Lucid Group, Inc.

Hello, and thank you for standing by. Welcome to Lucid's fourth quarter 2022 earnings conference call. At this time, all participants are on a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask the question during the session, you need to press star 11 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star 11 again. I would now like to hand the conference over to your speaker, Maynard Um. Sir, you may begin.

Thank you, and welcome to Lucid Group's fourth quarter 2022 earnings call. Joining me today are Peter Rawlinson, 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 include forward-looking statements under federal securities laws. These include, without limitation, statements regarding the future financial performance of the company, production and delivery volumes, financial and operating outlook and guidance, macroeconomic and industry trends, company initiatives, and other future events. These statements are based on the predictions and expectations as of today, and actual events or results may differ due to a number of risks and uncertainties. We refer you to the cautionary language and the risk factors in our most recent filings with the SEC and the forward-looking statements on page two of our investor deck, available on the investor relations section of our website at ir.lucidmotors.com. 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. With that, I'd like to turn the call over to Lucid's CEO and CTO, Peter Rawlinson. Peter, please go ahead.

Thank you, Maynard, and thank you, everyone, for joining us for our fourth quarter earnings call. I'd like to start by extending a heartfelt thank you to the entire Lucid team. I'm proud of their perseverance, resourcefulness, and teamwork. This allowed us to drive meaningful improvements in the back half of 2022 and close out the year with production above our previously stated annual guidance. We went from making 279 vehicles in 2021 to 7,180 in our first full year of production. And we went from delivering 125 vehicles to customers in 2021 to 4,369 deliveries in 2022. Now, I'd also like to thank our suppliers and partners who work diligently with us to navigate through an exigent year. And of course, I would particularly like to call out the PIF, who have not only been a committed investor, but really an incredible strategic partner. We are most grateful for their partnership. And of course, I'd like to thank our customers. One of the things I enjoy most is getting to meet you and see your delight when you take delivery of your Lucid Air. You are a big part of what drives us to deliver the quality and experience you so deserve. But let's not forget that 2022 was also a seminal year for the company. a year when we finally realized our vision of producing an EV embodying our view of the most advanced technology possible and getting that into customers' hands in significant numbers. That was not without its challenges, but as ever, the team worked tirelessly to resolve, as I will cover later. Now, during that period, I also observed a growing realization and acknowledgment of our view that our core EV technology is not just the best, but the best by a tangible margin. We see this acceptance widely by many in the know, by those who follow the EV and technology space. In fact, even some of our detractors are coming to this inevitable conclusion that the lucid air is a truly incredible product. Now, this awareness has happened. though in the large part, not just through an overwhelming endorsement from journalists and outlets in the automotive sector, but moreover, through customers experiencing the range, comfort, and sheer driving pleasure of our cars. Now, some of you may have heard my synopsis, but there are really three steps that will lead to our success as a company. And those steps are manufacturing, sales, and profitability. In short, in respect of our cars, can we make them? Can we sell them? And can we make money on them? So in 2022, our primary focus was the first of these steps to prove it was indeed possible for us to manufacture cars. We put the right leaders in place, brought logistics in-house, and I personally worked tirelessly on the factory floor, leading the team to identify and remove the manufacturing bottlenecks that we faced. In the fact that I'm taking today's earnings call, from our headquarters here in Newark, California, is symbolic of the transition of the day-to-day factory operations to Stephen David and our Arizona team. Let me be clear. Production is no longer a bottleneck. We were also able to deliver a lucid air touring and a small number of lucid air pure in the fourth quarter and delivered our first airs into Europe and Saudi Arabia as promised. So we now have variants of air covering a spectrum of performance and range on the road today. And Sapphire, our highest performance air, is scheduled to start production this summer. You may indeed have seen a video on social media of the Lucid Air Sapphire in a quarter mile drag race with the Tesla Model S Plaid, the Bugatti Chiron, and a Ducati motorcycle. Lucid Air Sapphire's extraordinary performance