Lucid Group Inc Aktie

Thank you. Good day and welcome to Lucid Group's second quarter 2026 earnings call. [Operator Instructions] Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker, Nick Twork, Chief Communications Officer. Please go ahead.

Thank you and welcome. Joining me today are Silvio Napoli, our CEO, and Taoufiq Boussaid, our CFO. Before handing the call over to Silvio, let me remind you that some of the statements on this call include forward-looking statements under federal securities laws. These include, without limitation, statements regarding the future financial performance of the company, production and delivery volumes, vehicles and products, studios and service networks, financial and operating outlook, timeline and guidance, liquidity position, capital expenditures, macroeconomic, geopolitical, policy and industry trends, tariffs and trade policy, company initiatives and plans, leadership changes, and other future events. These statements are based on various assumptions, whether or not identified in this communication, and on the predictions and expectations of our management as of today. Actual events or results are difficult or impossible to predict and may differ due to a number of risks and uncertainties. We refer you to the cautionary language and the risk factors in our annual report on Form 10-K for the year ended December 31, 2025, subsequent quarterly reports on Form 10-Q, current reports on Form 8-K and other filings and the forward-looking statements on page 2 of our quarterly earnings presentation available on the investor relations section of our website at ir.lucidmotors.com.

We undertake no obligation to revise or update publicly any forward-looking statement for any reason, except as required by law. In addition, management will make references to non-GAAP financial measures during this call. A discussion of why we use non-GAAP financial measures and information regarding reconciliation of our GAAP versus non-GAAP results is available in our earnings press release issued earlier this afternoon, as well as in the earnings presentation. Please note that today's agenda is longer than usual. We plan to reserve 20 minutes for questions at the end of the call, and we'll take them in the order received. With that, I'd like to turn the call over to Lucid CEO, Silvio Napoli. Silvio, please go ahead.

Thank you, Nick. Good afternoon, everyone, and thank you for joining us for my first quarterly results as Lucid CEO. As promised, today I'll share my initial assessment, our mid-term priorities, and the actions already underway. In my first two months as CEO with the company, I spent much of my time with the people who do the work: factories, studios, service centers, engineering labs, and technology centers. My approach is simple: listen first, understand what is happening on the ground, and act with urgency. Over more than 30 years, I've led complex technology-driven manufacturing and service businesses through many of the same fundamental challenges Lucid faces today. That experience is directly relevant to the work ahead and is one of the reasons I came to Lucid.

And what I've seen so far gives me confidence in Lucid's inherent value and potential. We have leading technology, compelling award-winning products, and deeply committed people. But potential is not performance, and effort is not the same as results. Now, before discussing our priorities, I want to be very direct about our situation. I came to Lucid with a mandate from the Board to do what is necessary to fix the business. My acceptance of this exciting challenge is based on the clear understanding that financial support is needed to provide the runway to make the company profitable and successful. Together with the Board, we are confident in our resolve, and that confidence is supported by the financial and operational measures that I will discuss today, which we expect will provide sufficient liquidity runway well into 2027.

But let me be direct. The way we operate has to change. While there is no question that Lucid brought leading innovations and outstanding products to the market, we have disappointed on several fronts, and for far too long. We have not executed consistently, we missed commitments, launched products before they were ready, underinvested in service, responded too slowly to quality issues, and allowed complexity to slow decisions down. Accountability has too often been diffused rather than clearly owned. We have not operated as one team. The consequences are clear. We have strained trust. Trust with our customers, trust with our employees, trust with our suppliers, and ultimately, trust with you, our investors. And I'm here because I'm convinced we can rebuild this trust.

We will fix the business because the underlying causes are operational and largely within our control. But to get there, we must go back to basics. All our work must be focused on three fundamentals and four must-win deliverables. We define the three fundamentals as our three Cs: cash and cost, customer and quality, and culture and team. The four must-win projects are: first, our plan to deliver $1.4 billion of cash flow improvement by year-end; second, the Uber and Nuro Robotaxi project; third, the completion of our AMP-2 factory in Saudi Arabia; and fourth, our mid-size platform. Let me first provide some color on the three Cs, starting with cash and cost. During my first month as CEO, we reduced our U.S. workforce by one-fifth and eliminated the second shift at the Arizona factory.

These two measures combined generated $158 million in projected annualized savings. The decision to separate ourselves from hard-working team members was not taken lightly. And in fact, I would like to take this opportunity to thank them again for their contribution to make Lucid what it is today. But that decision was necessary, and it was only the first step in our cost reduction efforts. We need to be direct about the scale of the challenge. Lucid continues to consume a significant amount of cash each quarter as we invest simultaneously in a manufacturing footprint, vehicle production, and future programs. That level of cash burn is not sustainable, and bringing it down is an immediate priority.

We are therefore reviewing every major cost, each individual investment, and every single program across the company. Our objective is to reduce cash burn with urgency while protecting the initiatives that are most critical to Lucid's long-term value. We've already identified approximately $1.4 billion of cash flow improvement in 2026 across operating costs, capital spending, and working capital. We deliberately reduced production by eliminating a second shift because building vehicles faster than we could deliver them was consuming cash and increasing inventory. Today, our priority is to convert inventory into deliveries and cash, aligning production with demand to improve working capital. We will continue to selectively use incentive programs, but we will not buy volume at the expense of cash or vehicle economics. Here, I also want to address the speculation surrounding our work with AlixPartners.

Their engagement has been focused solely on supporting our cost savings plan and streamlining our operations. We will be wrapping up their assignment once that work is complete, which we expect at the end of this month. Moving on to the second C, customer and quality. Frankly, this is not optional, but a must for every business, including ours. Let's be honest, we have exceptional vehicles, but the ownership experience has too often fallen short of the promise of the product. That's why we created the Chief Customer Officer position and hired [ Billy Hayes ], a highly respected automotive industry leader, with a unique understanding of the customer experience in our sector. We then were assigning clear ownership to each major customer pain point and creating a closed loop from customer feedback to corrective action.

We are making significant investments in service. By the end of the year, we plan to increase the number of technicians and dedicated staff supporting our customers by 35% and mobile service capacity by more than 20%. Together with improvements in parts availability, service operations, and capacity, we expect these actions to reduce wait times by more than 30%. Our objective is to make the full experience of buying and owning a Lucid match the strength of the vehicle. We will continue to invest in innovation and bring outstanding products to the market, but only after passing rigorous quality gates. We created a Chief Technology Officer position and hired [ Raja Macha ], a proven technology leader, an accomplished scientist with extensive industrial experience, including the automotive sector, to take our innovation to the next level and enable the quality our customers expect. Even prior to [ Raja's ] joining, we knew that software was a common root cause for customer dissatisfaction.

To address this pain point, we immediately deployed measures to strengthen our software rollout process. And we're already seeing progress. During the quarter, software quality improved across Gravity and Air, with work focused on infotainment stability, access control, and OTA reliability. We strengthened our validation and release processes, reduced software-related customer issues, and established more rigorous quality disciplines. At the same time, we continue to bring innovations to the market. Our latest software release, Gravity UX 3.6, added Hands-Free Drive Assist in combination with other customer features and stability improvements. And I'm excited to share that in a few days, at Monterey Car Week, we will unveil a new, sportier version of the Lucid Gravity. Coming to the third C, culture and talent.

Without the right team and the right culture, no plan can succeed. That's why culture and team must be one of our top priorities. Last July 2nd, in my second month on the job, we introduced a new simplified organizational structure which halved the number of direct CEO reports. To enforce accountability and foster transparency, we introduced a true C-suite to lead the company. To accelerate decision-making, we are greatly reducing the number of committees, except for legally mandatory ones. In just a few weeks, we began a major transformation of Lucid as a company and as a team. To keep the momentum going, we created a Chief Transformation Officer role and appointed [ Hugo Martinho ], a proven leader with deep expertise in driving organizational change across global businesses.

We will establish the Lucid Business Process function, led by [ Hugo ], to enforce process discipline across everything we do. Lucid needs leaders who are fully present and working side by side with their teams. That is why we asked our new leadership team to work in person from one of our main locations close to our customers and teams in manufacturing, supply chain, and engineering. My expectation is straightforward. Tough medicine first, clear ownership, fast action, and unity of effort. The people closest to the work will diagnose the problems and design solutions. Leadership sets priorities, removes obstacles, and holds individuals accountable, starting with me and our executive team. Alongside this fundamental reset, we identified four must-win deliverables that will shape Lucid's future.

I've already addressed the first one, a spending reduction plan which delivers approximately $1.4 billion in cash flow improvement in 2026. The second one is our Robotaxi project with Uber and Nuro. A top priority and indeed a must-win project for Lucid. Lucid's capabilities are recognized not only through independent awards for our products but also through partners choosing our platform for their own strategic platforms. The work between Uber, Nuro, and Lucid is one example and demonstrates the potential of our technology beyond privately owned vehicles. Brand recognition and committed sales aside, this project applies our technology in a new, fast-growing sector. Independent estimates project that 2.5 million robotaxis will be operating globally in 2035. That is less than 10 years from now, and the total addressable market for robotaxi vehicles will grow to $600 billion by 2040.

Given Lucid's differentiated technology, the Robotaxi ecosystem also creates opportunities beyond vehicle sales, including recurring software services and mobility revenue. Over time, Lucid has the potential to participate across a broader share of the Robotaxi value chain, which some industry estimates value at approximately $1 trillion. These exponential growth prospects are not the only feature that makes the Robotaxi market so attractive. Equally compelling, if not more so, is the profit potential. We project the margins vastly exceeding those of the traditional retail model. As a native software-defined vehicle company, Lucid is ideally positioned to capture a large share of this rapidly emerging market. Lucid's technology platform combined with our vehicle space, efficiency, and lower operating cost provides a clear advantage over legacy carmakers.

The success of the Uber and Nuro project will demonstrate the value of our platform at scale. Our program is deep into the testing and validation phase with an active engineering fleet of nearly 100 vehicles across the San Francisco Bay Area and Houston. Last month, we began delivering to Uber and Nuro production validation vehicles assembled at our facility in Coolidge, Arizona. This will be followed by regular vehicle production in Q4, which in turn will be followed by a launch in late 2026. While we progress towards this milestone, the Robotaxi industry is at a pivotal juncture, and Lucid is resolved to fully capture this historic opportunity. That's why we are creating Lucid Technologies, a new business unit with its leader, [ Kai Stepper ], reporting directly to me and driving our efforts in Robotaxis and other high-potential technology opportunities.

Lucid Technologies brings together AI, ADAS, and our broader digital functions under one single structure to improve resource and capital allocation. [ Kai ] previously led our ADAS and autonomy organization, and now serves as President of Lucid Technologies and Chief Digital Officer. With more than 25 years of experience spanning autonomous driving, advanced vehicle technologies, product development, and strategic partnerships, [ Kai ] is ideally positioned to help Lucid capitalize on this emerging opportunity. Moving on to our third must-win project, AMP-2, our new factory in Saudi Arabia, is steadily transitioning from construction to industrialization. Last April, in my second week with Lucid, I traveled to Jeddah to see the factory first-hand and get a sense of construction progress and factory readiness. And I was impressed by the progress achieved despite the geopolitical situation.

All buildings are functional and manufacturing systems installation and equipment testing is happening across stamping, body, paint, and final assembly in preparation for production trials. These pictures also attest to the heroic effort by the Lucid team and our supportive Saudi government partners who continue to work to meet the project milestones. I view to return to the Kingdom this month, and I look forward to seeing the continued progress over there. It is important to clarify that there are two distinct components to our readiness plan. The first is the factory itself, which is within our control. Based on the work underway today, we expect AMP-2 to be ready for production in early 2027 and ready to run mid-size production in the second half of the year. The second component is the surrounding supplier base and supporting infrastructure, required to enable a sustained production ramp.

We are closely working with the Saudi authorities, suppliers, and other partners to ensure that this ecosystem is ready to support our planned ramp. The Saudi authorities continue to be a strong partner helping to advance the road, water, electrical, and telecom infrastructure. We are also evaluating supply localization timelines and identifying actions to mitigate potential delays. Importantly, this does not change our commitment to the Kingdom, to the local supply chain networks, and to our broader industrial strategy. We look forward to updating you as the work proceeds. Speaking of progress, I had the opportunity to drive our latest Cosmos prototype at our Arizona test track last week. And I have to say, I came away extremely impressed.

This new model delivers everything you would expect from a Lucid. The acceleration is remarkable, the handling is precise, and it remains unmistakably true to the Lucid DNA. Really, I can't wait for you to experience it yourself. Cosmos will be the first vehicle produced at our new AMP-2 factory and the first model from our mid-size platform. And this mid-size platform remains an essential element of Lucid's strategic plan. That's why it must be one of our must-wins. While the EV market is experiencing near-term demand uncertainty, we remain confident in the long-term transition to electric vehicles.

EV adoption continues to expand globally, and we believe the mid-size segment represents the largest opportunity for Lucid to bring our technology to a broader EV customer base. I am encouraged by the progress across the program. Atlas drive units and prototype vehicles are already in advanced stages of testing. With work underway across chassis, drive units, battery pack manufacturing, and on-road and test track validation. We are also carrying out crash testing, aerodynamic refinement, and durability testing with cold weather evaluation in New Zealand. The next major phases of the program include additional prototype and quality launch builds, completion of the regulatory and homologation activities, expanded manufacturing validation, and preparation for a start of production. To lead the process and coordinate actions across functions, we have promoted [ Christian Appel ] to VP of Program Management. Based at our AMP-1 factory in Arizona, [ Christian ] is responsible for the program while ensuring discipline and coordination across the company to deliver top quality.

With a strengthened team and additional resources, he and his team are performing a comprehensive review of the program and will implement any changes needed to ensure a successful launch. Our objective is clear. Mid-size will launch only when every process and quality requirement have been met. We will not repeat the mistakes of the past by bringing a product to market before it is ready. Once more, we remain confident in mid-size as a core enabler to scale, improve unit economics, and ultimately, profitability. Finally, moving on to Outlook. Today I have provided an update on my ongoing assessment, our near-term priorities, and several of the actions already underway. As you will understand, we are not yet in the position to provide detailed guidance. We will set formal guidance once our leadership team has completed the strategic planning process.

In the meantime, we want nonetheless to offer some directional context. In particular, I want to stress how current consensus estimates for production and deliveries are based on operating models that no longer reflect the figures we anticipate today. Consequently, based on our ongoing assessment, production and delivery figures are expected to come in below current consensus estimates. Specifically, production in Q3 and Q4 is expected to be below Q2 levels, reflecting AMP-1 transition from two shifts to a single shift configuration through year-end. On the other hand, given the availability of existing inventory, deliveries should be above the deliberate reduction in production. Deliveries in the second half should benefit from recent product and service enhancements and reflect sequential growth broadly consistent with the typical seasonal increase from Q2 to Q3. We expect growth to be more moderate than in the prior year period, which at the time also benefited from a pull forward of demand and the ramp of the Gravity model.

When we are ready to provide formal guidance, it will be grounded in market-calibrated demand, lower inventory, and disciplined cash management. Above all, it will reflect commitments we are confident Lucid can deliver. For now, our business review remains underway, and [ Alexander DeBocq ], our incoming Chief Financial Officer, who joins us this week, will play a leading role in completing that work. So, what can you expect from us over the next two quarters in terms of further updates? In November, at our Q3 results, we will provide details on the progress of our $1.4 billion cash flow improvement for 2026, including a liquidity update. We will also provide a progress update on the new Uber Robotaxi project and on the latest advancements of our AMP-2 factory readiness. Next, at the year-end results, we will provide guidance for 2027, as well as our mid-term plan and targets. To wrap up, the work ahead is substantial.

And rebuilding trust will take time. We have a clear understanding of the key issues. The issues are operational in nature, and we are fixing them. A deep transformation is in motion at Lucid. With a new team in place, clear priorities, the direction is clear. Focus on the fundamentals, execute the must-win projects, act with discipline, and demonstrate progress through results. Lucid has the technology, products, and people to succeed.

Our responsibility now is to build a disciplined operating model that converts those strengths into consistent performance. We expect to be judged by the results. Before I turn over the call, I want to thank Taoufiq for his outstanding efforts and loyal service to the company. His contribution and partnership throughout this transition reflect his professionalism, commitment, and integrity.

Thank you, Taoufiq, and over to you.

Thank you, Silvio. As Silvio outlined, we are focused on improving capital efficiency, preserving liquidity, and positioning the business for the successful launch and ramp of our mid-size platform and commercialization of our autonomous offerings. While our review of the business remains ongoing, we have already begun implementing actions. My comments today will focus on our liquidity position, second quarter financial results, the actions already underway, and the priorities guiding our decision going forward. Turning to Q2 results, production was 4,774 vehicles, down 13% from 5,500 in the first quarter, a deliberate reduction, and up 24% year-over-year from 3,863. We lowered production during the quarter deliberately to better align production with near-term demand, reduce inventory levels over time, improve capital efficiency, and preserve liquidity as we prepare for the launch and ramp of our mid-size platform and commercial Robotaxi program. As Silvio and I have discussed, our objective is to stabilize the business and accelerate the path towards profitability.

Looking ahead, we believe certain external expectations regarding our production levels do not yet fully reflect the operating assumptions guiding our decisions today, including the reduction of our manufacturing workforce to preserve cash. Our near-term focus is on improving unit economics, reducing cash burn, and progressing towards breakeven. Our objective is to allocate capital efficiently while maintaining readiness for the next phase. As we optimize incentives, improve product mix, and convert inventory into customer deliveries, we expect these actions to support average selling price, working capital efficiency, and operating cash flow. Q2 deliveries were 3,953 vehicles, up 28% from 3,093 in the first quarter and up 19% from 3,309 in the quarter a year ago. Lucid Gravity continued to be the majority of deliveries. Deliveries in the Middle East improved during the quarter.

As a reminder, under our existing agreement, the government of Saudi Arabia has committed to purchase more than 4,000 vehicles during 2026 and annually through 2032, subject to the terms of the agreement. During the quarter, we continued working through the effects of the stop-sale actions announced earlier this year. Deliveries improved as the quarter progressed, and we are focused on converting the remaining affected orders. As part of our back to basic priorities, we are determined to improve customer experience, product quality, and execution. Our focus remains on converting existing demand, shortening delivery cycle times, improving order to delivery execution, and restoring customer confidence through product and service performance. To be very clear, we are prioritizing margin, and we will not sacrifice pricing to chase volumes. Revenue was approximately $405 million, up 44% sequentially from $282 million in the first quarter and up 56% year-over-year from $259 million in the quarter a year ago.

The increase was driven primarily by higher deliveries and improved product mix reflected in a 3.7% overall sequential increase in average sales price, which was further supported by higher regulatory credit sales revenue by $25 million. Besides pricing, we expect revenue growth ahead will be driven by improved sales execution and mix, an expanding service footprint, recurring software and subscription opportunities, and finally, future vehicle programs. On top of traditional EV sales, revenue streams from robotaxis are expected to be a new source of revenue growth. Q2 gross margin was negative 105% compared with negative 110% in the prior quarter and negative 105% year-over-year. Gross margin in the quarter reflects higher revenue sequentially, lower production volumes, which resulted in lower fixed cost absorption, and higher conversion costs per vehicle. Gross margin also reflects $300 million in impairment charges associated with inventory optimization actions, offset by a reduction in loss on firm purchases commitments as a result of lower volumes. This impairment has had a negative impact on gross margin of 74 percentage points in the current quarter.

The gross margin also included $25 million of regulatory credit revenue. Adjusted EBITDA was negative $901 million in the second quarter, compared to negative $781 million in the first quarter. The sequential change was primarily driven by higher gross loss as we continue to ramp Gravity production through May, thereby increasing finished vehicle inventory. Operating expenses remained flat sequentially, reflecting reduced payroll from lower headcount and the absence of certain one-time costs recorded in the first quarter. These benefits were partially offset by increased prototype parts and tooling for our mid-size platform, as well as sustained cost and investment related to the construction of our AMP-2 factory. Our focus during the quarter was not simply reducing inventory balances, but improving inventory quality. As noted previously, the $300 million impairment in the current quarter reflects a reassessment of carrying values and expected demand, and we cut firm purchases commitments proactively reducing future inventory obligations and cash requirements.

Inventory conversion remains one of our most significant opportunities to improve working capital, free cash flow, and capital efficiency. A large part of our inventory has already consumed cash. Converting it into deliveries unlocks working capital and reduces our cash requirements. The efforts initiated as of June have not yet been able to offset the created inventory increase during the first 5 months of the year, during which Gravity production outpaced demand. Together with the impairments and lower purchase commitments, the inventory reduction improves the quality of our working capital position. Our objective is to accelerate the order to delivery to cash cycle and improve inventory turnover. As we convert finished inventory into deliveries, we expect stronger working capital efficiency, liquidity, and free cash flow.

Free cash flow was negative $1.476 billion during the quarter. A meaningful part of this is working capital trapped on the balance sheet rather than permanent burn. As we convert that inventory to cash, our free cash flow is positively impacted. The actions underway today are specifically designed to improve cash generation and reduce capital requirements going forward. Operating cash flow was primarily affected by working capital investment, including inventory built into finished Gravity vehicles ahead of deliveries, lower accounts receivable collections, and accelerating the conversion cycle and increasing inventory turnover. More broadly, our operating assumptions today prioritize liquidity preservation, cash generation, and disciplined capital allocation. Investors should expect a measured operating approach as we improve unit cost economics and progress towards profitability.

In June, we launched a comprehensive review of the business to identify opportunities to reduce cash burn and improve cash flows while preserving our most important strategic initiatives. To date, we have identified approximately $1.4 billion in cash flow improvements for 2026. Implementation is already underway on many of these, and the review continues. These opportunities span inventory, capital expenditure, and operating expenses and together are intended to improve liquidity, reduce cash burn, and increase capital efficiency while preserving key growth programs including our mid-size platform and autonomous commercialization initiatives. Turning to our liquidity position and financial flexibility, as of June 30th, we had $3 billion of total liquidity, including $800 million of cash and investment and $2.2 billion of available borrowing capacity through our credit facilities. Following the quarter, we drew an additional $800 million under our delayed draw term loan facility. This strengthens our cash position, increases financial flexibility, and supports execution of the actions underway.

This transaction reflects continued support from our stakeholders and provides additional flexibility as we complete the construction of our AMP-2 factory and prepare for the launch and ramp of our mid-size platform. It also supports our autonomous initiatives and Robotaxi programs where we continue to work alongside strategic partners towards commercialization. Our priority remains maintaining adequate liquidity while preserving investments that are strategically important to Lucid's future. We continue to expect liquidity to extend well into 2027, further supported by ongoing organic improvements, including the announced $1.4 billion in cash savings in 2026. This gives us the flexibility to select the right timing to raise further additional funding, while ensuring that we optimize the execution, pricing, and capital structure. Lucid will provide an updated liquidity outlook with its Q3 results. In closing, while our review remains ongoing, we have already moved from identifying areas for improvement to executing actions across the business.

Manufacturing actions have been implemented, organizational changes have been announced and are being executed, cost reduction initiatives are underway, and additional opportunities across inventory, CAPEX, and OPEX continue to be identified and implemented. At the same time, we are preserving investments in the program and technologies that strengthen the foundation for our next phase. We are not providing quantitative financial guidance at this time. However, we believe external estimates do not yet fully reflect 3 things. The lower near-term anticipated production given the reduction in the manufacturing workforce, improved cost structure and cash preservation from recent workforce reductions, and updated operating assumptions, and the upside to gross margin as we reduce inventories and release impairment provisions. We are confident in the direction of the company and will provide additional updates and guidance as we are able. Looking ahead, we remain on track for the launch of Robotaxi's service with our partners Uber and Nuro, and we continue to advance AMP-2 and our mid-size readiness plan.

We anticipate multiple opportunities to extend Lucid's technology platform to new applications over time. In closing, I would like to thank my colleagues at Lucid, partners, investors, and analysts for their engagement and support. It has been a privilege to serve as Lucid's CFO during this important chapter in the company's journey. I remain deeply confident in the strength of Lucid's technology, products, and people, and look forward to watching the company continue to execute against the significant opportunities ahead. Thank you for your partnership and support. And with that, I turn it back to the operator.

Thank you. We will now begin the question and answer session by taking questions submitted through the Say Technologies platform first. Our first question comes from John R. Thanks for stepping in as a Lucid CEO, Mr. Napoli. How confident are you and your team today in bringing Lucid Motors to a stable company? What message would you deliver to the public, to people who love and are loyal to Lucid Motors?

Thank you, John, for your question, your support, and your engagement reflected in the statement you make here. If I'm here, it's because I'm extremely confident in Lucid's future. The one thing that impressed me the most in joining is the depth of our technology, the strength of our people, but also the engagement and loyalty of our customers. You are a perfect example, and I think now it's time that we reward this loyalty with performance. So I am absolutely confident, and that's why we launched these priorities and most of our projects. Delivering on those will set the platform for our success going forward and for a company that will always be stronger, closer with its customers, with new products and also a much stronger service.

So again, thank you for your question, and I look forward to providing more products and more technology and more service to you.

Thank you. Our next question comes from Vikas A. How is the restructuring of your expenses, manufacturing, and software coming along with new leadership in place?

Thank you, Vikas. We addressed the financial aspect of the structure, and so I'd like to focus here about more the aspect of software. I also did mention in my statement how we are reviewing the whole aspect of software from conception to coding into the installation and into the service. I was at our factory last week and I witnessed firsthand as an example how we are actually bringing software engineers and manufacturing line experts together in order to improve the process. And as an example, we totally changed the way we do over-the-air upload of our software in our vehicles. And by simply having these workshops, we improved our performance in terms of not only efficiency of the upload, but also quality. We get very good marks on, for example, the Gravity 3.6 release that just came out, and I'm very positive this will continue going forward. We are very conscious that software is a key element of key opportunity for us to improve our performance, and we'll continue doing so.

So, Vikas, thank you for your support, and I look forward to showing results going forward in that regard too.

Thank you. The next question comes from William I. Is Lucid ready to become more than just a car company by branching into ESS where it could see huge growth, especially if working with Saudi Arabia to achieve its 2030 goals?

William, thank you for this question. I think you point to a very important opportunity, which I strongly believe in. That's why we created Lucid Technologies, which is meant to drive this opportunity starting with the Robotaxi, which I addressed during my speech, which is an immediate big opportunity. There will be others, many more, thanks to our technology. At the same time, before we get there, we need to stabilize the business. This is our priority today, our three Cs and our four must-wins. Then we create the platform. We have to be disciplined in not going after other things today which may further strain our resources.

So ESS is definitely one of them. There are actually, in fact, many more, and I look forward to putting myself in the position to address all of them. But thank you for the confidence in your question. That, again, indeed shows a big opportunity for Lucid going forward. We are resolved to get there by first strengthening and stabilizing the business.

Thank you. Our last question comes from John R. I purchased the Air Touring and I love to drive every day. Kudos to the teams, but what is the plan to improve the quality of software issues/bugs? Could we stop tarnishing the brand name, unveiling with the bad quality of the vehicle?

John, thank you. This is another question that I really like because it's direct and specific and addresses one of the major opportunities. I addressed it in my answer to Vikas a second ago, how we're improving software, so we'll not repeat it here. Again, your question reinforces a belief that having customer and quality as a central part of a strategy is absolutely essential to the future. In fact, customer and quality are the best investment we can do in a brand. That's why we are investing in service and that's why we created a Chief Customer Officer position, because we want someone accountable to me, but to the company and to the Board into the driving forward with a single accountability point, all these actions, which address software, as I mentioned before, but many other aspects, which I think a great opportunity for us to improve, not only versus software, to surpass performance, but also against the industry, which generally, I must say, from what I see, has a lot of room to improve in terms of customer service. So, again, thank you for that. Reestablishing a brand and rewarding the right of our customers is my absolute key priority.

