Lucid’s Gravity SUV arrives with excessive expectations, and massive dangers

Lucid Motors will get rave opinions from critics. However it’s sorely missing prospects.

That is an issue the corporate cannot afford.

The Arizona-based EV maker has top-shelf tech, deep-pocketed backers, and extremely praised vehicles. Nonetheless, it has struggled to fulfill manufacturing targets, and has been unable to steal the highlight away from established luxurious manufacturers with century-old pedigrees.

Lucid is ramping up manufacturing of its high-end, three-row, Gravity SUV, although it has bought only some hundred models to date in 2025. The Gravity’s manufacturing ramp has confronted a slew of challenges, primarily provide chain shortages.

But the corporate already has plans for an additional car aimed extra on the center of the market, the place it might compete with the top-selling Tesla Mannequin Y SUV. And it is investing in self-driving vehicles for customers whereas engaged on a robotaxi fleet with Uber and self-driving tech maker Nuro.

Within the course of, Lucid is burning by means of some huge cash. The corporate’s third-quarter outcomes had been worse than Wall Road anticipated, with a web lack of near $1 billion.

“Their gross revenue has been getting sort of worse,” mentioned Tom Narayan, an analyst at RBC Capital Markets. “Lots of people are doing the maths. How lengthy can the corporate maintain shedding money?”

Including to its challenges is a more durable surroundings for all EV producers. Demand has fallen in need of expectations, and plenty of automakers are pulling again. EVs have misplaced key assist from the federal authorities, together with a $7,500 tax credit score, funding for charging, and restrictions on state degree packages that incentivize automakers to supply zero-emission automobiles.

A ‘improbable automotive’

Lucid’s first car, a sedan name the Air, is the most well-liked car in its section, based on Cox Automotive. By means of the third quarter, it was the third best-selling full-size luxurious sedan, and the highest promoting electrical one, based on the corporate. The Air is incessantly a “critic’s choose.” No different EV can contact the 512-mile vary of the Air Grand Touring, one in all its high trim ranges.

Final yr, Lucid delivered 10,241 automobiles, the vast majority of which had been Air sedans, a 71% improve from 2023. U.S. EV chief Tesla delivered 1.8 million.

Sadly, sedans have constantly in comparison with SUVs, crossovers, and pickups–which now all however dominate the roads. Of the highest 10 best-selling fashions within the U.S., seven are from these three segments, based on Edmunds.

“It was a improbable automotive,” mentioned Sam Abuelsamid, vp of market analysis for Telemetry. “It nonetheless is a improbable automotive. However it got here to market at sort of the incorrect time.”

In 2023, Tesla’s Mannequin Y was the best-selling car on this planet, based on JATO Dynamics. It bought greater than 265,000 models within the U.S. by means of the third quarter of 2024, based on Cox Automotive, about 100,000 greater than the Mannequin 3 sedan. Amongst EVs, the Mannequin 3 is unusually fashionable for a sedan. Behind the 2 Tesla Fashions, the three automobiles that spherical out the highest 5 are crossovers — Chevrolet Equinox, Ford Mustang Mach-E and Hyundai Ioniq5.

The Mannequin S, the Air’s closest Tesla competitor by way of dimension, efficiency, and value, bought simply over 4,500 models in the identical interval.

The very best quantity EVs, such because the Mannequin Y, are additionally cheaper than the Air, which begins simply above $70,000 and runs as much as a few quarter of 1,000,000 {dollars}. The Mannequin 3 is sort of half that. The common EV transaction value in November was simply above $59,000, based on Cox Automotive.

“There’s simply not sufficient of a marketplace for these premium electrical sedans proper now,” Abuelsamid mentioned.

Lucid bought barely greater than 300 Gravity SUVs within the US by means of the third quarter of 2025, based on Cox Automotive. Just like the Air, the Gravity has a excessive price ticket. Nonetheless, the corporate has mentioned the Gravity stands to draw six instances as many shoppers because the Air.

“We’ll see if that is the case,” mentioned Narayan. “The newest numbers I’ve seen present it sort of equalizing the gross sales of sedans.”

Lucid interim CEO Mark Winterhoff informed CNBC in an interview that the corporate has seen “an excellent uptick in demand with regards to the Gravity as in comparison with the Air.” He added that almost all prospects are configuring the automotive in ways in which run the worth up above $100,000.

Manufacturing bother

Demand could be robust, however Lucid additionally has to get the car into prospects’ fingers. Gravity’s launch earlier in 2025 was beset by shortages of key supplies like magnets, aluminum, and chips, Winterhoff mentioned on the corporate’s third-quarter earnings name.

“We have not been capable of produce as many as we wished up till this level,” Winterhoff informed CNBC. “We’re very assured proper now that we solved these issues.”

Deliveries have risen for seven straight quarters, culminating in a 47% % soar over the third quarter of 2024. Lucid has added a second shift to the ultimate meeting part of its manufacturing unit to fulfill demand.

The corporate mentioned demand has been resilient regardless of worries the EV market is stalling after the federal EV incentive ended on Sept. 30.

“In October, our supply numbers went up,” Winterhoff mentioned. “Whereas in lots of different pure EV gamers and even EVs for incumbent gamers that even have [internal combustion] automobiles, the deliveries dropped down drastically.”

