Funding and Cash Burn
Q: How will cash burn affect funding needs through next year?
A: Lucid expects to spend around $1.5 billion on capital investments, including expanding the Arizona facility from 30,000 to 90,000 units and building the AMP-2 facility in Saudi Arabia. These investments will increase cash burn, but the company is in a strong financial position due to support from the Public Investment Fund (PIF) of Saudi Arabia. Management will raise capital opportunistically as needed and is confident that the existing liquidity will see them past the start of production of the Gravity SUV and well into next year.

Production and Sales Momentum
Q: Can you quantify the sales momentum you've mentioned?
A: Sales momentum is strong, with growth of approximately 37% from 2022 to 2023 and nearly 40% growth when comparing Q1 2024 to Q1 2023. The company is balancing production with deliveries to avoid excessive inventory and working capital tied up, taking prudent management steps.

Gross Margin and Cost Optimization
Q: What are you doing to improve gross margins amid pricing actions?
A: Despite pricing actions, gross margin improved due to cost optimization initiatives, including reducing bill of materials (BOM) costs and logistics expenses. The company is working hard with suppliers and internally to bring costs down, especially in battery technology and logistics. In Q2, gross margin is expected to remain flat despite the full impact of pricing actions, with some negative impact in the second half due to inventory increases and higher depreciation, but significant improvements are expected next year as Gravity production ramps up.

Gravity Launch and Supplier Readiness
Q: How is supplier readiness progressing for the Gravity launch?
A: Lucid is closely managing supplier readiness for the Gravity SUV, synchronizing product development, factory build-out, and supply chain readiness. They have hundreds of suppliers globally and are conducting supplier quality assurance activities to ensure readiness for production starting late this year.

Future Products and Reservations Policy
Q: Will you provide more details or take reservations for future models early?
A: Lucid believes taking reservations too far in advance is not in the best interest of consumers and does not contribute meaningful liquidity. They prefer to wait until they can provide transparent and realistic product specifications closer to production before taking reservations, as they are doing with the Gravity SUV.

Partnership with PIF and Funding
Q: How does your relationship with the PIF support your funding needs?
A: Lucid has a special relationship with the PIF, which goes beyond financial investment. The PIF is invested in Lucid's success as part of Saudi Arabia's Vision 2030 to transition to a sustainable economy. The PIF has shown steadfast support in every funding round to date, putting Lucid in a strong financial position.

Saudi Arabia Deliveries and Demand
Q: Can you quantify deliveries to Saudi Arabia and future expectations?
A: Deliveries in Q1 exceeded 500 units, and there is strong demand for Lucid's products in Saudi Arabia, particularly for the upcoming Gravity SUV. The company is not currently guiding on future delivery splits to Saudi Arabia.

Variable Margins and Scale Impact
Q: Will vertical integration impact variable margins in the near term?
A: While vertical integration and low volumes may impact variable margins negatively in the near term, margins are expected to improve with increased scale. As production volumes increase, fixed costs are spread over more units, improving contribution margins.

Third-party Sales of Hardware/Software
Q: Are there bottlenecks in closing deals for third-party hardware/software sales?
A: Working with traditional automakers involves a natural cadence and time scale. Lucid is making progress but notes that patience is required when engaging with large OEMs.