Shulou(Shulou.com)11/24 Report--

Musk, step on it, too.

Author | Truman

Every time you sell a car, you lose $338000, or 2.46 million yuan.

Such a big deficit comes from Lucid, a new power in the United States, which was once known as the "killer of Tesla."

According to a new report from Bloomberg Industry Research (Bloomberg Intelligence), the Lucid's EBITDA (earnings before interest, tax, depreciation and amortization) is likely to lose $338000 this year, up from $325000 a few months ago.

So Bloomberg believes that Lucid's current business model is no longer sustainable and must expand significantly and attract additional capital by 2025. In other words, if this situation cannot be reversed, coupled with the possibility of a recession, the financial and operational pressure will intensify, even before 2025.

Source: Yahoo Finance at the same time, Lucid's share price has been plummeting, recently falling directly to an all-time low. As of Oct. 6, the offer was $5.50 per share, with a market capitalization of just $11.7 billion.

This new luxury force, which once competed with Tesla and Mercedes-Benz, is now at a crossroads.

Increased risk of default although most of the new forces at home and abroad are losing money and making money, the loss of Lucid is indeed too big.

Rivian, another new car-building force in the United States, is a good comparison. According to Bloomberg Intelligence, Rivian's loss per car is about $110000.

While the car was sold at a huge loss and the stock price hit a new low, Lucid's misfortune is far from over.

Joel Lewington, a Bloomberg credit analyst, said there was a growing risk that Lucid would default on its loans. The current default risk is 16 per cent, almost four times the global carmaker average. "the near-term advantage of Lucid is its cash balance of $5.2 billion, but by 2024, they will consume about $7 billion in cash," he wrote in the report.

Source: the proportion of Lucid analysts' bullish ratings on Lucid has fallen to 1/4 of all recommendations, and more than half of Rivian's ratings are "buy."

Of course, Lucid's share price hasn't always been this low. When Lucid rang the bell on Nasdaq in July 2021, its shares rose 11% on its first day of trading, closing at $26.83 per share, with a total market capitalization of more than $40 billion.

Source: four months after Lucid went public, Lucid announced that it had received more than 17000 pre-orders for its luxury electric car Lucid Air, which surpassed Ford at one point to become the world's eighth-largest automaker with a market capitalization of $86.517 billion.

But the good times don't happen very often, and Lucid's market capitalization is now 70% lower than it was when it went public.

The continued decline in Lucid's share price has a lot to do with the continued sluggish demand for its first production model, the Lucid Air.

Source: LucidLucid earlier reported an operating loss of $1.61 billion, up $500m from a year earlier, and a net loss of $1.544 billion, a fivefold increase from $300m a year earlier, while only 1404 new cars were delivered in the quarter.

Jerry Brackman, chief investment officer of first American Trust (FAF), believes that Lucid's current delivery growth rate is much lower than the target of 10000 cars this year. "that's why they continue to lose money." And he said, "Lucid shares will continue to face challenges unless there is a big increase in sales."

Source: the other side of the insufficient sales of Lucid is the urgent need for foreign aid. Since the establishment of Lucid, a big problem is the lack of funds.

In 2013, Lucid received round B financing from Venrock, a Silicon Valley venture capital firm, and BAIC invested $100m in Lucid's Series C financing in January of the following year, with a 25 per cent stake becoming the largest shareholder. In the same year, Jia Yueting personally invested $200m in Lucid, becoming the second-largest shareholder after BAIC.

However, BAIC hoped that Lucid could come to China for development, and Xie Jiapeng, the founder at that time, had no such intention at that time, and he preferred to give priority to the US market. BAIC then sold all its shares to Jia Yueting, making Boss Jia the largest shareholder in Lucid, with a stake of about 40 per cent.

Jia Yueting later sold his stake in Lucid, and in September 2018, the Saudi sovereign fund PIF, led by Saudi Crown Prince Mohamed Ben Salman, acquired a 67 per cent stake in Lucid for an investment of more than $1 billion.

Source: Lucid last December, Lucid Group announced the completion of a $1.5 billion stock offering. Of these, Lucid sold more than 56.2 million common shares for a total profit of about $600 million. Lucid also raised $915 million by privately selling nearly 86 million shares to an affiliate of its largest investor, the Saudi sovereign public investment fund (PIF).

At that time, this round of financing was no less than "selling your body". At that time, foreign media Electrek believed that without new external investment or turning the situation around, Lucid could only survive for another year or so.

Musk also stepped on Lucid and Rivian were once regarded as Tesla's strongest competitors, but in fact, whether it is Lucid or Rivian, both of them do not have the ability to compete with Tesla.