That concludes the questions from the Say Technologies platform. We will now take questions from the phone lines. [Operator Instructions] And our first question will come from the line of Andres Sheppard-Slinger with Cantor Fitzgerald. Your line is open.

First, I just wanted to quickly thank Taoufiq as well for all his contributions. It's been great working with you and you will be missed. Regarding questions, you know, Silvio, I wanted to maybe touch on the AMP-2 and mid-size a bit further. I realize you talked about it in your prepared remarks, but I guess as we move closer to production of mid-size starting in early 2027, curious if you can maybe help us understand, you know, what are the milestones involved that are left regarding the completion of the Saudi plant? You know, what can investors be tracking there? And separately, you know, how should we think about those initial deliveries in the first half before ramping up in the second half of next year? Thank you.

Andres, thank you for your question. So it is about AMP-2 and mid-size. So what are the key milestones? Let's start with AMP-2. AMP-2, as I tried to address in my remarks, there are two of them. They're the ones that are achievable to us under our control and the ones which are outside our direct control. In terms of what is our control, the only thing missing is the industrialization testing or the different parts of the production line. So there is the painting, there is the body in white, all the solutions, which are now into final testing with the different suppliers that brought that.

That is something which is on track now. Of course, never should be taken for granted, but that's why we are confident we should be able to close them as planned by year-end. Parts which are outside our control and this mainly involves certain elements of local certification, but also access to power, for example. All the things that are not in our control, but have to be validated with the local authorities or agency, which so far have been extremely supportive. So I'm very positive. The third element, which is not entirely in our control, the suppliers network which is due to be built around this new manufacturing area being built in the very same geographical location where the factory is. These ones are not only, it depends on the supplier corresponding which we have only limited control and so this is one thing that we need to keep close watch of. To be clear, we have backup plans. If they were late in their localization plans, we would be able nonetheless to proceed with production by importing the parts.

This is all in flux, and again, not in our control, hence our caution into providing an exact date. In terms now of the mid-size, the mid-size we're going through all the certifications. I mentioned all the lists and parts as part of my remarks. So far, I tell you, also based on my personal experience last week with this prototype, it is all looking very, very well. But again, in automotive, until you have not produced a car, you don't know until there are all those certifications and not only external, but also internal that want to make sure are done well. And, you know, to do it well takes time. And in the past, mistakes were done.

I want to make sure they're not repeated here. So all in all, that's why we are not being held to account to a date established top-down, my objective is to launch the car when it is ready with top quality. And when that moment will come, it's going to be in '27, when we are clear about the date, I'll be communicating that to everyone.

Excellent. Thank you, Silvio. I appreciate all that color. That's very helpful. And maybe just as a quick follow-up, so you highlighted a $1.4 billion cash flow improvement for the year, which is excellent. And now with $3 billion in total liquidity as of the quarter, just curious, if you can maybe give us a sense of how you're thinking about capital needs going forward.

Andres, thank you for the follow-up question. To be clear, capital needs going forward will be a function of the business planning we are just in the process of completing. We will once done with the planning and clarity on the business planning, the top and bottom line, this will be the time to assess how to then manage our balance sheet. On the findings we'll decide. We have many options, we have a very supportive Board, and as soon as we will have an answer on how to do that, we have different alternatives, we'll be communicating that.

Wonderful. Thank you again. Congrats on the quarter. Looking forward to working together. We'll pass it on.

Same here. Thank you, Andres. One moment for our next question. That will come from the line of Alexander Perry with Bank of America. Your line is open.

I guess first, I just wanted to ask, you know, what milestones should investors be monitoring to measure progress in robotaxi growth? Maybe talk through some of the key learnings from your testing and validation in San Francisco and Houston. Thanks.

Alex, thank you for this question. So clearly there are two elements. This is a three-party partnership. So I can comment on the learnings of the engineering EV supplier side. I will refrain from comment concerning the software and platform side which are with our partners. So clearly Houston and Bay Area. The idea is really we have a vehicle that is software-defined, so the challenge of integrating that to the new firmware in the software is in fact facilitated by the way our vehicles are conceived. It is really essentially about how to make sure that all the checks and balances, all the redundancies, which are very much safety related, function through operations about this, robotaxi certification. It's all about miles accumulated, and there are miles on the road, miles virtually, and now the whole system, which is now 3, so the software, the firmware, and the vehicle respond to that. So, data is there a number, and I personally, by the way, every two weeks review the state of the projects with my counterpart at Nuro. And in parallel, there is a number also certifications that have been dealt with by Nuro in terms of openness. It's passing all those certifications, making sure enough miles are accumulated that then paved the way for the final launch. This is what we're following. So far, there is honestly no red flag in terms of the engineering aspect.

But again, there is new systems coming through. I was last week, as I mentioned, in Arizona, and I saw how the prototype vehicles are being assembled and shipped to our partners, and I am very excited to see them on the road, and how they perform will be the next stage of validation of the project.

That's really helpful. And then my follow-up question was just on inventory and how you're thinking about inventory. How much do you plan to underproduce relative to deliveries? What is the ultimate goal? And I think you actually produced more than deliveries in the second quarter, I guess. Is the expectation that that sort of reverses as we move into the back half? And when should we expect the inventory right-sizing to be complete?

I'd like to pass this question to Taoufiq, please.

Hi, Alex. So, I mean, as we said, we are not providing a detailed guidance, but the baseline that we're starting from, so I mean, we have published obviously our inventory, so you saw the evolution since, I would say Q4 of last year. So what we want to do is that between now, and year-end we come back to a normalized inventory level so that's the plan that we're building so that's also one of the key components of the $1.4 billion cash optimization plan that we're working on. So normalization is supposed to happen by year-end. So as a result of that, so the expectation is that production will slow down. When it comes to deliveries, we have the normal seasonality which would help. You know that, and we have commented on that during our prepared remarks.

We're expecting a growth for the second half of the year when it comes to the deliveries and this is really the key component of the plan which will allow us to burn down the inventories that we have currently built and obviously the ultimate expectation is to release this trapped cash into real cash for the business.

If I may just double down on this question, Alex, for a second here. Going back to the earlier question, so inventory made me think about deliveries, right? So let's not forget this Uber Nuro project for the business. For now, has 35,000 units included in delivery. Those will start ramping up as of January or as soon as the project goes live. I'd like to say this is for us, not only for SEI, but as I said in my speech, this is really a new industry, which I think needs to be taken into consideration in terms of our growth prospects, which will not only be in this traditional EV, but very much so in an industry that is at the start of an exponential growth and therefore this project provides us a unique chance to position us for an additional growth with higher volumes and higher margins as I said and I feel very strongly about that also the investment and resources dedicated to that so sorry just wanted to bring that point back.

Thank you, Alex. One moment for our next question. That will come from the line of Andrew Percoco with Morgan Stanley. Your line is open.

Taoufiq, great working with you and wishing you the best in your next endeavor. But I guess maybe to start just where we kind of left off with that last question on inventory and the inventory turn, can you provide any more, I guess, clarity or color around within the buckets of inventory you put in the deck, raw materials, WIP, and finished goods, what's the proportion split between Gravity and Air within that? So, we can give you some indication.

First of all, hi, Andrew, and thank you very much for your very nice words. So, I mean, again, we are not breaking down the inventories by categories, but what we have said is that the majority of the production has been about Gravity, so you can take a reasonable assumption and consider that the big part of what we currently have on hand is Gravity related.

Okay, got it. That's helpful context. And then maybe just one question on manufacturing strategy. Obviously, right now running AMP-1 at a pretty low utilization rate, and you're still kind of ramping AMP-2 here. So I'm just kind of curious what your philosophy or your strategy is in terms of potentially consolidating mid-size production into AMP-1 and maybe mothballing AMP-2. What are your thoughts in general about trying to be maybe a little bit more capital efficient and running a higher utilization rate to optimize that fixed cost structure while demand is relatively de minimis in the near term?

Andrew, thank you for the question. I mean, in essence, this is part of what we're looking at now as part of our strategic planning. But to be clear, I asked the same question coming in, but the fact is today the AMP-1 factory is meant to design to produce Air and especially Gravity. The way the factory is designed, introducing a new line will create inefficiency on the other models. That's why the decision was taken to put this factory with a new platform in Saudi Arabia with AMP-2. So going forward, our job is to make sure we ramp it up with quality on both sides. Let's not forget that now we have a new source of volume, which is the Robotaxi.

So our plan is to optimize capacity utilization by also looking at these volumes and others that may come going forward, first of all by traditional business, but also by others that Lucid Technologies might generate. For now, that's all we can say, but I think it's a very understandable question and one that we cannot answer for now, but still a key to our profitability going forward.

Okay, that's super helpful. Appreciate it.

Thank you. Our next question will come from the line of Stephen Gengaro with Stifel. Your line is open.

Two things for me. The first is, and I know you're maybe not ready to give a whole lot of detail, but when you think about sort of the next couple of years, is the underlying business plan changing as far as, you know, willingness to license something of technology as one thing I'm thinking of, or just, and also just kind of the focus and importance of the mid-size? Is there anything material changing in the underlying plan? Is it all sort of financial and cost related?

Stephen, thank you for the question. The line is not ideal, but I do think your question related to the idea of licensing. I think as we look at our business planning, licensing absolutely is an option. And Lucid Technologies indeed also one of the activities will be to license or sell components into either automotive, EV, but possibly also to other industries. So that is very much something we're looking actively at. At the same time, allow me to come back. This will only be possible when we stabilize the business.

So our priority now is really our three Cs and our four must-wins, because then we're going to have the sustainable business model to take us forward. So all of what I understood you mentioned is still very much possible, and actively looked at, but we're also very conscious of our priorities, which are at the moment is to stabilize our business as it is today.

Thank you. One moment for our next question. And that will come from the line of Itay Michaeli with TD Cowen. Your line is open.

It's been great working with you. Thank you for everything and all the best. Maybe just a first question. I'm curious what the go-forward marketing and branding campaign might look like as you curtail production, and maybe hopefully can strengthen pricing. Just kind of curious how you're thinking about brand positioning, particularly ahead of the mid-size launch.

I thank you for the very current question. Something which in fact I realize I didn't speak much about this time, but I will elaborate more next time, is that we are, as we speak, carrying out, we just initiated actually this week in fact, a whole I call it a brand audit, and then it will allow us to reposition our brand in a way that is consistent with our product. Today, our brand is very strong, but I think it is fair to say the approach, the understanding of the brand is not consistent across every sector, every market, and I'm going to say even internally within a company in the sense of how people see that. So I want to make sure that this is clear because this is a strength. So building on that asset is a clear platform to go forward. I look forward to sharing more about that, but I do concur with your view that it's something that needs to be looked at. And this is independent from the volume we do, but this is a key to differentiate our offering and make sure that we build on our strengths and we are clear about our priorities and what makes our products unique in the eyes of our customer.

And this will have to include more and more the customer experience. Only engineering aspects, but to relate to the emotions that our products evoke walking customers, which frankly speaking, one of the reasons why I also came to Lucid in the first place.

That's helpful. As a quick follow up, I think it was mentioned a few times, sort of an effort to improve the unit economics. But typically there is some relationship between volume and unit economics. And so I'm curious, sort of during this period where volume is a bit more in a kind of a low period, how you're able to improve unit economics and sort of maybe some targets there would be helpful. Thank you.

Thank you for the follow-up question. I'm not in a position, again, to provide targets, but what I can tell you is that our suppliers have been extremely supportive in the way we look at different volumes in combination with profitability and say unit economics. At the same time, there are things that are also not controlled. For example, we have way too many options. So working on our configurator to make sure we focus on the trims that also support economics, is a key element and you can imagine that is itself a good opportunity. So that's an example of exactly the type of non-stopping exercise to look into every aspect of the business to make sure we establish a solid way forward. So thank you for the question, which allowed me to address that.

I will look forward to coming with more detail as we continue our changing.

Thank you. [Operator Instructions] Our next question will come from the line of Michael Ward with Citigroup. Your line is open.

When I look at page 23 and you talk about $1.4 billion in cash savings by the end of the year, are those annualized savings, cash savings, or a run rate? Because it's always going to occur in the second half.

Hi Mike, thanks for the question. So the $1.4 billion is what we're expecting to save this year between now and year-end. So that's a 2026 impact that will be reflected in our results. So now part of it obviously as you can imagine we will make it sustainable and part of it will be impacting as well the baseline for next year so we're trying to do things from a structural standpoint removing some of the cash but they are also part of the savings and optimizations which are leveraging phasing. So some spend will be potentially pushed to next year. So when you read the 1.4, read it as an impact in 2026.

And so then, so it sounds like some of the CAPEX are deferred, so they're not eliminated. But it sounds like the inventory... it looks like to get back to the December 2025 level, it's like $300 million. So there's more there. And that sounds like more of a structural change. Is that the right way to read it? Getting more efficient with the new rate there?

That's absolutely the right point. So, I mean, and we refer to it in the prepared remarks, it's really about how we accelerate the conversion cycle. So reducing the timing between the moment where we receive the raw materials for our products into converting them into WIP and finished goods, that's something that we're working on from a structural standpoint, and it's really about carrying the lowest level of working capital and translating this working capital into revenues as soon as possible. And this obviously touches receivables, payables, so it's really an end-to-end approach and structural change to your point that we're implementing currently.

And it leads to a lower inventory write-down, correct?

That's right.

And the second thing is on the Cosmos, where are those prototypes being built? It sounds like you have some out there being tested and certified already. And where are those being put together? In AMP-1 or –

Today it's assembled in Coolidge. We have a factory next to AMP-1 considered a part of it, which is still in Arizona. And so today we have the pilot lines in Coolidge, in a facility which is just a few miles away from Casa Grande. This is where we also have a test track and that's how we drive our prototypes and make them ready. So there is actually an interesting technology transfer that we're going to do from Coolidge into Saudi Arabia. In fact, we have a whole line testing everything before we can be transferring it to AMP-2 in Saudi Arabia. And when will the prototypes begin coming off AMP-2? That is what I said before. They will be coming prototyped. That will be starting in the early '27, and the full runtime production will be in the second part.

Okay. Thank you very much. Really appreciate it.

I'm showing no further questions in the queue. I'd like to turn the call back over to Silvio for any closing remarks.

Thank you. So as we come to a close here, I'd like to thank you all for joining us today, for your engagement and for your questions. Our priorities are clear. Reduce cash burn, improve quality and the customer experience, build a high premium team and culture, simplify the company and deliver our must-win projects. We know that rebuilding credibility will take time, and we intend to earn it through consistent results. Thanks again, and I look forward to seeing you again soon and continuing our conversation. Bye-bye.

This concludes today's program. Thank you all for participating. You may now disconnect.

Ladies and gentlemen, thank you for standing by, and welcome to the Lucid Group First Quarter 2026 Earnings Conference Call. Please be advised that today's conference call is being recorded. [Operator Instructions]

I would now like to turn the conference over to your speaker for today, Nick Twork, Vice President of Communications. Please go ahead.

Thank you, and welcome to Lucid Group's First Quarter 2026 Earnings Call. Joining me today are Silvio Napoli, incoming CEO; Marc Winterhoff, our Interim CEO; and Taoufiq Boussaid, our CFO. Before handing the call over to Silvio, let me remind you that some of the statements on this call include forward-looking statements under federal securities laws. These include, without limitation, statements regarding the future financial performance of the company, production and delivery volumes, vehicles and products, studios and service networks, financial and operating outlook and guidance, macroeconomic, geopolitical, policy and industry trends, tariffs and trade policy, company initiatives, leadership changes and other future events.

These statements are based on various assumptions, whether or not identified in this communication and on the predictions and expectations of our management as of today. Actual events or results are difficult or impossible to predict and may differ due to a number of risks and uncertainties. We refer you to the cautionary language and the risk factors in our annual report on Form 10-K for the year ended December 31, 2025, and subsequent quarterly reports on Form 10-Q, current reports on our Form 8-K and other SEC filings and the forward-looking statements on Page 2 of our quarterly earnings presentation available on the Investor Relations section of our website at ir.lucidmotors.com.

We undertake no obligation to revise or update publicly any forward-looking statement for any reason, except as required by law. In addition, management will make reference to non-GAAP financial measures during this call. A discussion of why we use non-GAAP financial measures and information regarding reconciliation of our GAAP versus non-GAAP results is available in our earnings press release issued earlier this afternoon as well as in the earnings presentation. With that, I'd like to turn the call over to Lucid's incoming CEO, Silvio Napoli. Silvio, please go ahead.

Thank you, Nick. Good morning, everyone, and thank you for joining. This is my first earnings call with Lucid and has already had opportunity to share with many of you, and I'm extremely pleased to be here and part of the Lucid team. With not even a month with the company, I'm still on a very early stage, so I'll keep my remarks brief. Let me start by reiterating why I'm here. Lucid brings together state-of-the-art technology, a premium product platform and a unique opportunity to build a strong enduring position in a transforming industry and that combination is compelling. That is the reason that brought me here.

Today, 3 weeks into the journey, I'm even more convinced that this is the case. In my first days, I've had the opportunity to meet with our teams in Newark headquarters and in some of our key markets. In fact, on the very first day, I traveled to visit a factory in Arizona, the heart of Lucid. Last week, I traveled to Saudi Arabia to witness a strong brand recognition in this fast-growing market and to see firsthand the progress of a new factory under construction.

As you know, this manufacturing center is an essential part of our commitment to drive scale, profitability and to position Lucid on the world stage. While there, I've also been meeting with employees, shareholders and with local stakeholders. And everywhere I go and focus on listening, I'm beginning to understand where we are strongest and where we need to improve. And what stands out immediately is the incredible domain competence and outstanding motivation of the Lucid team and the strength of our product. At the same time, it's clear that realizing Lucid's full potential will require sharper focus and consistent execution, particularly around simplification, prioritization and speed.

My near-term priorities are straightforward. Recenter all our activities around the customers, ensure the organization operates with clarity and accountability to focus resources on the highest impact areas and embed a stronger culture of cost and capital discipline across the business. A central objective over time is to build a more, self-sufficient company one that progresses towards funding its own growth and that means being rigorous in delivering on our commitments. And now we allocate capital to a few [indiscernible] priorities.

In simple words, this means making clear choices on where to invest and just as important where not to. At the risk of stating the obvious, I'm not in the position to comment on results prior to my journey. Accordingly, I trust you will understand that today, I will not comment on any specifics, including the outlook. My goal over the coming weeks is to deepen the understanding of the business, so I can engage more fully with you in the future discussions. With that, I'll turn the call over to the team to walk you through the Q1 results. Thank you.

Thank you, Silvio, and good afternoon, everyone. Let me start with the key takeaways. We expanded our Uber partnership to at least 35,000 vehicles, raised over $1 billion in new capital and ended the quarter with a clear cost reduction program underway. The foundation is solid, and we are building on it. We have made meaningful progress on each of these fronts. Among the highlights. First, we expanded our partnership with Uber to provide minimum of 35,000 robotaxis, up from 20,000 previously announced and increased their investment to $500 million, up from $300 million, improving our visibility into long-term demand and revenue in a new and growing market.

Further reflecting the strengthening relationship between our companies, Sachin Kansal, Chief Product Officer at Uber has been nominated for election to Lucid's Board of Directors. Second, we significantly strengthened our financial position, raising approximately $1.05 billion, including $550 million investment from the Public Investment Fund through a private placement, reaffirming their continued support and long-term commitment to Lucid. We maintained approximately $2 billion of undrawn commitment under the DDTL after drawing $500 million of cash in April, further enhancing our financial flexibility.

Pro forma for the capital raise and the DDTL increase, liquidity at quarter end would have been $4.7 billion providing ample flexibility to continue to support development of our midsize platform and the continued build-out of M2. Third, we continue to execute to deliver scale and profitability, delivering $282 million in revenue despite the unforeseen geopolitical tensions and logistic obstacles in the region. During Q1, our M2 construction never stopped, and we continue to install capital equipment and work towards a start of production. The plan remains to ramp up midsized vehicle production in 2027. And we launched an aggressive cost reduction program targeting cost savings across all areas of the organization in all geographies.

Let me walk you through the key updates of the execution of our strategy in detail. Following the framework we laid out at our recent Investor Day, the Lucid Air and Gravity continue to anchor our near-term growth. And our focus here remains execution, quality, delivery and customer experience.

Operationally, we produced 5,500 vehicles in Q1, up 149% year-over-year. Despite a temporary disruption, which elevated costs, we exited the quarter trending back toward our cost targets. We delivered 3,093 vehicles, which was flat compared to Q1 2025. When Gravity deliveries were temporarily impacted by a supplier issue, we acted quickly, resolved it and resumed deliveries with additional quality controls. As deliveries resumed, we saw improving momentum through the quarter, including the highest March deliveries in Lucid history, up 14% year-over-year. We also experienced a strong rebound in order intake, up 144% in North America in March from February, with Gravity driving the majority of demand.

In March, we regained our position among the best-selling EVs in our segments. We also continue to make progress on our partnerships for our international distribution, including the official launch of our first retail partnership in Europe, which allows us to scale more quickly in a capital-efficient way. We expect the delivery trajectory to improve through the year. Near-term demand signals are mixed, but we see tailwinds building into the second half.

Apart from seasonality, which historically drives greater deliveries in second half, there are numerous other factors which may deliver a lift, including high gas prices, which still demand towards vehicles with more attractive operating costs, competitive dynamics, including exits from the Air and Gravity segments, lease cycles, Lucid software updates, potential tariffs on European imports and potential improvements in macroeconomic and geopolitical conditions.

As a result, we continue to expect a back-end weighted delivery profile for 2026, but are confident in the long-term trajectory of demand. Our priority now is consistent and predictable conversion of production into deliveries. Central to our framework to scale and drive profitable growth is the midsized platform. The midsized platform brings Lucid's signature range, efficiency and driving experience to a much larger TAM and broader set of customers and is key to unlocking scale, affordability and improved unit economics.

At our recent Investor Day, we provided a clearer view of the future product portfolio with the expected pricing starting below $50,000, reinforcing Lucid's its entry into a more accessible segment of the market. I'm pleased to be able to share that our BOM cost position remains favorable, still tracking below our initial cost estimates. During the quarter, construction on M2 and installation of capital equipment continued and we remain on track for production ramp-up of the midsize in 2027.

Turning to our third priority autonomy. In mid-April, we announced the expansion of our partnerships with Uber, increasing their total investment to $500 million and expanding the planned deployment to at least 35,000 robotaxi vehicles. This represents a meaningful increase in both scale and long-term visibility for the program, which generates a new revenue stream through a partnership approach that enables rapid speed to market in a new and rapidly growing market with minimal CapEx.

I'm excited to share that we have met all milestones so far in our joint project with Nuro to provide autonomous Lucid Gravities to Uber for commercial launch by the end of the year, and remaining milestones are on track. We delivered 75 engineering vehicles and testing and mileage accumulation is ongoing in several cities throughout the U.S. Starting in mid-April, Uber and Nuro employees are now able to test the end-to-end customer experience, including ordering a robotaxi within the Uber app and choosing from select destinations for drop-off.

Our partners at Nuro have also received approval from the California DMV for driverless testing of the Lucid gravity in the state, making it one of the only a handful of vehicles that have received such approval. This is a key step in paving the way for launching commercial autonomous operations later this year.

Looking forward, we are targeting the following milestones as we track toward commercial robotaxi operations in late 2026. This quarter, Lucid will start our production validation builds, which are intended to reflect our production intent design and some of the key robotaxi features like exterior beaconing for customers, interior cameras and consumer interfaces. This build is expected to be completed in Q3 and allows us to begin more comprehensive end-to-end testing with our partners as well as homologation testing and validation.

And following the completion of testing in Q3, we anticipate starting regular production of robotaxi vehicles for commercial sales in early Q4 at M1. As you can see, we are well on our way to achieving our goals with our robotaxi program and commercial launch is on track for late 2026. In parallel, we continue to expand advanced driver assistance features across our consumer vehicles. Over time, we expect these features to become an increasingly important source of recurring revenue with subscription-based offerings being launched starting in 2027.

In closing, Q1 highlighted areas where we still need to improve execution, and we are taking clear actions to address them. I'd like to close with a few personal words. It has been a privilege to serve as interim CEO. We delivered 2 years of consecutive record quarters when it comes to deliveries until the end of 2025. We ramped the Gravity throughout 2025, resulting in a production increase of about 100% last year. We've navigated real headwinds and the team's ability to keep moving through them is something I'm proud of. We sharpened and expanded our strategy with a clear and capital-efficient approach to provide leading autonomy solutions both for robotaxis and personally owned vehicles.

We made meaningful progress across our partnerships, including expanded commitments from both PIF and Uber. I'm confident in this team in Silvio's leadership and in where Lucid is headed and I'm looking forward to continue to contribute as Chief Operating Officer. With that, let me hand over to Taoufiq.

Thank you, Marc. I will walk you through the financial results for the quarter, the structural drivers behind them and how recent actions position us to execute against the framework we laid out at the Investor Day. Q1 was disrupted by a temporary stop sale but the underlying business held and in March, orders and deliveries rebound. With roughly similar units delivered and lower regulatory credit sales, revenue grew by approximately 20% and year-over-year to $282 million in Q1, driven primarily by mix and pricing effects from Gravity.

Let me give you the context that makes this number more useful for thinking about Q2 and the rest of the year. We produced 5,500 vehicles in the quarter, but delivered 3,093. This gap reflects a combination of the impact of the temporary Gravity stop sell during which finished vehicles sat in inventory pending validation rather than converting to revenue and segment contraction. A key highlight of the quarter was Uber's expanded vehicle commitment and increased investment in Lucid. It matters for 3 reasons: It improves long-term revenue visibility. It derisks the volume ramp into the midsized era, and it validates our vehicle platform as the reference point for commercial autonomy deployment.

This is a durable addition to the capital structure and to the revenue outlook, not a onetime transaction. Gross margin for the quarter was negative 110.4% versus negative 80.7% in Q4 and negative 97.2% in Q1 a year ago. I want to be precise about the work because the composition matters more than the headline. 3 factors drove the sequential decline. Lower delivery volume against a largely fixed manufacturing cost base, under absorption of fixed cost and large regulatory credit revenue in Q4 that didn't repeat in Q1.

Partially offsetting these were IEEPA tariff refunds and the lower inventory write-down versus the prior quarter. These costs were tied directly to the stop sell. With that resolve, they don't carry forward. What remains and what we are focused on is the structural trajectory, which includes as shared at Investor Day, an average of 50% to 60% reduction in unit costs over the coming years. While we saw unit cost spike during the quarter driven by temporary disruption, it trended back towards the targeted trajectory in March. As volumes scale into the second half and with the launch of the midsized vehicle platform, we expect continued structural improvement in unit economics.

I want to be clear, the underlying midterm trajectory of unit cost improvement that we described at Investor Day remains intact and Q1 does not alter it. Turning to operating expenses. This totaled approximately $678 million for the quarter. R&D was $336 million, down sequentially from $361 million, reflecting program level sequencing even as we continue to fund the midsized platform and our autonomy stack. SG&A increased $22 million sequentially to $304 million, primarily driven by discrete items, including the prior quarter provision reversal. Excluding these items, underlying SG&A was broadly stable.

