Lucid Group achieves record deliveries, improves revenue by 68% year-over-year, and outlines strategic advances in robotaxi and autonomy initiatives for future growth.

OPERATOR - (00:01:41)

Good day and welcome to Lucid Group's third quarter 2025 earnings call. @ this time, all participants are in a listen only mode. After the speaker presentation, there will be a question and answer session. To ask a question during this session, you will need to press star 11 on your telephone. You will then hear an automated message advising your hand is raised to withdraw your question. Press star 11 again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker, Mr. Nick Twerk, Vice President of Communications. Please go ahead.

Nick Twerk - Vice President of Communications - (00:02:19)

Thank you and welcome to Lucid Group's third quarter 2025 earnings call. Joining me today are Mark Winterhoff, our interim CEO, and Taufique Bousseid, our CFO. Before handing the call over to Mark, 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, vehicles and products, studios and service networks, financial and operating outlook and guidance, macroeconomic policy and industry trends, tariffs and trade policy, company initiatives and other future events. These statements are based on various assumptions, whether or not identified in this communication and on the predictions and expectations of our management as of today. Actual events or results are based on difficult or impossible to predict and may differ due to a number of risks and uncertainties. We refer you to the cautionary language and the risk factors in our annual report on Form 10K for the year ended December 31, 2024, subsequent quarterly reports on Form 10Q, current reports on Form 8K and other SEC filings, and the forward looking statements on page 2 of our quarterly earnings presentation available on the Investor Relations section of our website@ir.lucidmotors.com we undertake no obligation to revise or update any forward looking statement for any reason except as required by law. 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 vs non GAAP results is available in our earnings press release issued earlier this afternoon as well as in the earnings presentation. With that, I'd like to turn the call over to Lucid's interim CEO, Mark Winterhoff. Mark, please go ahead.

Mark Winterhoff - Interim CEO - (00:04:14)

