This reflects certain deferrals in our capital outlay from last year. The AMP-2 expansion for completely built-up unit, the completion of the AMP-1 Phase II expansion for stamping pin-sharp powertrain on-premise and Body in White for the Gravity SUV program. From a product perspective, we are scheduled for start-up production of the gravity SUV program in late 2024 and scheduled for start-up production of our high-volume midsized platform in late 2026. Our performance this quarter continues to demonstrate the positive momentum, the expansion of our total addressable market, the pure upcoming Gravity SUV and midsize programs provides further opportunities, and I feel very good about our cost optimization strategies and see many opportunities ahead.
With that, let me turn it back to Maynard to get to your questions.
A – Maynard Um: Thanks, Gagan. We’ll now start the Q&A portion of the call. Before we take questions from those on the phone, I want to post some questions that our retail investors sent into the Say technology platform. Our first question is from Anav. Can you elaborate on Lucid’s pathway to profitability? What are the key milestones and challenges the company anticipates facing in reducing production costs and achieving positive gross margins?
Peter Rawlinson: Thank you, Anav. It’s all about scale. The more we can scale, the more cars we make, the more volume we can spread the fixed cost, that’s the cost of our investment, our incredible factory and facility, our long-term investments across the sale of each car. So, how do we do that? We need to continue growth of Lucid Air sales right now. And right now, we’re trending up 40% from Q1 this year relative to last year. Now in a similar period, we see the sales of Tesla Model S down very, very considerably. We’re outselling key competitors like Porsche Taycan. It’s a about scale. And the next thing on that scale path is to get gravity into production that will have a multiplier effect upon the market size and gravity is scheduled for startup production late this year.
And then beyond that, we need to get a midsized vehicle, our volume vehicle price at around, we believe, about $48,000, get that into production and is on schedule for production for late 2026. And I’ve got to tell you just how much our current finances are truly dominated by the major investments that Lucid’s made for its future. Things like the expansion of our Arizona factory, we’ve got nearly 4 million square feet in there. General Assembly is ready. We’re putting the robots in now for building the body structure for Gravity. We’ve invested in a huge stamping line, we’re integrating logistics, we’re bringing a powertrain facility right under that one roof, and that’s exactly where we’re going to make the units that we supply to Aston Martin, all under one roof.
And I think there are some photographs in the presentation, Maynard and videos on our social media pages. And then the other thing is the real big advantage that Lucid’s got over everyone else is efficiency. And I don’t say that as an engineer, I say that as a businessman. The efficiency means we can make cars with smaller batteries with less batteries than anyone else. That means because the battery is the most costly part of an EV, we will be able to make cars more cost effectively and therefore, with more profit margin than anyone else, which leads perfectly to your role, Gagan.
Gagan Dhingra: Yes. Thank you, Peter. And two things more scale and continuous cost optimize initiatives. With scale, we’ll be able to significantly bring down, number one, the fixed cost per vehicle, including depreciation of the investment we made in the factory, which is a big part of our cost of goods sold. Number two, labor and overhead and you get more efficient when you work at the optimal capacity. Number three, also the BoM cost as volume provides a significant cost leverage. Now let me add to the cost optimization initiatives that we have been working very aggressively, and I’m personally leading this on a daily basis with big support from Peter. As I said in the prepared remarks, we were able to reduce the bill of materials, which is the cost of the parts that go into the car and also logistics costs significantly this quarter. We have also identified additional opportunities to execute throughout the year. Thank you.
Maynard Um: Thanks. Our next question from the platform is Jason [ph]. The stock price keeps dropping. What measures will you be employing to bring the price up considerably? It seems product output is extremely low.
Peter Rawlinson: Thanks, Jason. Now look, our share price, again, it’s all about volume. So forgive me, because the share price and the part of profitability are interwoven. Against a broader EV market, where other makers products are really down, we’re up, 40% on deliveries year-on-year. We’re bucking that trend. It’s all about scale. It’s about recognition on the brand, and I believe we’re getting there. And we’ve got Gravity coming. Just to put this in perspective, in Q1, for the first time ever, Lucid outsold Porsche Taycan. We’ve outsold the Mercedes Benz EQE for the third consecutive quarter. We’ve outsold the Mercedes Benz EQS as well for third consecutive quarter. We’ve sold the new BMW i7, and we’ve outsold the Audi e‑tron GT for the fifth consecutive quarter.
I want to also explain another matter here. We are not manufacturing constrained. This isn’t a ramp-up situation. We can link them. It’s very much an economy situation, it’s about growing awareness of just how awesome the product is and the sales will follow. And that’s the trajectory we’re on. It’s all about these cells and volumes. And I also want to just put — as a final point, I would like to put Lucid’s stock price in context for this year. Just for context, Tesla is down about 25.6%. Rivian is down about 56%. We’re down 27%. So really, there is a trend here in this sector. But clearly, we’ve got a path to get out of it. Gagan, do you want to add some color?
Gagan Dhingra: Yes. Thank you, Peter. And again, we are also very focused on execution and optimization of cost. We have the most efficient vehicle, but it’s not just about the sustainability story. It’s about growth, it’s about scale, and it’s about the profitability. I expect it will show in our margins over time as we scale.
Maynard Um: Thanks. The third question is from Justin [ph]. Is Lucid in talks with any of the legacy automakers to provide battery or motors for production?
Peter Rawlinson: Thanks, Justin. Thanks for the question. I can’t emphasize enough. This is absolutely central to the whole vision of the company, and that’s why we call it Lucid Group. The vision is to have a meaningful impact upon the planet upon the environment to take technological leadership. And to use that leadership that we can travel further with less and be truly sustainable and then to share that technology and provide that technology to other companies. And we’ve taken the first step, we’re providing the sapphire technology, our hypercar technology to no less than Aston Martin. And there’s a time scale associated with this, I mean the technology that we’ve got in our current lineup of touring, grand touring was ideally suited to a luxury performance car from another automaker.
But what really excites me is the potential for the technology that we’re currently developing right here in this building in listed headquarters where I speak for our midsized tech platform. This is the tech that really is going to suit a high-volume family car of the future. And that’s what’s going to create the multiplier effect. So as you can appreciate, we can’t really talk about specifics. But indeed, we are in talks. There are large OEMs that appreciate the value of our tech, and they are certainly interested in working together with us. Gagan, would you like to add anything to that?
Gagan Dhingra: Yes. And of course, under the right economics.
Peter Rawlinson: Absolutely. And I think therein lies another misunderstanding because of our current finances this completeness information that our tech is so expensive. And it’s completely the opposite. Our tech is made for affordability at scale. It’s designed around reducing the need for battery, which is the biggest cost item of making an EV. So actually adopting Lucid’s technology is a route to significantly reducing the cost of making an EV. And this is simply just not sufficiently appreciated or understood.
Maynard Um: Great. And our last question is from Robert. Will Lucid make an affordable car to compete with Tesla?
Peter Rawlinson: Well, I’ve got an answer to that. We already are. The Lucid Air, pure rear-wheel drive, finest machine on the planet, $69,900. The price I promised back in September 2020, we’re already competing with Tesla. But wait until our midsize comes out late 2026. That’s when we’ll have a car, $48,000, $50,000 and that is the big one, the one that’s going to be really exciting.
Maynard Um: Great. Now we’d like to take questions from the phone lines. Tawanda. Can we take the first question, please?
Operator: Yes. Thank you. Please stand by. Our first questions comes from the line of Adam Jonas. Your line is open.
