Andrew Perugi

Andrew Perugi sought details on the expected margin cadence for 2026, asking for a bridge of moving pieces including increased production, ramp cost headwinds, and commodity price trends (steel, lithium, memory). He also inquired about Lucid's growth strategy and expectations for the European market, including potential unit breakdowns between Europe and the U.S., considering the competitive landscape with Chinese OEMs.

Answer

CFO Taoufiq Boussaid explained that gross margin is expected to improve in 2026 due to volume-driven fixed cost absorption, ramp efficiency improvements (productivity, First Time Through, quality, reduced rework/scrap), and ongoing bill of material cost reductions for Air and Gravity. He acknowledged supply chain agility in managing headwinds. Interim CEO Marc Winterhoff stated that while Europe is a growth strategy, significant growth is not expected until the mid-size vehicle is available, as current models are large for the European market. He noted that Chinese OEM growth in Europe is primarily in low-cost vehicles, and higher-priced Chinese brands are not performing as well.

Andrew Peruggia with Morgan Stanley sought details on the expected gross margin cadence for 2026, asking for a bridge of the moving pieces, including increased production, potential ramp cost headwinds, and commodity price impacts (steel, lithium, memory). He also inquired about Lucid's growth strategy and expectations for the European market, particularly in light of Chinese OEM activity.

Answer

Taoufiq Boussaid, CFO, projected meaningful gross margin improvement in 2026, driven by volume, fixed cost absorption, ramp efficiency, productivity gains, quality improvements, and bill of material optimization. Marc Winterhoff, Interim CEO, explained that while Europe is a growth focus, significant growth is not expected until the mid-size vehicles, which are better suited for the European market, become available. He noted that Chinese OEM growth in Europe is primarily in low-cost segments.