Lucid Motors cuts its production forecast, blaming supply chain chaos.

Lucid Motors, a maker of popular electric cars that the company has struggled to mass produce, nearly halved its production target for the year on Wednesday after delivering just 679 vehicles in the second quarter.

The California-based company, which hopes to challenge Tesla in the luxury car market, announced to investors this year that it would deliver 12,000 vehicles in 2022. The new target is 6,000 to 7,000. Even this more modest target requires that Lucid delivers at least five times more cars in the second half than in the first half.

Peter Rawlinson, chief executive of Lucid, blamed “the extraordinary supply chain and logistics challenges we encountered” for the shortfall. Demand for vehicles remains strong, he said

“While frustrating,” Mr. Rawlinson said on a conference call with investors, “it’s a growth phase in our business that we’re going through.”

The 679 deliveries in the second quarter against only 360 vehicles in the first. Lucid said in May that he was having trouble acquiring components. All automakers have experienced supply chain issues, but shortages of parts and raw materials have come at a particularly difficult time for Lucid and other fledgling automakers like Rivian. Crafting vehicles is hard enough for a new company without having to fight for a share of rare goods.

After its first model, the Lucid Air, was named Motor Trend’s Car of the Year for 2022, the company was seen as a serious threat to Tesla due to the sedan’s 500+ mile range on a load and its attractive style. Lucid’s headquarters in Newark, Calif., is a short drive from Tesla’s Fremont factory, and Mr. Rawlinson is a former Tesla executive.

But investors have grown pessimistic about the ability of Lucid, Rivian and other electric car start-ups to gain significant market share. The cheapest Air starts at $87,400 while the top of the line costs $169,000, pitting it against established automakers that have started selling battery-powered luxury cars, like Mercedes-Benz, Audi and Porsche.

Traditional automakers have been slow to develop electric cars that resonate with consumers, but today their decades of experience and factory networks are proving to be a decisive advantage. Ford Motor said on Wednesday it sold 7,700 battery-powered vehicles in the United States in July, a 170% increase over the previous year. Ford sold 31,000 electric vehicles in the first seven months of the year.

Mr Rawlinson admitted that much of Lucid’s production shortfall was due to the company’s inexperience – for example, difficulties in setting up a system that delivers the right parts to the assembly line at the right time. moment. Several unplanned closures of the Lucid plant in Arizona “revealed the immaturity of our logistics processes,” he said.

Lucid hired several mainstream automaker executives to smooth things over, including Steven David, former vice president of manufacturing at Fiat Chrysler Automobiles. Mr. David, whose appointment was announced on Wednesday, will serve as senior vice president of operations.

Lucid’s tribulations were reminiscent of Tesla in 2018 when Elon Musk, the company’s chief executive, went through what he described as “production hell” as the company struggled to ramp up production of the Model 3.

Lucid “appears to be in the ‘production hell’ stage of its development,” Garrett Nelson, vice president of CFRA Research, said in a research note on Wednesday.

The expanded incentives for electric car buyers being considered by Congress won’t help Lucid. Its sedans won’t qualify for a $7,500 federal electric vehicle tax credit because its models are too expensive. Under the Senate’s proposed climate and energy program, buyers can only claim the credit for sedans with a list price of $55,000 or less and for vans, SUVs and trucks sold for $80. $000 or less.

Lucid’s stock price has fallen from a high of $55 in November to under $20 recently. The company’s stock fell about 11% in extended trading on Wednesday after announcing it was cutting its production forecast.

The company lost $220 million in the second quarter on sales of $97 million. That compares to a loss of $81 million in the first quarter of 2022 on sales of $58 million. Lucid said he has enough cash “to fund the business through 2023.”

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