Here Is Why Lucid Group Can't Afford To Sell Its New Gravity SUV at $80,000 Without Additional Saudi Cash

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it is stated that there is a great deal of clearness in hindsight. Lucid Group ought to have begun retailing its recently revealed Gravity SUV a lot faster than the money screen that is the Lucid Air electrical sedan. The SUV intends to strike the market's sweet area in terms of cost and facilities, and may even have actually ended up being the embattled business's lifeline in today's rough waters. The Gravity electrical SUV may yet change into Lucid Group's much-needed remedy, however not without a considerable money infusion from the Saudis.

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Lucid Group lastly revealed its 3-row all-electric high-end SUV a couple of hours back. Called Gravity and beginning at simply around $80,000, the business's newest offering boasts a spectacular style and an impressive series of over 440 miles.

Lucid Group states that it created a brand new "ultra-compact" battery platform for the Gravity SUV. According to the business's claims, the brand-new platform is a"bit over half the size "of the ones utilized in equivalent offerings from other business. Peter Rawlinson, the CEO and CTO of Lucid Group, kept in mind the other day:

"Its smaller sized, lighter, and greater innovation battery pack suggests less rare-earth elements and minerals, less energy to charge, less electrical power taken in, less pressure upon the grid, and a lighter weight and more vibrant automobile."

Naturally, the SUV leverages Lucid Group's distinct 900V electrical architecture that includes a series of around 200 miles from simply 15 minutes of charging at a 350-kWh fast-charger.

This is all well and good. As really plainly flagged by an ex-Goldman i-banker in the above X post, the timing of Gravity SUV's launch might not have actually been more unhealthy, particularly in the light of Lucid Group's decreasing money resources.

As we've kept in mind in a previous post, Lucid Group was burning around $1 billion in money every quarter towards the start of 2023. Recently, the business has actually handled to reduce its money burn rate to around $700 million per quarter. The primary issue for the business is the slow uptake of the expensive Lucid Air sedan which keeps its sales volume low and stock raised.

Now, with money resources of simply around $4.4 billion, Lucid Group can't pay for to rejig its assembly line for another design without sustaining considerable extra capital and operating expense, specifically as Gravity's production expenses are most likely much greater than the $80,000 price for the base variation.

With a market capitalization of simply around $10 billion, an extra capital raise from the equity market would declare considerable dilution for existing financiers and is most likely to deal with extreme opposition. The only possible option for Lucid Group is to tap the cash-rich coffers of its Saudi benefactors. The Saudi PIF is the embattled business's biggest investor and the Saudi state itself has actually played an essential function in propping up Lucid Group's flagging order book by inking a decade-long supply order for up to 100,000 EVs in return for a devoted EV production center, called the AMP-2, in the King Abdullah Economic City (KAEC) in Jeddah.

By pricing the base version of the Gravity SUV at $80,000, Lucid Group is lastly playing its cards ideal and in tandem with the dominating state of mind in the market that has actually been scarred by a full-fledged cost war started by Tesla. The business's survival, nevertheless, now depends more than ever on the largesse of the Saudis.

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