Lucid Group, Inc.

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

Welcome to Lucid Group's third quarter fiscal year 2021 earnings call. Thank you for joining us today. On the call, we have Peter Rawlinson, our CEO and CTO, and Sherry House, our CFO. Our quarterly report on Form 10-Q for the second quarter ended September 30, 2021, and was filed with the SEC, and the related earnings press release was issued after a close of market earlier today. Both are posted on our website. Before we get started, we want to emphasize that some of the statements on this call, particularly those regarding the future financial performance of the company, production and delivery volume, macroeconomic and industry trends, company initiatives, and other future events, are based on the information that we have as of today and include forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are subject to numerous risks, uncertainties, and other factors that could cause actual results to differ from expectations. And we refer you to the cautionary language included in risk factors in our quarterly report on Form 10-Q for the quarter ended September 30, 2021, as well as other documents filed or to be filed with the SEC for a fuller discussion of such risks, uncertainties, and other factors. Forward-looking statements made during today's call speak only as of the time they are made, and we are under no obligation and expressly disclaim any obligation to update, alter, or otherwise revise any forward-looking statements. Rather, as a result of new information, future events, or otherwise, except as required by law. You are cautioned not to place undue reliance on these forward-looking statements. In addition, management will make reference to non-GAAP financial measures during this call. A discussion of why we use non-GAAP financial measures and information regarding reconciliation of our GAAP versus non-GAAP results is currently available in our earnings press release issued earlier this afternoon, as well as in the investor deck available in the investor relations section of our website. at ir.lucidmotors.com. And now, I'd like to turn the call over to Lucid's CEO and CTO, Peter Rawlinson. Peter, please go ahead.

