This is Part One of a two-part write up covering Lucid Motors
The latest salvo in the vehicle electrification wars comes from Lucid $LCID, who, as of the end of October, has begun delivery of the first couple dozen of its Lucid Air Dream Edition electric sports sedan—priced at $169,000.
The company, helmed by former Tesla chief engineer Peter Rawlinson, is drawing eyes for its svelte looks and for its remarkable technical achievements. The sedan comes in two configurations (range and performance) and boasts performance of up to 1111hp for the performance version and a sub-three second zero-to-sixty time for both editions. The long range version features an EPA-rated 520 miles of range, besting the Tesla Model S Long Range by more than 100 miles and leading the market in a figure that matters deeply to consumers.
The company was founded in 2007 under the name Atieva as a battery maker. It changed its name in 2009 and devoted itself to manufacturing electric cars. Lucid nearly went bankrupt in 2018, but was saved by a $1 billion cash infusion from the Saudi Arabia sovereign wealth fund. Lucid went public via SPAC earlier this year and now reports a market capitalization of nearly $80 billion.
Of late, the company’s price has seen a hike after it made delivery of its first vehicle—a considerable hurdle for any new automaker.
Market
Thanks to government incentives and product innovations, the electric vehicle market is heating up. While electric vehicle sales made up a total of 2.5% of the global share of vehicles sold in 2019, that leaves a lot of the market left to go. Bloomberg New Energy Finance predicts that by 2025, EVs will make up 10% of global vehicles sold. By 2030 this figure will reach 28%, and 58% in 2040. Carmakers are expected to sell 66 million vehicles—including both internal combustion and electric—worldwide this year, according to Statista.
Like Tesla before it, with its initial offering, Lucid plans to capture the high end of the market and move downmarket as it grows. At $169,000, the Lucid Air Dream Edition is playing in rarefied space, sitting well above even the top trim Tesla Model S Plaid ($129,990). At its current price, the Lucid Air competes more directly with the Porsche Taycan, whose top trims, the Turbo and Turbo S, start at $152,000. While the Taycan is lauded for its driving performance, its EPA range is less than 200 miles, an important threshold for many customers.
Other competition at this price point includes two-seater internal combustion supercars like the Porsche 911, the Aston Martin Vantage, and the four-door Porsche Panamera.
After it delivers 520 Lucid Air Dream Editions, the company will move downmarket. It plans to offer a $70,000 (with U.S. federal tax credit) version of the Lucid Air by 2022. It plans to offer an SUV and truck in the near future and sell 500,000 cars by 2030.
Once it achieves that price point, the Lucid Air will be more comparable to the Model S, of which Tesla sold 20,301 in 2020. Tesla, which outsells all other global EV makers significantly, offers a downmarket sedan (the Model 3), and two SUVs (Models X and Y) and is planning on offering a truck any year now, sold nearly 500,000 vehicles in 2020.
The EV market continues to see new entrants all the time, but Lucid is well positioned. No foreseeable offerings challenge the company’s dominance in technology and its early focus on high-performance electric sedans. Rivian is entering the market with a pickup truck and luxury SUV. Mercedes-Benz’s EQS—a ground-up electric luxury sedan—is expected later in 2021 and will start at $102,310. The EQS is expected to challenge Lucid on luxury, but at an estimated 350 mile range, will likely not challenge the company on performance.
This is a freeform daily newsletter about the transportation industry: Planes, Trains, and Automobiles. I will take shallow dives into topics that I think are interesting—and that offer valuable lessons. These will include looks at startups in the space, historical explorations, market analyses, company and personal profiles, interviews with industry players, and occasional personal essays.
This week I’m starting with breakdowns of startups in the automotive space. Stay tuned for the next one! Please note: nothing published here is to be interpreted as investment advice. The author has a long position in Lucid Group.
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Drive well,
DS