Nonetheless, analysts say it is a more durable time to make EVs than it was when Tesla was ramping up the Mannequin 3 and Mannequin Y.

“They had been the one sport on the town,” Narayan mentioned. “So there wasn’t competitors there. Additionally they benefited from battery costs falling considerably. They usually acquired lots of authorities assist. As we speak we’re in a really totally different world.” 

If gross revenue does maintain getting worse, the corporate will ultimately should return to traders, Narayan mentioned. Lucid is at present about 55% owned by the Saudi Public Funding fund, based on FactSet.

Within the third quarter, Lucid and the PIF agreed to extend a delayed draw time period mortgage credit score facility from $750 million to roughly $2 billion. A DDTL is a mortgage the corporate can draw on over time, reasonably than . That brings its complete liquidity to $5.5 billion. The corporate has mentioned it has sufficient to get by means of the primary half of 2027.

“Up to now, the Saudis have put many billions of {dollars} into Lucid, and so they’ve been very affected person by means of Lucid’s struggles as they attempt to ramp up manufacturing and gross sales,” mentioned Abuelsamid. “It is unclear how lengthy they are going to proceed to be affected person.”

The corporate additionally acquired a $300 million funding from Uber in September to develop a platform for robotaxis with a 3rd associate, autonomous driving tech developer Nuro. On high of that, Uber plans to purchase 20,000 Gravity automobiles for the self-driving fleet.

Individually, Lucid has a partnership with Nvidia to develop what it calls the “the primary true eyes-off, hands-off, and mind-off (L4) client owned autonomous car.” L4 means Stage 4, practically the best degree of autonomy within the present system devised by the Society for Automotive Engineers.

“You might want to make investments first and you then reap the advantages in a while,” Winterhoff mentioned. “And due to this fact we have now to do lots of issues in parallel.”

Smaller SUV on the best way

Regardless of Gravity’s manufacturing challenges, the corporate is already at work on its subsequent car — a mid-size crossover priced nearer to the business common of about $50,000.

This might enhance volumes, however deepen losses.

“If gross revenue is unfavourable at a car transacting round $100,000 or extra on common, what Lucid’s Air and Gravity are at present going for, what is going to it appear like when the corporate is promoting a car that’s nearer to half of that?” Narayan mentioned.

“One reply might be, nicely, it is a a lot greater scale, so you could have higher working leverage,” Narayan mentioned. The argument, he mentioned, is that Lucid’s expertise permits it to squeeze much more vary out of a battery than opponents.

“Our automobiles are far more environment friendly by 30% to 40% than the competitors, which implies smaller battery use smaller battery to attain the identical vary,” mentioned Emad Dlala, senior vp of engineering and digital at Lucid. “Meaning a decrease [bill of materials] value. Meaning higher margins.”

Dlala mentioned the Lucid Air Pure has a battery dimension of a Tesla Mannequin Y, however has a variety of 420 miles, a few hundred miles greater than the Tesla Mannequin Y.

Lucid says the cash it is spending goes to growing an array of applied sciences and manufacturing processes which might be onerous to repeat.

“Lucid has about over 10 years of powertrain historical past,” Dala mentioned. “This did not come in a single day. There’s numerous IP patented applied sciences throughout powertrain, car and software program,” which result in “positive factors in effectivity throughout the board,” he mentioned.

That even extends to the best way the vehicles are made.

“We use manufacturing processes right here that nobody else within the business makes use of in powertrain,” mentioned Adrian Value, senior vp of operations at Lucid.

“Lucid could be very extremely vertically built-in,” he mentioned, which means it brings a lot of the car-making course of in home. “We’ve got much more of our personal subassemblies. That is additionally how we get the efficiency that different individuals do not. Quite a lot of that engineering is outsourced by different main automakers. Not solely can we do the engineering, however we additionally do the manufacturing, and we will management a few of the Lucid secret sauce by doing it in-house.”

One space the place Lucid seems to lag opponents is model consciousness.

“Lots of people do not know what Lucid is,” Narayan mentioned. “That is the largest, I believe, hurdle that they’ve.”

The corporate has given extra thought to advertising and marketing, and elevating its profile within the luxurious market, the place it is going up in opposition to names like Mercedes-Benz, Porsche, and BMW.

“The client of a luxurious model, sometimes, they like issues like heritage,” Narayan mentioned. “The model issues. So, you realize, how do you create that from scratch?”

“We’re very well-known and have tons of accolades within the motor press, Winterhoff mentioned. “So everyone who’s concerned with vehicles is aware of about it. However that is not the vast majority of car patrons.”

So, it has begun a brand new advertising and marketing and promoting technique for the Gravity, with Hollywood actor Timothee Chalamet as its first “international model ambassador.”

“We’re shifting from specializing in our automobiles, in regards to the capabilities of our automobiles, to what does it imply to personal a Lucid and what does it say about you?” Winterhoff mentioned.

Winterhoff mentioned he is assured the corporate can efficiently ramp the Gravity, whereas constructing and ultimately delivering its mid-size car.

“That’s the level the place I believe this can be a sustainable enterprise going ahead,” he mentioned. “We’ve got a transparent plan additionally to profitability.”

Watch the video to get an unique inside have a look at Lucid’s Gravity manufacturing and to seek out out what’s subsequent for the automaker.