Year-over-year, SG&A increased $92 million with the comparison impacted by $35 million noncash benefit in the prior year related to the reversal of stock-based compensation. These numbers also don't yet capture the $500 million in savings expected from our recently announced headcount actions over the next 3 years with the near-term impact most significant.

Taken together, our posture on operating expenses is straightforward: protect the investments that build long-term competitive advantage, mid-size autonomy software and drive discipline everywhere else. Net loss for the quarter was approximately $1 billion compared to $366 million in the first quarter of 2025. The increase reflects the gross margin dynamics we discussed, continue with the investment in the business, particularly the midsize platform and higher SG&A with the year-over-year comparison impacted by a discrete benefit in the prior year.

Importantly, a significant portion of the year-over-year change is driven by noncash and nonoperating items, including a $274 million of favorable change in the fair value of derivative liabilities related to movement in our stock price as well as lower interest income and higher interest expense. And as mentioned, it does not reflect the benefits of our recent headcount actions, no more recently launched cost takeout initiatives.

Net loss in any quarter reflects noncash and nonoperating items that moved significantly with our stock price. The operating loss and cash consumption metrics give a cleaner read on trajectory. Our focus remains on improving operating leverage as we scale volumes and continue to drive cost discipline across the business.

Turning to liquidity and capital structure. We ended the quarter with approximately $700 million in cash and cash equivalents and total liquidity of approximately $3.2 billion. Subsequent to quarter end, we executed a series of transactions that strengthened our balance sheet. $200 million of equity investment of common stock from Uber, $300 million from a registered common stock offering and $550 million in convertible preferred stock from PIF.

In addition, PIF and Lucid announced an amendment to our delayed draw term loan, providing greater flexibility and approximately $2 billion of available liquidity following a $500 million draw on April 1. Giving effect to the capital raise and DDTL increase, total liquidity would have been approximately $4.7 billion at quarter end.

This extends our operating runway into the second half of 2027 and gives us the flexibility to found Gravity ramp and to construction and launch preparation continued investment in the midsized program and autonomous stack. On the question of dilution, which I know is on investor minds, the recent financing was structured deliberately to balance liquidity needs against dilution considerations. The comfortable preferred structure with PIF reflects that balance as does the sizing of the common equity component.

We will continue to evaluate all financing options, including the public markets when the appropriate conditions materialize. And our bias is toward disciplined capital deployment and with opportunistic risk. The strategic stockholder base around this company anchored by PIF and now meaningfully reinforced by Uber gives us a structural advantage in how we think about capital over the medium term.

Now on working capital and inventory. We also expect to see benefits to cash flow driven by improvements to working capital. Inventory stood at approximately $1.47 billion at quarter end, up from approximately $1.1 billion at the prior quarter and elevated by the stop sale buildup. As deliveries normalize through the year and we draw down that inventory, you should expect a higher conversion into cash.

Beyond the stop sale normalization, we are tightening production to delivery alignment as an ongoing operating discipline. The new production reporting methodology, which I will cover in a moment, supports that by improving transparency on the conversion step. We took over $200 million in inventory impairments in Q1. Going forward, we expect both to decline and as inventory reduces through the year, we expect to benefit from impairment releases.

Now I mentioned our new production reporting methodology. I want to take a moment on this change to how we report production. Starting this quarter, we are moving our production metric to a process complete definition, meaning, we count a vehicle once it has completed the factory gating process regardless of whether it ships as a complete unit or in a semi knock down form. This change better reflects true quarterly production and reduces the volatility that the prior methodology introduced due to shipment logistics.

It has no impact on inventory or days on hand reporting, both of which remain based on finished deliverable vehicles. The effect for investors is greater comparability with peers and a cleaner signal on underlying operational cadence. Under the new methodology, the normal auto industry seasonality, Q2 strongest based on working days, Q1 and Q4, softer due to holidays and planned shutdowns will appear more visibly in our reported numbers.

Now let me address our outlook and guidance. With Silvio now on board and conducting his review of the business, we are suspending our prior guidance and we'll provide a full updated outlook at our Q2 earnings call. I want to be clear, this is a governance decision. Near-term demand conditions remain uneven, and we are managing our production cadence accordingly. Our 2026 objective is unchanged. We continue to work to closely align production with demand to avoid excess inventory.

We are not constrained on capacity. We are constrained by our own discipline not to build inventory ahead of demand. As market conditions develop, we will scale production accordingly. We have launched a company-wide program to sharpen operational efficiency, reduce costs and concentrate capital on the highest return opportunities. Q1 cash performance was affected by the stop-sell action and the associated inventory reset, which we expect to normalize as we move forward.

We are focused on restoring consistent cash generation and building a more durable operating foundation. Production of our first midsized vehicle is expected to ramp throughout 2027. and our Lucid Gravity robotaxi program in partnership with Uber and Nuro remains on schedule for launch in late 2026. In closing, to put the quarter in perspective, we strengthened our balance sheet, expanded the strategic partnership that improves long-term visibility and are implementing reporting changes that improve transparency.

A temporary stop sell in February was resolved, and we have taken action to address the root cause. The Investor Day framework [indiscernible] at profitability runs through scale from midsize cost reduction through M2 and improved mix and operating leverage. Q1 does not change that trajectory. It reinforces the importance of disciplined execution, and that is where focus is. The fundamentals of this business, the technology, the product and the strategic position we have built are intact. We are managing this period with discipline, and we intend to emerge from it in a stronger competitive position. With that, let me turn it over to the operator for your questions.

[Operator Instructions]

Our first question comes from [indiscernible]

How does management plan to restore shareholder confidence and address concerns about bankruptcy or a potential take private scenario. .

First, I want you to know that we hear your frustration and restoring your confidence is of our utmost important to us. We are focused on rebuilding your confidence through disciplined execution, transparency and measurable progress against key operational and financial milestones. The business is moving from a period of heavy investment toward a phase where we can begin to leverage those assets at greater scale. We ended 2025 having scale production, improved unit economics and maintain liquidity. And yes, we've been hit with an unforeseen operational disruption in Q1, which we solved, and deliveries and orders have rebounded towards the end of the quarter.

We are focused on translating operational progress into more predictable financial profile. To your specific concerns, we do not speculate on market rumors or hypothetical strategic alternatives. Our focus is on executing the plan we laid out, strengthening the company and creating long-term value for our shareholders.

All right. Our next question comes from Robbie S. When is Lucid going to turn a profit? What is the plan?

At our Investor Day, we laid out a clear path to profitability. The target is gross margin breakeven in the midterm, yielding towards the mid-teens by [indiscernible] and on cash flow, we expect to reach positive free cash flow on a similar horizon. The levers to get there are straightforward. It starts with improving fixed cost absorption as volume growth continuing to bring down bill of material and manufacturing costs, scaling Gravity, launching the midsized platform and developing higher-margin recurring revenue from software, ADAS and autonomy.

On the midsized platform specifically, this is a meaningful expansion of our addressable market. And importantly, it has been designed from day 1 with cost, scale and manufacturability at its core.

The next question comes from Crystal. Based on your current cash burn rate, how many quarters of runway does Lucid have without raising additional capital? And what specific milestones must be met before then to avoid dilution?

Based on our current cash burn and the recent financing activities, we have taken, including the capital raise and the extension of the DDTL, we have funding runway into the second half of 2027. That gives us adequate flexibility to support the Gravity ramp, progress M2 construction and continued targeted investments in both the midsized platform and our autonomous software.

During this period, our focus is on executing the operational milestones that moves us towards breakeven and reduce our reliance on dilutive capital. That means disciplined execution of the Gravity launch, continued manufacturing, efficiency gains, measured advancement of M2 aligned with demand and sustained momentum on the midsized program.

At the same time, we are actively pursuing top line diversification to higher-margin software and services, particularly around ADAS. On dilution, we are deliberate in how we approach capital raising. We have consistently favored structures that limit near-term dilution and preserve optionality. The use of preferred convertibles being a good example of managing both timing and impact, but ultimately, the strongest answer to dilution is accelerating our path to breakeven because this is what opens up a much broader range of financing alternatives.

That concludes the questions from the Say Technologies platform. Now I'll turn it over to the operator for live questions. .

[Operator Instructions] Our first question comes from the line of Michael Ward with Citigroup.

Can you share any volume targets for M2 for 2027? It sounds like it's going to be a gradual type launch throughout the year. And I'm just wondering if the launch is better than expected, does that liquidity take you into 2028?

The targets on the volume, we actually revealed at the Investor Day, and they have not changed. So the really the -- they have not changed. No, no. We are really laser focused on that ramp.

Okay. And then the second thing I would ask is, as it relates to the robotaxis, are the volume deliveries to Uber depending on them getting certified? Or is there some sort of a schedule for those volume numbers to start to accelerate? .

Well, it's basically actually Nuro getting the certification. As we just mentioned, yes, very good progress on that. So we are on track with this. I mean, still we have to have final certification to be able to do this. And for instance, when we start in the Bay area here in California. But so far, even all the development and the certifications are moving as we expected.

Our next question comes from the line of Andrew Percoco with Morgan Stanley.

Maybe if I can start out on the free cash flow expectations and just your general commentary around having sufficient liquidity through -- or at least until the second half of 2027. Can you just maybe help provide a little bit more context around what some of the underlying assumptions are within that? I understand that you guys are pulling the delivery guidance for the year for some governance reasons, but there's anything you can kind of provide in terms of what your underlying assumptions are around demand.

That would be super helpful.

Andrew, I think that the first answer to your question is that you need to recall that there is a typical seasonality in the company and that we see a significantly improved cash flows during -- on the back end of the year. So we shouldn't do any read-through of the cash performance as of Q1 because of 2 specific events. The first one is the stop sale, so which has led to higher cash burn, and we are saying that we will be recovering that. And the second element that you need to take into account is the typical seasonality with a step-up in the sales towards Q3 and Q4, which is helping us to manage the cash burn.

So we haven't guided specifically for the cash burn. We have guided for the runway. The statement remains unchanged. So we will be providing more visibility on that when we will reaffirm the guidance in Q2.

Okay. Understood. And maybe just my follow-up is just around the commodity cost environment. A lot of your OEM peers are continuing to highlight some pressures there this year and into next year. Can you just maybe provide an update in terms of what you're seeing? I think you guys in the past have said that you've at least hedged or contracted out some of that commodity exposure. But to what extent are you seeing any kind of incremental pressure there and might that impact that path to profitability?

Actually, right now, that is very limited. Yes, they have increased it over the last couple of months on certain raw materials like aluminum. But very recently, for instance, we haven't actually seen an increase. And the other topic is the DRAM, which hits the whole oil industry. But even that, I mean, as compared to the rest of the BOM, cost of the vehicle is a small amount. So we don't see a major impact compared to where we ended end of last year right now.

Our next question comes from the line of Ben Kallo with Baird.

Just maybe the first one, could you maybe talk more about the sales partnerships, which I guess will be very important, especially as you introduce the in-size vehicle, you mentioned 1 in Europe.

I mean what we're doing there is basically extending our approach there from a pure direct-to-consumer model into also partnering either with dealerships in an agency model, for instance, within Germany, so in areas where we already have D2C network or with importers in new markets that we are entering right now. And we are in the midst of all this process. And recently, launched the first agent in addition to our D2C outlets in Germany, which gives us from 1 day to the other 2 additional cities to cover.

And we have numerous LOIs. I think the recent number is like 12 LOIs that are -- we're pushing forward and hopefully get to a contract situation and launch very soon. but it allows us to much faster grow within the areas and the countries we are already in, for instance, in Germany or in the Netherlands or expand into new countries through an importership where you then use existing infrastructure and existing business relationships of those importers to scale much faster.

Great. And then just on the review, Silvio review. Could you maybe talk if possible, just about the timing of whether we should expect another update or is there [indiscernible] not a lot of certainty in that for now.

Thank you, Ben. I think at the moment, I'm getting to the position. I would say, as which was somehow gaining a sense where we are. Now in terms of by when I'll be ready to give a plan, et cetera, this I think is something I'll discuss with the board at the earliest opportunity. Great. Fair good evening.

Our next question comes from the line of Andres Sheppard with Cantor Fitzgerald.

Congratulations on the quarter and just wanted to maybe take a brief moment to thank Marc and congratulate all these great efforts over the past 2 years. First question, I just wanted to clarify on the guidance. So just to be clear, you'll give us an update in Q2 regarding the production guidance as well as the CapEx guidance.

But just to be clear as well, the midsized timing, robotaxi timing and also the medium-term goals those are all overall on track and unchanged just wanted to clarify.

Well, on the midsize, this is also what we guided before. So that is also subject to the suspension right now. But I think what is important to understand is that what really counts is the ramp up in 2027, and that's what remains unchanged. As I said in the beginning, the volumes that we're looking at is unchanged. On the start of production, that's something that we will guide after we view is Silvio and the team then by the end of Q2. I also want to point out that when we talk about the start of production, that is less impactful actually than the ramp.

I mean we've seen this. You probably remember with the Gravity where we had an SOP, but then we weren't able to ramp as we intended to. And that is something that we definitely absolutely want to avoid, and that's why we want to review everything and make the right decision for the business.

Wonderful . Okay. That's really helpful. And maybe just as a quick follow-up. I wanted to touch again on the second production facility, the one in Saudi just given the geopolitical conflicts still going on, do you foresee any bottlenecks or any issues to the time line for the construction there? Or is that on track? Just any update there would be helpful.

Well, so far, I mean it is going and we have never stopped doing it. I mean we had a few delays when it comes to arrival of equipment to be installed. But our team was able to mitigate that. And so yes, on that as well, we will update at the end of Q2. But so far, we haven't seen any impact.

[Operator Instructions] Next question comes from the line of James Picariello with BNP Paribas.

This Is Jake on for James. First, could you give us some idea of the split between the Gravity and Air deliveries in the first quarter? And approximately how many units were pushed from the first quarter into the second by the stop sale.

I mean, as we said in the past, so the majority of our deliveries are now the Gravity. We don't give it [indiscernible] projection on that. I mean on the average selling price, you maybe can reverse engineer the math somehow. When it comes to how many sales are being pushed into the second quarter, it's actually a number that I don't have handy right now. I mean the numbers of deliveries and orders rebounded in March significantly, but that exact number, I don't have handy.

All right. And then I think a little bit longer term, you guys are targeting breakeven free cash by the end of the decade. Right now, your $4.7 billion and liquidity gets you into the second half of 2027. Is there any way to think about your total liquidity need to get from the second half of 2027 until 2029 or 2030?

Well, I mean, James, you asked us the same question during the Investor Day. I understand that it's a very important point for you. So again, the key data points that we have. So we have a trajectory of how we will be rebuilding the gross margin and how it will be progressing over the years. So it's a very important data point for you to assess. We have also communicated the details around the different levers for us to reach the breakeven and the rough timing to get there. I think that our historical and future delivery of the key milestones will allow you to do a calibration of what it would mean, and it will help you estimate the additional capital requirement, which is required.

Having said that, I would like to reinforce 2 very important points. So what we have said is that the important component of the cash burn is related to the CapEx in M2. So we have also shared our trajectory in terms of CapEx reduction. We will have a steep decline after 2027. And as a consequence of that, we will see a significant reduction of the cash requirements that will be needed for the plan. So over time, cash burn profile in itself will have to change and evolve. So again, I'm sharing some of the important data points. We have not historically been in a position to provide the exact quantification. We obviously have a plan what is really important is the milestones and how we're executing against some of these important targets, milestones beat in gross margin, be it in terms of reducing the CapEx and accelerating the trajectory to the breakeven. .

Ladies and gentlemen, I am showing no further questions in the queue. That concludes today's conference call. Thank you for your participation. You may now disconnect.

The next leg of our corporate series here. We're really excited to have Lucid here with us today. Lucid is an auto tech company that IPOed in 2021 and is focused on the design, development, customer experience, sale and service of premium electric vehicles, primarily, at least currently targeting the luxury consumer market. Its flagship consumer vehicles include the Lucid Air Sedan, Lucid Gravity three-row SUV and currently actively developing its Midsized platform, which I think we're going to talk a lot about. So really, really excited to have Lucid here with us today.

Today, we have Marc Winterhoff, Lucid's Interim Chief Executive Officer; as well as Taoufiq Boussaid, Chief Financial Officer. So thank you both for being here. We appreciate it.

So I guess maybe just to start, you just hosted your Investor Day. So I think timing is really good here. And you shared a number of updates. For investors who may have not been able to see the full presentation, can you maybe just walk us through what the most important takeaways you want sort of investors to focus on, on the back of your Investor Day that you hosted?

Yes. I think that there are a couple of key messages. The first one and probably in my mind, the most important one is that we are at a pivotal time, a pivotal time where we're transitioning from a period of heavy investment because we needed to establish our manufacturing system. We have 2026 being the last year of this heavy investment cycle and then we're moving to a phase in the history of the company, where we will start actually using this manufacturing system and leveraging the scale that we will get through our products. So with that, we were able to position a timing around the margin positive, around the cash flow. So we communicated that we're aiming at gross margin positive in the midterm and the free cash flow breakeven by the late decade. So that's the highlight of the guidance that we have provided.

Maybe I can add to that because what we also talked about is basically how we evolved our strategy because, I mean, as you rightfully said, in the past, we were basically a luxury company with one product, the Lucid Air sedan that won for those of you that have watched the Investor Day, won a lot of awards more than many other OEMs actually together, but was and still is in a relatively small segment, luxury sedan segment is not a big segment. Now we added the Lucid Gravity, which is an SUV, three-row SUV in the luxury segment. If you combine the addressable markets of the two, you're talking about something around $40 billion. But now with the Midsized platform, which actually we already have plans for three top heads on top of that platform, that enlarges our addressable market from about $40 billion to north of $350 billion. So a much bigger pool we are now in also at a lower price point. And so that's step number one.

Step number two is last year, we really laid out our strategy when it comes to autonomy. And before that, we were basically focusing on best driving vehicles and most efficient vehicles out there, and we still are because this is our DNA. But more and more autonomy, be it on the robotaxi side or be it for personal use, it becomes important. So therefore, last year, we defined our strategy on that and we're doubling down on this. We have -- last year, the first agreement with Uber developing a -- based on the Gravity, a robotaxi together with Nuro together and we somehow announced that we're finalizing another agreement, which is not fully finalized that will happen over the next couple of days and weeks in the same way now on the Midsized platform, so we're going down from a price point.

And last but not least, really providing autonomy to our -- higher level of autonomy to our consumer vehicles and also starting with subscription services to monetize software revenue as a recurring revenue beyond what we've done in the past. So we're really opening the aperture going into new revenue streams and also in markets that are currently developing and growing.

Really helpful. I guess maybe just to step back, Marc, if you just sort of think about the broader environment, how are you thinking about EV demand trends in 2026, I guess, particularly in the premium segment? And how do you position the company sort of in that backdrop?

Yes. I guess number one is there's a lot of discussion about a K-shaped economy right now, so I think that's one element that you have to keep in mind where the demand is going to be. At the same time, those situations that we have since end of Q3 last year, you discontinue tax credits and all of a sudden, the world is kind of tumbling down for everybody. Everybody is talking, "Oh my gosh, now it's an EV winter, okay?" So -- and then all media talks about it and then customers think, "Oh, my gosh, maybe there's something to it," and it typically takes between 6 and 9 months until this is blown over because it has happened in other markets as well. The same happened in Norway two, three years ago when they discontinued the incentives. It happened also in Canada. After 6 months, it was actually back.

And the interesting thing for me, which is actually quite -- I don't really understand why. But if you really look at the facts and you look at the tax credits that were out there and the pricing of a vehicle on a, let's say, monthly basis that you have to pay for a lease, you compare it before it went away to now, it's exactly the same. And still, people now have all of a sudden the second thought. So I think it's a little bit like, okay, people need to realize, "Hey, nothing much has changed." So I'm very confident that in the second half of this year, it will go back to where it was before. And also in the Investor Day, I mean, we showed the traditional hype cycle. New technology adoption always works that way. And I would say that right now, we are in this trough of disillusionment, that's how it's called and we're actually on the way out already, so I'm very confident that in the second half of the year, this will be blown over.

Maybe as a follow-up to that, can you just talk about how the competitive environment has evolved sort of under the new EV mandate. So I think some of the more legacy OEMs have pulled back a lot in terms of product launches and are pulling out, especially some within that premium sort of EV space, which maybe -- opens the door more for players like yourself. But I would love to just understand how you see sort of the competitive dynamic evolving sort of under this new regulatory complex?

Yes. Well, I mean, you said it. I mean there's a lot of people that had pulled out, which is completely right, we see it the same way, which would actually create a tailwind for us. I mean there haven't been a lot of tailwinds when it comes to EVs in -- or actually in the automotive industry at large in 2025, but that is definitely one. I mean there are several ones. I mean the incumbents out of the Detroit area have basically come down with a lot of vehicles that they discontinued. And then also Tesla obviously now announced that they discontinued Model S and Model X, which is really not exactly where our Air and our Gravity is positioned.

So I would call that a tailwind, and we obviously plan to take advantage of that. And we actually think that we are the rightful successor and key player in that space. The Lucid Air is already the best-selling luxury sedan -- EV luxury sedan and so for that reason, I think we have -- when it comes to that, we have some positives. And I personally also believe that in the mid and longer term, the flip-flopping that has now happened will really, really be bad for incumbent OEMs in the long run because, I mean, they will even fall further behind, and that's an opportunity for us.

Just wanted to talk a little bit more about the upcoming Midsized launch. So you had some big updates on the launch, including the profiles and names of the first two top hats. I think you have Cosmos and Earth at under $50,000. With production on Cosmos starting this year, what does the Midsize mean to Lucid? And what gives you confidence that you can take market share? And then I guess what the investment community is really interested in is what will the volume scale to over time?

Maybe I talk about the cars and then maybe you can talk about the volumes.

Yes.

So I mean, the one big question that we actually got very often is, well, you create this great cars. They're awesome. They drive perfectly and then they're really great, but they're expensive. And then the question is, "Hey, if you now bring this down to starting at under $50,000, can you keep the same DNA and still deliver the Lucid experience in those cars." And I think we have succeeded. We really spend a lot of effort on how can we simplify things, how can we make things cheaper while at the same time, really not losing what Lucid stands for, which is awesome driving vehicles.

And so I'm pretty confident about this. And every time when we show those vehicles to customers, actually several of the analysts, we had -- I don't know whether that's widely known, but we had in a certain area. We actually had our Cosmos in the back hidden from, let's say, the general public. And everybody we talked to was really super impressed about, "Hey, how the vehicle looks," and it will also be when it comes to how the vehicle drives, it will be fantastic.

The other thing that we are now paying a little bit more attention to than what we have done in the past is the whole, let's say, infotainment, the digital experience in the car. We were very much focused on how the car drives. And with autonomy, but also with the digital experience, we are doubling down on that. And we actually think we are one of the few, if not the only OEM who can combine both of those, let's say, old world attributes being great to drive, very efficient, those kind of things. And then the new more digital experience in the car.

We announced an AI assistant, which didn't work in the moment when we needed to in the presentation. But we had a lot of people that afterwards were in the Gravity and then realize, "Oh, it works." I don't know why this can happen just as 1 second, and it doesn't work. But anyway, so we're launching a lot of those things and I'm very confident that our Midsize really achieves two things. First of all, it's amazing cars and at the same time, from a cost point perspective, we are in a very good spot. Maybe you can talk about BOM cost and Gravity.

Probably just starting from something you mentioned earlier, so this is a car which is positioned in a TAM, which is valued at north of $300 billion, so it's a massive market, but it's also very busy. So what we have tried to do is really to make sure that we segment the positioning within the Midsized category as accurately as possible for at least the two first variant -- the three variants that we have, but we have a short-term visibility in terms of timing. So as far as the volumes are concerned, so we are going to do it in a very prudent and measured way. So we are not going to build overcapacity for the time being. So what we're aiming at is to use fully the capacity that we are currently installing, that we have in Arizona and that we're adding in KSA as well. So if you combine the two plants, this will lead us to roughly 240,000 units a year.

If we see that the volume expand beyond that, we will obviously add in a very flexible way, additional production line, but 240,000 units, that's the total capacity, including Air, Gravity and Midsize. Midsize will be first manufactured and produced out of KSA, where we're building 150,000 units capacity, start of production -- end of 2026, a relatively slow ramp in '27 and then moving towards full capacity in 2028.

And then maybe just let's talk about costs in the BOM and some of the structural cost improvements built into the midsized architecture. What enables you to make those cost reductions versus the current vehicles? Is it higher embedded volumes, cost negotiation with suppliers? What's -- maybe just walk us through sort of the cost profile and how the economics of that vehicle compare to some of your other models?

Well, it actually starts with engineering. A lot of cost is due to engineering, how you engineer vehicles. And so when we started the Midsized program, we basically started with a blank sheet of paper because with the Air and also with the Gravity, the ambition was to build really great vehicles. Actually, we think the best vehicles out there might be a little bit biased. And so cost was a consideration, but not the focus.

With the Midsize, given that we needed to or want to come down significantly with the price point, it was a completely different story. We started with simplification and cost as the paramount while maintaining our Lucid DNA and provide something that customers actually want. So engineering is a big, big driver. And simply -- yes, simplifying the -- not only the amount of parts. And we have shown in the investor presentation that if you even compare it to our direct competitors, for every 100 parts that we need right now, not to be named EV leader in the -- in the U.S. needs 110 parts.

And even one of those -- the Chinese competitors, everybody is talking about right now, needs 165 parts, I believe, 195 parts for the same. So it's really -- we really try to minimize parts count, complexity and all that, which then also influences the supply chain. You have -- obviously, we have a lot of commonization as well and then how easy it is to manufacture. So it really starts with engineering and then you have downstream effects on how you can further reduce the cost.

So wanted to shift and talk about robotaxi and sort of the autonomy road map. I think the Uber President joined you to discuss the robotaxi opportunity and mentioned that you're finalizing expansion of the partnership from the Gravity to the Midsize. Can you talk a little bit about your strategy with robotaxi and sort of what this market means for the evolution of Lucid?

Yes. I mean, I would call it kind of like a second leg. If you look at the consumer market, that's one area where we want to stick, let's say, either in the premium segment. We obviously want to increase our volume, but we're not going into mass market territory like down to $35,000. At the same time, on the robotaxi side, that's basically our second leg. We really think that's a strategic market that is now developing. And given how well prepared our vehicles are for that market, we are planning to take a good share of that market.

As you just mentioned, the Uber partnership that we had last year, we're just working through the final rounds of the next tranche of that, which is, as you said, based on the Midsize. We also showed last week that we're already thinking beyond this, what comes after the Midsize, which will still be a vehicle where you would have this TRO on top of the roof. But then after that, we're already working on a concept, which is a two-seater robotaxi, which is really purpose-built for robotaxi applications. There will not be any TRO on top. It will have very high efficiency because that's an important topic because of the operations costs that are going down and it's really from the design and from the use of the space, very much focused on what's the best way of doing it for that application.

You might ask why two-seater, it's not because Tesla did it. But there's actually over 80% -- way over 80% of the rides either with one person or with two people when you look at the Uber network. So in general, that is a much bigger market where you can -- and if you purpose-built a vehicle, you can make it smaller, lighter, therefore, more efficient, increase the uptime and all these kind of things. That's why it is a two-seater. That's what we're working on after that. And so yes, I think this is going to be an important driver for our business going forward.

