Lucid Group, Inc.

Good day and thank you for standing by. Welcome to Lucid third quarter 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'll need to press star 11 on your telephone. You'll then hear an automated message advising your hand is raised. To withdraw your question, please press star 11 on your telephone again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your first speaker today, Head of Investor Relations, Maynard Arm. Please go ahead.

Thank you, and welcome to Lucid Group's third quarter 2023 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 law. 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 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 forward-looking statements on page two of our investor deck, available on the investor relations sections 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 CEO and CTO, Peter Rawlinson. Peter, please go ahead.

Thank you, Maynard, and thank you everyone for joining us for our third quarter earnings call. In Q3, we delivered on a number of the key milestones that we set out to achieve. In September, we started production of the AirPure rear-wheel drive, as we said we'd do, and we are currently in the process of ramping up its production. Now, the AirPure rear-wheel drive is our most attainable air with a starting price of just $77,400. However, it sacrifices absolutely nothing for the style and technology, range and performance, space and practicality. It has it all. The pure rear-wheel drive can charge up to 150 miles in just 12 minutes and has an official EPA estimated range of 419 miles, more than any other electric car currently available besides other Lucid Air models. But most importantly for me, it's incredibly delightful and engaging to drive. And we continue to push the boundaries of our technology with a pure rear-wheel drive efficiency of approximately 4.74 miles per kilowatt hour. And this is further widening the gap against our competitors. Now for customers, this means the ability to go further with less batteries. And because the battery is smaller, this means the car weighs less, is more agile, and can cost less than a vehicle of similar range with a larger battery pack. So you get greater distance, smaller battery, less raw materials, lower running costs, immense interior space, and it's much better for the environment. We also started production of Lucid Air Sapphire in September, and we delivered the first cars to customers at a special event in early October. The Air Sapphire is the world's first fully electric luxury super sports sedan, achieving a 0-60 mph time of just 1.89 seconds, a 0 to 100 miles per hour time in just 3.84 seconds, and a quarter mile time of 8.95 seconds with a top speed of 205 miles an hour. Air Sapphire delivers both 1,234 horsepower and an efficiency of 3.61 miles per kilowatt hour, as well as an EPA estimated range of 427 miles on a single charge, representing an extraordinary fusion of capabilities. I mean, for reference, the closest competitors provide perhaps between 20 and 50% less range. Now, the technology that underpins Sapphire enables an unsurpassed blend of performance, agility, and versatility. And the result is an extreme performance car. But it's not just about 0-60 time. That's just one dimension. It's truly a rewarding car to drive with amazing road car dynamics. In fact, Jason Kamisa, who is a well-regarded automotive journalist, said the Lucid Air Sapphire is, and I quote, the best handling sedan in the history of the world, or maybe the best handling car, period. With Lucid Air Sapphire, we once again raised the bar and increased the gap between Lucid and its competitors, creating the world's most well-rounded and versatile high-performance EV. We also achieved major manufacturing milestones in September. In Arizona, we officially shifted General Assembly to the Phase 2 factory. This is just the start as construction continues on the new powertrain manufacture area with our body and white expansion and stamping facility getting really vertically integrated out there. We made history in Saudi Arabia also, opening the country's first ever car manufacturing factory. In its first phase, the factory has a capacity to assemble 5,000 Lucid vehicles a year, and operations are already underway. Now, before turning to production and deliveries, I'm delighted to announce the appointment of Mr. Mark Winterhoff as our new Chief Operating Officer, a newly created role which reports directly to me. This appointment is a natural evolution of the company as Lucid enters the next phase of its growth. In just two years, we expanded our global sales and service footprint, built our second factory facility located in Saudi Arabia. We signed our first technology agreement with Aston Martin, and we're working assiduously on our future vehicles, the Gravity SUV, as well as our more affordable midsize vehicles. Thus, the execution of our strategy towards global manufacturing, supply chain, sales and service, marketing, and international markets is indeed critical to our success, and I'm confident that Mark's intimate knowledge of Lucid and extensive automotive experience will be invaluable as we continue to grow. And I believe this will significantly benefit us by freeing up my time to focus upon my key strengths, mainly the product strategy and its technical execution, the overall commercial strategy, and a long-term vision for this company. I particularly look forward to help drive our technology advantage over our competitors with our exciting technology roadmap. And naturally, I'll also be closely partnering with Mark in essential day-to-day matters and operations. Now, turning to production and deliveries. In Q3, we produced 1,550 vehicles. Now, this does not include over 700 vehicles that were in transit to Saudi Arabia. Whilst these were manufactured in Q3, they will only be counted towards production upon final assembly at our AMP2 facility in Saudi. We delivered 1,457 vehicles in the third quarter, including initial deliveries of Lucid Airs under the Ministry of Finance agreement. We decided to prudently align our production with deliveries and we are adjusting our production outlook to a range of 8,000 to 8,500 down from more than 10,000. Now Sherry