Thank you, Nick. And thank you everyone for joining us. First, I want to acknowledge all our employees, customers and partners. We appreciate your commitment and support. Secondly, I'm pleased to point out that in Q3, despite all of the headwinds, we delivered our seventh consecutive quarter of record delivery numbers with that in mind, I would like to reiterate the near term priorities we are focused on which we laid out earlier this year. Disciplined execution and scaling production, building our brand and further driving consumer demand and advancing our technology leadership. And this has not changed. We remain focused on designing and delivering the best cars, period. This is the core of our business and in a moment we'll review our progress against these near term priorities. But before I talk about the near term priorities, I'd like to share how our strategy has evolved from the beginning of the year and how we have been executing that strategy with intention. Beyond expanding our core business, we are pushing hard on what will be our next chapter. A push into new markets and high value adjacencies. So before reviewing the quarter with you, I want to explain to you a bit about the next stage of our strategic evolution where we have already been working hard, building block by building block toward the Future of robotaxis Level 4 Autonomy and new opportunities for revenue. Our vehicles are not only awesome driving machines, but built on industry leading EV technology, but also a platform for delivery of new customer service and next generation customer experience. And we're starting with Autonomy. As you all know, we announced in September that we closed a $300 million strategic investment from Uber as part of our partnership to deploy 20,000 robotaxis or more. We already reached a first milestone with successfully delivering the first batch of Robo taxi engineering vehicles to Nuro. Nuro is now finalizing their integration and will begin further testing activities. And we announced last week that the San Francisco Bay Area has been chosen as the first location for deployment planned in 2026. Uber is a global leader in ride sharing and their scale, brand and global reach help position Lucid at the forefront of the B2B level 4 market. Their strategic investment in Lucid validates our highly advanced technology platform and aligns with our strategy. But we don't stop at Robotaxis because we believe demand for high levels of autonomous driving will grow as consumers have the opportunity to experience this technology and that they will not only choose vehicles that have these capabilities over those that don't, but also are willing to pay for this capability. And that's why we are very excited about our collaboration with Nvidia to deliver full level four eyes, hands and mind off point to point autonomous driving capabilities to our consumers. We are playing to win. We plan to leverage our agility and focus to be the first to bring full Level 4 capabilities to the B2C market. And we couldn't ask for a better partner than Nvidia Lucid's vehicle platforms and safety architectures combined with the world's AI computing leader will result in a vehicle with formidable performance and intelligence. We will jointly develop L4 capabilities, drawing on years and millions of miles of data and continuously update software as technology improves to remain at the fourth forefront of the industry. To be clear, while we are pushing for L4 with this partnership, we plan to provide significant upgrades to our advanced driving assist functionality beyond what we're already doing in house as early as end of next year. For decades, cars have been a symbol for freedom to go anywhere at any time with autonomy. This freedom expands by being able to be productive during your commute or being driven home safely after dinner with friends. And of course, with Lucid's exceptional driving feel, you always have the option to experience the thrill of driving your lucid yourself whenever you choose. So in a nutshell, we continue to develop the best driving vehicles. Providing the most advanced EV technology significantly advance our autonomous driving capabilities and user experience, expanding into new businesses and optimizing our operations to become leaner and more efficient. Now, maybe there's a question about developing autonomous technology fully in house versus working with partners. Well, Lucid's strategy here is clear and very intentional. We are doing both. Developing higher levels of autonomy, especially true for L4, requires enormous investments and while some of our peers spend vast sums of for in house development to provide this functionality to their customers, our focus is to provide a high level of autonomy to our customers as soon as possible. And with optimized capex spend, our partnerships are enabling us to do exactly that. Having said that, we are continuing our in house development but with a smart and resource efficient approach. In early Q3 we already rolled out hands free highway driving for the Lucid Air via OTA and we will bring the same to the gravity soon. Fully developed in house. The verdict is still out on whether owning autonomous driving technology in house will be a sustainable differentiator or will become commoditized in the long run. Working with our partners allows us to monitor how the technology develops and make focused insourcing decisions once the future path becomes clear and avoid costly investments. I hope this gives you some insight into where Trufik and I and the leadership team plan to take Lucid. We are fully committed to technology, leadership and innovation, but at the same time we are committed to efficient and smart capital allocation. Now let's turn back to progress on near term priorities. First, let's talk about our operational execution. As mentioned in the beginning, we achieved a seventh consecutive record quarter for deliveries. I've said before that our delayed ramp up of the gravity is mainly due to a small number of suppliers not able to ramp as expected. On top of that, we had to cope with