And then maybe talk about sort of the autonomy road map and reaching various levels of autonomy and sort of who you plan to partner with to reach sort of each level. I think your one of the few that have put out sort of timelines in terms of when you want to hit L3, L4. Maybe walk us through sort of the autonomy road map, who you'll be partnering with and what that timeline sort of looks like as we look over the next few years here?

Yes. Well, I mean, first of all, we are right now at what we call L2+, which basically means hands-free driving in the air and in a few weeks from now, also in the Gravity. So that's our current starting point. We did this completely in-house without any partners. Then, when mid last year or actually beginning of last year, we started to look into, "Hey, what is the path to L4?" Because quite honestly, getting to something which is more akin to what Tesla has right now with FSD, which is what we call an L2++. It drives in the cities, but you're supposed to look on the road.

In case of Tesla, you're actually supposed to put your hand on the steering wheel. That is maybe a little bit convenient, but it doesn't really give you what you want. What you want is you don't have to pay attention. You can read your e-mails, you can do other things while you are in the car. And that only happens with L3 maybe on highways and L4 then in a full spectrum. So when we had conversations last year, we had conversations because we have thought about are we doing it ourselves. I mean, obviously, that costs a lot of money. And therefore, we said, "Hey, we really want to focus on a very capital-efficient approach," so we started to have conversations with many different potential partners.

And then with NVIDIA, Jensen himself, he said, I want to skip L2++ and L3. I want to go right to L4. -- [indiscernible] yes, okay. It's not that easy, so maybe -- but we can help you to get there. And mid last year, when we then did the arrangement is very often what we actually heard why NVIDIA? And they were nowhere on the map with already miles on the road. I think by now, it became clear what they were working on in the background and nobody really knew about it. We obviously did.

And after Mercedes, we were the second one that said, "Hey, we would do that." And then we also aligned with them about, okay, when can we get to L4 and then communicated that 2029 is the time when we want to do it. And it's in a very close partnership with NVIDIA. And I also want to reiterate, it's really because of our focus on capital efficiency right now. I mean, building cars and investing into plants and everything is already very capital intensive. If you then add billions on top of it to get your own L4 logic, we didn't think that this is the right way of doing it because, quite frankly, we will -- the verdict is still out. Is it a strategic advantage to own it in-house? Or will it become available anyway by different partners, and therefore, it's something that you can basically buy.

And the time -- as time progresses, the speed to get there and the cost involved to get there will further decrease. When you compare what happened 10 years ago or even 5 years ago versus today, it's not even on the same planet when it comes to the costs involved. And we think that this goes further down, and we will have time to make that decision. Is it a strategic thing that we need to do or not? So that's high level of our road map.

It seems like the technology to go from L2++ to L4. It seems like having experts just build that technology and then deploying that or selling that or licensing it to your car manufacturers, to me intuitively makes sense because it's really -- it's two different things. You have the ability to build a beautiful car that handles well and then you've got like the software application, the brain of the vehicle that could be designed in a tech manner that could be deployed. Is there any specific issues to a particular car that would inhibit that ability to scale like that? And then also separately, if we were speaking with NVIDIA now, like what was their angle to create this partnership?

Well, I mean, the main angle was they were basically looking for a partner with which they can get to L4 as soon as possible. That was really the main impetus when we talked with them about that. And as you said, I mean, there's always -- that's why I said the verdict is still out. I mean there's a benefit of owning it yourself because you can then -- you're fully vertically integrated and you can obviously optimize it for your own individual vehicle. If it becomes -- if it is in a way that because everybody else is kind of using it as well and then it doesn't fit with your needs anymore, then it might actually slow you down.

And that's what we need to figure out is, is it something that even in the future will not slow us down to make it even better and fit it for us? Or is it something that at some point, we might need to in-source. But even then if you think about it, NVIDIA has announced that it's -- their model is actually open source. So even that, the starting point, maybe in a year or two or three from now is on a completely different level than it is today. And so I guess the verdict is still out. I mean what is important though is you shouldn't underestimate how difficult it is to actually from a software to create a car that always works in the right way. That's often underestimated in a sense, yes, the autonomous driver is the software. Well, yes, but the software only can say, "Hey, go this way or don't go, make this curve, but then the car has to listen to it, yes. It is very different [indiscernible] what the car is.

And so there is a lot of work involved to actually make that work. And our vehicles are from the get-go, very well equipped. We call them L4 ready because we have full redundancy of the major electronic architecture that if maybe -- I don't know, one ECU doesn't really work, then somebody -- then another ECU can take over, which you need because you need to have a failover redundancy like in an airplane. In an airplane, it's the same thing. You have fully redundant systems, that if something doesn't go right, then something else takes over. And that's the same in our cars already, which also gives us right now a leg up versus others. And this is, by the way, the reason why Uber chose us for the cooperation with Gravity because what they were looking for is, "Hey, who is our partner, who can actually build something within 18 months." And to build an autonomous driving vehicle from not even thinking about it to a commercial application in 18 months is pretty much unheard of in the automotive industry.

What if it's ultimately going to be like -- if you look at car manufacturers around the world, primarily build their own engine, right? So you can see the same thing. If you had like a software package for L4 that everyone would buy the same one, you can say the same thing about an engine that everyone buy the same engine by just an engine manufacturer and each car kind of has its own engine for its own purpose. So I wonder if it would be hard to just have an L4 manufacturer and software package that goes everywhere. I think it would be hard to do. I think individual companies, I think are going to build it themselves for their own application. That's my thought.

Perfect. I guess maybe you laid out a lot of sort of targets. You revealed a lot over the last few days. What are the key milestones investors should watch over the next year that reinforce the trajectory towards stronger economics and growth? Is it scaling of Midsize? Just what are the milestones people should be looking for?

Yes. Well, I think that you can call them milestones or key catalysts for us. So obviously, I mean, the start of production for Midsize is an important one, so we will need to be ready. I mean, completing the plant in KSA is another important milestone. I think that the progress that we're making and the strategy that we have towards the additional revenue streams, primarily in terms of capturing software revenue or revenue from partnerships in the robotaxi field and how fast we go on that journey. That's also something really important. We have also very ambitious targets in terms of the speed that we will see in terms of reducing the unit cost. So we have laid out some milestones and timing around that. So these are some of really the key things. At the end, it all comes back to our ability to drive scale at the best cost to drive margins and free cash flow.

So we have about 3.5 minutes left. So I wanted to just scan the audience and see if we have anything out there. I think back left. Thank you for the question.

At what unit production level would you have gross margin and EBITDA breakeven on the new Midsized models?

We haven't stated an exact figure. So what we refer to is the trajectory of the cost down versus our current Gravity, so we have laid out the expectation and timing to achieve that and we have also communicated the timing of the margin breakeven. So I think that the combination of some of this information that we have shared and data points that we have shared will allow you to extrapolate probably the answer to your question.

Any -- I think we have one alright.

I just had a quick one, maybe a bit of an update on the partnership with Aston Martin after some of the delays to their EV program?

Yes. So the -- well, yes, the program, their EV program is delayed. So I mean they have been going through some difficult financial situation. I mean, they published their results lately. So I mean, we are in close contact. The program is still very much alive. Our teams continue to work together in order to get ready for the launch. So again, it's triggering a different phasing in some of the proceeds that we initially accounted for as part of the initial terms, but there is no -- beyond these delays, I mean, there is no major change to the way we're working together on the EV program.

Maybe I'll ask one final one. So I think you have a production target 25,000 units to 27,000 units this year. I think you have maybe available capacity like around 40,000 units roughly. I think that implies some conservatism in the current backdrop. What are your expectations longer term around some of the new launches and the additional capacity coming online? And then I guess, maybe just quickly, are there any disruptions to the timing of the production ramp at the facility given sort of the conflict in the Middle East and the location of that facility?

I maybe answer the first part. So 25,000 units to 27,000 units, yes, I mean, we're being conservative in our assumptions. We didn't account for some of the tailwinds that we're seeing, so we see that the market -- there are some specific dynamics going on in the market where we see that the potential to capture additional volume, but again, given the start of the year volatility that we see from the macro environment, we want to remain prudent for the time being. So 40,000 units that you referred to is a theoretical capacity. This is the max capacity that you can reach if you don't have a disruption in your supply chain if everything goes well. So I mean, last year, during the fourth quarter, we reached a theoretical production run rate of 2,100 units a month, so you can extrapolate what it means for a year.

Having said that, supply chain still remains an area of concern. I think that there are two things that we're closely watching and monitoring. It's the supply chain disruptions, which translate into price increases. That's something that we're dealing currently with the supply of DRAMs, for instance and there are supply chain disruption, where you simply don't have access to the materials that you need. That's what we had to deal with punctually last year with the supply of aluminum or some of the rare earth metals that we need.

So it's very difficult in the current environment to say, okay, what we expect in terms of supply chain disruption. We simply don't know what we don't know. Anything can happen. So that's why we still continue working very hard on making sure that we are as agile as possible, making sure that we have backup plans that we know what are the alternatives for us to mitigate these potential disruptions.

The second piece of your question was about disruption because of the current conflict. Well, thankfully, so far, we haven't seen any additional disruptions. And -- but I also want to make clear that can happen on a day's notice. So neither in our plant, which is on the west side of Saudi Arabia nor in other markets when it comes to shipping routes or so, we haven't seen anything. But again, I've seen a lot of things happening last year, which I didn't expect. So we rather want to be prudent and hopefully, nothing is going to happen. But I mean, as Taoufiq just said, I mean, we learned a lot of -- what you need to do to be prepared.

And quite frankly, when you just look at our -- what we achieved last year, despite of all of the challenges, I actually think it's quite good. It's like about 10% below what we initially said. If you compare that to others, we're in a pretty good spot. And I think that's -- might be a little bit underappreciated when you say, "Oh, yes, in the beginning of the year, you said 50,000 units and the end it was about 18,000 units." Okay. Well, I've just seen the year. So others had a much bigger impact, obviously. And yes, I hope it's not going to continue that way this year.

Perfect. I think that's all the time we have. I want to thank the Lucid team for a great conversation, and thanks.

Thank you. Thanks, everybody.

Good morning, everyone. If I could kindly ask all of our guests to take a seat. We're about to get started in just a couple of minutes. Good morning, everyone. We're about to start the program. Please silence your cell phones. Please welcome Lucid Interim CEO, Mark Winterhoff.

Good morning, everybody. Thanks for coming at this rainy morning in New York City. Very glad to have you all here. And also, hello to everybody who is joining us online. Maybe good afternoon, good evening, wherever you are. So I'm so excited to share all the fantastic information that the team has put together for you today. And yes, maybe let's just get right into it. Our Investor Day is actually the first Investor Day that Lucid Motors has done is under the model Accelerating to Profitability. This is our North Star really focusing on profitability.

And I want to quickly walk through a couple of things that we are going to cover throughout the day. And actually, what I would like you to take away is what we have written here, what I'm sharing with you, what are the main key takeaways. First of all, we have a clear vision to be the leader in mobility technology. Second of all, we have a very, very strong existing product portfolio. Lucid Air is #1 selling EV in its segment. Gravity is off on a good start and we obviously plan to expand on this, and we will talk about this later.

Then we are launching our midsized platform at the end of this year. Midsize is a very important platform and product for us, a big portion of our future, and that's why we have spent most of the time today talking about midsize and how are we making it possible that the same DNA, our compromise nothing ethos that we have established with the air and the gravity. We are also able to put into the midsize but at a completely different price point. Then we also talk about our strategy in autonomy, which we actually started in 2025 and which we are progressing in the future. It's a very important topic for us. I really want to emphasize, it's not a one-off where we do one deal and then move on to the next, playing a big role in the upcoming robotaxi market is a strategic endeavor for us.

But it's not only Autonomos not only important for robotaxis, it's also important for consumers. And we're also doubling down on that and creating new revenue streams, high-margin revenue streams that we can add to our portfolio of revenue-making offerings. We are working and continue to improve our operations to be able to scale in a very affordable way and capital-light way, and we'll go into those details later on. Last but not least, showing you the path to profitability to cash flow positive by the late decade. So if you take nothing else away, please remind those things after you leave today.

Let me start with our vision. Through technology, we are creating exceptional experiences to drive the world forward. Let me unpack this a little bit. First of all, technology. I think it's well known that Lucid is very obsessed about technology. Some people say, well, doing it a little bit too far. But that's what we are. That's what brought us where we are right now as a company. And we will not relent there. It is our ethos. This is what we are focusing on also in the future and hopefully see this today throughout the day. But we're not doing this only because of for the sake because we like to do technology. We're doing this to create exceptional experience that benefit the customer and that make customers want our vehicles or other offerings that we offer.

So it's very important to say it's not a -- technology is not just a thing for itself. We do this to create exceptional experiences, drive the world forward. We always try and we actually always do push the boundaries. We don't want to do what everybody else does, and stop when people say, "Oh, it can't be done." We always want to push the boundaries and drive the world forward.

Let me start with our current product portfolio the success that we have with it and how we go from there. The Lucid Air in 2025 was the #1 best-selling luxury sedan in its segment. As you can see on this chart here, we outsold everybody on the Visa EV side in our segment. And actually, we're defining this segment pretty wide, as you can see here. The ones that are on the tailend we didn't even put on the chart. Otherwise, there would be probably 10 more on the lower end. Here's the thing. We're not only #1 in the EV segment. But in the whole segment, including all internal combustion engine vehicles, we are #3. The whole segment, luxury segments, we are selling vehicle -- sedan is the #3 selling vehicle in that whole segment, which we believe actually shows that our car is not only good as an EV, but it's actually -- we personally say is the world's best dam car.

Then gravity. Gravity is off to a good start. We ramped it up last year and then when you compare it to other vehicles that have been introduced in the market and you look at, hey, 3 quarters after the introduction into the market. We are right there where the [ Rivian 1 ] was, at that time, slightly behind the model Tesla. Tesla Model X. But let's not forget, there's no was in a completely different time. There was no competition at that time. So off to a good start here, and we obviously want to build on this.

Then awards. It's probably known by everybody that Lucid received a lot of awards. As a matter of fact, the Lucid Air and now also the Gravity have received more awards than those 4 esteemed brands that you can see here together, since inception in 2022. And it's not only the air, it's also now the Gravity. For instance, the one that you see, the first ones that you see here, [indiscernible] list. Gravity was now also elected to be in the 2026 [indiscernible] list for the first time. Air got the same, the third time in a row. There's a little fun fact on this.

Lucid is the only brand where all of their vehicles are on the 10 best list of [indiscernible]. I know. We don't have that many vehicles or it might be easier for us than others. I know. On top of that, I'm personally very proud of the one in the lower left last year for the Lucid Air sapphire becoming the German performance car of the year last year. You probably know I'm German. So very surprising for me that German journalists, not just anywhere, but 32 esteemed journalists picked the Lucid Air sapphire as the performance car of the year. Very proud of that.

So this picture here shows what Lucid is today, centered around our 2 awesome vehicles. We have fantastic interior. As you can see on the upper right, the very luxurious interior, fantastic driving dynamics, traction control on the upper right. repeatedly also talked about by very -- by critics. We have built our production platform. We invested a lot in the past, which is now tapering down. We will hear about that later on. And we have some EV technology drive units, but also our battery, that's what everybody knows about Lucid, centered around Gravity and Lucid Air and about, I would say, fun to drive, thrilled to drive and, obviously, efficiency.

So where are we going from here? Our strategy, obviously, is grounded in maximizing what we have built with air and gravity. And we will go throughout the day in what we're doing there and how that is progressing. On top of that, midsize, a very important new platform for us, start of production end of this year and then ramping up throughout 2027 and then in the later years. Extremely important for us, and we will talk about that in further detail.

On top of that, we continue to drive forward our already pretty strong software-defined vehicle platform and software innovations not only for the sake of innovations, but also to provide new awesome products and experiences to our customers and add new revenue streams that we haven't had in the past. Last but not least, as I mentioned in the beginning, the robotaxi space is strategic for us, and we aim to lead in that space and have a big portion of that market. So scaling is very important for an automotive manufacturer.

When you look at the Air and the Gravity in the lower right, the market that we are looking at right now in the countries that we are in or which we are expanding into, we're looking at a $40 billion total addressable market. With adding the midsize platform, we're going from $40 billion, almost 10x higher to $350 billion. And if you then add on top of that, the robotaxi market, which is the different estimations how big it's going to be, ranked somewhere between $300 billion and more than $1 trillion. We just want to stay on the low side. That's why we just used the $300 billion. And -- but we're adding that. And as you can see, it almost doubles then our addressable market compared to what we're doing with our personal owned vehicles.

Why is scaling so important? And why is going into midsize so important? Well, when you look here on that slide, on the left-hand side, you see last year's Gravity unit cost. Let's take that as 100%. If you look at our projected unit costs for the midsize in 2028, we see a reduction of 60% to 70% right now. So a dramatic reduction of unit costs for the midsize, which you would assume because it also comes at a lower price point, which we'll talk about later as well. But that's not the only thing. It's not only about midsize. It's also about the rest of our portfolio, because that scaling, that efficiency gain also allows us to reduce the unit cost of the Gravity, which is shown here right now by 30% to 40%, and also the Air obviously.

So for the whole business, scaling drastically changes the unit economics. That's what we're working on, and that's why we are pushing forward with the midsize so much. And we have some very interesting details about that later in the presentation. It's not only about the material cost, it's also about manufacturing efficiency. And we're working very hard, and you have seen in last year that after in the beginning a little bit slower ramp-up that we were hoping for of the gravity, we were basically creating a hockey stick in Q4. doubling our production from Q3 to Q4. And for the total year, we doubled our overall production.

And we did that because we really focused very much on improvements on our supply chain. As you all remember, 2025 was probably the worst year for supply chain. I can remember with all of the things that happened in talking about additional tariffs, talking about magnets, talking about other issues like fires in aluminum plants. And at the end, then we had issues about the chips availability. So a lot of things went in the wrong direction, but we overcame them. And we also were able, from the beginning of 2025 to the end of 2025 to really drive down already the BOM cost of the gravity by 25%.

On the production, I just mentioned, almost doubled the production throughout the year and also significantly decreased the Gravity production cost, which is now also continuing, as I just showed you on the slide. On the quality, actually going back a little bit longer since we started with the Lucid Air, we drove down our warranty cost by 85%. That's another big topic of us for cost reduction. When it comes to supply chain, we obviously have still work to do. I mean 1 big thing, for instance, right now the way it looks, those external disruptions don't seem to slow down. Therefore, we are rethinking and reworking our supply chain to make sure that we're even more -- even more insulated from external shocks.

And obviously, we are in a very good position with our bill of material costs right now with the midsize. We need to land that. The last little bit that is missing, stay there and then get into production with the midsize. Then I would like to talk about software innovations. We have tons of software in our vehicle. Much of it is actually not necessarily visible to the eye. When you look here on the lower part of that slide, these are all things like traction control, our driving dynamics. Our efficiency that leads to our enormous range, fast charging all these things are enabled. Obviously, there's hardware involved, but it only gets as far as we get it because of fantastic software.

And then we have what the IC, which is the infotainment here with, for instance, with the new -- with the Gravity we have our new UX 3.0. We have [ Surround ] Pro, which I very big fan off. I think I talked about it a lot, and everybody knows that. And we have also Carplay in the Air and Android Auto. Then you also see then when you look at our ADAS features, our Dream Drive Pro, you obviously see a little bit the vehicles driving around in the display. But the biggest portion of that technology is under the hood. Again, a lot of software. So we know though that when people look at software, what they talk about is very often, hey, that's what I see. And we do a lot of things now. to make it also clearer and provide new offerings to our customers on the visible piece.

Let me tell you a couple of information about that. Today -- actually, yesterday, yesterday, we announced that we are now rolling out Carplay into our Gravity vehicles. So over the next couple of days, and then globally weeks, all existing owners will get an update, which then has Carplay or Android auto build in. We're also launching an intelligent AI assistant. You will hear more and see more about that later today. We are bringing hands-free driving, which we already have in the Luciad Air into the Gravity in Q2. We're bringing back the new user interface that we have on the Gravity back into the air in the existing vehicles in summer. We also launched Digital Key in the Lucid Gravity in summer. And by the end of the year, we will have in city hands free driving -- in City and in Gravity. We also have a new product coming, which we talk about later, vehicle-to-home, that's maybe something for a later event.

So a lot of things are going to come into our vehicles into our existing vehicles and our new vehicles that are very visible for customers and actually met several of those, including Carplay, once that customers are bringing our door at why is it not there yet? It's there starting right now. And I tried it, I used it works perfectly. So going to autonomy, as I said in the beginning, very, very important for us. And it's a new addressable markets for vehicles, but it's also in new addressable markets for revenue -- software revenue that we are embarking on. How are we doing that? Well, first of all, we obviously start with our L4 ready vehicles, and we will hear about this throughout the day.

Also, the efficiency that we have, the efficiency leadership helps us particularly in the robotaxi market, where cost of operations is actually a very important topic, even more important than the purchase price or the cost of the actual vehicle in the beginning. We are working with best-in-class partners in order to do all this with a very capital-efficient approach. As I mentioned, not only at this Investor Day, but right now, Lucid is accelerating to profitability. And therefore, we want to do everything that we do in a way that it's capital efficient, and at the same time, provides exceptional experience to our customers. That's why we are partnering on autonomy, and that's why we are not spending as much capital as others may do or are about to do.

And last but not least, I already said that it's not only about Robotaxi. This is also about providing this to our consumer vehicles as something that you could compare as FSD or better. What does this mean? What does this lead us to? So Lucid tomorrow, in the middle here of this slide, you still see our vehicles. Nothing is changing here. We're still grounded on our awesome vehicles, our compromised nothing approach when it comes to the traditional vehicle attributes will continue, but we add much more around the software, around user interfaces. You will see later on first hints of our UX 4.0 that really takes our user interface to the next level. We will have more robotaxis than what we have already announced in the future.

We have an AI assistant and we will have an even more productive environment on the manufacturing side, all to, in the end, become profitable. So as I just said, the core is the same. We're playing in a much bigger TAM. We're getting our software capabilities and making actually money with that. L4 is our North Star to get there as fast as possible. And in the end, be a profitable company and cash flow positive.

So with all that, I would now like to hand over to my colleague, Ervin, our Senior Vice President of Global Revenue to take you -- tell you more about how we are continuing with Air and Gravity before we then later on go into midsize.

Thank you, Mark. Thank you, and thank all of you for coming out today, and thank you in the listening audience online as well. I'm really excited about the opportunity to talk to you about what we've been doing, how we got here and where we're going in the future. So today, I'm going to tell you a story. I'm going to tell you a story about Lucid Air and what we've done to get here, how we're going Lucid Air, how we launch Gravity and scale Gravity with a magnificent growth in Q4. And then I'm going to talk to you about our distribution network. We've got to deliver these vehicles. So we're growing our distribution network around the world, there's 42 new locations around the world.

And then I'll land on this new diversified revenue source. It's $1 billion of revenue but I really like it. I'll tell you why I like it in a little bit. For Lucid Air, Mark already spoke about the fact that this vehicle was the most awarded vehicle since inception. It's great for us that it's been growing like it has consecutively year-over-year last year, ending up #1 in this segment. But it's not just that we're #1 in our segment for last year in the EV segment. 6 consecutive quarters leading its EV segment. And last Q3 to Q4, that growth is 23% in volume and 30% in market share, really solidifying our position. We're going to continue growing that position. I'm excited about that.

And then we launched Gravity and started scaling Gravity. And you can see from Q3 to Q4, 4x growth in Gravity deliveries, really excited about that, positioning us well for continued growth with this vehicle, already winning awards. Gravity has started gotten off to a really good start for us. One of the reasons I like Gravity is because 80% of the customers coming in to Gravity are actually new to lucid. So we're growing. We're expanding our attainable market. And I like that. The other thing I like about this is that 28% of the conquest in the Gravity are coming from non-SUV segments.

So I'd like to say we're actually growing the SUV segment with this vehicle that's not just the best EV on the planet. It's the best dam car. And don't listen to us let's look at what some of the critics and our writers in the industry and outside have had to say. Motor Trend said this is the best as good as an EV SUV gets. And I actually think the EV was a typo. I think they meant to say, it's as good as an SUV gets. And if so, I agree with them. This is literally as good as an SUV gets. And then Esquire is we won the 2026 car of the year said the car defies the laws of physics. And it's true, Who would have thought that an SUV that carries 7 people and their luggage can also get 450 miles of range on a single charge.

And oh, by the way, outperform sports cars on the straight away and around curves and in every other way. And oh, by the way, it still maintained the maneuverability that we love in parking, it does things that shouldn't be possible. That's defying the laws of physics. And then I really like Tech Crunch because they highlight how our brand and our brand promise comes to life, compromise nothing. In their first Gravity test drive, Tech Crunch says, it's an electric SUV that doesn't make compromise it. I love it when we work and we put our heart and soul into our promise, and that promise is appreciated. But don't just listen to us. Of course, I'm the SVP of Global revenue. I'll tell you that. But I want to listen to somebody else. This is one of the most popular tech reviewers on the planet. Not a car guy, a tech reviewer just happens to love cars. And so when we heard that he test drove our Air, I, of course, was very interested in hearing what he had to say. And what he was going to tell his 20 million followers who have looked at his videos billions of times. Let's listen know what [indiscernible] has to say.

I daily drove a Model S for many years. I said they were basically the best daily driver you can get. But then I found one that I feel like one up to the Model S in every useful way and that was the Lucid Air. I think they just do the packaging so much better. It drives super well. They have a lot of space on the interior. They have a power opening front, more front space. They have more rear foot space. They have better headroom. It also has CarPlay and Android Auto, all the things about being in the car are great. Luicid Air, that's the obvious alternative.

That's pretty cool. I was excited about that. And when I thought it couldn't get me better, I heard he also drove a Gravity. And here's what he had to say about the Gravity.

The Lucid Gravity as far as a rock solid like does all of the normal fundamentals of an EV better, 800-plus horsepower, drives amazing has great suspension, great NVH, super quiet, ton of space on the inside, a ton of storage, great premium materials, it's just aimed at being the ultimate alternative to the Model X. Yes, it succeeded.

Thank you. The only thing he didn't say was other [indiscernible]. I mean, this thing is unbelievable. I know the EV industry has been seeing some headwinds. You know that. I know that I'm not going to shy away from it. The reality is we're still very bullish. And globally, we have good reasons to be bullish. When we look at the S&P Mobility forecast for the growth of EVs globally, excluding China, if China were included, this would be a much bigger number, but look at the growth at the darker portions of the bars. This is from 2025 to 2035, 15% compound annual growth rate. That's stunning. And by the way, that's when the gas-powered cars over that period will be declining we are growing.

Our segment is growing. Our industry is growing. We're very bullish, 3.5x in the next 10 years. So why would you believe these numbers? I know you see a lot of forecasts out there. Think about this. Whenever there's new technology, there's this hype, this technology hype, there's a hype curve out there where everybody gets excited about the new technology. They don't know what it is, but they want one. And then they begin questioning themselves and then they chase after some new shiny object. But as a traction takes and people realize that, in this case, the EV makes a lot of sense. They don't have to go to gas stations and smell up their hands or stand in a dark gas station getting gas at night. They can just plug it at home. And by the way, the cost of ownership is so much lower and the performance is instantaneous.

