to provide guidance on two production rates and this is.

Because it can be misleading.

Perfect.

If we can delay production a little bit to put in.

Improvements to line points deploy which for example can improve ROIC in the future and once we saw cherry picking specifics and weekly production sites.

This territory.

I think so.

We've proven we do give them most.

Broad and only description.

Ability to help reduce costs through this slow a bit.

And ongoing.

Six.

Seven.

For the year I believe is a very balanced.

And a realistic goal.

<unk> for the future so I'm sorry.

The other thing is willing to commit to give you a weekly production rate right now.

Yes, let me cover off a couple of your questions as well you were asking about the short term and long term investments. So you are right. We took some of our cash and we parked in short term and long term investments in separately managed funds and we did this because we didn't need access to all the cash right now and we wanted to be.

We're able to get a little bit higher return on our money. Those dollars are accessible to us at any time that we don't intend to use them right away and we plan to let them mature and garner the interest rates, which is the purpose why we put them there, but they are absolutely acceptable to us I don't want people to get confused when.

I see the cash balance the cash line on the balance sheet going down quarter over quarter. Some of that was moved into short term and monitor investments or assets are still there and it wasn't that we spent all of that and I definitely don't want there to be confusion on that point.

Secondarily, you asked a bit about just the the reservation. So when we looked at that normalized curve I was talking about we did exactly what you said I look back three months I look back six months nine months and I kind of looked at what is that normalization look like.

Definitely well above that when you look at May June and July kind of taken together.

Installations came down slightly so it.

<unk> seen some improvement there as well, but what you are going to see as we go forward as the deliveries are going to be increasing substantially. So yes, I don't know what youre going to continue to see that kind of growth because youre going to have a lot of deliveries coming out of that number now we will be opening up the gravity order book at some point then we expect we're going to get.

Other large spikes again, right, so theres going to be some dynamic nature to these reservation numbers going forward and we'll be sure to be as transparent as we can about that in future earnings calls.

Great. Thanks, and we will close out with a last question from the Se platform, which is what is the plan for growth how do you plan to take more market share in the EV market.

Well I mean first of all I have to say this I think there is no such thing.

Okay.

But we're not going to cost.

So we're not competing for this sort of artificial construct of EV market share I think that's a fantasy we're competing for the rest of the marketplace, which is huge the white space, which is currently occupied by outdated gasoline costs unless what we're competing with.

The penetration into that market, but I would also say that this is a technology race.

<unk> and Mrs yet to plant.

Because not all E. These create.

Created equal.

And I'd also like to add I mean, we lose today, we're addressing.

Specific issues that have been sort of resistance points, I guess too to customer adoption with evs in the past.

We have the longest range the fastest time to charge.

Incredible spacing interior design.

We leveraged <unk> so much more than just an easy it is to leverage all of those advantages.

<unk> mutation can provide.

And I think we can sell more of the cost.

These key resistance points.

But.

Furthermore, I guess is a bigger issue at stake here.

I'm glad you asked the question because it.

It allows them to address this.

<unk> pushes battery materials are really scale and our technology allows us to make more calls.

But for these initiatives.

At this point, it's really mixed because we can make more progress we must resources because we can go server for given the massive energy because we've got more efficiency for.

For example, we believe we can.

Elusive they appear with over 400 miles range with a battery pack size of less than 90 kilowatt hours, that's what's going to make lucid.

Pure really awesome.

Similar range, but few about freeze them contend with evs.

And that is the future that is the consequence of being in the tank right.

Great. Thank you and I think that's a great way to end.

This concludes lucid is first quarter 2022 earnings conference call. Thank you all for joining US today and you may now disconnect.