a number of extraordinary external headwinds that threatened to shut our production down several times throughout the year. That's why we are not where we want to be. Let me elaborate a bit on this to give you a flavor of what our teams are working through each day. Over the last six months we have contended with three consecutive industry wide supply chain magnets, aluminum and chips. These are crises that set even far bigger competitors on their heels. However, thanks to our vertical integration and our team's agility and resourcefulness, we have. Been able to problem solve our way. Through each one to limit impact. First, the magnet shortage in Q2. The magnets we were able to get were incompatible with our unique NACS Boost charging drive units for gravity. Hence, we had to temporarily shift our production plan from the grand touring trim for North America to the touring trim for export to Saudi Arabia until magnet availability improved. Unfortunately, that impacted our Q3 production and delivery numbers simply because the additional transport time needed. After we successfully crossed that bridge, a fire at our aluminum suppliers plant shut other original equipment manufacturers (OEMs) down. But we were once again able to minimize the impact and right after this chip supply threatened the whole industry. While once again our team is on the job and we are still working through it, I hope this gives you some insight in what our teams are able to navigate on a daily basis and I'm very proud of what they have been able to accomplish and continue to accomplish. Having said that, I want to assure you that we hold ourselves to a high standard and constantly evaluate how we can improve as an organization. So today we are making some key organizational changes to streamline decision making, enhance accountability and accelerate growth as the company scales globally. To support these objectives, we are making the following organizational changes. Imad Dalla has been appointed Senior Vice President, Engineering and Digital. In addition to leading the powertrain organization, he will now oversee all product development functions including vehicle engineering, digital systems and software. In his expanded role, he will continue to drive Lucid's technology leadership, lead vehicle development, improve cost efficiency and manufactureability and and advance Lucid's software defined vehicle architectures. EMAD has made remarkable contributions to Lucid's technology leadership over the last 10 years and we expect this leadership will have a similar impact on the vehicle development as he will now have end to end responsibility. Urban Rafael has been elevated to Senior Vice President Revenue with expanded oversight of Lucid's global operations. Since Erwin has been at Lucid, he has driven consecutive record results every quarter. He will now lead global sales and services operations, driving accountability for revenue and customer experience. As Lucid expands further into new consumer markets worldwide, we are also appointing a new seasoned quality leader to our executive team. Mani Levergood is appointed Senior Vice President, Quality and will lead efforts to ensure Lucid delivers vehicles that meet the highest standard of quality and craftsmanship, working in close concert with engineering and manufacturing. She previously held quality and manufacturing roles at Scout Motors, Stellantis and Magna. Levergood succeeds Jerry Ford, who is retiring after more than 35 years in the automotive industry. We thank Jerry for her service to Lucid. These organizational changes are designed to capitalize on opportunities to strengthen our business and we are confident that they will help drive the results we need moving forward. Before I hand over to tufik, I'd like to share a few points on our efforts to boost awareness and strengthen our brand. In Q3, we accelerated our focus on building the Lucid brand and increasing awareness among luxury EV intenders and and we are already seeing results. In the United States, brand awareness jumped 8 points month over month among consumers who plan to purchase an ev. This improvement was driven by the launch of our new brand campaign titled Driven, staring our first global brand ambassador Timothee Chalamet and directed by Academy Award nominated director James Mangold. Driven is now the most successful brand campaign in Lucid's history. With more than 7.2 million views on YouTube and over a billion total impressions in the U.S. lucid's cultural relevance continues to grow. In October, we launched the We Write for New York campaign featuring NBA All Stars Jalen Brunson and Josh Hart with billboards across New York City and global extension in Abu Dhabi during the Knicks preseason game. And we're just getting started. Stay tuned for more to come. We also received another award our whole Lucid team is especially proud of. The Lucid Air Sapphire was selected as this year's German Performance Car of the year by 30 leading German motor journalists. Let this sink in for a moment. The German Performance Car of the Year is designed and built in America. To my dear fellow countrymen, Sorry to rub that in, but you probably can imagine how proud the Lucid team feels about that. Last but certainly not least on midsize SOP of the first variant of our all important midsize platform remains scheduled for the end of 2026 and I can share that we are very pleased with the progress of sourcing and cost structure the team is able to achieve and on our Atlas Drive unit family it is on track with again class leading efficiency, much fewer parts, lower BOM cost, lower weight and it will include also a Rare Earth 3 variant. With that said, we are entering a new phase and looking forward to a very exciting year ahead. One where Lucid's award winning vehicles, our leading technology, thoughtful partnerships, brand and focus on execution come together to define the next generation of mobility. Thank you for your continued support and confidence in Lucid. With that, I'll turn over the call to Tufik to discuss our financial results and outlook.