And oh, by the way, it's the only thing robotaxis will work on. And these vehicles get better with time every day. As a matter of fact, I'm downloading software on mine right now. So right as I speak, like any other great investment, my investment is increasing in value as it gets better. That's why we believe this will go. So let's overlay the hype cycle over the S&P data and it matches almost exactly. We're just at the bottom of what we call the trough of disillusionment as we begin to grow and get traction and growingly, and globally, we're going to grow. We're going to continue to grow, and I'll explain to you why in a few slides. But we've also had some industry tailwinds.

Recently, you might have heard that one of our competitors who will not be mentioned announced that they're going to cancel production of the Model S and Model X. And there's 350,000 of those vehicles in the car park in the United States. We're going to help those people learn about Lucid and learn that they can upgrade, just like Marcus told us from their Tesla into a Lucid. And this is happening every day.

How do I know that? Well, for people trading in their Tesla Model X, Lucid Air is the #1 vehicle they go to and not by a little bit, by a factor of 2x versus their next choice. We are the obvious choice, and gravity is following in precisely the same footsteps. Gravity is also the #1 choice of customers trading out of a Model X. So we're already there. We're confident that we're going to get more than our fair share of that car park. In order to do that, we have to scale production.

And last year, we started scaling production, as you know, in the second half of the year. The dark bars represent are scaling throughout the year. And you can see here that by September, we had already achieved the run rate required to hit our initial 2025 targets. And by November and December, we got to the 2026 rate. So we've proven that we could scale. We're scaling production and we'll be able to deliver. In order to deliver these vehicles, however, we need a distribution network. We have global distribution network. And this map represents where we are today the United States, 4 countries in Europe and the Middle East, with the white dots being where we currently.

And now we -- you can see where we're going to be in just this year in 2026. We're adding 7 new locations in the United States, which, by the way, happens to be 15% more than we have now, that same compound annual growth rate. And I found it interesting that the growth rate of electrical charging infrastructure is also 15%. So there is some truth there, and there's some consistency. So adding these 7 locations in North America this year is going to help position us not just to deliver this year, but to position us for midsize and the good things we're going to do with that product, you'll hear about a little later. We're adding 10 new locations in the Middle East and 25 in Europe, including all of these countries in the lighter gray. We're going into Europe. Why are we so bullish in Europe?

Well, the EV adoption rate in North America by the end of this year will still be just 8%. In Europe, it will be 20%. We need to be in that market. We need to grow in that market. We need to succeed in that market. And so we're focusing there with a 200% increase in our distribution network. And in particular, in Europe, here we go. Yes. In particular in Europe, you can see the countries that we're in 7 new countries will be represented this year. We already have, in fact, late-stage LOIs for these 7 countries for these 25 locations.

Germany is particularly interesting. As Mark spoke about the German performance car of the year being our Lucid Air Sapphire, design, engineered and built here in America. I absolutely love it. But we're going to be in Germany. We already have 2 locations identified, and we're moving in. And then we've got 10 other locations with late-stage LOIs. So we're really going to double down in the German market as part of the broader European operation.

Our distribution network looks a little different here than it does there. And I'm going to explain that. In North America, we have enjoyed really favorable retail economics. By going directly to consumer, we cut out the middleman, and the middle man has got to get paid, so why not pay ourselves, right? We're going to retain that. But more importantly, we will retain the relationship between us and our customers. from discovery, the shopping, the acquisition, ownership and service and then reacquisition and oh, by the way, this recurring revenue from software, 100% want to retain that relationship, especially as we grow. This is the heart and soul of our brand. and we need to make sure that we deploy our culture and the Lucent brand properly here.

Now in Europe and the rest of the world, we have other challenges. We need to scale quickly. We're just scratching the surface in Europe. So we need to scale quickly, and we need to do it in a capital-efficient way, and so we're engaging partners. So we have more of an indirect model in Europe that allows us to pull ahead our growth of our network by up to a full year with 85% less upfront capital. That's smart growth. It's intentional, and it's demand driven. And that's why we're taking a different approach in Europe.

I started out telling you about additional diversification of our revenue streams, and I love new revenue streams. This $1 billion opportunity. I know $1 billion in and of itself, well, I'll take it. But I really like it because when I look at the sources of the $1 billion that Gold Bar is gold for a reason. In fact, its gold for 3 reasons. One is that's where the money is, okay? Secondly, this is really high-quality revenue, very high margin. As you can imagine, there's not a lot of cost and maintaining that software once it's developed. But because we codevelop our software with our hardware and we can do so much in controlling the vehicles, it's valued by the customers. And this gives us an opportunity to monetize this and it's recurring revenue. So I love recurring revenue.

And the third is it's growing. As we grow, it's going to grow not only because our car park grows, but also because the value we provide to our customers continues to grow. So it's golden for a reason. This is going to help diversify our revenue, and I love what this is doing for us. You'll hear a lot more about that in a little bit. I'll give you a little bit of a tease right now. We already told you that the Lucid Air and Gravity or the most technologically advanced products on the road today. And you can see a lot of the technology that's on here. Don't worry, I won't go through every detail. There's too much. This is just scratching the surface.

But in 2026 alone, look, we're adding the UI UX 3.0 from Gravity in the air. We've got this Lucid AI assisted that you will hear about and see very soon. And that's going to be an Air and Gravity along with vehicle-to-home back up, just all kinds of goodness. And Gravity's got even more -- and we're already in 2027. This is just what we've identified and committed to for 2027 and beyond. So I'd like to say like fine Y and our cars literally get better with time. The longer you own them, the better they get, and this is what we're after. 95% of the functionality of our vehicle is upgradable by software. 95% think about that.

Last year alone, in 12 months, we had 13 over-the-air updates. That's a lot more than the industry average, which is 2, we had 13 last year. And we're going to continue making our cars better and better. Now we know that our customers absolutely love our ADAS and other software options because the adoption rate is already at the high end of air is at the high end of the industry average of 10 to 40. Air's already at 40%. And gravity is at 65%. And over 50% more than the high end of the industry average. This is very powerful. This is going to help us monetize our software diversify our revenue and continue making our products better for our customers. So I've just told you about our Lucid Air and Gravity and how we've demonstrated market leadership and we'll continue to grow and do that.

I showed you that we've proven our ability to scale production and deliveries and how we're growing our distribution network and expanding globally. And finally, the diversification of this very high-quality revenue. This is going to position us well not only for this year with the products we have, that will position us well for the future with our midsized product and beyond. Speaking of midsized product, please allow me to introduce you to our Senior Vice President of Design and Brand, Mr. Derek Jenkins.

Thank you. Thank you, Ervin. Good morning, everybody. Thank you for joining us bright and early today. It's really, really appreciated. I am so proud to be able to say I've been working at Lucid for over 10 years taking all the way back to 2015, it has been a journey, quite a journey, a very exciting one. That was when we really kicked off the mission, the innovation that Mark talked about earlier. And I think that's really set us on such an exciting path all the way through the creation of air through the creation and production of gravity all the way to this point today, which is so exciting.

Today, we're going to talk about midsize, and this is a big deal for us. I've been working on the midsize together with my colleagues in engineering and planning for 2.5 years now and it takes that long to really create something special. And what is so incredible and so special about midsize, it represents a tenfold increase in total addressable market. This is a huge step for us, but we're also maintaining the key DNA that people know about Lucid and that is so celebrated by our industry experts. It's also going to be at an accessible price point that is designed to scale. We're taking our volume to the next level. All the while cutting our cost by up to 70%. This is a big deal for us. It's a big step for Lucid as a company and our core philosophies taking this to the new level.

Now we started 10 years ago with Lucid Air and lucid Gravity with a clean sheet to really create the most innovative EVs or even the most innovative vehicles in the world. And I really think we've done that with Air and Gravity where we've really established ourselves as key players in the luxury category with advancements in space packaging range in efficiency, performance and of course, design. We're very proud of our design. And of course, I would say that as a head of design. But I feel it's true. I think we really are about the future, and we bring the future to people every single day.

But with midsize, it's really about that next step in the marketplace. How are we going to win? Well, it's going to start with not just 1 vehicle, not just 2 vehicles, but 3 distinct products. Listen, the midsized category is very competitive. It's a very diverse consumer segment. And we think these 3 unique products will give us maximum opportunity to hit the widest audience possible. And that audience is, as I mentioned, tenfold of where we are today but it's a different audience than our current market. It's very price sensitive, it's very value sensitive, and we've taken that very, very serious.

Now today's customer target represents about 10% of the market. It's that very desirable luxury category. And as Erwin pointed out, we do very, very well there with Air and Gravity. But if we're honest, it's a relatively small category. It's a very desirable group, tech savvy, mature EV owners, and they love their Lucid and we become the product of choice for them in that category. But as we look forward to the future, we have done our homework. We found our key categories that we're targeting, and there are 3.

From the left side, we have our upscale nurtures, they tend to be more family oriented. They tend to be more technology savvy, and they really are adopting to EV quickly. The secondary category is our trend-setting achievers, they tend to be both urban as well a little bit more adventurous and outgoing on the weekends, but most importantly, they like a very, very expressive advanced design. And thirdly, our active explorers. They like advanced technology and experiences, but they're a little bit more outdoorsy, they need more functionality in space, and of course, design is still a big, big priority.

These 3 new categories represent a target of up to 50% of the EV segment. So the combination of our 10% existing EV target, our 50% new target means we will be targeting 60% of the coveted EV market. The first of those products will be called Lucid Cosmos. This is going to be yes. Yes. This will be our first product, very excited about this. And the second product will be called Lucid Earth. So we have Air, Gravity, [ Cosmos ] and Earth, Thet's kind of a theme there, right? How did that happen? You came up with that. And of course, the third product, well, you're going to have to stay for -- maybe it's our next investor meeting, I don't know, but that's the third product. Now why is this so important? Why are these 3 products so critical? Well, it's about the positioning of these products in the marketplace. As I mentioned earlier, the midsized category is very dense. It's very competitive, and it's diverse. It's a diverse customer segment. So on the left side, we're targeting folks that, again, want a more sporty vehicle. I always say a future-facing vehicle, a more dynamic product and we're very well positioned with [ Kosmos ] there. In the middle, it's the in-betweeners. It's the product that is still sleek. It's efficient. It's fun to drive. It's spacious but also it's a little bit more rugged little bit more capable.

And then on the right, maybe it's a little bit more traditional, still future, but it's more spacious and definitely more geared towards an outdoor experience. And we've positioned ourselves really, really well for the diversity that exists on the global stage with these 3 products. Now we've done a ton of research about our customers, and we talk to them about what are their priorities. As the design boss, of course, design an emotion and experience is extremely important. The overall look and feel of the car inside and out has to be exceptional, sophisticated, modern, crisp, clean and emotional. But it's not only that. It has to be functional. It has to have the space and the utility for people, gears, stuff, pets, you name it. It all has to fit in. They demand that. And our designs will deliver as they do today at a value, at a great price point.

What's next? Of course, range. Range and efficiency, we are the leaders. We do this so well, and that is right up there with the top purchase consideration for folks in this category. That is a fact. And we obsess about this and [ Emad and Zach ] will come up in a minute to tell you exactly how we're achieving that and how we're going to do it at scale at that coveted price point. Third, performance. Lucids are fun to drive. It's a fact. They're a blast. And we get that time and time again. I love driving my Lucids and we're going to bring all that thrill, all that experience in a motion, dynamic not just 0 to 60x, although we do that great.

But it's the steering dynamics. It's the braking. It's the way the car stays so solid and so planted on the road. We do that so well. the experience. The digital experience is an obsession, especially right now. We've taken big steps. You saw the improvements our OTAs that have been happening with Air and Gravity. We're going to take with Lucid UX 4.0, we're going to take that to the next level with the midsize program. And all of this is going to be done at an accessible price point and bring that value to consumers. So through that research for the customers, we actually showed them our vehicles. We shared with them the price point, the feature set, the metrics, and you know what, this was also, by the way, against a wide range of the top peer players in the category, both at the low end of the market to the high end of the market, that sweet spot where we're going to play, and guess what, we blew the competition away every single time. #1 in exterior design, #1 in interior design, #1 in specifications and #1 at our claimed price point and value proposition.

And I love the quotes off to the side. It was the best looking car, looks like the Jetsons, right? I grew up with that, okay, I'm sorry, I'm dating myself. But it's about the future, right? We can still be optimistic about the future, and we're going to deliver on that. So the design itself, this is a big opportunity, especially for us in the design department because we created Air and Gravity with a consistent DNA look and feel. With the midsized program, we really wanted to evolve that. We wanted to mature it, but we also wanted to put even more emotion into the products. And I think we've really done that. It starts with a very sleek emotional silhouette, really concentrating on enhancing the dynamics of the vehicle.

We put more movement, more muscle, more sportiness, we give the car that planted stance, the car sits so well on the wheels and I think people are going to see that. They are a more emotional product, and it's really going to stand out in the category.

Cargo. Through our miniaturization of our components, we repackage the interior, the layout optimize space inside the vehicle, optimize cargo areas. We will be the space leader in our category, and that's so important because we're making the car oversized on the interior while keeping the outside of the car, lean and sleek in compact dynamic sporty and aerodynamic. So important, we are going to have class-leading aerodynamics, a drag coefficient below 0.22, that might not mean anything to some of you, but that's really, really hard to achieve. I'm not going to lie there are days where I curse the or Dynamics team. But we work together and we solve it and we get those numbers. It's true. You know it. We've been there, but it is important. It's the design really validating itself making the car look great and work well, that's design. And the aerodynamics will deliver and that will support our range target.

Now on the inside of the vehicle. Hopefully, you're familiar with Lucid Gravity, we took a big step forward with this layout. We call it the ClearView cockpit. We position the display higher in the vehicle just below your line of sight of the road. This is good for safety, for viewing both the road in front of you as well as the content on the screen, safely reduce latency and we reshaped the steering wheel. So you see the screen uninterrupted, and this is the ClearView cockpit. We've taken that and evolve that on the midsize. We've moved to one single screen placed up high 36 inches, and this is dedicated to both driver and passenger alike and that's a big deal because we create a more unified space, a more social space, and this is something that we've really brought as a theme into the midsize program and that allows the driver and passenger to have their own unique experience.

Sorry, I'm going to go back on. And we kept the physical controls, of course, to be able to control fan speed, temperature volume in the middle keeping our tactile feeling on the steering wheel, so we can control screen and features alike. And brace yourself for this one, Mechanical analog door handles. Okay. Inside and outside the vehicle, what a time to be alive. The future is now. Okay. I'm joking, but they are pretty cool. So feature-wise, we're focused in 4 key categories with 4.0. Energy. We have some very unique applications that are basically widgets that help you understand the efficiency of the vehicle, how you're driving dynamic affects your range and just inform you so you don't have that range of anxiety. We put so much effort in making the car go far on as little as possible. We want the drivers to be informed and understand that.

And this is something that we're continuing to work on the user experience team to come up with features and display items that really inform the driver. NextGen navigation. This is going to be about a more 3-dimensional navigation experience, better way finding and it's also going to be better turn by turn. We're working to layer the turn-by-turn navigation experience over our ADAS representation. So that's going to be super, super exciting. Entertainment and productivity Ervin talked about this a little bit. This is really about applications coming inside the car in areas of streaming content, productivity, even gaming.

And that lastly, natural interactions, obviously, we're living in a world of AI, accelerating innovation and natural voice is going to be at the very center of the driving experience for Lucid going forward. Speaking of which, our AI assistant, we're all super excited about this. The team has been hard at work at it. And I think we've really hit it out of the box with the Lucid intelligence AI experience. It's agenetic. This can literally plan your day out for you, whether you do it in the car or do it on your phone prior to your trip, it can think through a plan for your day, I can ask it simple things, you can ask it complex things, but it can think through it and give you recommendations.

It's personalized. It learns what you like and don't like over time, it becomes your mobility partner, your friend and it can optimize your mobility experience through personally knowing you. It's seamless, both when it's computing just on the edge inside the car? Well, it's the same when it's computing on the cloud and so that experience is very seamless. It's not changing from one assistant to another assistant, which is so common in the marketplace today. And maybe most important, with the rapid changing industry it's language model agnostic, meaning we can work off of any language model. We're not dedicated to one single language model and it's a very dynamic world out there right now. The news changes on a daily basis. We need that flexibility and we need to be agnostic.

So with that, I would like to first talk about the personality because the personality is quite exciting. We put a lot of work to really brand, Lucid brand the experience inside the car, whether you want a personality that's more laid back and chill and easy going or perhaps the other end of the spectrum, one that's more direct and just gets down to business and gives you the information you need or perhaps something balanced right in the middle. This is again something that can grow over time, and we're really going to evolve this idea of personality inside the vehicle. So to give you an example of that experience that we're talking about, I'm looking at you, Dave. Dave is here. Dave is our Head of User Experience and has been at the center of developing our Lucid intelligence assistant, and he's going to give you a demo of that right now. Dave, take it away, if you can hear me.

Yes. Thanks, Derek. Our customers aren't going to have to wait until Midsize to experience our new AI assistant in both Air and Gravity. Let's take a look at some of the things that can do. Hey, Lucid, Hello, [indiscernible] Well, yes, we've lost connectivity. We did record a video prior to this for exactly this reason, cars aren't meant to live in doors and sometimes these things happen. So do we have that video we can queue up?

[presentation]

Just a small example, and that's -- even though it's a video, it's not staged. Super exciting. I'm guilty probably more than most of looking stuff up on my phone while I'm driving. I mean you literally could go buy a drill from Home Depot with using this. And we've actually played with it, and Dave's had a lot of fun with it. But we're super excited about it. And trust me, it does work much better than that outside.

Before I hand off to my engineering colleagues, I just want to leave you with one thought. Lucid is in a very, very unique position as a brand, and it's really based on kind of the values of the company that Mark and Ervin talked about earlier. We're in a unique position. If you think about the traditional brands, the storied brands in the world that we all have the most respect for. They tend to focus on traditional automotive attributes and excellence. I'm talking about ride and handling performance, comfort features, design, these traditional elements that have evolved over 100 years and modern automobile is quite impressive as a result.

And then you consider the traditional players, the new -- sorry, the new players, whether that be our fellow startups, or even our competition from China, focusing more on advanced technologies, ADAS, connected experiences, aspects of EV. They do that well. Lucid is rare. We're able to compete at the highest level with the storied brands on those traditional attributes, true excellence at what makes a solid car grade. At the same time, we're competing at the highest level on the New World Technologies in ADAS, connected experience, and cutting edge with EV efficiency and performance packaging, et cetera. Very few companies can claim to live at the intersection of those 2 worlds. In fact, I would say nobody else can say that like Lucid.

That is what's going to give us the edge when we come down into that coveted Midsized segment because we're going to do it like we've done it with Air and Gravity at an awesome price point. So with that, I'm going to hand off to my colleagues [indiscernible] [ Iman Dalal ] our SVP of Engineering and Software and Zach Walker, Chief Engineer of Midsize.

Thank you very much, Derek. Welcome, everyone. So every time Derek talks about Midsize, my excitement level goes up so high. And why not? It should, because Midsize is really a pivot moment of Lucid in many ways. And today, I'm going to talk how we're able to deliver that amazing experience that Derek just showed us at scale and at that accessible price point. So like Derek, 10 years ago, I joined Lucid. And the first thing I was asked is to design the most efficient car, the most powerful and the most spacious. And I said, maybe that breaks the laws of physics.

So I stayed humble, working with the team, including Derek, Zac and many of us here to try to approach the laws of physics smartly, not break them. And yes, efficiency was the #1 priority in that list. And this graph shows the results of that mission, and that drive, which turned out to be truly rewarding. Efficiency is important because it defines the size of the battery. It defines how battery energy is converted into miles driven. And this chart in particular, shows 15% of greater efficiency achieved through Lucid Air compared to its best competitors in production today, including a known U.S. leader.

This efficiency, as I mentioned, it's important. And the question is how are we able to achieve that and why it's been so hard to replicate. As the graph showed, we have over 5 years of an advantage over the competitors and that gap is widening. And my answer to that, most companies optimize a subsystem, a one subsystem at a time. And that's actually a great way to make the vehicle a failure, to lose the whole vehicle because at Lucid, we obsess with the system, the entire system, not a subsystem. And that relentless pursuit of excellence across the vehicle, the systems -- any system that dissipates energy in the vehicle from drive units, our [indiscernible] unit in Air and Gravity set the standards in every metric possible. efficiency power density to our density speed in all EVs globally.

Our energy density and the battery set a technological benchmark and combined with our software focused, as Mark mentioned earlier, the underlining secret sauce that connect us infuses all these systems together and make them work in harmony. So I want to come back to the point of efficiency. Just for a second. As I said, efficiency defines the battery size. Why? Because it's directly linked to the miles driven. And this is truly a foundational cost lever. So our folks and efficiency is driven by economics, not just to make the best dam vehicle. So that's also super desirable. We know that, but also to make the vehicle affordable.

And today, of course, I'm still talking about Air and Gravity to set the stage to midsize and what has been truly distinctive, as I mentioned earlier, is fusing the range, efficiency with performance. We didn't trade this away. We made them coexist together, blending comfort, acceleration range, handling in one single vehicle. The Lucid Air grand touring today achieves over 512 miles range with 819 horsepower. It's to only Sedan that sets the standard. And that's not a confidence. That's a pursuit of science at every level. And we delivered all of that while we still have best-in-class exceptional interior space and that space is not accidental. It's super intentional, and it's engineered in the vehicle, because we achieved it through not making the vehicle, not by making the vehicle larger but by making the technology smaller.

Our drive units are [indiscernible] power dense, our battery backs or super energy dense and so there is every system, the cooling systems, the body in white, the chassis, all designed intentionally to be super efficient. So now I'm sure many of you wonder Will Midsize live up to Air and Gravity. Will Midsize deliver the award-winning excellence as Air and Gravity. And at what price point is yes. Kosmos and earth [indiscernible] Lucid DNA uphold fully diluted DNA in energy, performance and space, completely redesigned our systems, building in our promise of technology that has virilized in Air and Gravity to take midsize to a next level.

It's so many years of hard work leading to a platform, this is a platform that's used across the differentiated products that Derek just shared. And how are we able to achieve these attributes. Again, we leaned in our philosophy, approach, scientific approach, designing every system holistically as one single system and meticulously innovate and optimize across all engineering domains from the drive unit, which I will speak about more in detail in a minute, the high-voltage battery system that Zach will elaborate on in a minute, our bidirectional charging systems, centralize low-voltage electronics or zonal architecture.

And of course super areodynamics [indiscernible] now how do we achieve these attributes. I'm incredibly excited to reveal Atlas, our next-generation drive unit that has been entirely designed in-house and will be manufactured in-house as our previous generation of drive unit, which we call [indiscernible]. So what's different about Atlas? When I joined in 2015, I was able to use our talented team to design that technology. But no matter how talented the team is assembled for the first time. We evolved and, of course, with the new aim and goal and scale level in midsize. Atlas designed from day 1, low cost, high volume, that results in a materially lower bond cost, lighter, fewer parts. So Atlas isn't just a drive in it. It's a mindset.

It's a shift in our mindset you can ask now what and how we measure the superiority of that Atlas drive unit. One of the best ways to measure that is through power-to-weight ratio criteria or metric. This metric is important because it's a key that impacts energy efficiency because that would mean you would use list material, and it would also impact, of course, vehicle mass and space. Conveying against the best over there, we have astonishingly 40% higher power density in the most cost conscious drive unit in the wallet. So where does this feed to. Ultimately, this feeds to the most important criteria in an EV, take it from me, technical criteria [indiscernible], which is energy efficiency, Again, it means more directly linked to the battery size, which is the most expensive part in an EV. And I'm super thrilled to say that, again, our new platform for the midsize is going to be class leading in efficiency with projected over 10% greater efficiency compared to the most optimized and the newest, most optimized platforms in the world, including the U.S. leader of EVs German and Chinese leader that everyone these days talking about.

So let me take a step back. So if Midsize is capable of matching air and Gravity DNA. How do the economics work? The answer is radical efficiency. It's truly not a buzzword. It's a philosophy. It's a set of principles that we adopted at Lucid to be able to keep the lucid DNA in energy performance and space, but expand on that with software and manufacturing efficiency. Software first, design for manufacturing mindset was [indiscernible] for Midsize and eventually, engineering led companies win as the head of engineering, I would say that. I'm truly sure because the right engineering decisions determine everything downstream in the product, cost, scale, and that's exactly how we design Midsize and build it to deliver excellent product at a lower or very low price point or low cost; and thirdly, at scale.

All together, combined together, not choosing one, all of them. Now I want to bring Zack to the stage to give you examples of these innovations and share with you much more cool stuff.

So efficiency Fundamentally, this means doing more with less. Radical efficiency means doing more for the customer and giving them product superiority but requiring less from our business and leading to a cost efficiency. This is radical efficiency. This is embedded in everything we are. This is what the midsized architecture was built on. Everything was about radical efficiency, the battery, the body, the drive units, the architecture. Radical efficiency defines everything we do. So what I'm going to do is I'm going to take you through 5 of these points and talk through how radical efficiency led to product superiority and cost efficiency for our business.

So first, we are going to talk about energy efficiency, one of the first big pillars. And we're going to talk about the battery. So when we talk about the battery, this is the Midsize battery. And as you see, a Gravity is going to appear, and our architecture is going to come next to it. But you'll see there is multiple components that we built throughout Gravity that all merge into one. This one component is then assembled to the battery. So we have a singular high-voltage system. This joined up thinking this way to merge it all together leads to one product superiority. We still -- our superior product when comes to charging.

We still have all the features that we've talked about, vehicle to vehicle, vehicle to home, but we didn't throw money at the problem. You see radical efficiency leads to cost efficiency. When we talk about non-cell parts that is an 80% reduction in components. That is an 80% reduction in components. And all of that is one system that you can build offline and meat into the full vehicle. And then when we talk about those same parts that is a 45% reduction in cost compared to Gravity. We're going to compare to Gravity a lot, and Gravity was already an engineering marvel. What we're showing here is why Midsize will be mind-blowing when we do radical efficiency.

So what do we talk about with energy efficiency. I think the numbers that Imad shows can really go over a lot of people's heads when we talk about miles per kilowatt hour. So I'm going to give a reference. We're going to talk about the fact that when we go 300 miles our vehicle, the Kosmos requires 69-kilowatt hours. That is not our overall range, but I'm just giving you a range of 300 miles, how much energy that takes us. But when you compare to others, that same 300 miles which is the same distance traveled, requires some 73, 82, 86, that is 2,000 extra dollars the customer has to pay for and get no extra value. Who likes to give away $2,000. There's no point in that where does it go? You get nothing.

Radical efficiency leads to product superiority because we can give the customer more for less to us. But it doesn't stop there. Let's keep going. Let's look at the factory. Again, Air and Gravity or a Marvel, but we've gone further. When you look at the left, you'll see the factory for the battery for Air and Gravity. But Midsize was miniaturized. We reduced the components. We reduced the requirements on our business. We reduced the factory itself. By doing that, we can reduce the square footage by 40%, while achieving a higher output while also reducing our labor and overhead by 50%. This is radical efficiency when we talk about the pillar of energy efficiency.

Now we're going to talk about the drive unit, the amazing DNA, the thing we all love about Air and Gravity of the driving enjoyment. See Atlas helps deliver this. On the left, you'll see [indiscernible] on the right, you'll see Atlas. You see here how many of these components Imad just told you about, were merged. On the top now, Atlas was reduced to just a couple of components. And then we expand and we see that we merged everything, the castings, the side faces. Everything was simplified. We had to do that. So one, we could still deliver a superior product. right? We're still having the 3.50 to 60. We still have amazing highway passing, and we still have this motor contribute to our energy efficiency story. But the cost efficiency, 30% fewer parts a commonized front and rear driving it. We don't have to go resource all those components, we get scales, we get economy that comes together, and that leads to a 37% reduction in driving a cost. This is radical efficiency.

