Operator: Our next question comes from the line of Tobias Beith with Redburn.
Tobias Beith: I had two, if that’s okay, and I guess where I’d like to start is on engineering changes. And I think you mentioned a couple of — or you’d mentioned that you made a start on engineering changes to the Air during this quarter and also in the last quarter. But I was wondering if you could actually give some examples of changes that have been made or incoming to reduce diluted Air’s bill of materials. And perhaps outside of that, what opportunities are there to de-content the vehicle to reduce its BOM. And then I have 1 follow-up.
Peter Rawlinson: I think the most significant point here that affects the bill of material cost, it’s not so much a change but it’s a new model, which was planned. So there’s a difference in the engineering but it’s not a sort of unplanned change. It is a structured part of our product rollout. And that is the rear-wheel drive, 2-wheel drive Lucid Air appeal. This has got just 1 drive unit at the rear and so the other cars have got 2 drive units, 1 at the front and 1 at the rear. So you save the cost of a drive unit. That in itself is very helpful. But we’re down to just an 88 kilowatt-hour battery pack, which for most other companies would remain an unacceptably small range. But we’re achieving 419 miles on the new EPA cycle with just this 88 kilowatt-hour pack, which is unprecedented.
And because the battery pack is the biggest single cost item in the bill of materials, this has significant downward pressure on the cost of building the car. I think that’s the most significant change that we’re making. I wouldn’t portray that we’re making implementing a series of changes to the vehicle other than on the software side because we’re able to download over-the-air significant software changes to existing customers, which see their cars become better through the course of ownership. And I also would like to indicate this, that because we have this modular battery pack, it means that we can just reduce the number of modules in the pack to downsize the pack for the rear-wheel drive 88 kilowatt-hour pack. So it’s not a fundamentally different battery pack.
It’s just a natural derivative designed in from the outset of the pack we’ve got. And actually, we use a very similar philosophy on the pack of Gravity. It’s very similar to the pack of Air using a very high percentage of carryover components to reduce cost and maximize economy of scale as well for us.
Tobias Beith: Got it. That is super helpful. And I guess my second question is really for Sherry. I calculate Lucid’s written down approximately $1.1 billion worth of inventory and firm purchase commitments since starting production in the third quarter of 2021. And I was wondering, when exactly do you expect to benefit from consuming the stock or perhaps cease writing down new purchases?
Sherry House: Well, over the next few quarters, we’re going to continue to use inventory that has already had LC NRV charges taken against it. So that would be over the next few quarters, you can see what the inventory balances on a raw material basis, work in process as well as finished goods through the footnotes in the 10-Q. And then you can do some rough math essentially to think about either the cost that would be attributed to the vehicles that are sold and think about the volumes in your model in order to do that math.
Operator: At this time, I would like to turn the call back over to Maynard Um for closing remarks.
Maynard Um: Thank you. This concludes Lucid’s Second Quarter 2023 Earnings Conference Call. Thank you all for joining us today. You may now disconnect.
