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Lucid’s new chief executive has warned that the US car sector would not “stay isolated” from cut-throat competition posed by Chinese rivals as he predicted a shakeout in the crowded global EV market.
“Everyone is fighting for survival . . . the number of EV suppliers we have today is excessive and they will not survive,” Silvio Napoli, who took over as head of the struggling Saudi-owned group in June, told the FT.
Steep US tariffs and restrictions on Chinese car software have protected the American car industry from the influx of affordable EVs from the likes of BYD and Geely. But Napoli said newer EV players from China would continue to infiltrate global markets and the US was unlikely to keep them out indefinitely.
“I have no illusion that the US will stay isolated. In the end, strong competitors make better companies,” Napoli, the former boss of Swiss elevator manufacturer Schindler, said on Tuesday.
The comments came as the California-based start-up announced a $1.4bn cost-cutting programme involving production cuts to reduce its vehicle inventory.
It also announced a delay to the long-awaited launch of its affordable $50,000 model until next year as it focuses on stemming its bleeding of cash. The new car was earlier scheduled to be unveiled this summer.
“We are reviewing everything from investment but also in terms of product and engineering,” Napoli said. “We are not chasing volume for the sake of volume . . . My objective is to launch the vehicle when it is ready.”
Shares in Lucid fell as much as 57 per cent intraday on July 14 following a report in the electric vehicle news site that consultants at AlixPartners were advising the company on whether it should file for bankruptcy or be taken private.
Lucid denied the report, helping shares pare their decline, but disclosed that it had hired AlixPartners to help with Napoli’s revival plan as it struggles to scale its EV business despite having strong software technologies. Napoli said the company’s financial difficulties might have created an environment for the “absurd rumours”.
“Our job is to make sure that we steer away from those choppy waters into a situation where these rumours would not even need to be denied,” he continued.
For the April to June quarter, the company’s net loss widened to $1.3bn from a loss of $739mn a year earlier, while its free cash flow was negative $1.5bn. Lucid said it ended the three-month period with $3bn in liquidity, which, along with recently secured funding from Uber, would be enough to last “well into 2027”.
During the quarter, Lucid delivered 3,953 vehicles, up 19 per cent year-on-year. Despite deliberate efforts to cut production, the company still built 821 vehicles more than it sold. Its US rivals Rivian and Tesla delivered 12,194 and 480,126 vehicles respectively over the same period.
Saudi Arabia’s Public Investment Fund was an anchor investor in the special-purpose acquisition company deal that took Lucid public. It has received more than $8.5bn in investment and credit lines from the PIF since its listing in 2021.
Lucid operates two plants in Arizona and in 2023 opened Saudi Arabia’s first car manufacturing facility as part of the kingdom’s “Saudi Vision 2030” economic diversification drive.
“They wanted to turn the business around,” Napoli said when asked what requests PIF made when he took the job. “This is about a real industrial project that will establish manufacturing in a country where there is currently no automotive manufacturing.”
Saudi Prince Alwaleed bin Talal, who has an extensive US investment portfolio, revealed in a late July regulatory filing that he had purchased a 5 per cent stake in Lucid.
“I think Lucid has the strength of products and the strength in terms of shareholder support to be one of the companies that will come through this difficult moment much stronger,” Napoli said.