And when we put this all together, when we talk about the Midsize and what the customer gets, this smaller battery, this smaller drive unit, this integration into the body gives us more customer space. This is more customer space without a bigger car. This is the customer getting a superior product, but not just for them, but for their cargo, we're talking about 24% extra cargo space compared to the average of our competitors. That's 24% more space, whether it's your car, whether it's an Uber that you're trying to desperately get to an airport in or there's a robotaxi that you're doing the same. This radical efficiency goes across all of our businesses and leads to value for us and for the customer.

Now [indiscernible] a really good point. Software efficiency. Ironically, software efficiency is not about just the software. It's about needing to do a system -- it's about a software-defined vehicle. Now I know you've all heard this term way too much, right? This is probably the buzzword that is hitting us all the time. So what does a software-defined vehicle really mean? It means changing the entire architecture, centralizing as much as you can into a couple of easy use so that you don't have to go and update the software for tons of things, make the communications, make the connections, it means replacing components with virtual components, so reducing the amount of parts but not reducing the customer experience, and this leads to an utmost software efficiency.

When we talk about Gravity everything that Irvin just told you about, it's still true. It is an amazing vehicle. It is constantly getting better. At the moment, multiple people are downloading OTAs and their cars becoming more valuable. But we had to take to the next level. And our new architecture takes all the same body electronics and merges them into 3 ECUs. What does this mean for us? This means, again, a superior product. You're still getting the over-the-air updates. You're still getting reduced latency because we have less connection that's all happening on less ECUs. And you're getting this AI assistant that you just saw that can -- is a game changer for the experience and brings you into the world of the vehicle, but it gives you cost efficiency. 40% fewer wires compared to our competitors, 40% fewer wires, every wire you cut is cost.

You have to go make it, you put it in the bundle that it's 40%. That is a reduced assembly time. I'll tell you, if you're in the automotive industry, wire harnesses are usually not your friend. They are like the worst thing to put in the car. It is so difficult to deal with. So when we were building our first midsize everybody was afraid. We basically put like a full day. Like the entire team was circled around, okay, how are we going to do this? We're going to have to rework this? We're going to do that. How are we going to force it in there? We are prepared. The wire harness it in 4 minutes. We've heard a day, and it took us 4 minutes because the team was obsessive with radical efficiency, obsessive about how we build this faster and have less demands on our business.

This is radical efficiency in our product, in our software and our software-defined vehicle. I want to really just show a scale and show what that means, right? We talk about this electronics architecture. I want to pull further to the right because we want to centralize. Again, centralizing is not reducing customer value. It's increasing our ability to deliver customer value with less needs for us. So everyone is trying to pull to the right? We see here that there are some OEMs who are still more in a domain, but we see them more advanced pulling to the right and going to centralized. But you also need to move up in this matrix, moving up as a reduction of wires, that's not just a reduction of wires, but a reduction of parts. Again, that is using virtual components rather than real ones, and no one compares to us with that. We have reduced the wire count compared to some of those new EVs by 100%.

We've really cut it in half. That is radical efficiency. That's how we're helping manufacturing, and that's how we're winning with our software-defined vehicle. And the last thing I'd like to chat about is our body. I'm here to make a huge announcement that we're not using giga castings in the midsize. And again, everyone surprised because everyone's heard gigacagigacast and gigacasting. It's what you hear all the time when we're talking about the automotive. But we need to not follow trends, we need to do what's right for us and for the customer. When you optimize the body, you find that there are a lot of spots that are the most efficient for steel, and there are a lot of spots which are most efficient for castings and aluminum -- you have these corner nodes where we've put our mega castings in the corners because those are high focal points of stress and connections. There's where it pays to put our castings and that's where we put all of our time and effort.

But there's another place, which is about customer value and customer repairability. This is a huge deal to customers, whether you can actually service your vehicle. This is needed in the midsize segments. So we obsessed about these front rails. We've actually put 2 different separate sections of rail to have both high speed, lower [indiscernible] low speed, higher parability and even another high-speed rail, so we don't destroy the castings, but we can ease repair and bolt in. And we see this is where we want to go. We want to have these mega castings, and we want to have repairability. We can see that other people are actually following this trend as well. It's ironic that some people have been fighting for giga castings with their latest updates have fully moved to their front underbody being full steel stampings.

So we see that we believe in our trend that we believe what we've done and we believe how we design the body. So what does this lead to? It leads to product superiority. It leads to $1,000 less of annual insurance. That is how we help the customer. That's how we're going to obsess and we're going to get midsize to be successful. It leads still to our 5-star cash ratings and it leads to all the other benefits of space and performance that we've already shared. But it's cost efficiency for our business. We have a 65% reduction in our joining guns that is 1/3 for increased JPH, and we have a 2x improvement in our robot efficiency. This is how we are going to be radically efficient in our manufacturing.

So what does this all mean? What does this mean for product purity? Well, you got a vehicle with better driving efficiency, better charging speed, better cargo space and lower insurance, but we didn't throw money at the problem. No, we used radical efficiency and reduce the parts in half compared to some of our competitors. When we index to 100 parts, you see here that some have 110, some have 165 and some have 195. That is half the parts that our team needs to spend time putting in the vehicle. that is half the parts that we need to kick off that we need to design, that we need to waste our energy on. That is a superior product with a real radical efficiency for manufacturing and cost. And this is what the midsized platform was built upon, and this is what everyone at Lucid obsessed about for the last 2.5 years, as Derek referenced.

So with that, you can ask the question, how do you take that and really impact your business? And what does that mean for our final outcome. Mark, do you want to come share and join what that means for us?

Thank you very much. Thanks, Zach, for all the information. Didn't I mention in the beginning that at Lucid, we're obsessing about technology. I think what became very clear. But when it drives cost down and still maintains product superiority, I don't have a problem with that. Keep obsessing and deliver on it. So I'm perfectly fine with that, because I want to show that slide again that we had in the beginning that walk that brings us down from where we are at the Gravity right now on the left-hand side to Midsize, a completely different level when it comes to unit cost and at the same time, also optimizing the Gravity and also the Air obviously.

So we're moving with the whole company to a completely different unit cost level is all of this very welcomed obsession of our engineering team. The biggest part of the unit cost of a vehicle are the BOM cost, the bill of material, the parts. And now there's a lot of talk about, and we've asked very often, hey, can you compete against the best out there and particularly with the new Chinese. Let me show you something.

This is a comparison of the Lucid [indiscernible] current BOM cost against the -- an equivalent or a comparable vehicle of a U.S. EV leader who will not be named. And a Chinese EV SUV, brand new, everybody is talking about and so afraid about. When you look at that, well, you can say, well, this EV leader is a little bit lower here. Well, but there's also a lower range in that car. So if you would normalize it, -- and the better way would be a little bit bigger, you would actually get to the same level we are. But we are on a lower BOM cost than the Chinese competitor that everybody is so afraid of when they come in globally.

So we are in a very good position and very happy about all that obsession and what the team has done has led to this. And typically, by the way, this is typically the starting point, after you've done the initial design, that's when you actually start to drive down the BOM cost even further. So I'm very happy to see that we are currently -- and those are actually numbers that are sourced. It doesn't mean this theoretically that has sourced numbers that we can already count on for the start of our production. So it's not only obsession of technology. It leads to cost reduction.

And I'm very happy about. And I think my dear colleague [indiscernible] even more than I am. He will tell you all about it later on. So the Lucid [ Cosmos ] is in a great BOM position, BOM cost position. But -- that is a good start, but remember, we have 3 products we are working on and which we will launch. The next one is Lucid Earth. And given we are already further advanced when it comes to the Lucid Earth versus the other one that you have to stay tuned for. We already know that 95% of the parts are -- and particularly, the biggest or most expensive parts, batteries, the drive units, all of those things are carryovers.

So you can expect that the Lucid Earth will have a very similar, very attractive BOM cost position for us. And now obviously, we're working on the third model to take as much commonality into that as possible. commonality to reduce cost. But at the same time, the vehicles will look very materially different. That means we are able with that despite the commonality to address different customer segments that Derek talked about earlier to really address the whole midsize market which is nowadays, much more competitive than it has been maybe a couple of years ago.

And I also want to quickly repeat what Zack has already said. One more time. Obviously, we're obsessive about our costs. but we also think about the customer. And when it comes to insurance, that's actually one of the big complaints that we hear quite often about EVs, hey, your insurance costs are materially higher than what I have with an internal combustion engine. That's why we actually focused so much on that, including the body composition, the body structure to make it repairable and not like when you have a small vendor, you basically have to throw the car away. So we really have this $1,000 or 30% lower insurance cost that we are projecting based on our current information.

So I would like to summarize everything that you -- as much as best as possible to summarize everything that you heard about our midsize. First of all, obviously, a significant market expansion. The term is about 10x bigger than what we are working on right now when we add the midsize to our portfolio. We will maintain same product superiority that we have worked on so hard with Air and Gravity also with Midsize at a very attractive cost position for us and, therefore, attractive margin position for us. And based on our engineering, we make those cars also ideal platforms for our next endeavor, robotaxis autonomy that we will tell you much more about it after the break because we now have, I think, it was a 20-minute break.

And yes, I wanted to just invite you for some refreshments and then see you in a few minutes here after a break when we talk about autonomy. Thank you.

Please welcome Kai Stepper, VP of Autonomy at Lucid.

Good morning, everyone, and welcome back to the Lucid Motor Investor Day presentation. Thank you so much for joining us today, both online as well as live right here from New York City. As Marc mentioned in his opening remarks, autonomy plays an outsized role for the future of Lucid Motors. So here's what I would like to share with you this morning. I'd like to talk about how our vehicle platform is ready for Level 4 autonomy. I also would like to share with you what that means in terms of time to market. I will share with you that, of course, we are not forgetting about our retail customers when it comes to higher levels of autonomy. And of course, I'm going to spend some time on our innovation, technology and commercial advantages.

But before I get into all of that, I'd like to address one question. We heard a lot about great technology components Imad talked about systems and subsystems, isn't Lucid interested in selling and licensing these components and subsystems. The short answer is yes. The long answer is there is much more. So yes, of course, there is the drive units, the battery technology, our power electronics that come together to build our award-winning skateboard and vehicle platform. But now we're taking it a step further. We are offering complete vehicle platforms to our customers to enable them to turn radical efficiency into cost efficiency.

Talk about the size of the deal. Of course, selling components and licensing technology is great. There's millions of dollars in that, and that's a good deal. But when you think about growing that to entire vehicle platforms, both from an EV as well as AV platform. You easily talk about 5x to 10x that size of component sales. 5x to 10x easily going into the billions of dollars per deal. So what is Lucid Motor's approach to autonomy? Well, by leveraging our innovation, our strong foundation and technology, we actually pursue multiple paths to commercialize autonomy.

On your right hand on the screen, you see what we would call personal autonomy. So this is higher and higher and higher levels of autonomy features for our retail customers. And by the way, the monetization for those features has already begun. As Erwin already showed with you earlier, and I will show you some more in the next few minutes. So that's on the one hand. On the right hand of your slide, you see business-to-business customers for robotaxi operations where we see a strongly developing market that is happening after many, many years of promise and many, many years of heart development.

So in short, Lucid Motors pursues a dual strategy when it comes to commercializing autonomy. Few facts when you look at the overall industry right now, not just Lucid Motors, not just the segments we play in. But overall, what is the adoption rate or take rate for Level 2, Level 3, Level 4 autonomy in the overall market. Well, it's at about 25% right now, give or take, but that is growing to more than 60% by 2035, overall market. Now Erwin shared with you earlier, the Lucid take rate for our award-winning [indiscernible] Drive Pro is already between 40% to 65%, 40% to 65% take rate of Dream Drive Pro when the rest of the market is at about 25% or less.

So you see the outside potential because we can really forecast and assume that our take rate will not just be 60% in 2035, but it already goes up to 65% today. we anticipate a much higher take rate. On the other hand, on the right hand of your chart, you see the developing robotaxi market. That's been a promise a long time in the making, but it is here. You see the scale, you see the growth. Yes, total addressable market for ride healing with robotaxis, less than $1 billion last year. But that has grown to more than $300 billion by 2035 total addressable market, more than $300 billion.

How is that possible? It's possible because the percentage of driverless taxis will grow in the same time frame from about 1% today to about 65% by 2035, leading to more than $300 billion of total addressable market. But in order to actually make that a reality in this to become reality in the future, there's an important enabler that [indiscernible] in place. One such enabler is an underlying vehicle platform that allows for autonomous operation. So what does that mean? That means the subsystem that Imad talked about in the vehicle need to be ready for Level 4 autonomous operation.

We're talking the steering system the braking system, the network communication, the low-voltage power supply, the sensors, the compute and the list goes on and on and on. And here's the rub. You get all of that straight from the factory for Lucid Motors. No retrofitting, no removing components or subsystems, no adding components straight from the factory from Lucid Motors. So let's take a look at how we compare to our competition, there we go.

So some of these vehicles on the right, some of you may already experienced this with [indiscernible] robotaxi. At a minimum, you have seen or you may have heard about them. And their reality today. the I-PACE, the ANV coming soon, RT coming soon. If you look at how we compare already today with Lucid Gravity, and you can see it right here. We have it in the full year, you can touch it, you can feel it, you can check it out. I will be around after the presentation to answer your questions. We are already beating that in several metrics. We're beating that in efficiency, efficiency in miles per kilowatt hours. We're beating it in charging speed. Think about this. In 11 minutes, you can charge a 2-mile range, 11 minutes. Think about what that means for operation of a robotaxi fleet.

And of course, as I mentioned, we have the safety backups in place for the core vehicle operation, steering, braking, et cetera, but also the safety backup and redundancy in place for the specific autonomous operating system, like the compute, like the sensors and other elements. Now when you look at how the Lucid Midsize compares for robotaxi operation, we blow them out of the water, efficiency up to 4.5 miles per kilowatt hour, charging speed with a smaller battery pack, then the Lucid Gravity and others up to 14 -- yes, 14 minutes charging speed up to 200 miles. And of course, the same safety backups in place that we already built into Lucid Gravity.

Now this may all look nice on a chart in a table. What does it mean in reality for our customers. Well, here's what that means. Here's how radical efficiency that Imad and Zach have talked about earlier translates into cost efficiency. Our Lucid Midsize vehicle platform for robotaxi operation and for Level 4 technology, in general, offers a significant lower operating cost per mile. You can see others have an up to 34% higher cost per mile for Robotaxi operation. Now that may look very abstract in this chart. Let me make that specific for you.

Just from charging speed and the range we get for 1 charge, that is a $2,000 cost difference per vehicle per year, per vehicle per year. That still may not sound like much $2,000 per year, a big deal. Well, I did a big deal. Let's do the math together per vehicle. Let's assume a robotaxi fleet of 20,000 over the course of 6 years, 2,000, 20,000 vehicles, 6 years. That is $240 million, ladies and gentlemen, 240. Now that is not small in terms of a cost advantage for our customers. Now the efficiency that Imad and Zach have talked about and some of the underlying technology foundation that I'm talking about has not gone unnoticed by major players in the tech and automotive industry.

So matter of fact, in July of last year, Uber decided to partner with us in a joint partnership with [ Neuro ] and committed to 20,000 units over the course of 6 years and decided to invest in our future with $300 million as well. But I'll take it for me, there's a quote from Dara, the CEO of Uber right there that says Lucid's unmatched efficiency, autonomy ready vehicle architecture, autonomy ready vehicle architecture and customer-centric approach gives us confidence in our ability to deliver autonomous mobility together at global scale. Those are not my words, those are [indiscernible] words.

So you may ask, okay, you signed this deal with Uber and [ Neuro ] last summer. Great. How's the budget going? What's happening? Well, here is how the project is going. We are right on track for commercial operation by the end of this year. Just a few milestones that we already have achieved since July of last year. Within 7 weeks, only 7 weeks after contract signing, we already delivered our first prototype vehicle to our partner [ Neuro ], for them to start testing and development and their software stake in our vehicles. Seven weeks from start of project. Since then, since September of last year, within the last 6 months, we added 75 more vehicles they are already delivered to [indiscernible].

So that gives our partners a fleet already of up to 80 vehicles to collect data, to test and develop already today in the San Francisco bay area. This is only possible because our vehicle comes Level 4 ready from the factory. If we would have to rearchitect, if you would have to reengineer, remove components at components, you can do that in 7 weeks. And you will see the production and 10 version right here in 3D and live in this room to touch and feel. So there is a couple of more milestones to come. Of course, this year, more vehicles, more homologation, more testing, but eventually the start of the commercial operation by late 2026. That is how the project is going.

Now autonomy is a topic that's been talked about, written about for the last 20 years. And there's a lot of investment that has gone into autonomy. It is estimated that the industry between auto and tech has spent between $160 billion to $200 billion over the last 20 years to develop autonomous vehicles between $160 billion and $200 billion. As a matter of fact, if you look at company A, B, C on this chart, some of them have spent billions. Some others have spent tens of billions to develop autonomy vehicle technology. Well, I'm here to tell you this morning that we are not going to spend $1 billion or a couple of tens of billions, very much to the joy of [indiscernible]. We're going to achieve this was a lot less, as you can see on this chart.

How is this possible? A lot has changed, not only in 20 years ago, 10 years ago, 5 years ago, about 2 years ago, in terms of how do you achieve autonomy. When it comes to the availability of high-performance compute, when it comes of the availability to collect and store data in the cloud, how the possibility has come to learn, train and optimize your AI model in existing infrastructure. The cost of sensors has come down, et cetera, et cetera, et cetera, drastically declining investment in order to get Level 4 autonomy. So there's the declining technology costs on the one hand, but there's also the smart collaboration that we do with our partners. And that enables a reduced investment by Lucid Motors to get to Level 4 autonomy.

Another fact I want to share with you is our timing. So cost is one element that's very important. Maybe it's the most important, but there's also time to market. So if you take a traditional OEM approach and you've seen some of the vehicle examples on the prior chart, you have to reengineer retrofit the vehicle. You have to remove components, you have to add components, you have to ensure that every subsystem of the vehicle has redundancy for the autonomous operation. Now if you do that and reengineer, you change the steering, just that. You have to retest. you have to rehomologate you have to revalidate. So that whole process until you finally get to deployment easily takes 3 to 4 years.

We are cutting this time in half. We are able because our vehicle comes ready from the factory, for Level 4 operation, of course, software needs to be added, model deployment needs to happen, test and validation needs to happen. But we can offer and support time to market within 12 to 18 months. 12 to 18 months compared to 3 to 4 versus the competition. So a cost advantage as well as a time-to-market advantage. So besides robotaxis, I also would like to talk about our offerings in autonomy for our retail customers. Already in production, as Irwin alluded to earlier, is our hands-free highway driving. That will be added also Lucid Gravity with the city drive assisted by the end of this year. In 2027, we will have hands-free highway and city driving in Lucid Gravity and it also comes to the brand-new Lucid-Cosmos. And that is followed by level 3 eyes off driving in 2028. And last but not least, eyes off, hands-off, mined off highway and City operation by 2029.

So I know there was a lot in this video. So let's recap. Very clear road map when it comes to the rollout for autonomy features for retail customers. Step one, hands-off driving, [indiscernible] already in Lucid Air today coming to Lucid Gravity in Q2 of this year. Step 2, now we're expanding that to city driving in 2027, both for Lucid Gravity as well as for our midsize platform, specifically in 2027 are Lucid Cosmos, followed in 2028 by eyes off driving on the Lucid Midsize platform. And last but not least, the mind off Highway and City driving 2029.

Erwin talked about our high take rate and the fantastic feedback we have gotten from customers. So let me share with you a couple of the feedback that we received since rolling out our hands-free driving and lane change. So what are customers saying -- those are not my words. Those are feedback we get from the Lucid owners forum, we get it from Reditt, we get it from other platforms, fabulous update, Hence, [indiscernible] was flawless now a smooth as silk. Lucid, not the ball out of the park. It's that perfect. I drove it with zero issues. Try to lane change to the far right, as the vehicle was going downhill. Brutal test, not my words, that's the owners words, brutal test, and it handled it like a champ. I have nothing to add -- so that feedback when it comes to our Dream Drive Pro performance in the real world.

Now what I would also like to share with you this morning is that we're introducing the option to get autonomy levels by subscription. Starting in 2027, we will offer different levels of autonomy once they become available, starting from $69 a month and that starts with Level 2 plus or hands free driving as we've seen in the prior road map slide. $69 to $199 depending on the autonomy level when the technology becomes available from Lucid Motors. So what have we heard this morning about Lucid's approach to autonomy. We learned is that through leveraging our core technology foundation, our relentless innovation and smart partnerships, we're participating strongly in the developing market for autonomy, both for robotaxis as well as personal vehicles.

With that approach, we have a right to win. How do we have a right to win? And I want to come back to what Marc shared with you earlier. I'll give you 5 reasons, how Lucid is going to win in autonomy. Number one, Level 4 ready vehicles straight from the factory. What you see right here in the room, the gravity robotaxi, that comes off the assembly line by the end of this year from Lucid Motors, sensor integrated, everything integrated, ready to go. Number two, a Zack and Derek and Imad have shared multiple times, we have the best efficient EV platform on the planet. Number three, we are partnering with the best of the best, namely, Uber, NVIDIA, [ Neuro ] and others. Number four, our approach is responsible from a cost and investment perspective, we call it the capital-efficient approach. And last but not least, we're pursuing a dual path to commercialize autonomy, both for robotaxis as well as autonomy features for our retail customers.

That's what I would like to share about autonomy. But now it is my pleasure to call our CEO, Mark Winterhoff, back to the stage to share with you some exciting news.

Thank you. Thank you, Kai, for all of the information and really exemplifying how important autonomy is for us. I actually have a special guest that I would like to ask to the stage now because we have here today, Andrew MacDonald from Uber, President and COO of our, I would say, right now in that space, most important partner. And I'm super excited to have you here for a little bit of a fireside chat asking you about things how you see the market and other things. Thanks for coming.

Happy to be here. Thank you. Great. So good to be here. It's such an exciting day.

Yes. Maybe I kick it off with some questions. So I mean, we've just talked a game about the robotaxi market, right? How does Uber are you seeing it? Is it developing now? Is it scaling? Or how are you thinking about that?

I mean, first off, I'd say I think you guys are thinking about it the right way. So I think that was a very compelling narrative. Our from our perspective, and I think this is sometimes a misconception people have about Uber and what autonomy means for Uber, but we are extremely excited about autonomy. We think we're the largest mobility platform in the world. Autonomy is going to make mobility much safer. It's going to make roads much safer. It's going to ultimately, over the long term, bring down the cost of transportation, and bring a vision that we've frankly talked about for 16 years, but haven't yet brought to life, which is true mobility as a service, right? I think the days of I've got 3 daughters under the age of 5. I don't think any of them are going to get a driver license.

And you can see it in the data today that 16-year olds in the U.S. aren't getting their driver's license like they used to. So we're big believers in autonomy. It is going to take some time, right? I think the edge cases in autonomy still exists. You still see it every single day as commercialization starts to happen. There are edge cases that need to be ironed out. But we think as the largest mobility platform in the world that we can help bring Atomi to life, and we're encouraged by the progress. Progress on the software side, there are multiple L4 players today that have sort of its finish line on L4 capable software and are hitting the starting line on commercialization.

There are vehicle OEMs, platforms emerging, such as Lucid with the Gravity today, they're autonomy ready that have the necessary levels of redundancy and compute on board and then are able to build in the sensing. That cost needs to come down over time, and we can talk about that. But the OEMs are getting ready, and I think Lucid is the leader amongst the OEMs or one of the leaders amongst the OEMs. And then finally, consumers are ready. I mean we see it in our data. We have deployments live in the U.S., in Austin, in Atlanta, in Phoenix, in Dallas and rolling out more and more. And what we're seeing is not only our existing ridesharing customers choosing autonomy when given the option, it's actually growing the market in cities that we're operating in, and that's exciting.

Awesome. Awesome. Yes. I mean now that we're sitting together one-on-one in a small setting, nobody is watching. Maybe you can share a secret. Why did you choose Lucid for that collaboration?

[indiscernible] that up wasn't in the script. I was wondering where you're going there. [indiscernible] Yes, it was better to keep it real. Look, I think a couple of things. And I just heard in Kai's presentation, some of the why, right? We believe in a vision for transportation and a vision for mobility, which is shared, electric and autonomous. I believe Lucid is going to be one of our premier partners in bringing that vision to life. Why? Well, a, you're ready today. The Gravity platform has the necessary redundancy built into the core components, the efficiency, as we just heard a lot about which is really important when you think about how autonomy is going to commercialize. These vehicles need to be ready for long-range fleets today. There's a lot of wear and tear on ride share vehicles. It's a different -- ultimately a different asset experience than a personal vehicle in the sense that you need ultimate durability, ultimate efficiency and the ability for long range and 20-plus hours a day of driving and the gravity platform is ready.

So -- so one is just the -- you guys are ready today, and that's really exciting for us. Two, and I think this matters, there's sort of the right DNA at Lucid. You've been a tech forward OEM from your inception. And with respect to our many other OEM partners around the world, a lot of the automotive industry is trying to adapt and become tech first, become software first, become electric first, but you guys started there. And I think that's really important. So for those 2 reasons, plus our just shared belief in the vision for where we had, I think Lucid is a great partner.

That's great to hear. Another question that I have. You have a lot of autonomy partners. You have a lot of cooperations that you signed. As a matter of fact, you just announced one this morning -- overnight on the other side of the world in Japan and also on, I think, yesterday. So what is -- how do you see our collaboration compared to others? What is different?

Yes. And to start, I think we've been very open about our strategy and our belief in how the market evolves. And we think that every automotive OEM is going to need an autonomy strategy and it's ultimately going to need to produce help for vehicles. There are dozens of software companies around the world building the software capabilities to drive a vehicle autonomously. And our intent is to be an open platform and partner with everyone and partner with everyone to provide a great experience for consumers to make the world a safer place to improve mobility, all these great things about autonomy that we were just talking about.

I do think our relationship in the Lucid Uber and Lucid Uber [indiscernible] partnership is particularly unique for a few reasons. One is, I think, the depth of collaboration, from my perspective, goes deeper than in many cases, what are commercial agreements with other players, but not the sort of true in the trenches building the platform and approach together. I mean you know it as well as I do. Our teams are together daily working on how is the exterior of this vehicle kind of look as we add autonomy sensing capabilities? What is the interior experience look like? How do we optimize that for ride share passengers, which again is different than personal usage what does the vehicle controls look like? What does the interface customers are using look like? How does that all blend together seamlessly and really adhere to the standards that Lucid has set.

And that's hard work, it takes trust, and it takes like -- actually, I think a deep understanding between organizations, and we're doing that work today. So that's really important. The second thing that's unique is this is a 3-way partnership. right? We both have independent partnerships with Neuro, and we are doing a 3-way thing here, which can be very complicated, right? I think in any industry, doing sort of multiparty partnerships is complex. But we've got a unique opportunity to leverage what each of our companies is best at, right?

