This is Part Two of (what has become a) three-part write up covering Lucid Motors. Part One can be found here.
Product
The company’s launch vehicle, the Lucid Air, is a super-fast sports sedan capable of traveling from zero-to-sixty at 2.5 seconds with a top speed of 168 mph. The per unit cost of making the Lucid Air, whose starting version will be priced at $169,000, and whose base price will later lower to the mid-$70,000 range with federal tax credits, is unknown. Over time, it’s reasonable to expect a 30% unit margin, which is what Tesla is estimated to have achieved. Note that Tesla has been delivering vehicles for nearly a decade.
The Lucid Air is able to achieve its industry-leading performance figures with several innovations for EV hardware. The first is miniaturization. Peter Rawlinson, the company’s CEO, sometimes brings his company’s motors into pitch meetings carried in a standard suitcase to demonstrate their small size. In fact, the company’s entire electric powertrain has been miniaturized. Thanks to the lower weight, the Lucid Air achieves class-leading efficiency, with the ability to squeeze 4.6 miles per kilowatt-hour out of its 118kWh battery. Tesla’s Model S, the previous class leader, achieves efficiency of 3.9 miles per kWh.
The component miniaturization effort of the Lucid team has also allowed it to design a roomier interior and feature more cargo room than it would have otherwise. All of this contributes to a luxury feel in the Air’s cabin which has received acclaim by reviewers—especially in contrast to Tesla’s Model S, which has often received criticism for its spartan feel and subpar quality fit and finish.
Featuring a soaring glass roof, Lucid’s interior design utilizes recycled materials and mixes and matches materials to create innovative colorways designed to evoke different aspects of California’s natural environment. The company’s focus on driver touchpoints—and what has been called a more accessible and less distracting approach to technology in the cabin—again contrasts with Tesla’s minimalist approach.
Handling has traditionally been a challenge for big-battery electric sports sedans. Chassis engineers must perform the challenging task of making the car—which, thanks to the weight of its battery, weighs much more than a traditional internal-combustion vehicle, feel many hundreds of pounds lighter than it actually is. Where big-battery electric sports sedans have also received criticism for their handling—the Model S, in particular, has been derided for its lightning fast straight-line performance without the handling and brakes necessary to back it up—the Lucid Air has received warm reviews. MotorTrend magazine even named the Lucid Air its car of the year for 2022.
…you'll find no complaints from us behind the wheel. Steering is light and communicative, and the Air's ride is composed without being punishing over poor pavement.
–MotorTrend
Thanks to its deep industry expertise, led by Peter Rawlinson at the top and Peter Hochholdinger—Lucid’s VP of manufacturing, both Tesla veterans, Lucid is also placing an early focus on manufacturing precision. This is another point where its rival Tesla has long struggled—and users still report panel gaps and fitment issues. Both Rawlinson and Hochholdinger are well aware of the challenges of ramping up manufacturing and have committed to ensuring that even the earliest examples of the Lucid Air are well put together.
Lucid’s vehicles are manufactured at its plant in Casa Grande, Arizona. As further deliveries are made through Q4 and Q1 2022, we will be able to get a better sense of whether the company is able to follow through on this commitment. It is a pivotal challenge for any new auto manufacturer—and ramping up to its targeted 500,000 units a year while maintaining quality is an uphill battle. Even Tesla—with four global Gigafactories—has been unable to keep up with a recent surge in demand. Deliveries timelines for some versions of its Model S and X have now slipped all the way to 2023.
Another important differentiator in the EV space is charging infrastructure—this is one place where Lucid lags. Tesla will continue to lead the market with its robust network of 30,000 superchargers across the globe. Lucid will use the Electrify America network within the US—which expects to have 3,500 chargers across the country by the end of 2021. The experience of charging on the Electrify America network is reported to be less seamless than the Tesla experience, with frequent outages and many units incapable of supporting the Lucid’s fast charging times.
Lucid does not plan on building a charging network of its own at this time.
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 holds a long position in Lucid Group.
Thanks for reading—and please let me know if you have any feedback or if there is anything you would like to see me cover.
Drive well,
DS