When it comes to the relationship between Lucid and Tesla, it is even more disorderly. Many of the start-up teams and executives of Lucid come from Tesla.

Source: in Lucid2007, Bernard Tse (Xie Jiapeng), a former vice president and director of Tesla, resigned from Tesla, and another Chinese executive, Sam Weng (Wen Shiming), who resigned from Oracle, founded Atieva in California, when Atieva mainly worked on the research and development of three electric systems for electric vehicles, which was the predecessor of Lucid.

In 2013, Peter Rawlinson, former chief engineer of Tesla Model S, moved to Atieva as CTO and served as CEO at the helm of Lucid in 2019, while Peter Hochholdinger, former vice president of production of Tesla, also served as vice president of manufacturing to Lucid in 2019.

Lucid CEO and CTO Peter Rawlinson source: in Lucid2016, Atieva changed its name to Lucid Motors, began to enter the new energy vehicle industry, and officially announced plans to develop all-electric high-performance luxury cars. In December of the same year, Lucid's first model, the Lucid Air, was officially launched.

But Lucid said that Tesla is not their competitor, they are going to occupy the luxury electric car market.

In other words, they think Tesla is more innovative, but not luxurious enough.

The Lucid Air is positioned similar to Tesla's Model S, with a 100kWh battery pack with a maximum power of 1013 horsepower, zero acceleration of only 2.5 seconds, a limited edition priced as high as $255000, and the car had the lowest stroke resistance factor of any mass-produced electric car at that time, only the 0.21cd.

Source: although the relationship between Lucid and Tesla is complicated, they are surprisingly consistent in their disdain for each other.

Musk said in May that the wave of electric car breakdowns was coming.

"Tesla is not only the largest electric car manufacturer in the world, but also the most profitable vehicle manufacturer in the world," Musk said at the time. "but it's really not easy to make electric cars profitable. Take a look at our competitors. They have been struggling and trying to make better profits."

Among the competitors who are struggling to make profits, there is obviously Lucid. Musk predicted at the time that "the macro environment will be challenging in the next 12 months, but many companies are likely to go bankrupt in the near future."

Later, in an interview, Musk directly pointed out the names of companies that could go bankrupt. Both Lucid and Rivian have a bankruptcy trend. "unless Rivian and Lucid make major changes, they will both go bankrupt, and they are going bankrupt."

03. Can the Saudi and Chinese markets be saved? Earlier this year, Betaville, a US trading website, reported the breaking news that Public Investment Fund (PIF), the Saudi sovereign wealth fund, planned to buy all the remaining shares of Lucid and completely privatize it.

One stone stirred up thousands of waves, and Lucid shares rose nearly 98% in intraday trading to a high of $17.80, but neither side responded to it.

Source: Lucid

However, throughout the development of Lucid, every important node can not be separated from the support of Saudi sovereign wealth funds. PIF has helped Lucid when it encountered financial difficulties or supply chain crisis.

Last October, Lucid opened its first showroom in Riyadh, the capital of Saudi Arabia, to showcase its new cars and technology. Lucid Vice President Faisal revealed that Lucid Air Deluxe has thousands of orders in the Middle East.

In April this year, Lucid also announced an agreement with the Saudi government to build a factory in Saudi Arabia to produce 150000 electric vehicles a year in Saudi Arabia by 2025, while the Saudi government will buy as many as 100000 Lucid electric vehicles in 10 years.

Source: Lucid and from the perspective of PIF's position in US stocks, Lucid is also its key position target.

But now things have changed, and the Bloomberg report puts Lucid's plight on the table. So how long Lucid can last may largely depend on whether Saudi financiers continue to receive blood transfusions.

In addition to the support of the Saudi tycoons, another recent good news for Lucid is the cooperation agreement reached with Aston Martin in September to produce high-performance electric vehicles, which will be provided by Lucid and acquire about 3.7 per cent of Aston Martin.

At the same time, Lucid also plans to enter the Chinese market, and Zhu Jiang, a former Xilai executive, has also entered Lucid, which is also a key step for Lucid to enter China.

Previously, job postings updated on Lucid's official website showed that the job was based in Shanghai: the Lucid Air Pure currently sells for $77400, or about 565100 yuan, according to the Lucid website. If exported to China, the price is likely to be more expensive, most likely more than 600000 yuan.

Tesla in China, even encountered domestic new energy brands around and intercept, how big can the market of Lucid?

This article is from the official account of Wechat: Super Electric Lab (ID:SuperEV-Lab). Author: Truman.

Welcome to subscribe "Shulou Technology Information " to get latest news, interesting things and hot topics in the IT industry, and controls the hottest and latest Internet news, technology news and IT industry trends.