will touch on this in a little more detail. Now turning to brand awareness, a critical imperative has been very specific and compelling sales and marketing initiatives and actions to enhance awareness and demand. Efforts are well underway and showing good results. In North America, the majority of orders in the third quarter came, in fact, from new customers. These are customers whose first contact with Lucid was in the quarter of their order. And we believe that our targeted, data-driven approach to marketing, as well as our compelling offerings, are bearing fruit despite an uneven macro environment. The volume of lucid airs on the road also continues to grow, and it's exciting to see all the photos of air sightings in the wild that people are sending out. I believe that our brand awareness can benefit more meaningfully once we hit that critical mass of cars on the road. So we're pleased with our brand awareness progress in the US as well as in the Middle East. We're making progress in Europe with test drive growth, but we're still early on in our journey there, frankly, and expect more significant progress towards growth next year. We've also been working on improving the customer journey. from the start of the journey with a financial service process all the way through the final delivery process. And we've made great progress, but we do still have some more work to do. We're also working on new sales initiatives to accelerate deliveries and to improve the customer experience. So a lot of things happening behind the scenes that we're really excited by. I'm also pleased to announce that Lucid customers can gain access to more than 15,000 Tesla superchargers in North America, and that we will integrate the North American charging standard into our vehicles in 2025. And of course, all Lucid vehicles with a current CCS charging standard will be able to access that network through an adapter. Now this is an important addition to providing our customers expanded access to reliable and convenient charging solutions. Now turning to software, earlier today we started rolling out our latest over-the-air software update. This update will enable a new revolutionary feature in vehicle-to-vehicle charging. Not only are we solving range anxiety with our industry leading range, but the Lucid Air can now also lower anxiety for owners of other EVs with less range. So please stay tuned for more details of this in the very near future. But let me tell you why this is so significant. This is a shining example of our systems approach to the design of the vehicle. It's the tight integration of our cutting-edge software with our state-of-the-art technology. Now, this systems approach of integrating hardware and software is what allows us to provide these value-added updates, and I believe few in the auto industry can do it as well as to the degree that we can. And with Lucid Air, the longer you own the car, the better it can get. We continue to improve and add functionality as you own the car. Now, I invite you to watch a video with Mike Bell, our head of digital, that you can find on the Tech Talk section of our Lucid website, and which I hope will give you some insight into our software differentiation and a glimpse into what's to come. I'm also delighted to say that we recently closed our Aston Martin arrangement. Sherry will go through this in more detail, but I want to highlight that Lucid was chosen as part of a competitive process based upon the merits of our Sapphire technology. And in fact, since the announcement of the Aston Martin deal, I'm very pleased to say that we've seen an increase in inbound interest to access our great technology. As we move forward, I continue to see significant market potential. We'll continue to advance our technology and look to further widen that technology gap. Some in the market are talking about the potential for a reduction in EV investments by other OEMs. Now whilst I urge the industry to accelerate the transition to sustainable transportation, nonetheless, If this were to come to bear, I believe that Lucid would be in a prodigious position to benefit through our technology licensing business. And whilst Lucid is becoming widely recognized as having the best EV technology bar none, some may be led to believe that it's expensive to make. And this is not well understood. ARDI's technology was designed from the outset for mass manufacturability. I cannot close without talking about a product I'm very excited about, the Lucid Gravity, our three-row, seven-passenger SUV. And I can't wait to unveil it at our special launch event on November the 16th next week at the LA Auto Show. the gravity will significantly expand our market opportunity, opening up a total addressable market that is nearly three times larger and growing. More importantly, for our customers and for the planet, the gravity takes all of the innovations of Lucid Air and builds upon them. The range, the efficiency, the performance, the driving experience, the interior space, Just everything that people love about the air and that helped redefine the sedan space. We will now bring to gravity and in turn, we will redefine the SUV in the electric age. But let me be clear, the gravity SUV isn't an air sedan design that we just converted to an SUV. that gravity has been designed from the ground up to be a true SUV. Now, I don't want to reveal too much, but I think you're going to love it, and I just can't wait to show it to you all next week. And I hope that many of you will be able to join us for this momentous occasion. So in closing, we recognize that there are forces that are out of our control and that some are not. we are navigating an uneven macro environment that is also affecting many others in the industry. But I'm excited about the remainder of this year and for 2024. In addition to gravity and the expansion into a larger and growing market, we have a number of other announcements that I'm excited to share with you in the future. We know we have a lot of hard work ahead of us, and I'd like to close by saying thank you to our most important asset, our employees, to our suppliers, and to our partners. And with that, let me turn it over to Sherry for an update on our financials. Sherry.