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Tesla price cut hits rival Lucid

Published: 04:09 23 Feb 2023 EST

Lucid Group Inc - Lucid suffers from lower demand as Tesla price cuts bite
Lucid was set up in 2007

California-based electric vehicle firm Lucid Group Inc (NASDAQ:LCID) reported a large drop in fourth quarter orders as competition heated up across the market, including from rival Tesla cutting its prices.

Lucid, founded by a former Tesla lead engineer, had 28,000 orders in place as of February 21, a drop of 18% from the second quarter.

Chief executive Peter Rawlinson suggested the fall in demand was the result of supply bottlenecks suffered earlier in the year, which have been “exacerbated by the challenging macroeconomic environment”.

Lucid reacted to vehicle price cuts by Tesla and Ford by offering discounts of US$7,500 on its own Lucid Air sedan from early February, due to run until late March.

For the whole of 2022 it produced 7,180 vehicles, ahead of its own updated 6,000-7,000 guidance, but far below the 20,000 originally anticipated, delivering 4,369 of those throughout the year.

Revenue of US$257.7mln in the fourth quarter was up 876%, with this being the company’s first full year of production, although this figure was below the Wall Street consensus forecast of US$300mln.

Underlying losses on an EBITDA basis rose to -US$623,610 for the final quarter of the year, from -US$299,583 a year earlier.

For the whole year, attributable losses were reigned in to US$2.56bn from US$4.75bn in 2021.

This reflects what founder and CEO Peter Rawlinson said was "a challenging year for everyone" and a surge in competition within the market which has heated up in the past year.

Analysts at CFRA Research said there were a lot more EVs available at lower price points than the Lucid Air.

“We're gearing for growth, while simultaneously taking a comprehensive look at reducing costs,” said chief financial officer Sherry House, looking ahead to 2023.

Lucid's hopes will also be resting on a deal with Saudi Arabia's government, signed in April, for 100,000 vehicles to be sent to the country over the next 10 years, which was not included in its reservation figures.

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