Lucid leading on our vehicle experience in the vehicle platform, Neuro leading on the L 4 software and Uber leading on the platform and network and go-to-market for autonomy, I think that's a really compelling group there, and that's unique. And then finally, I'd say we have aligned interests and that -- in a relationship, that matters in a partnership, it matters. -- we have a vision that I think is shared for the future. We want to scale volume. We want to go big with this. We want to go global with this. We have management team relationships. We have board level relationships. We're an investor, there's just a lot of tight ties that I think means that moving forward together makes a lot more sense than moving forward apart, and it's going to be great for our customers.

Yes. Yes, and I have to actually say our teams work great together. I mean I was also kind of hesitant, okay, there's a lot of cooks in the kitchen when 3 parties are coming together. But everything that I see and what I also hear from my own teams, it is actually pretty seamless, and it's really integrated teams. And that's the only way to make this work.

It's been fantastic. And I'll tell you, everyone at Uber, who works on this project is just a true believer in your product, which I think makes a big deal as well, people want to work on stuff that they're inspired us and I think that [indiscernible].

That's awesome. Okay. Well, so we announced the 20,000 gravities. And how do you think this collaboration is developing? What comes after the Gravity?

Yes. I mean it's a great question because I think the -- what we have planned for 2026 is really exciting, but we know that's just the foundation for something that's going to be much bigger and it's going to change the world. The ridesharing industry, right? Uber was founded in 2009, I've been with the company 14 years, the ridesharing has always been a supply-led business, right? If Uber has had the great fortune of having such great product market fit that if we put more cars on the road, we can fill those cars with customers. And I think the development here is going to be the same. We want to get to scale. That means we need volume. We want to launch more cars in existing markets as we stand them up. We want to go to more cities, more countries, and we want to do so with volume.

Now today, Lucid offers a premium experience, and that's really important. And I think it's really important for the early adopters of autonomy in the consumer space to experience that premiumness. I think over time, though, we want to go mass market, and to do that, you need to bring the price down both of the individual consumer rides, but also the underlying vehicle platform, the compute and operational cost, the sensing kit, all the things that we know goes into the deployment.

So we've got a bring the cost down over time to go big on volume. And I'm really excited about the sort of development track of the midsized platform. In fact, I think I'm now authorized to say that we're finalizing an agreement Uber and Lucid to do a similar deployment of the Lucid midsized platform at similar levels of volume of the Gravity robotaxi platform. And I think that's really exciting. It's a great development, and I'm so happy to.

Thanks. Awesome. Yes, we're working very hard on this to -- as you said, you really want to bring down the costs. And we started together with the Gravity, but we all knew this is the premium sector, and we need to go 1 step down. We are totally excited about our -- the status, which is almost done. We'll see.

Well, now we have to get it done.

That's right. That's right. Maybe I take over and say a little bit how I see what comes after the [indiscernible] because we are not stopping with the midsize, as you can imagine. Midsize as it is today because what I would like to reveal is that we are working on a dedicated Lucid robotaxi, which is based on the midsize platform, but we made a lot of changes to make it even more efficient and more suited for robotaxi applications. Do you want to see it?

Who's going to say no to that, of course.

Okay. Why don't you join me come over there and take a look.

I'm going to fit in this vehicle, right?

Yes. I hope so. [indiscernible] we designed it wrong. Yes, I'm introducing here Lunar our 2 seater robotaxi concept that we have developed. As I said, it's based on the midsized platform. So again, it has a lot of commonalities. It doesn't mean we can do this tomorrow. And as you can see, it's still a concept. But again, we can implement a 2-seater robotaxi in a very, very short period of time. Maybe we can walk by, maybe if you can take the passenger seat. We actually have to rephrase this in the future, right? There is no person no driver anymore. So you take the right seat and I take the left. But you see here purpose-built, very easy to access a luggage compartment. And when we go and sit in the car, I mean, you are much taller than I am. Let's see whether you're fit.

It's a beautiful vehicle. I'm amazed by the storage space.

So here in the front, we have also integrated the new white screen where -- well, the left passenger and the right passenger in the future can actually interact together. There's also an AI assistant in this, which we have not activated today. But I wanted to point out, well, are you sitting comfortable?

It's wonderful more space than I could have imagined. I think the view is beautiful. The screen is beautiful. And from an Uber customer perspective, I think the whole trip changes when you're reorienting the vehicle in-car experience.

And also, what is -- what we think is important that with the way we have designed it -- and I know we haven't discussed it with you. But when you see the frontier, you can obviously relax like you're doing right now, you can also, if it's a short to quickly take luggage or anything here in the front. You don't even have to open the [ front ], just put it in here. And we also watched very much out to, hey, how easy is it to get in and out because that's what we always hear that in some robotaxis is very easy because they're very bulky, but they're not very efficient. And others are differently designed, but it's very, very hard to get in and out. So that's another point. Efficiency. This concept, based on all of our calculations right now, would achieve between 5.5 and 6 miles per kilowatt hours.

Sot's even a significant step-up from what we have done with the midsize, although we're actually using the midsize platform. We're also estimating that the operating cost would be 40% less than what is currently being used as robotaxis. So a drastic change, which, I mean, for you is very important since every cent counts per mile, and 40% is a significant number. And as you just said, we think that having a great entertainment in the vehicle offers a lot of opportunities, not only for customer experience but even additional monetization potential in the vehicle.

100%. Yes. I mean I think, first of all, I feel like I'm sitting in a personal theater with the comfy chair and lots of leg room and the media center in front of me. Second of all, I think our customers are going to love it. So I'm really excited.

Yes. Very, very interested in working with you guys and driving this further. As I said, we have not yet discussed, whether that's exactly the specs that you guys are looking at, but our teams have actually spent already my opinion, way too much time to develop that concept and drive it to where it is today. And yes, so this is our future when it comes to the Lucid robotaxi.

Fantastic all done.

Okay. Thanks very much, Marc. It was a great conversation, and thanks for all of the insights, and I hope everybody enjoyed it. Now I'm actually it's still running -- we might be able to cut that short. Yes. Coming back to the specs here. But now I would like actually to invite to [indiscernible] to the stage, our CFO, to tell you why you're actually here. You want to know about the financials. So [indiscernible] take it away.

Thank you, Marc. Hello. Welcome, everyone. So I guess that you've heard about the many obsessions that we've been developing in the company over the years. Obsession about technology, obsession about efficiency. I might add some additional obsessions of my own, and it's obsession about cost, obsession about free cash flow. And these are obsessions that we don't want to cure, actually, that we will keep promoting in the organization. And that's probably one of the key things that we're trying to change and which is leading us to believe that the company is going through a significant pivotal time.

It's not only on the back of, yes, the macro environment, some of the technologies reaching maturity. It's also about the fact that we strongly believe that we're reaching the end of a cycle in the company. It's the end of a cycle where we have been investing heavily. So some of it referred to you as the cycle of cash burn. We prefer to refer to it as the cycle of heavy investment. And that's what we've been doing in the company. So it's not like we were shoveling dollars in an oven, where we're taking every dollar and building a manufacturing system, bringing our technology to maturity. Now we're entering into a cycle where it's about time to start harvesting the fruits of this investment.

So 3 things will underpin the pivotal time for the company. It's the scale, the profitability and the capital discipline. The scale will come on the back of the growth. So we have a very well-defined road map to achieve this growth. So we discussed about the Midsize. It's allowing us to tackle dramatically different markets in terms of size. We talked about the additional revenue streams that we have been working on, be it software, ADAS and so forth. These are gold revenue streams, as Erwin has referred to them. I also like them a lot because of their low capital intensity.

Then profitability. Profitability will come because we have a better mix. We are reaching the scale. We are in a position where we are in a better position to absorb the fixed cost that we have been building over the year. This is not something that we did without purpose. It has been done by design because we needed to stabilize our manufacturing system and to be ready to put in production our products, our platforms in the best possible conditions. So this is where we are now.

So we will also be obsessed when it comes to profitability to go after every dollar. So we are not going to underspend. We know where our value creation areas are. We will continue investing in that, but we will do it in a smarter way. We will stage gate our investments. We will rationalize our portfolios. We will make sure that the areas where we spend our dollars do generate a demultiplied return for the company.

Capital allocation. So again, we have been investing heavily. We did these investments because we had good reasons to do it. It was by design. Now we're moving to a different type of profile when it comes to the way we will be investing in our company.

So with that in mind, we have now defined our objectives for the midterm and what we refer to as the late decade. So for the midterm, what we're aiming at in terms of revenue is high single digit and high teens by the late decade. Gross margin, positive in the midterm, mid-teens by the late decade. And capital allocation in teens as a percentage of revenue for the midterm and single digits by the late decade. This is the framework against which we will be operating.

So now when you look at the road map and how we will be executing the plan, we don't look at it as a single learning or single improvement curve. We will have 3 distinct phases in our trajectory. The first one is right now. That's the very short term, and everything is about execution. We want to stabilize our performance, and we want to solidify all the things that we have been working on. We want to drive the cost per unit as low as possible. And this is -- this will be the primary focus for us during 2026. With that, we are expecting to double the revenue growth, high double-digit revenue growth for 2026 and a significant reduction of our unit economics improvement.

Then comes the midterm. Midterm is very important because this is the moment where we will be able to materialize the proof point of the Midsize, allowing us to drive scale. We will be absorbing a higher portion of the fixed cost that we have been building over the years. We will be leveraging the mix effect that this will do on our top line, and we will be moving faster to a higher gross margin generation and also a cash generation. This is also a phase where we will start seeing the effect of the diversification of our top line. We will start introducing new sources, new revenue streams which will allow us to derisk, to diversify the way we drive our top line.

Then by the late decade, our ambition is to outperform. We strongly believe in the unique value proposition that the technologies that we have been developing over the year will allow us to do in terms of performance. We strongly believe that we will be in a position to outperform in terms of global growth, in terms of autonomous solution scaling and in terms of advantaged cost base.

So that's the plan. Again, it's not a single learning or improvement plan. It's 3 different building blocks, 3 different foundations, 3 different phases, each one building the foundation for the next one.

So now if we move to 2026 very quickly. So we have already communicated some of the high-level guidance that we have for the year. Just reiterating some of the key figures. The deliveries, 25,000 to 27,000 units, a CapEx of $1.2 billion to $1.4 billion. Again, it's a year where we need to further scale the Lucid Gravity, that will be the key focus. We have seen a very good level of performance for Q4 when it comes to the production. We were able to hit 2.1 -- or 2,100 units a month during Q4, a very strong proof point of our ability to scale the production, and that's something that we will continue doing.

The expansion, international expansion, that's also something that will kick off actively in 2026. 35 new locations will be opened during the year. It's something which is absolutely key for us to further expand our top line. The obsession on cost and the obsession on driving the unit cost improvement, not only through the BOM, but also through the work, through all the work that we've been doing in terms of engineering simplification, rationalization, this is also a very important lever that we will be activating. And also, the efforts in terms of cash preservation and extending our cash runway as far as possible.

Then comes the midterm and how we will be expanding our top line. So the graph basically shows 2 -- gives 2 key data points. The first one is that for the midterm, in the next couple of years, the majority of our growth will come from the core business. So it will mainly rely on the Air, the Gravity and the Midsize starting 2027 and most importantly, in 2028. So altogether, these 3 platforms by 2028 will allow us to reach an overall production of 100,000 units per year over the period.

The second important information is the change in the mix. So the Gravity will keep scaling up over the next couple of years. Then in 2028, you will see significant contribution from the Midsize in terms of revenue generation. On top of that, 2028, this is the year where we will start seeing a meaningful impact on the top line from the additional revenue streams that we've been discussing. That's the ADAS, autonomy, the business, the B2B partnership and so forth that we've been discussing about.

So again, many things will happen. The underlying message is that we don't want to rely on one source of revenue generation. We want to diversify and derisk this revenue generation, leveraging the global scale, leveraging and offsetting some of the cyclical effects that we might have from one region to the other and also diversifying the sources of revenues and very short -- in a very short period of time during the next couple of years. That's for the top line.

Now if we move to the cost, that's also an area where we will be absolutely relentless in terms of effort. We want to be able to deliver a cost saving per unit of 50% to 60% overall for the company. That's something that we're absolutely confident we will be able to deliver. We have proof points. It's something that we are not going to start. It's something that we've been working already on for so many quarters. Now it's really a matter of accelerating.

So the way we will do it, obviously, we will go after every dollar that we can find in the bill of material. That's something that we do well. We're very happy, and Marc has touched on that. We have already sourced a significant portion of the Midsize bill of material in a way that makes us quite satisfied and I'm very happy about the performance. We will continue doing that, and we will leverage this success to also impact the bill of material of Lucid Air and Lucid Gravity.

Then Emad has explained what we're doing, Emad and Zach have explained what we're doing in terms of radical efficiency. This is something which has also a direct impact in the way it's driving cost. They have elaborated on that. They will discuss and explain this much better than what I will ever be able to do. But this efficiency, the simplification, the rationalization has a direct impact on the way we're driving cost overall for our business.

Then there is the mix effect on -- resulting from Midsize. This is something that will contribute to the overall 50% to 60%. And we will continue targeting ad hoc opportunities going after every pocket of optimization that we might have in the organization. So that's when it comes to the cost.

So now if we bring this together, what does it mean in terms of our journey towards the breakeven? So we have a direction which is relying on several levers. We are not counting only on scale to make the breakeven happen. We have a multi-leg approach. So obviously, the overhead absorption, because of the installed fixed base and the fact that we will be bringing volume to absorb this fixed cost absorption, will have a significant impact overall in the trajectory. The bill of material coming from the scale and the new volumes that we will have going forward will also have a significant impact on top of the manufacturing improvements, productivity stabilization of our manufacturing system, plus the golden revenues that we all like in the company that will also start kicking in and having a significant impact on our P&L in the next couple of years.

So again, it's not something that will happen in the future. Many of these levers are already happening. We're tracking them through different metrics. It's something that we really want to make sure that we capture as fast as possible. We have specific KPIs, just disclosing and showing you some of the things that we're looking at. Obviously, our ability to scale the production is a very important one. The extensions of the partnerships that we have just discussed about between Uber, Neuro and ourselves is also a significant contributor. The start of production by the end of the year for Midsize, a significant proof point on our ability to deliver on this trajectory for the margin. And obviously, everything we're doing around autonomy.

So now with that in mind, so we discussed about gross margin. That's part of the equation. There is the below-the-line additional cost that sits in the OpEx. That's also something that we will be tackling in a very bullish way. We will have a phase of transition. So R&D, again, it's something that we will continue investing on. We will constrain it at 10% of the revenue in the midterm. Same goes for SG&A, with additional opportunities to improve it. I will explain later on, what the profile will look like on -- by the end of the decade, but we are already taking the actions that will allow us to bring the OpEx at the level of the benchmark that we see with some of our competitors.

So that's for the P&L. If we spend 1 minute on the balance sheet and the CapEx. So we have been spending a significant amount of dollars for the CapEx over the years. That was done by design. We needed to implement and to establish our manufacturing system. This is now done, virtually done. By the end of the year, it will be done. And the best proof point is how the overall spend in CapEx will shrink dramatically over the years. It doesn't mean that we will be underspending. It means simply that we're moving to a new model where we spend more efficiently and our CapEx profile is more about maintenance CapEx rather than adding up capacity. So obviously, we will retain some flexibility, and we'll adjust based on the market developments. But for the moment, we're aiming for a very prudent approach and a very prudent CapEx projection for the coming years.

Now the diversified revenue mix. So I already touched on the additional revenue streams, but I think that it's also important to translate into a figure, some of the things that Erwin has explained earlier this morning around our expansion in Europe, Europe and rest of the world, actually. This is really something which is important for us. So we see the potential to deliver by the late decade, around $5 billion of additional revenue coming from these regions.

But on top of the incremental revenue that this delivers or these new regions will be delivering, what is important is what it does in terms of derisking our profile. So we will not be relying only on one region. The cycles are very different from one region to the other. And this diversification will allow us basically to counter some of the negative cycle developments that we might have between regions. So it's something which is very important to us. The second aspect on top of what we're doing in terms of diversification of the revenue is to change our model to a more efficient model. And the best indicator to measure the change towards this more efficient model is how we're spending in the different categories of spend that we have in the company, be it in R&D, SG&A and CapEx.

So these figures that we have in our plan actually are the best benchmark that you can compare us to. And that's something that we will be delivering on. We are not going to wait at the end of the decade to implement that. This is something that we are already working on, and we know how we will be generating that. It will not be only on the back of constraining cost. It will be on the back of all the structural changes in our operating model.

So I guess that -- once we establish all that, I think the question is how are we going to leverage all that to come to breakeven free cash flow. Again, we are obsessed by free cash flow. I have my treasurer right in front of me looking at the table once again. So it's something which is at the heart of what we're doing every day. It's something which is at the focus. We are now in a stage where we're doing a cost -- design for cost. And we're doing a design for cost for Midsize specifically because we want to accelerate our path and our journey towards the neutral free cash flow. It's absolutely important for us.

So we're very proud about the products and the technologies that we're delivering. But as I like saying, great products don't make great companies. We want to become a great company. And the only way to assess what a great company is in its ability to generate cash. And this is what will represent a great success for the company once it's achieved.

So our journey is very simple. It starts already this year, at the end of this year, once we have completed the significant investment -- the investment that we have in CapEx of $1.2 billion to $1.4 billion that we have already announced in our guidance. We will leverage the scale.

The Air and the Gravity are not dormant platforms. Gravity, yes, we have -- might have reached -- sorry, the Air, we might have reached the full potential of what it can do in its segment. Gravity is still growing, and it's a great product, and we want to leverage the scale on this product. Then Midsize comes next year. It will accelerate this journey towards the cash generation. We will have non-new vehicle revenue work streams, which will also contribute to this overall cash performance. We will significantly reduce the CapEx because we will be shifting to a maintenance CapEx mode. And then by the late decade, we're expecting a positive cash generation for the company.

So translating this into something that we really have at heart, which is how do we deliver shareholder return. Again, we are not only here to do great products. We want these great products to generate money and to generate shareholder returns. We have 4 building blocks. I already touched on them. It's about the growth, but not only the growth, it's growth at scale. It's about the profitability with the targets that I have already mentioned. It's about the cash conversion and how we accelerate the journey towards cash positive and the capital allocation, the disciplined capital allocation policy that we want to do.

So the vectors of our trajectory in terms of performance are very clear. So it's also 3 different steps. It's -- in terms of business and offering from the company, it's around the core business, which is the OEM, the automotive OEM, software and services and autonomy. Unfortunately, but I hope that things will change today. Every time we were asked questions about what are our upsides, what are our -- the profile of our revenues, everything was about cars. We're very proud, very happy to make cars, but we are also a technology company. And we want to monetize this aspect of our company. We were a little bit too humble about that. I hope that now we're conveying a different message on our ability to drive the technology aspect of our company and to monetize this technology aspect. This is really something that we will be doing. We like this revenue because it's recurring, because it comes with a lower CapEx intensity, because it comes with higher margins, and this is something that we will be doubling on going forward.

So that's the plan. That's how we will be expanding. Having said that, we're very confident about the upside. We're very confident about the plan, but we're also realistic. So we know that there are things that can go wrong. So -- and that's the reason why on top of accelerating and having deliberate actions to drive the performance, we're also spending a lot of time to understand all the potential derailers and how we can mitigate them. This is a significant component of what we do on a day-to-day basis as a management team in the company.

So when it comes to EV, we know that the global demand for EV and autonomy can shift. We are in a cycle. The cycle still uncertain. It can change depending on how macro environment evolves. But we do believe that the diversification in terms of revenue streams and also the diversification in terms of manufacturing footprint is a significant mitigating factor to this potential fluctuation.

We know that competition is active. I mean, we hear about China. We hear about how fast they're going in EV and developing their technology. We know that. But we are also confident on our ability to counter this risk because we're confident on the value that our technology brings, and we're confident that the fact that we will continue investing will allow us to keep an edge versus this competition and keep this competition at bay in the future.

We're still dependent quite a lot on the policy and regulatory changes. That's something that we're also closely monitoring. With our own limited means, we try to influence where we can influence by explaining things and by driving a different perception on some of the things related to our sector.

We're also perfectly aware that capital availability might become scarce. We're looking at interest rates on a daily basis. We know that it's something which can also make many businesses derail. That's why we're also diversifying our revenue streams with less CapEx intensity, through less CapEx intensity opportunities.

So that's for some of the key risks. Obviously, there are many risks on top of that, that we're monitoring, but we have also a lot of upside, and we have additional opportunities. So among them, we know that the tariff environment is a very fluid environment. Things might shift, and this might have a significant impact on our bill of material, on our revenue streams as well.

The robotaxi scaling is also following a maturity curve. This maturity curve might go faster than what it is today, and this will generate additional opportunities for us. We will be also capitalizing upon some of the market dynamics, and we have touched on some of them, with some of the U.S. leading competitors withdrawing or stopping the production of some of the true platforms that they have. This is a great opportunity for us, and Erwin has provided some of the metrics associated with this opportunity, plus all the additional aspects related to the battery cost reduction and regulatory environment, which can also generate significant upside to our business.

So with that in mind, I think that it's probably important to summarize the key building blocks on which relies the Lucid investment thesis. I think that it really focuses or relies on 4 key building blocks. The first one is our technology. I think that we spoke enough about that. We spoke about how proud and obsessed we are about our technology. We explained how some of the things we're doing is giving us up to 5 years advancement compared to the nearest competition, and that's something that we will continue pushing. So it's something which has a value, and it's something that we are going to monetize in a more active way.

We also have, and we've been doing this for the last few years, world-class infrastructure and manufacturing. So we want to get the best from this manufacturing system. We didn't invest and went through the pain of investing all these billions in this manufacturing system if we were not sure on our ability to extract value out of it. And this is the phase and the moment where we will start getting value from this investment. We have front-loaded the investment. We will be moving to another profile of CapEx spend going forward, and it's really the right moment to capitalize on the value creation on the company.

We have also a capital-efficient approach in terms of driving top lines. We have already elaborated on that. So the combination of all this makes our case truly compelling. So now there's a question of timing. So some might say, okay, we need to wait until we see proof points about all that happening. This might be too late. I think that these proof points are happening already now. And it happens already now because we have great products already in our portfolio. We have the Lucid Gravity, which, again, is by all measurable means, one of the best SUV -- and not EV SUV, Erwin, available out there. So we're very proud about the potential of this product and the potential that it can generate for the company.

The Midsize TAM is huge. So some of you will have the opportunity to have a sneak preview at the car, which is located just over there. So I guess that you will really feel the excitement that we all feel in the company once you see it. So it's really an inflection point that we're going to. And this inflection point is right now.

So I guess that I have summarized most of the key points. We will obviously be discussing with many of you during the next coming weeks to further elaborate on some of these key messages. So for the moment, I think, Marc, I think it's time for me to hand back the stage to you.

Thank you, Taoufiq. Thank you, Taoufiq. Yes. Now I have actually, the difficult task to summarize it again in a broader way than you just did because I think you already summarized everything very well to the point. And I hope that everybody who is here today in New York and also online got out of it, the information that you need. And as Taoufiq said, we are very happy to go into further elaborations, discussions. And as you probably can tell, our whole team likes to talk about those things in detail and forever. So there's no shortage of insights that we are willing to share.

So I would just like to go back to where I started. In the very beginning, I said, okay, these are the things we are talking about. These are the things that we want you to take away at the end of the day. And I hope we made clear that we have a clear vision to be a leader in the mobility technology space. At the same time, we not only have great products right now with the Air and Gravity, but we also have a clear plan how to grow it and to add additional revenues on top of that, both with new software revenues, but also through expansion.

Taoufiq just said that Air has -- may reach a plateau, which is correct in the United States because we're actually very high with our market share already. But now we are expanding more internationally, which we haven't really focused on up until now. And now we are doing it, starting with Europe and with Middle East. We actually have plans beyond that later on.

The big prize for us, as I hope that became very clear, is the Midsize, where we are on track to start the production by the end of the year. And I think we found the way to really bring our compromise nothing ethos, our product superiority to the Midsize at a much lower cost for us and therefore, lower price for our customers.

Then when it comes to robotaxis, we talked a lot about of autonomy. And I'm thanking [ Mac ] very much to confirm that, that market is growing or your expectation is it as well. So we see that as well.

And I also think that we might see it scaling faster because it is really a supply problem. You said that last time when I spoke with [ Dara ], you said the same. If we would have more cars, we could deploy them tomorrow. It's really more the question about having the cars. And we want to be a leader -- leading supplier or partner in that space.

Then I just mentioned additional revenues, particularly software base. I think we have a lot of very good and exciting things coming. We will introduce subscriptions starting beginning of next year for our ADAS offering that we will have, then which we'll have L2++, which doesn't mean a lot to much -- many, many people, but maybe -- well, it's basically FSD. That's an easy way to describe it. And from there, we continue on the higher levels, L3 and L4. And Taoufiq, I think, was very clear about our next obsession, capital efficiency and preserving cash and generating cash really to drive the business forward to positive gross margins in the midterm and then positive cash flow in the late decade.

So with that, I would like to thank everybody for coming and also for joining in and listening to our presentation. I can't believe it's already over, but I think we are pretty much on time. We're not done because now we move to a Q&A. And I would like to ask all of my colleagues, all of my speakers, speaker colleagues back to the stage, and then we open it for Q&A. Thank you.

Okay. Ready for questions.

Mike Ward at Citigroup. First off, thanks for doing this day, all of you. Very impressive. First, a simple question. The Cosmos and the Earth, are they being introduced simultaneously? Are they different products? Or are they trim levels?

They will not be simultaneously, but they're not trim levels. They are actually different products.

And how far behind is the Earth from the Cosmos?

It's about a year.

About a year. Okay. Second thing, and maybe more importantly, huge gains in efficiencies on the product side and the cost side, manufacturing side with the Midsize platform. Will and can that be incorporated into the next gen of the Atlas and Gravity?

I can take that. Definitely, it's under consideration. We've seen many opportunities where our next generation of powertrain in Air and Gravity would be reliant on the Midsize technologies. So this is one of the factors we included when we projected the BOM cost reduction for Gravity.

That's the '28, the midterm type thing you were looking at?

Yes.

Probably.

Some of that.

Andres Sheppard, covering analyst at Cantor Fitzgerald. Congratulations. Lots of information, lots of questions. I'll try to narrow it down to two. Lots of catalysts, I think, to look forward to this year. You guys highlighted a lot, robotaxi, Midsize.

I want to maybe also connect those dots to the second production facility that you're also underway, which is also a catalyst this year, which I believe is where most of the Midsize will be built. So can we get an update there? How do you foresee once both Cosmo and Earth are production ramps up, what kind of unit mix might you think about? How are you thinking about that? And then maybe lastly, given the geopolitical conflict there in the region, might there be any impact to the production facility time line there?

Yes. So I can take definitely, the time line, the progress. It's still on track. And thankfully, and I really hope it stays that way, there are no interruptions right now. And yes, it is planned for start of production end of the year. And right now, we don't see any things that talk, that say that it's not possible.

It always can always change. That's why I really want to say there have been so many things in the past. We've done everything that we can in order to keep it in check. I don't know what's going to happen tomorrow. But so far, even with all of the things that are going on, we are on track with that.

And we start then the Midsize production in Saudi Arabia. And you're right that -- it's actually only Midsize that is going to be produced in Saudi Arabia, the various top heads. We will also then bring it back to M1 in the United States at a little later point. So it's not that it's only built in M2, it also comes back to M1. But we didn't want to completely overlay that. It's actually very difficult to launch a product at the same time, actually almost impossible at the same time in 2 locations. The same people will be involved. And therefore, we kind of stretched it a little bit, and we started with M2.

