The Saudis have a seemingly bottomless supply of petrocash. But their patience may be more finite. Luxury electric-vehicle maker Lucid Group said on Tuesday that longtime chief executive Peter Rawlinson would immediately leave his post and the company’s board. Its driver gone, the carmaker’s fate now rests in the hands of its financial passengers.
Lucid went public in 2021 by merging with a blank cheque company sponsored by the financier Michael Klein. Its high-end focus makes it one of the most ambitious EV projects in recent years. Within a year of going public, Lucid’s market capitalisation hit $60bn. Its plan was to sell 135,000 sedans and sport utility vehicles by 2025, enough to hit break-even cash flow.
The reality has fallen well short. In 2024, Lucid sold only about 10,000 vehicles and produced a similar number. Its cash burn for the year was $3bn, the latter only slightly better than 2023. The only thing keeping the company out of bankruptcy was funding raised from the Saudi Public Investment Fund, a longtime Lucid backer whose ownership of the company has now reached 60 per cent.
There is only so much demand for a car costing more than $100,000, even if the Lucid Air model has won major industry awards. As such, the staggering development and production costs are chasing a lucrative market but one with little margin for error. In the fourth quarter, Lucid was spending just over $2 to produce each $1 in revenue. By contrast, Rivian, the EV truck company, just posted its first positive quarterly gross profit.
Rawlinson’s defenestration was grave enough that he was not on the earnings call, an absence that elicited a question about his whereabouts from one analyst. Lucid’s interim team said production should hit 20,000 in 2025 though capital expenditures will swell to $1.5bn. The company has $5bn in cash and claims to have enough existing liquidity to last until mid-2026, when its midsize sedan is supposed to be ready to sell.
Investors love a lofty vision, and, for a while, Lucid obliged. In one of his final public appearances, Rawlinson, a former Tesla executive, mused that Lucid’s auto and battery technologies were good enough that one day it could license them to third parties, to the point where perhaps just one-fifth of revenue would be from selling cars.
His former employer tried to walk that prediction back on Tuesday. The question for Lucid is what exactly it can build, at what cost, and for what kind of demand. The company warned that tariffs and cancelled government incentives to buyers are going to have a further impact on its already lowly gross margin. Saudi Arabia, for its part, has committed to buy about 100,000 upcoming Lucid SUVs and midsize sedans. To keep its investment afloat, the kingdom may need to tap those petrodollar wells again.
sujeet.indap@ft.com