Taufik - (00:17:51)

Thanks Mark Good afternoon everyone. Q3 for Lucid was really about progress, preparation and stabilization in what continues to be a complex and volatile environment. We pushed through those headwinds and kept the plan moving. Revenue was up 30% sequentially and 68% year over year, which is a strong result. Just as important, we strengthened our balance sheet today. I will cover the strategic actions we took and why they matter, how the quarter played out and how we're thinking about the months ahead. On strategy, Mark already touched on our partnership with Uber and Nuro and Nvidia. These collaborations are important because they reshape our financial model in a very meaningful way. They give us a capital efficient path to growth and open the door to new recurring revenue streams in advanced driver assistance software and data services. At the same time, they help us optimize cost through smarter manufacturing and operational efficiencies. These partnerships are a key part of our mid term plan to strengthen our path to profitability and and deliver long term shareholder value. We expect them to improve margins, support scalable growth and drive returns aligned with disciplined capital deployment. Now we all know the industry and geopolitical headwinds are real, but what matters is execution and our team is delivering. We hit record deliveries, improved our product mix and set new highs for average selling prices. Production rates picked up towards the end of the quarter, which is especially important in a context where the rest of the industry is reporting major headwinds. On top of that, we expanded internationally and built strong consumer awareness ahead of next year's mid sized launch. All of this puts us on a solid trajectory for Q4 and here's the big milestone. For the first time, Lucid Gravity is expected to make up the majority of our production in Q4 and the momentum is already here. October deliveries are climbing, especially for Gravity and that gives us confidence that this quarter is going to be a turning point for Lucid. We also announced today that we strengthened our liquidity subsequent to quarter end to an increase of our delayed short term loan facility with our majority shareholder, the Public Investment Fund, from $750 million to approximately $2 billion of all of which remains undrawn. This increase lengthens our Runway into the first half of 2027 and provides lucid with stable access to liquidity. This underscores PIF's ongoing support of Lucid and their strong commitment to our business and confidence in our long term strategy. We are committed to maintaining a healthy liquidity position and will continue to evaluate all financing and liquidity options, including in the public markets when the appropriate conditions materialize. Now moving to our business performance in the third quarter demand once again exceeded our production. We delivered 4,078 vehicles, our seventh rate, quarterly record and a 47% increase year over year. ESP moved higher with gravity mix and more high value configurations. On the production side, we built 3,891 vehicles and produced over 1,000 additional vehicles for final assembly in Saudi Arabia. During the first three quarters we produced 9,966 vehicles just short of 10,000 units, excluding additional vehicles in transit to Saudi Arabia for final assembly. Our second shift that came online in October is expected to further accelerate our production growth. Our exit rate improved late in the quarter and we plan to carry that momentum into Q4 now. As Mark mentioned earlier, the supply chain remains challenging not just for us but across the industry. We're working through issues one by one, but we can't completely rule out further volatility on the financials. Revenue came in at $337 million, up 68% year on year and roughly 30% sequentially driven by deliveries growth and gravity mix. Gross margin improved about six points sequentially as mix improved and productivity and cost reduction actions took hold. Margins are still below our long term goals as we work through tariffs and input costs. Adjusted EBITDA was negative $718 million reflecting our increased sales and marketing effort, an ongoing investment in our mid sized platform, the Atlas powered train platform and our Autonomy initiatives. Free cash flow improved to negative $955 million on tighter working capital and execution discipline on liquidity. We ended the quarter with $4.2 billion, $3 billion of cash and investment and $1.2 billion of credit facilities. That includes the $300 million strategic investment from Uber. After the quarter closed and as disclosed earlier today, we agreed to increase our delayed route home loan with the PIF from $750 million to about $2 billion. It's undrawn and extends our Runway into the first half of 2027. This again underscores PIF's ongoing support and strong commitment to our business and confidence in our long term strategy. We are committed to maintaining a healthy liquidity position and will continue to evaluate all financing and liquidity options, including in the public markets when the appropriate conditions materialize. Now on the outlook, we're entering Q4 with stronger visibility and solid foundation for growth. Over the past quarters we made real progress refining processes, tightening quality controls and ensuring supplier readiness. We exited Q3 with higher production run rate and in October we successfully launched a second shift that we trained during the third quarter. We also have units already in transit to Saudi Arabia for final assembly along with the vehicles produced so far this month. Assuming no unexpected disruption from supply chain factors, we expect total production at year end to be around 18,000 units. This is in the range of our guidance and it's a strong outcome given the complexity of the macro environment. Looking ahead While the industry expects a continuation of the effects on the demand related to the tapering of incentives and the expiration of certain US tax credit which pulled some demand forward in Q3, we do see this as a temporary dynamic and we expect a significant delivery growth in Q4. We anticipate demand to normalize in early 2026 supported by expanded marketing campaigns and the broader availability of lucid gravity across multiple trims in October. While US EV sales in general have dropped, our deliveries and market share have increased, showing strong demand for lucid vehicles while other OEMs are slowing down EV investments. We believe we can turn the current challenges into an opportunity continue to grow market share, capturing shares from other luxury makers. We are already seeing encouraging signals. European orders are up year over year and North American traffic and test drives in October were solid compared to historical levels. Gravity orders becoming a larger portion of total order intake will help to drive higher ASP's and revenue. These trends are confirming the strength of our brand and position us well to capture growth as the market stabilizes. We believe the steps we've taken this year, including operational improvements, disciplined incentive management and strategic product expansion are setting the stage for sustainable growth and margin improvement. As the gravity touring launches and our marketing reach expand, we expect to unlock new demand opportunities globally and reinforcing our long term trajectory. For 2025 CapEx, we are planning 1 to $1.2 billion. We will continue to focus on scaling production mid sized development, automation and cost reduction initiatives. We intend to lower capital intensity per unit as we move through the year directionally. The goal is clear move towards break-even as mix scale and cost actions Compound to close Q3 showed that we can grow de risk and strengthen liquidity at the same time. Orders and delivery reached record levels. Mix improved quality and exit rate moved the right way despite higher complexity. And we extended the Runway with an undrawn facility that takes us into first half 2027. Our focus remains the same compound, liquidity, de risk ramp and improved unit economics. And every quarter I want to thank our teams for their execution and our customers, investors and partners for their continued support. With that, I will hand the call back over to Nick. Thanks, Taufik.