Thank you, Lauren. We're very excited to welcome stakeholders to Lucid's inaugural earnings call. We have achieved a tremendous amount over the course of 2021, and we're excited to lay out our vision and priorities for the company. We look forward to continuing to work with investors and analysts to build long-term relationships with our stakeholders. Now, for those of you who are new to Lucid Stories, we were originally founded as a Tiva back in 2007. At that time, we were focused on advancing our battery technology, logging over 20 million miles in real-world driving data. And armed with everything we learned as Ativa, we then turned our efforts to creating the best car in the world as Lucid, rethinking from the ground up every single aspect of the vehicle, from design to engineering to manufacturing. The initial result of that effort is Lucid Air, which carries with it the means to accelerate the adoption of electrification. while redefining luxury in the automotive market. As we continue to bring lucid air to market, it's clear that the opportunity we have in front of us is massive, because the market opportunity is not just for electric vehicles, it's for vehicles overall. Currently, there's only about 2.5% penetration into the U.S. vehicle market through EVs. and only about 4% penetration into the global vehicle market. We see the luxury car market expanding at an annual rate of about 5% over the next few years, and ultimately reaching over $700 billion of global sales near the middle of this decade. We believe that the growing customer sentiment for electric vehicles, coupled with the government mandates encouraging their adoption, provides significant support for the EV industry overall and for Lucid's position within it. Lucid is uniquely positioned to capture this opportunity, driven by our key differentiators, namely our technology innovation and the people who work here. Now, first off, We believe that our technology is worlds apart from even the current market leaders. For example, no one expected Lucid to achieve even 400 miles of range. And now we have an EPA certification of 520 miles of range for the Lucid Air Dream Edition R. And we've created this technology with an eye towards an ability to manufacture it at scale. which is where true innovation lies. Furthermore, we have a drive to continue innovating, which is why we've been able to surpass even our early range estimates. As another example, our technology powers every car in Formula E, the world's premier electric motorsport series. And indeed, it changed the sport. Our battery packs have enabled Formula E cars to complete full race distances on a single charge. And what we learn from every race car at every race goes directly into the battery technology powering Lucid Air. As the media and early customers have learned, our vehicles are truly the fusion of hardware and software, made possible by one of the best teams in the industry. We have auto industry veterans, including members of my former Tesla Model S team, working with former executives from Apple, and learning from their customer electronics experience, along with so many other standouts from the automotive and tech industries. We plan to leverage our team's abilities to continue to improve vehicle function and features even after customers take delivery via over-the-air updates. Now, before we update you on some of our substantial achievements during the most recent quarter, I would be remiss in not highlighting some of our most recent achievements outside of Q3, and that's because these are quite significant. Now, first off, we started delivering vehicles to customers at an event at a Silicon Valley HQ just two weeks ago on October the 30th. Now this preceded an increasing number of deliveries nationwide slated for this month and next, including more than two dozen deliveries to paying customers that occurred just this past weekend. So you may have already witnessed your first sighting of Lucid Air in the wild. We actually have a full report on customer deliveries during our Q4 call. So watch this space for more. Next, just this morning, Lucid Air was officially announced as Motor Trend's 2022 Car of the Year. Now, this is arguably the most prestigious award in the motor industry, seeking out true innovation and groundbreaking vehicles. For a new brand and a new company to win, well, to my knowledge, that's only been done once before. and I should know I was there. Getting back to the matter at hand, in Q3, we secured a number of certifications required to sell the vehicle ahead of those customer deliveries that I just mentioned. This includes full FMVSS, CARB, FCC, and FDA safety certifications, all of which further establish our credibility and cleared the way for the ramp-up of Lucid Air deliveries. But what I'm most proud of is the official EPA rating of 520 miles range. And because we achieved this landmark through our world-leading in-house technology, not by simply installing an oversized battery pack or off-the-shelf parts, our Lucid Air Grand Touring has an official EPA-rated range of 516 miles. And it achieves that with a 112 kilowatt hour battery pack, giving it an industry-leading efficiency of 4.6 miles per kilowatt hour. Taking a step further, we have six Lucid Air variants in the top six positions of the EPA range ratings for EVs. And unlike many other EV companies, we design, develop, and build our powertrain and cool EV technology components in-house with an emphasis upon efficiency. Now, we view this as a strategic competitive advantage for Lucid as we look ahead. Next, after securing the EPA rating, we officially commissioned our factory in Casa Grande, Arizona, and started production of Lucid Air. At a factory event on September the 27th, we hosted our customers, media, and guests, all of whom had the opportunity to drive Lucid Air. The reactions and feedback from this experience could not have been better. including broad validation from important media. You know, I rather like when reporters call Lucid Air jaw-dropping and the future of cars. Now, the fantastic experiences customers and media have had with the Lucid Air to date have only increased interest in the brand. The result is an accelerated pace of new reservations. Currently at 17,000, and climbing quickly, which has also spurred us to increase the total production quantity of the Dream Edition to 520, both to accommodate demand and also to recognize the landmark EPA 520 miles achievement. Lastly, I'll highlight that the customer journey has also been an area of focus for us this past quarter. We now have 16 Lucid studios and service centers across North America. But this is only the beginning, and I'll talk more about our plans for expansion shortly. Now, I wanted to look ahead to our near-term strategic priorities, which will see a continued focus on achieving progress against our existing activities. As I mentioned earlier, last month we started delivering Lucid Air Dream Editions models to our reservation holders, and we're currently ramping up customer deliveries. We will soon start to deliver Lucid Air Grand Touring models, followed by Touring and Air Pure next year. With such demand across the Lucid Air lineup, we felt it critical to accelerate the expansion of our Advanced Manufacturing Plant, or our AMP, one factory in arizona essentially investing in our capabilities to mitigate future business risks this process started in q3 with progress well underway on the addition of 2.85 million square feet of manufacturing space to our arizona factory this expansion will allow for a significant increase in production capacity for lucid air and enable production of the Gravity SUV in 2023. And speaking of expansion, our retail footprint grew significantly this year, including our first location outside of the US in Vancouver, Canada, which reopened last month. And we plan to have 20 studios and service centers open by the end of this year. So you can see acceleration. as a theme in the second half of 2021. We also continue to increase our service footprint across the U.S., not just with physical service centers, but also with the rollout of our mobile service program. We expect service centers to continue opening in North America, and we anticipate hiring a significant number of additional service technicians as we expand our capabilities. We're optimistic about these goals, even in a challenging environment as COVID-19 continues to present numerous obstacles for the auto industry and supply chain. Lucid is no stranger to this, but we have continued to deliver against our timeline and with the highest standard of quality. And I would like to commend the company's employees who've worked relentlessly and tirelessly to help Lucid's progress and grow during these recent periods of uncertainty. Lastly, I would like to spend some time providing an overview of our longer-term strategic focus areas, as well as upcoming major milestones. Lucid continues to grow its operations in the US, but as part of our growth strategy, and more specifically, our international strategy, we intend to expand our sales, maintenance, repair services, and manufacturing activities outside of the US, again with the goals of mitigating business risk and charging future growth. On the retail and service front, we're looking to expand our footprint in Europe and the Middle East, And we expect to enter these markets in 2022. There has been continued expansion of the team in both regions with key additions to leadership and the employee base. And we're excited by the prospects of these key regions. We believe this will help establish Lucid as a global brand and address untapped market demand in these regions on an entirely new level. while also taking action to address climate change through sustainable mobility. Moving to our air lineup, the longer view will see production expanding to include touring and pure models, as well as future variants. With our in-house technology establishing Lucid Air as the new bank benchmark for EV efficiency, we will be quick to maximize this potential. Because if we can achieve 516 miles with just a 112 kilowatt hour battery pack, it's easy to imagine a smaller pack and the weight and cost savings afforded by it, which would allow for a much more attainable EV that can still achieve 300 plus or 400 plus miles of range. And finally, we're excited to launch additional vehicles over the coming decade. including Project Gravity, a luxury SUV that leverages the AIRS platform and that we expect will elevate the SUV to a new level with extraordinary performance and category-defining interior space. And we look forward to sharing more details about the Gravity next year ahead of expected production in 2023. So with that, I would like now to hand the call over to our CFO, Sherry House, who's been a tremendous addition to the Lucid team. Her experience and background have been truly invaluable. I could not have asked for a better partner to work with me on the next phase of this very exciting journey. Sherry.