is clearly a testament to the superiority of the technology we have developed in-house. So whilst other EVs may offer a choice between performance, range, efficiency, charging speed, luxury, and space, variants of Lucid Air lead in all of these key metrics. And this is fundamentally enabled through the vertical integration of our technology. We design, we develop, and manufacture our own motor, inverter, bi-directional charger, and race-derived battery pack in our powertrain factory in Arizona. Now, integral to this is our world-class EV powertrain software. And I want to clarify that a large part of our incredible range and performance is indeed software-derived. And I think that there's insufficient understanding and appreciation of this core Lucid capability. And this is where the importance of our in-house technology leadership is paramount. Not only does it provide advantages in performance, efficiency, charging time, interior space, among many other features, we also expect it will provide a cost advantage at scale. And there are tangible metrics that lead us to believe our technology is probably several years ahead of even our next closest competitor who, in turn, we believe is several years ahead of others. And we continue to invest in cutting-edge innovation. This is a central capability which I find really exciting and personally really inspiring. A great example is our new motorsports glide unit with integral electric motor, inverter, and transmission, which is already in use as the standard front glide unit for a leading electric racing series. And this embodies Lucid's very latest technology, resulting in unprecedented compactness and light weight for its power output. Now, I'm also proud to say that Lucid Air achieved the highest possible rating of five stars in the rigorous Euro NCAP safety assessment, with a full five stars for each category. We brought a clean sheet design and engineering to Lucid Air with the goal of securing highest possible safety ratings. Also in the fourth quarter, we released 22 over-the-air software updates, and in particular, released UX 2.0, which is our most extensive software update to date, comprising literally tens of millions of new lines of source code across nearly every updatable computer in the vehicle. Lucid Air was engineered from the start with this over the air capability and is in every car we make today. And many of the plates and refinements were based on owner feedback and ideas. And our incredible software team is working on further developments and improvements and features, and you'll see these continuously rolled out over time. Our software capabilities are further demonstrated through our recent decision to initiate a voluntary recall of a small number of Lucid Airs related to a supplier issue. Now, I want to be super clear. We were not mandated to do this, but we have an unwavering commitment to our customers. We were able to identify potentially impacted vehicles by sending a software update to all of our vehicles that allowed us to scan for a particular electrical signature within each car, and thereby to identify the less than 300 cars potentially affected by this supplier issue. Now, this truly innovative, over-the-air solution is an example of our world-class software capabilities and advanced technologies. Believe me, very few car companies would have been able to implement such a solution. Now, I'd also like to address some questions that we've been getting about battery cell supply. In the fourth quarter, we signed an agreement with Panasonic for battery cells. We expect this agreement, along with our existing agreements with LG and Samsung, to give us sufficient cell supply for our air and gravity programs comfortably through 2025. So having manufactured 7,000 180 vehicles and delivered 4,369 vehicles in 2022. We currently have more than 28,000 reservations. In fact, more than we planned to even make in 2023. And this doesn't include the up to 100,000 vehicles under the agreement with the government of Saudi Arabia with deliveries expected to start this year. Now, as we indicated last quarter, one part of the variance between production and deliveries is the distribution of vehicles across three areas of the delivery process. And that is vehicles in transit, vehicles awaiting delivery inspection, and vehicles awaiting delivery to a customer. Now, some of the vehicles were also internal fleet cars for test drives and engineering. A further constraint is, of course, matching The precise specification of cars revolves to that of the customer selection. But, like many other companies, we are not immune from a challenging macroeconomic environment. Now, Sherry will go through our guidance in more detail, but I want to reiterate that we are not limited by production. build quality. We are focused on building versions of AIR to meet customer interest, converting reservations into orders, meeting and increasing customer demand, and getting Lucid AIR into the hands of more drivers who can become brand advocates. And I want to stress that this is nothing new to Lucid team. Having designed and