Nick Twerk - Vice President of Communications - (00:27:10)

We'll now start the Q and a portion of the call. Before we take questions from those on the phone, I want to pose some of the questions that our retail investors sent in through the SAIT technology platform.

Patrick - (00:27:20)

The first one comes from Patrick.

Mike - (00:27:21)

Mike, please share. Lucid's plan to increase the market cap and shareholder value within the next 12 months.

Mark Winterhoff - Interim CEO - (00:27:28)

We appreciate the question, Patrick. What will drive market cap and shareholder value is profitability and cash generation in the short term. It's about executing against our plan to reduce cash usage and improve profitability. This relies on ramping the gravity and next year launching and ramping the midsize. With the right focus on capital allocation and spend mid term, we want to further accelerate our cash generation. Mark has laid out some of the foundations of how we can achieve that. Technology and software will be key as they will allow us to maximize return in a repeatable model and with low capital intensity. There are many exciting developments in the pipeline. I strongly believe that if we continue to make progress against the strategy we laid out, the results of these efforts will be reflected in the share price and the shareholders return.

Minh - (00:28:22)

Our next question comes from Min. Any updates on the Robotaxi partnership with Uber?

Mark Winterhoff - Interim CEO - (00:28:27)

Yeah, thanks Minh. This is Mark. Yeah, there's a lot of updates. There's a lot of progress being made between the teams at Lucid and at Nuro. And we successfully delivered the first batch of the vehicles of the engineering vehicles to Nuro during the quarter for testing. We also announced that San Francisco is the first city we're working towards launching. In 2026 subject to regulatory approvals. And we closed the 300 million equity investment from Uber during the quarter, which speaks to their level of confidence as. Lucid as a partner.

Oberdoola D - (00:29:05)

Okay, Our third question comes from Oberdoola D. When will the company become profitable?

Mark Winterhoff - Interim CEO - (00:29:12)

Well, we have an internal roadmap and stage gates against which we are executing this plan Is the North Star for the company and our teams in everything we do we haven't yet publicly communicated the timing for Breakeven, but as a management team, we are continuously working towards this goal through a disciplined focus on executing our short term plans and mid term strategy. We have a pathway mapped out and we continue to make significant progress on both short and mid term plans. As Mark has explained, we are confident that in the short term the combination of gravity and mid size will allow us to achieve the scale needed to become profitable midterm. Mark has explained some of the strategies and plans we are executing against to further consolidate the cash generation capabilities of the company. One last information, we are planning to organize an investor day early next year which will give us the opportunity to explain our short term plans and strategy as well as our roadmap towards cash generation.

Nicholas A - (00:30:16)

Okay, our next question comes from Nicholas A. What is the timeline of an affordable entry level vehicle for lucid. Thanks, Nicholas.

Mark Winterhoff - Interim CEO - (00:30:24)

The first variant of our midsize platform remains scheduled for the end of 2026. Nothing has changed and we're working towards that goal.

Nick Twerk - Vice President of Communications - (00:30:37)

All right, now we'd like to take questions from the phone lines operator.

OPERATOR - (00:30:43)

Thank you. As a reminder to ask a question, please press star 11 on your telephone and wait for your name to be announced. To withdraw your question, press star 11 again. One moment while we compile the Q and A roster. And our first question will come from the line of Ben Callo with Baird. Your line is open.

Ben Callo - (00:31:08)

Hi, good evening and thanks for taking my questions. Maybe can we start with just where you are with choosing suppliers for the midsize vehicle and then if you could talk about any kind of overlap that can be leveraged from the air gravity suppliers and then have a follow up as well.

