Lucid Group, Inc. — FY2023 Form 10-K
Reporting period: Fiscal year ended December 31, 2023. This is an annual filing; the supplied text does not provide a separate Q4 income statement or clearly state full-year vehicle production and delivery totals.
Business context
Lucid designs and manufactures luxury electric vehicles and related powertrain and battery technology. Its principal vehicle was the Lucid Air. The company began semi-knocked-down assembly in Saudi Arabia in 2023, while the Lucid Gravity SUV was scheduled to begin production in late 2024 and its Midsize platform in late 2026. Lucid sells directly to consumers and reported 45 studio and service-center locations at year-end.
Key financial results
| Metric | FY2023 | FY2022 | Change |
|---|---|---|---|
| Revenue | $595.3 million | $608.2 million | Down 2% |
| Cost of revenue | $1.936 billion | $1.646 billion | Up 18% |
| Gross loss and gross margin | $1.341 billion; approximately -225% | $1.038 billion; approximately -171% | Gross loss widened |
| Operating expenses | $1.759 billion | $1.556 billion | Up 13% |
| Operating loss | $3.100 billion | $2.594 billion | Loss widened |
| Net loss | $2.828 billion | $1.304 billion | Loss widened |
| Net loss per share, basic | $1.36 | $0.78 | Loss per share increased |
Revenue declined despite higher vehicle deliveries, primarily due to product mix, pricing and incentives. Cost of revenue rose with vehicle manufacturing and sales and inventory and firm-purchase-commitment write-downs. The filing reports $926.9 million of such write-downs for 2023, compared with $569.5 million in 2022. Research and development expense was $937.0 million, up 14%; selling, general and administrative expense was $797.2 million, up 9%. Lucid recorded $24.5 million of restructuring charges following a workforce-reduction plan.
Net loss growth also reflects a much smaller non-cash gain from revaluing warrant liabilities: $86.9 million in 2023 versus $1.254 billion in 2022. Interest income increased to $204.3 million from $56.8 million.
Cash flow, liquidity and obligations
- Cash used in operating activities was $2.490 billion, versus $2.226 billion in 2022. Cash used in investing activities was $947.0 million, versus $3.682 billion; the decrease mainly reflected investment maturities and sales. Financing provided $3.071 billion, primarily reflecting 2023 equity offerings.
- Cash, cash equivalents and investments totaled $4.321 billion at year-end, compared with $4.443 billion in 2022. Cash and cash equivalents alone were $1.370 billion. Current assets were $4.757 billion and current liabilities were $1.008 billion.
- Long-term debt carrying value was $1.997 billion, primarily the $2.013 billion principal amount of 1.25% convertible notes due December 2026. Lucid also had $72.5 million outstanding under its Saudi GIB facility. No borrowings were outstanding under the $1.0 billion ABL facility; reported availability was $413.4 million after the borrowing base and letters of credit.
- Lucid said its existing liquidity and projected operating cash flows were expected to provide adequate liquidity for at least the next 12 months. It anticipated approximately $1.5 billion of capital expenditures in FY2024. Non-cancellable long-term commitments were approximately $4.9 billion, primarily for inventory components and battery cells.
Material changes and notable developments
- Revenue fell 2% while cost of revenue increased 18%; inventory and purchase-commitment write-downs rose to $926.9 million from $569.5 million.
- Operating cash use increased by $263.5 million. Financing cash inflows increased substantially following a $1.2 billion public stock offering and a $1.8 billion private placement to controlling stockholder Ayar in June 2023.
- Lucid entered a strategic technology and supply arrangement with Aston Martin. It received $33 million in initial cash and 28.35 million Aston Martin shares, valued at $81.5 million at year-end; additional cash payments of $99 million are scheduled over three years. Aston Martin committed to an effective minimum $225 million spend on powertrain components.
- The Saudi government purchase agreement provides for a minimum of 50,000 vehicles and an option for up to 50,000 more over ten years, subject to terms that permit reductions in the minimum for certain unaccepted or late orders. Lucid recognized $43.7 million of vehicle sales under the agreement in 2023; the government-related receivable was $35.5 million at year-end.
Outlook, risks and contingencies
Management highlighted continued substantial losses, negative operating cash flow, high investment needs and uncertainty about achieving production scale and profitability. The company relies heavily on the Lucid Air and faces competition, cancellable customer orders, price pressure, supply-chain and single-source supplier risks, and potential constraints on future financing. Management expects production to remain significantly below installed capacity in the near term.
Risks include execution of the Gravity launch and manufacturing expansion, demand and pricing, supplier availability and costs, and international operations. Lucid said portions of its Arizona manufacturing facility were not built to contractual requirements and require remediation expected to entail significant costs; it did not expect production to be taken offline, but recovery from contractors is uncertain. The company also disclosed prior vehicle recalls and warranty-estimation uncertainty.
Pending matters include securities and derivative litigation, an appeal in litigation concerning direct sales in Illinois, and an opposition to Lucid’s “Gravity” trademark. The company stated it did not consider the pending matters material or likely to cause a material adverse effect, while noting litigation outcomes are uncertain. The SEC informed Lucid in April 2023 that it had concluded its investigation related to the business combination and did not intend to recommend an enforcement action.
Other investor considerations include PIF/Ayar’s 59.8% ownership at year-end, related-party relationships and Saudi facility support, and potential dilution from equity compensation and securities. Independent auditors gave unqualified opinions on the financial statements and internal control over financial reporting; management also concluded controls were effective at year-end.
Important facts for investors to verify
- 2023 vehicle production, deliveries, average realized prices and order cancellations; the supplied filing text does not clearly state annual unit totals.
- Whether inventory and purchase-commitment write-downs, per-vehicle costs and gross margins improve as production scales.
- Cash-burn trajectory, the availability and conditions of credit facilities, and funding needs beyond management’s stated 12-month liquidity outlook.
- Timing and cost of Arizona facility remediation, Gravity production readiness, and Saudi CBU expansion milestones.
- Realized deliveries and collections under the Saudi purchase agreement, and revenue recognition and component orders under the Aston Martin arrangement.
- Exposure under the $4.9 billion purchase commitments, warranty and recall costs, and pending litigation and trademark proceedings.