engineered Lucid AIR through a time of considerable turbulence in the supply chain. We built our greenfield factory in arguably one of the most challenging times the industry has ever seen with the COVID pandemic, later overcoming newer supply chain and logistics bottlenecks to ramp production. Indeed, we persevered through circumstances outside of our control while growing and becoming a stronger and more nimble company from our experiences. And we'll continue focusing upon innovation and bringing the best products we believe anyone has ever seen to market to delight our customers, but also to make the planet a better place for generations to come in so doing. And we're not only building zero-emission cars. We're building zero-emission cars that make the best use of the world's resources, and that's through our advanced technology and design. It's this mission and our incredible customers that drive us every day. And indeed, that's why I am so optimistic about our future. In 2023, we have two primary strategic areas of focus. Number one, customer awareness and growth. And number two, a laser focus on costs. Sherry will talk more about costs in her prepared remarks. So let me speak now to growth. I spoke about the early momentum we had that was impacted by our ability to manufacture airs for delivery. We identified the issues and moved quickly to address them. We've gotten past the major bottlenecks, limiting manufacturing. But this had some impact on the demand we generated early on. And this has been exacerbated by the challenging macroeconomic environment. But we know there's real interest in our car. We know this because despite not having An aggressive brand awareness campaign, we generated a considerable amount of consumer interest and reservations. And these are customers that discovered leases through our accolades. There's a coveted early Dream Edition and Grand Touring customers who love this luxury EV. We've learned so much from our early adopter customers. And they're on the cutting edge of automotive. They're the tastemakers. And now we're ready to expand to a broader audience. Just as I work side by side with the team in Arizona to alleviate the manufacturing bottlenecks, I've been personally touring the country, visiting our studios, listening to our sales associates, delivering cars in person, and speaking to customers to garner all their insightful feedback. And I've taken this feedback to energize the team with a renewed focus upon building broader and more targeted brand awareness. This effort reaches across our organization, from leadership to the retail customer experience, and furthers the progress we've already seen with national ride and drive programs. Indeed, we're inviting people to experience the best, and those who best understand this are our customers, who ultimately become our very best advocates. And there's also a critical mass we're nearing. In my experience, there's a tipping point in brand visibility once enough vehicles are on the road. And I believe we're getting really closer to that point now. I'm proud to say that today, indeed, we believe there's a lucid air in every single space of the USA. And turning to our product roadmap, we have stealth look coming, metal roof touring, more pure all-wheel drive, and Pure rear-wheel drive, the purest of the pures. We have a lot of latent demand for these products. However, I should note, we are experiencing a supply chain issue with stealth look that will impact our ability to ship these in Q1 of this year. And we have quite a bit of demand here, and we're working very hard to resolve this. We'll also be ramping up international shipments this year, of course, to Europe and to the Middle East. And I'm really excited about the Gravity SUV, which remains on track for start of production in 2024. Gravity builds upon everything we've achieved thus far, driving further advancements of our in-house technology to create a luxury SUV like none other. Gravity is a further evolution of Lucid's core DNA of luxury, spaciousness, and efficiency through its in-house technology, setting itself apart from the competition with the previously unattainable combination of supercar performance and seating for up to seven adults. I look forward to Gravity's public unveiling later this year. So, I want to leave you with a message of restless optimism for the year ahead. We have what we view as the very best car imaginable in production today, a view substantiated with countless reviews and accolades. Plus, we have more attainable versions arriving very soon. We now need to amplify this message across a broader customer audience in order to broaden awareness, which will in turn drive sales. We'll be ramping up in key new international markets. will be producing with quality and volume. Truly landmark products on their way in Sapphire and Gravity, supported by technology roadmap to keep us clearly ahead of the competition. I consider myself privileged to lead our talented team through this, the next step of our journey. And with that, let me turn it over to Sherry for an update on our financial sharing.