Mark Winterhoff - Interim CEO - (00:31:30)

Yeah, Ben, Yeah, I can take this. So we are well underway with all of our sourcing for the midsize, so fully on track with where we want it to be at this point in time. And I also want to point out that we are very pleased with the bomb costs that we're currently seeing that it looks like that we can achieve. As a matter of fact, in many instances we are coming in below our. Own should cost calculations, which is very. Very good and speaks to our suppliers wanting to work with us. And your second question is also something that we see and it's very positive that many of the suppliers we are already working with for the Air and the Gravity are now also giving us relief on our pricing for the Air and the Gravity because of being awarded the programs for midsize. So all in all that is a very, very encouraging development right now and we're very pleased with the results.

Ben Callo - (00:32:36)

Great. And thank you for that. Could you just talk about maybe about how you guys are prioritizing capital between what the work you're doing in Autonomy and then also pushing forward with your technology manufacturing, just how you prioritize or if you don't look at it that way, then I'd love to hear that too.

Mark Winterhoff - Interim CEO - (00:33:04)

Yeah, absolutely. I mean that goes very much in line with our partnerships that we have announced. I mean they are capex efficient. We don't have to spend a lot of capex. That's exactly why we're doing it. We want to be able to provide really leading edge capability and features to our customers without having a very big CapEx outlay right now. That's why we did the Uber Neuro partnership for our B2B market, but also now the Nvidia partnership when it comes to the autonomy for, for consumer vehicles. So yeah, I mean that's exactly what. We are planning to do. And while we're doing that, we are monitoring also where it makes sense for us to you know, in the future invest capital. But at this point right now, given the, you know, it costs a lot of money and very big numbers of investments in order to do this completely in house. And that's why we, why we chose that path.

Ben Callo - (00:34:09)

Great, thank you guys very much.

OPERATOR - (00:34:13)

One moment for our next question and that will come from the line of Etay Michele with TD Cowan. Your line is open.

Etay Michele - (00:34:30)

Great, thank you. Good afternoon everybody. Maybe just to start a couple questions. On the L4 announcement with Nvidia. Can you maybe roughly share how you're thinking about the timeline for achieving level four on consumer owned vehicles and then for the midsize, do you expect that. The L4 hardware will be standard on. The vehicle and if so, does that have any impact on the projected price of the vehicle? Thank you.

Mark Winterhoff - Interim CEO - (00:35:01)

Yeah, so on the L4 side, I don't think that we have right now the number actually we have internally obviously a plan. But I would like to communicate that once we are a little bit further down the road in the project and we have the first dots on the board, what I can tell you is that the first result that we want to roll out of that partnership is basically an L2 version for gravity and also for the launch of midsize by. The end of next year. So that's the first step. And from there we will then roll out via OTAs additional updates. We will also already have all the hardware changes being made, but we will then roll out additional updates in order to get to L4 eventually, but I reserve the right now not to say it's end of next year or next. Year. But rather come with a date when we are very confident that we can hit it at the same time. Both Nvidia and ourselves have very ambitious targets. That's why we did this together with our, let's say accelerated engineering approach and their, let's say firepower when it comes to running the large models and calculations, we are confident that we can do. This sooner or later than later.

Etay Michele - (00:36:38)

Terrific. That's very helpful. And then just as a follow up. Maybe just on the outlook, with the uptick in production in Q4, how should. We think about just the deliveries in relation to that production level as well. As maybe the impact on kind of. Cogs per unit as you ramp production and of course ramp the gravity as well?

Mark Winterhoff - Interim CEO - (00:37:01)

Yeah, I can take it. And maybe afterwards you can also chime in to fish. But I mean, when it comes to. Deliveries, we're not guiding deliveries, but obviously we are expecting a significant ramp up of the deliveries in Q4 and the majority being the gravity. And when it comes to cogs, I mean, obviously, you know, the more volume we have in our installed factories with what we have there, the lower the cogs will become. But to think maybe you can.

Taufik - (00:37:37)

Yeah, I think you hinted at the key point. So it's really. I mean, when you think about the cogs, I mean, directionally, obviously we have a plan and the plan is that to continue progressing and reduce the Cox per unit compared to the performance from last year. So that was the plan. Directionally, we gave a direction when it comes to the gross margin, which is a good proxy to assess where the cogs will land. We didn't assume some of the headwinds that we had to deal with like the tax tariffs, which are obviously impacting the cogs this year. But directionally, the combination of the incremental volume resulting from the ramp of the gravity and some of the volume projections that we are currently assessing for next year, plus the benefits that we're getting from the bill of material and our suppliers that Mark has touched on will help us crystallize some of these improvements that we're aiming at in terms of cogs per unit in the short term. Terrific. That's all very helpful.

Etay Michele - (00:38:45)

Thank you.

OPERATOR - (00:38:47)

And one moment for our next question. And that will come from the line of Andre shepherd with Cancer. Your line is open.

Andre Shepherd - (00:38:58)

Hey everyone. Good afternoon. Congrats on the quarter and thanks for taking our questions. Mark, I was hoping to maybe get a sense of how the contract with the government of Saudi Arabia, you know, the one up for 50,000 plus another option for 50,000 if you can maybe give us an update on kind of where that stands. I think in the past we've said most deliveries to that agreement will be the gravity and then the upcoming mid size. So I know you're not guiding anything for 26, but should we expect some deliveries to that region next year or will that likely come after the completion of the IM2 facility? Thank you.

Mark Winterhoff - Interim CEO - (00:39:40)

Yeah, thanks for the question, Andres. Well, absolutely. I mean as of now already we are developing delivering vehicles to Saudi Arabia as part of that arrangement. And it was always planned to be on a certain level, lower level, when we only have the air, then we're adding to the deliveries when the gravity becomes available. I would say the big increase versus this agreement of 50,000 that we have. Already will though come with the mid size. But we will have higher deliveries to the government now in 2026 with a ramp up of the gravity. Absolutely.

Taufik - (00:40:29)

Got it. Okay, that's helpful. And then maybe one for Tafiq, you know. So you've extended your capital Runway, it looks like into first half of 2027. Now I'm curious if you can maybe refresh us on near term capital needs. Does that extension now in the draw facility, does that account for the maturity in September of 26 or how should we think about that? Thanks. No, that's two separate things. So the maturity, I guess you're referring here to the con. The convert will need to be refinanced and we have a plan, we have a plan for that. So it's not directly related to the ddtl. Got it. Okay, that's helpful. Thank you so much.

Andre Shepherd - (00:41:21)

I'll pass it on.

OPERATOR - (00:41:23)

One moment for our next question. That will come from the line of James Piccarellio with BNP Paribas. Your line is open.

Jake - (00:41:35)

Hey guys, this is Jake on for James. So first I just wanted to follow up on the Nvidia partnership. Obviously you guys set a pretty ambitious goal being the first company to roll out consumer level four capability. Virtually every major automaker has some form of advanced ADAS program. And after billions of dollars invested, no one has really been able to move past level 2 plus. So can you just provide some color on why you think you'll be able to succeed where everyone else has failed?

Mark Winterhoff - Interim CEO - (00:42:10)

Yeah, James, maybe I can take that. Well, I guess obviously a lot of things have changed in the, I would say in the recent year or so when it comes to approach to autonomy. I mean, and that's actually a good point that you're saying, because if we would have, there was a question earlier about capital investments around this topic. If we would have done what others have done earlier, like five years ago, we would have probably invested billions and nothing to show for. But the technology with the end to. End models and the compute power in the meantime has drastically changed. And the way both end to end models can be trained, this is now completely different than how it was two years ago. And so that makes us confident with everything that we are seeing right now. And obviously in our conversations and our testing with Nvidia, we see a path now to get there. And why we think we can be among the first. I mean, obviously we cannot guarantee this. We can only say that, you know, we are together with Nvidia, do everything to be the first. It has also a little bit to do with, you know, our vehicle cycle. Where are we in the with the development versus others that, you know, are further out until they even can do something like that. So, yeah, but given the drastic change in AI technology and approach to autonomy, that's what makes us confident that it's achievable now. Thank you.

Jake - (00:43:55)

And then can you just provide some color on the new vehicle order trends you've been seeing since the expiration of US EV tax credits in October? Obviously, the Air and the Gravity weren't eligible for the 30D credit, but it looks like roughly 65% of your US sales in the third quarter came from leases where people were able to take advantage of the 45W credit. Thank you.

Mark Winterhoff - Interim CEO - (00:44:26)

Yeah, well, I mean, what I can definitely say is that actually our delivery numbers in October, meaning first month of the fourth quarter, actually went up. And so that is a very encouraging trend. Compared to many of our, let's say, competitors that have EVs and ICE. There are several ones that reported, I think a drop of about 50%. Our numbers went up and so did our market share. And we credit basically our vehicles in particular now the gravity becoming more and more available with us ramping up the production with that. So we believe we are in a very good spot when it comes to sustaining the demand and then therefore the deliveries. And you know, we also believe that this is a passing phase, meaning we think that by beginning of next year the demand will normalize compared to what we are seeing right now or what. Others are seeing right now.

Jake - (00:45:39)

Thank you.

OPERATOR - (00:45:40)

Thank you. As a reminder, if you have a question, please press star 11. Our next question will come from the line of Tobias Bath with Rothschild, your line is open.

Tobias Bath - (00:45:52)

Hi, good evening. Thanks for your time. I've got three questions if that's okay. First one's for Tafiq. The gross margin rate when I adjusted for income from emission credit trading and Depreciation improved by 8 points quarter over quarter and was possibly flat on a pre tariff impact basis. My question is why wasn't leverage on volumes and the impact of products mix visible? So.

Taufik - (00:46:31)

The thing is that if you look at the production of Q3, the impact from mix was not as big as what we wanted it to be because we still in a ramping ramp up phase for the gravity. The numbers are improving versus Q2 but they are still at a meaningful level where they can significantly impact the volume. But the real reason behind this. Flat. Or lack of improvement is mainly related to the increase of inventory and the impairment associated with that. So we have increased inventories in preparation of the ramp up in Q4. We are in a loss making situation and we needed to impair these inventories and this is hitting the gross margin.

Tobias Bath - (00:47:26)

I see. Understand. Thank you. Mark, what is Lucid's plan regarding the localization of production of the mid sized platform, if at all? I appreciate that global automotive trade is in flux at the moment, but even an expansion of AMP1's capabilities would probably have a lead time of at least a year if you started tomorrow.

Mark Winterhoff - Interim CEO - (00:47:51)

Well, I mean we have already made preparations for that to build the midsize in AMP1. So I actually thought that we talked about this some time ago, but maybe not. I mean the M1 in Arizona is planned to produce the midsize as well. It's not only our plant in KSA. M1 is also already being prepared. We will have still to make some investments, but it's actually not that much. Much of the investments that are needed in order to produce the vehicle are already there. So that's the plan. I mean we're more talking about okay, when would we have to expand that? But for that we want to be very prudent and we want to see how everything goes before we pull the next phase. But yeah, it is definitely planned to be also built here in M1.

Tobias Bath - (00:48:54)

I see. Okay. And last question. The PowerPoint, it shows for the first time I believe a detailed render of the Atlas propulsion system. It's visually very impressive. It seems to show that there's a new inverter, redesigned thermal management system and I know that the Atlas propulsion system was mentioned in your prepared remarks, Mark. But I wondered if I could ask.

Mark Winterhoff - Interim CEO - (00:49:21)

For even more of an update on the atlas, please, given its importance. Yeah, well, I mean what I can say is definitely that, you know, it's totally on track. So that's why we are now starting to leak or not leak actually a little bit of information but I mean it's coming out actually really great. I mean it's from a, from a cost perspective, it's a material change and we will also share soon probably at the investors day that we are planning the details how far below of our current generation the cost is. We have much fewer parts, highly integrated as you just mentioned, the inverter in everything. So weight is lower, efficiency is even higher from what we have right now. So we are very, very, very pleased with that. And we also have different versions where we have also versions of the atlas that doesn't have, doesn't need any rare earth. So I mean we're really very, very convinced that this is a big step forward for us.

Tobias Bath - (00:50:34)

Can I ask why not do all of the atlas without rare earth given it has caused problems for lucid and the broader industries the last six months or so.

Mark Winterhoff - Interim CEO - (00:50:48)

That will be, that will be let's say the long term plan. But certain applications, certain power. Requirements for. Certain trims require these at least at this time still permanent magnets. But that is the goal that we obviously try to figure that out. And again maybe in the investor day that we are planning, I mean Imad will definitely be there and he can probably tell you in a short explanation for over about two hours what exactly we are doing there. But yeah, I mean happy to provide further insights on that.

Tobias Bath - (00:51:30)

Great, I'd like that and I'm sure other people would too. Great chat. Thank you.

OPERATOR - (00:51:36)

Thank you, thank you. As I'm showing. No further questions in the queue at this time. This concludes today's program. Thank you all for participating. You may now disconnect.