And sorry, can I ask a quick follow-up? And then I guess, just to build on that, you do have that contract with the government of Saudi Arabia for 50,000 units, plus another option for another 50,000 units afterwards. Give us a sense of -- will most Cosmos be delivered to them? If you're a customer, what's the earliest you might be able to get a Midsize given that you do have a large contract that you'll be supplying to?

Yes. That's not the case that we are basically shipping until the 50,000 are full, so to speak, all of the cars down there. That's not the case. So we are very cognizant that we want to bring -- actually, the early versions will be North America versions that we build. So we know that this is our most important market and there are people really waiting for it. And I can't wait to get it to the market, I have to say.

And so we will time that equally, but I have to say North America is actually a priority for us. But there will be a significant uptick in what we are able then to sell and to deliver to the government. Because you can imagine, Lucid Air, a luxury sedan, there's only so much demand in the government for those kind of vehicles. Then the Gravity is a little bit higher, but it's still on a very low level. There will be a step change when the Midsize comes available because it's really fitting many of the uses that a government might have. But yes, they don't scoop up everything, and all the other markets have to wait. That's not what's going to happen.

It's Itay Michaeli from TD Cowen. Thanks again for hosting this event. It's been very, very helpful. Just had a few questions on the late decade gross margin target. First, maybe can you just dimension how you're thinking about the global volume required to get there? And then maybe how you're thinking about kind of vehicle margin versus the software services margin? And lastly, given that you'll be kind of launching L4 in 2029, how much of any of that opportunity is baked in to the late decade margins? And if not, how do you see that beyond as an opportunity?

Yes. I think that you will be able -- if you -- we will be sharing the presentation, I think, after this event. So if you read it in detail, you will be able to connect the dots. So we already gave an indication of the volumes that will come from Midsize, Gravity and Air. We referred to the 100,000 units by the midterm. We also gave an indication that we will be gross margin positive in the midterm. So that gives you a proxy of how you can connect volumes with margin.

So when it comes to which extent we have included some of the assumption around some of these revenue streams, there is, but it's a small portion. Because what we're saying is that between now and the end of what we call the midterm period, the contribution will be very limited. It will start picking up by the late decade.

Stephen Gengaro, Stifel. When you talk about the cost outs on the BOM costs over the next several years, how much of that is sort of identified, negotiated with suppliers? And how much of that is sort of your projections off of the new vehicles?

Well, I can start, and maybe Emad and team, you can then jump in. I mean for the Midsize, it is identified and is actually sourced. So it's not something that still needs to happen. That level that we have shown here, which I think is actually pretty good, what we achieved there, that's already sourced and agreed on.

At the same time, when it comes to the reduction that we are now working on with Air and Gravity, there's a plan. We have a lot of ideas. It's just a matter of what are we doing first. Are we bringing Midsize to market, which has by, itself, actually a pretty good margin profile? Or are we hitting very hard on the cost reduction? Because it involves engineering, it involves potentially resourcing, revalidation, all these kind of things. That is something that takes maybe a little bit longer, and we are balancing what are we focusing on.

There are other elements that we're also already doing with Midsize. When we have new contracts with suppliers that also help support us and supply us for Air and Gravity, we basically tell them if you want Midsize, you need to give us a kickback here on Air and Gravity, which is happening. So there's already immediate impact which doesn't require any engineering. But on top of that, there's a lot of engineering ideas there, and what was just mentioned about the Atlas, for instance, is one. We could bring the Atlas back into those vehicles. But those are things that we are tackling based on priorities, where do we get the best bang for the buck. Or do you want to...

Yes. I can add just a few things. Our supply chain done an amazing job, of course, in sourcing Midsize. But of course, engineering is a big driver there. However, also, we're sharing this BOM right now today based on our current volumes and situation as a company. We believe, of course, as we scale, there could be more opportunities for BOM reductions for Midsize.

And the follow-up was, as you look at much higher volumes, I imagine your CapEx expectations, you've built in sort of the need for a larger service network into your expectations?

Yes. No, absolutely. So I mean, we have broken down our CapEx projection into M1, M2 and the Other. So Other is everything around our services, CapEx requirement, our commercial network, some of the vendor tooling which might be required as well. So the assumptions is already built in, in the plan.

Andrew Percoco from Morgan Stanley. Maybe just to start on the autonomy offering. You mentioned 65% attach rate today for DreamDrive Pro. What are your expectations going forward in terms of attach rate as you start to have higher levels of autonomy? Obviously, it comes with higher functionality, but also at a higher price point. Some of your peers have lower attach rates on some of those higher functionality and higher cost solutions. So what are your modeling assumptions under attach rates going forward for your financial plan?

So our assumptions are pretty much that we stay where we are right now. That is what we're looking at. It is also -- I mean, it can be higher. But at some point, it's also then the question, what do we want? Do we want to charge more for it at that rate? Or do we want to charge less and then hope for a higher attach rate? We will modulate that based on what is best for us.

And you saw the range that we showed there. And the 199 is obviously when we get to L4. Because that's basically when you really don't have to pay attention anymore, which is a step change from what is out there right now, where you still -- although the car drives, but you still have to watch and you're not supposed to do anything else, right? So -- but we think that when that happens, and I think it's shared by many of you, I believe, in recent reports that I read that the current levels will actually go up, and that's what we're expecting as well.

Great. And then just a follow-up on the robotaxi announcement. Is the R&D associated with that in the financial plan? And what's the timing in terms of rollout for that product into the market?

The R&D is not in our current plan for that. But at the same time, we wouldn't do it if we wouldn't have a business case that makes sense. And there are different ways to think about how this will be funded, and I don't want to go into further details on that. But it's currently not included. And when I say not included, I mean the robotaxis, the Lunar concept that we have here right now. What we're doing together with Uber, the next phase, that is all in the numbers.

Just on the next-generation vehicle, why have 3 top [ hats ]? I saw the 100,000 number. I'm just trying to square with the bigger market, why you have 3 different vehicles just out of the gate there. So if you could talk more on that, please?

Yes, I'll take that. I mean, of course, those are staggered, as Marc mentioned, between Cosmos, Earth and the 2 we announced later. And that's what you're seeing there is really Lucid diversifying its product appeal for the category. I think that's really important, what Lucid stands for today. And as we look towards that larger TAM, we really have to broaden appeal of our products, both in look and feel, style and function. And those 3 categories is where we've identified the most opportunity to do that. And of course, like I said, that will be debuted over time.

I would just add, of course, this is based on underlining fact that the platform is common. So that differentiation, as Derek mentioned, expands the market significantly with a very minimal capital investment. As we said, 95% common investment and shared parts. It's similar to, for example, the U.S. EV leader did with their 2 models, the midsize sedan and the midsize SUV. I think it's tremendous opportunity to do the same, but not exactly with the sedan. In our case, we don't know yet. But I think you can see from the slide that Derek shared where that Earth product fits in the market.

I would actually like to also add to that because the EV leader these days in the U.S., maybe that's where your question comes from, right? Do you actually need this in order to get to the volume? Well, first of all, I think times have changed. There's a lot of competition, and there will be more competition. And that's why we're looking for an approach where we have vehicles that are very different in appearance, but share not only the platform, but 95% of the parts. And so there's an enormous amount of commonality.

And that also means that the costs are very simple. That means that it's very efficient to produce. And still, we're able to cater to various different preferences of our customers. And I personally believe that in that segment, the one-size-fits-all approach is not going to work in the future.

[ John Sager ] from Evercore ISI. I wanted to ask a little bit about battery costs. And can you maybe discuss what your expectations are in the plan for battery costs over the period? And then a related question, would you consider improvements in either faster charging time or better energy density, something that you would pay a premium for over today's batteries? Or is it -- is cost the primary focus?

Yes. So what we shared today, of course, is technologies that we're working on the -- future technology we're working on the Midsize that delivers one of the highest, I would say, the highest probably energy density technology, at least in the U.S. here and best charging speeds. If you look, we shared about 14 minutes adding 200 miles, which actually doesn't necessarily show the full picture because the battery, which we can't share, the size today is quite small and compact.

The 10% to 80% time is super competitive and will be best in the U.S. here. Cost-wise, of course AMP-1 and AMP-1 could have a different variance and sourcing. Because if you know the global tariffs imposed here are forcing us and allowing us to explore other sources of battery. And therefore, we're getting a very highly competitive battery cost, very competitive. The market right now is favorable for sourcing battery at a good cost. Despite recently, there's some small noise, but we're still very competitive.

I think also, it's -- really, when you talk about having higher energy batteries or really the story of radical efficiency is by doing that, you get a little bit more energy in the pack, but then you can get more cells out, you can take out more weight and then that makes your efficiency higher. So what we're talking about is it's not, oh, we had to add cost or we have to add -- pay a premium for range. By doing a cohesive system design, you're actually making the product better and driving costs down.

And so a higher -- of course, we're going to want higher energy dense cells that obviously helps. And when we do that, we can then take out other cells, drives down our weight, increases our radical efficiency and then continues to make the business case even better. So it's a converging series whereas you do one thing and you chase everything through the system, you can bring it down even further without having to pay that premium.

And in summary, smart range concept, which means small battery, long range. This is what the Midsize is about.

Maybe I add one sentence to it because what we showed you today is our current focus on what we are prepared to talk about. What you guys didn't mention, obviously, we look at a lot of other things. But we're not ready right now to talk about it, but we definitely will share whatever comes out. I mean, higher density batteries, even longer ranges, those -- you guys are working. So -- but it's not ready to share right now. Right now, we're really focusing on how do we get the Midsize to deliver what we think is still class leading at the lowest possible cost.

Jake Scholl from BNP. Could you just take a moment to talk about liquidity? So as of the first quarter call -- I'm sorry, the fourth quarter call, you had about a 12-month runway. So can you talk a little bit about your capital needs to get to that late decade free cash flow breakeven?

Yes. So I mean, the statement that we made about the fact that we have $4.6 billion of liquidity when we closed last year and that this is taking us to second half of 2027 still stands. We are not going to give the late decade or the midterm financing needs for the time being. I mean, we obviously have the plan and the figure, and we know our needs, but it's not something that we're ready to speak about today.

All right. Just a quick follow-up. Can you talk a little bit about your plans to retrofit some of the newer autonomy software and chip stack in the Midsize into the Air and the Gravity?

Yes, I can take that. So also there, we are applying very much, our efficiency approach on the topic. Meaning specifically that we are -- everything that we have learned from the robotaxi application and build of Lucid Gravity, we're applying to Midsize. So we are able to carry over the redundant compute. We're able to use the same type of sensors maybe here and there with a slightly newer sensor evolution, but the exact same type, very similar locations. So for the most part, we're carrying over more than 90% of what we already apply on Gravity today, and that also helps dramatically with cost efficiency from carrying those autonomy options to Midsize.

But the question was also, are we bringing it back, right? Yes. We are bringing it back. We're basically -- for instance, the compute and the sensors that we have in Gravity...

Correct.

We will bring back into the Air.

That's right.

And then in the future, there might be from the Midsize,, things going back into the Gravity and the Air. So there is definitely a plan for that.

Yes. This is a theme of commonizing the platform from hardware and software. Economies of scale, not just important for BOM, and it's also for software development and rollout.

[ Subrat ] here from Inside EVs. My question is for Emad or Zach, either of you could answer. Can you talk a little bit about the software challenges on the Gravity and how you've addressed them, what you've learned from it? And how do you plan to ensure that those don't reoccur on the Midsize?

Emad wants to talk about this all the time. So thank you for the question.

Well, of course, we are a company that evolving, and also our appreciation of software complexity. But as you've seen in the past 3 months, our evolution of addressing some of these concerns have been super positive. And our customers are very happy with the progress we've made and the lessons absolutely learned.

Now we increased our certain capabilities in our automation of testing, introducing new processes, how we release software, developing a few work streams in parallel with shift lift approach of developing software. As well as, of course, we have made some significant changes in our leadership that Marc also alluded in the past to get this fresh perspective about software. And you've seen probably the progress. I'm very confident about Midsize software to be very, very competitive.

This will be our last question.

My point to the team is that we need to be better than the best. There's no compromise.

[ Ivan Feinseth ], [ Tigris ] Financial Partners. So what levels are existing cars able to be upgraded to as far as levels of autonomy? And how much of the progress in Level 4 will be based on hardware versus software and planning that the cars you'd probably make 2 years from now are going to be able to have much more advanced, hardware advanced processors? So how do you kind of line that up with the software upgradability?

Kay, do you want to take that?

Yes. No, happy to take that. So what you have in Lucid Air and in Lucid Gravity today is taking us to Level 2 driving. As you saw earlier, we have the hands-free Level 2 highway driving in the Air and [ full 2 ], that's coming also to Gravity. Now what we're launching at the end of the year is our -- also our City Drive Assist on the same hardware, same software. So we can take a Lucid Gravity, the functionality all the way to L2++, meaning hands-free highway and city driving without any hardware changes.

Now when you switch to Level 3 and Level 4 autonomy, that is not a smooth evolutionary step. That's quite a disruptive step in terms of compute needs, also the amount of sensors needed to address, especially a very complex in-city and urban driving scenarios. So for Lucid Midsize platform, you will see for the first time, a new ADAS hardware platform. When we're ready to launch that in 2028, that has an upgraded compute and additional sensors.

And my follow-up is, are you open to or envision partnerships with other companies licensing or partnering your technology, similar to like you did with Aston Martin?

The answer is yes, 100%. As a matter of fact, what we do for our entire vehicle platforms in the EV market, we're doing exactly that.

Yes, I think you had this actually in your presentation because I expected that question. Because it was for a long time, something that we talked about a lot, and we also were asked about a lot. And then there's a long stretch of not a new deal.

I mean, what we're doing right now with venturing into robotaxis in this particular case using our platform is basically the same approach, but supercharged. It's just -- it's not a drive unit, but it's a whole vehicle. As a matter of fact -- and I keep, unfortunately, saying this -- we have conversations going on as we speak for drive units for complete vehicles, actually not by somebody like Uber or but by an OEM asking us, can we do that? But like in the past, those are always very, very lengthy discussion. And the moment when the engineering departments come involved, then it always gets to the point, oh, just give us more budget and we can do much better than Lucid can.

No one had done it for 5 [ decades ].

That's why we -- that's why last year, we actually also engaged into market with robotaxis, for instance. Well, there is no internal engineering department that thinks that they can do things better. They need cars that work, and they need them fast. And as [ Mac ] said earlier, there are not so many out there where you can, in a very short period of time, turn it from a car that you have to drive to an autonomous car.

So we're shifting. Quite honestly, we have those discussions. And if it comes to pass, fine, but we're not pushing it right now because the opportunity in the -- I personally believe in the robotaxi market is bigger than selling drive units.

Good. Well, thank you very much, everybody, for coming. As I said earlier, I can't believe it's already over. Typically, we can -- if you want, we can continue talking one-on-one. We have still a lot of things to discuss.

I hope that we were able to bring across the trajectory of Lucid, what we are up to, what we're -- where we're starting, where we are right now with the Air and Gravity and our awesome driving vehicles and energy efficient. And then how we're adding to that now the Midsize, completely new segment that we haven't been able to touch before, software revenue on top of it and the robotaxis, altogether really helping us on the path of accelerating to profitability. Thank you very much.

All right. Good morning, everyone. I think we're right on time. So we'll go ahead and get started. For anybody that doesn't know me, my name is Andres Sheppard. I'm the lead equity analyst here at Cantor covering mobility.

I'm a little biased, but we have an incredible panel ahead of us upcoming. We are joined today by Marc. He is the Interim CEO at Lucid and as well as Taoufiq, Chief Financial Officer.

For the purpose of today, I'll lead the conversation, I'll ask some questions, but I ask of the audience, let's try to make this interactive. The less I talk, the more fun it is for me. So I may call on the audience to ask some questions if we don't have any volunteers, and I will be calling blindly on people. So just be consider this your warning.

All right. So with that, maybe we get right into it. Thank you so much, first of all, for being here. Good morning. Thank you for joining us. I know it's been a hectic week as we have Lucid event as well later this week. So really appreciate you both being here.

Marc, maybe to start with you. So last year, Lucid produced about 18,000 vehicles. For this year, you recently guided that production to increase to between 23,000 and 25,000. So just maybe talk to us about what kind of improvements you're seeing in production and what kind of gives you confidence to continue to ramp up?

Yes. I mean, first of all, thanks for having us here. We're excited to be here. So I mean, when you look at Q4, what we produced or how we increased the production last year just from one quarter to the other, over 100%. The rate that we were producing in Q4 is actually on the level that we would need to get to between 25,000 and 27,000. So that makes us very confident that our production system can actually deliver what we guided for.

And I mean, if you go back to last year, I mean, we all know it was a very challenging year for the automotive industry, particularly because of new tariffs coming in and then shortages. First, it was magnets, then it was aluminum, then it was chips.

Everything that you can think of happened. And therefore, it's really about the supply chain that needs to work out. And I said it a couple of times last year, at the end of last year saying, hey, when I was asked, what do you wish for 2026? I said not another 2025. Well, when you look out the window, it keeps challenging, let's put it that way. But we're confident that we can make what we guided for.

Excellent. And so I guess last year, you unveiled your second vehicle, right, the SUV Gravity, which has gotten some great feedback from both investors and consumers. As we think about production for this year, how are you thinking about kind of that unit mix between the Air and the Gravity?

Yes. I mean, mainly what we see with the Air is it's almost like relatively flat. I mean we're expecting a little bit of increase, but that's more because we go into new markets, international markets. But when you just look at the segment, it's not growing. It's the large sedan segment is not growing. It's actually contracting in some areas.

So we're expecting this to stay flat. The vast majority of our additional production and then ultimately deliveries, we expect to be Gravity, which only happened end of last year in the fourth quarter, where the majority of our vehicles were actually Gravities.

Got it. So I think Gravity, the SUV, that represented a not change, but maybe an improvement in the business and that you expanded into the SUV segment. So how critical is Gravity for Lucid over the next 12 to 18 months, would you say?

Well, do you want to take that?

Yes. So I mean, Gravity is very straight -- is very important. I mean, for a very simple reason, I mean, it comes with a significantly higher ASP. So the mix contribution in our overall performance is very significant.

So that's why, I mean, we will keep pushing the numbers in terms of production for the gravity. The market and the segment where it belongs is much bigger as Marc has explained and the sedan. So we see the potential there. It's about capturing additional customers. We have some good catalysts coming from the fact, as you said, that the feedback and the way the product has been received so far has been great. So yes, we do see a positive momentum to achieve the target that we have.

Excellent. I want to maybe now switch gears to what I believe to be kind of a core focus for Lucid going forward and something that's very topical in the industry now, which is autonomy. And so Lucid recently disclosed a partnership with both Uber and Nuro to kind of ramp up autonomy. Can either of you maybe just tell us a little bit about that? What led to that partnership? And kind of what are you excited about?

Well, what led to it is basically that Uber scanned the markets who are the automotive manufacturers that can help them to stand up a robotaxi within 18 months. That was basically the North Star. What can we do in order to make this possible from starting mid of last year until the end of this year when we plan to actually provide a vehicle that then can go into commercial service.

That was the starting point. They scanned the market and then they, in the end, chose us that, hey, we have an L4 ready vehicle where most of the underpinnings are already there, almost like you put this [indiscernible] Nuro on top and off you go, it's a little bit more complicated than that, obviously.

But all of the things that are in the car, how you -- the actuation and the failover redundancy, all of those things are already in the car. So there was not much to do on that side, after 7 weeks when we aligned on the collaboration, we had the first car running already driving autonomously in a testing site in Las Vegas.

We have just delivered all of the engineering testing vehicles. And so we're well on track to achieve what we said we would. And yes, I mean, in general, it is really about the capabilities of the vehicle, the luxuriousness as well and to provide a different offering than what is already on the market.

And last but not least, the efficiency because in the end, when you think about it, this is all about utilization and uptime. It's not so much about only the joy of driving. And I actually wanted to mention this. I hope everybody gets a chance. There's here in the big packing district, there is a studio, do that just drive in the Gravity because the Gravity is not only an efficient car for the size and the segment, but it's an awesome car to drive. It's a lot of fun. And I think that is an important piece as well.

I want to maybe add to that for any ICE vehicle fanatics here or maybe EV skeptics, anybody that has maybe that range anxiety concern, Lucid made a record about a year ago, I think it was 1.5 years ago now with 520 miles of range in a single charge.

So kind of squashing any range anxiety skeptics that we may have here. Taoufiq, I want to maybe come back to you. Help us quantify further this partnership with Uber and Nuro. I think it's for roughly 20,000 vehicles over what time period? And how will it work? Is Lucid essentially selling the vehicles to Uber and they will then integrate them into the fleet? Just maybe a few more details there.

No, no. Yes. So it's 20,000 units over a period of 6 years, but I think there's just a small caveat. Obviously, 20,000 over 6 years is a drop of water for us. So I mean, we do believe that this is the first -- it's a start.

So the first 20,000 units will be serving a very limited number of cities. So there is -- it's a reasonable expectation to assume that this figure will grow in the future. So the way the setup currently works is that we provide the vehicle part of the integration as well. So -- and as Marc has said, I mean, the cars are already fit for purpose. So the level of integration is minimal. That's the setup as of today, things might evolve in the future.

Maybe I can add to this because regarding the 20,000 and this being a start. When you think about it, we -- quite honestly, and I said that actually before, we probably wouldn't have done it if it would only be about 20,000. We looked at the whole robotaxi market is it now finally becoming real. And I think there is a growing consensus that we're now at an inflection point where the technology is finally there.

And by the way, we think it takes a little bit more than a camera, but that's a different story. But now it is really starting to make sense. And so then we made the decision to go into that market, which is my -- and I always frame it as an extension of what we always did before because remember, we talked about licensing and offering our technology to others.

And when you look at it, what that is right now, this particular arrangement, it is the -- doing exactly that on the largest scale we can. It's a full car. And we're -- it's not only that, it's also the car is completely built on our production lines. So there's not an upfitting done afterwards. It comes off the line, software update afterwards by Nuro and that's it. So there's nothing else that needs to get done. So we really see this as a starting point and our plans with Uber and with others go much further than that.

So I think maybe then to build on that. So it sounds like this 20,000 partnership with Uber is just the start. So I guess my question is how important is autonomy for Lucid? What is maybe your longer-term vision? And maybe if I may, how would you say it's different from, say, somebody like Rivian?

Yes. So for us, autonomy is very strategic and actually in 2 dimensions. One is personally owned vehicles because we also will go towards autonomy with personally owned vehicles. That is a market that is already there. Pretty sure that if we -- if somebody would be able to provide that in their vehicles tomorrow, many people will buy and pay a lot of money for that.

So that's one area, and we're doing that as well. Obviously, not with Uber and Nuro. We have another partnership with NVIDIA for that. The other piece is the robotaxi market. This is also, as I just mentioned, this is now becoming strategic for us. It's basically another leg to stand on, so to speak.

And it really increases also our addressable market because before we were in basically personally owned vehicles in the luxury segment, which is a relatively small market. Now with the upcoming Midsize, it will be significantly larger. But then you add robotaxis to it, then it becomes even larger.

So it's really a strategic topic for us, and that's why we wanted to be among the first, and that's why we also designed the cars in the way we're designing it in order to make it ready to be among the first.

Very helpful. I want to maybe switch gears again, if we may, and talk a little bit about Midsize. So I think that's obviously going to be a key focus for Lucid going forward. For the audience, Midsize is yet to be unveiled possibly this week at Lucid's event.

But so we don't yet know what it looks like, but we do have some details around it. So I guess, what can you tell us about it today that you've disclosed to the public before? And how material is that, would you say, for Lucid's near-term to medium-term growth?

You want to take that?

Yes. So obviously, I mean, the star -- Midsize is a pivotal time for us. So I mean, we will be -- we are talking about a platform, which is meant for scale. So the philosophy of the design for Midsize is radically different from what we have done so far. It's a car, which is leveraging Lucid DNA, while at the same time being designed for cost.

So this is really one of the key components and the key differentiator. So it's a car, which is meant to be designed for cost, more easy to produce and that we can scale with a higher level of certainty, derisking some of the learnings that we had from the Air and Gravity.

So that's the whole -- the philosophy for the Midsize. Why it's pivotal? Because it represents a market and it's meant for a market, which is radically different from what we have been dealing with so far. So -- and that's why we're very excited. And yes, we're really looking forward for the start of the production.

Go ahead.

Maybe I'll add to this because it's -- I mean, it comes down also to the price point, right? The price point will start below $50,000. And when you think about where the market, the average price of a new vehicle right now in the U.S. actually has surpassed $50,000 a couple of months now ago.

So it's right in the middle of the market, and it's opening a much bigger addressable market and customer segments for us. And I think the other important point is Midsize is a platform. It's not just one vehicle. So we're trying -- we're not trying to solve world hunger with one car.

It is really -- we think that with more vehicles coming into the market, you actually have to be more focused on the various tastes or preferences of customers. And that's why we designed it as a platform that -- where we can build different top heads, that's how it's called on top of it.

It's very limited change. I mean between the first 2, most of the parts are actually the same, the first 2 variants that we have. And so that allows us economics of scale and it allows us also to do things relatively quickly.

I think it's a great point. So I guess as we think about the Midsize now, Taoufiq, I want to maybe go back to something that you said, which resonated, which is talk a little bit more about how Lucid can maintain its performance status with a Midsize platform, which, as Marc just said, will be priced around $50,000, while at the same time improving margins. Have you found some secret sauce that...

I think we did. I think we did. So I will not go here today in the details. I mean, we will be discussing the unit economics rationale during our events. But again, starting with the philosophy of designing a car, having the cost in mind and leveraging the things that we do well, the efficiency, the great engineering that we have, simplifying the way we design the car has really led us to a very sweet spot, where we're confident that at the $50,000 or below dollars price mark, we can deliver a very good level of margin add to that the effects that it does in terms of scale, fixed cost absorption and so forth.

Would you say is it fair to think of the Midsize platform as kind of Tesla's Model 3, Model Y in the sense that, that will be your high-volume, lower-priced vehicle tailored to maybe a bigger target audience? Is that kind of a -- better performance and longer range and...

We kind of pride ourselves of being a kind of anti-Tesla Model Y and things like that. So yes, I mean, to answer your question in a simple way, I think that if you think about it in terms of size segment and things like that price point, yes. But again, with what makes Lucid DNA, that's probably the key differentiator.

And do you foresee integrating autonomy into Midsize maybe initially or eventually? How are you thinking about combining autonomy with the Midsize platform?

Yes, absolutely. And actually, I can say a little bit more than that because, again, in both directions, for personally owned vehicles, the Midsize is actually the first platform that we want to bring completely to L4 to full autonomous driving. Why is that with the Midsize?

Because it requires some changes on camera placement and sensor placements. And if we would do this now with the Air or with the Gravity to get completely to L4, that is quite an investment.

So we want to do this now because now we have the level of freedom with the Midsize to still do that. So the Midsize will actually be the first one that we're driving all towards L4. And it's already prepared for that.

But that's the personal autonomy topic. Then it will also -- it's a perfect platform actually for robotaxis because as you think about it, it's from an MSRP point of view, cost point of view, it's much less expensive than the Gravity. And we have conversations, obviously, when we talk with people out there in the market. We're not talking about, hey, can you build another Gravity at scale.

Robotaxi, we always talk about what can you do with the Midsize. And the Midsize platform is so flexible that we can do different things. We can shorten the wheel base. We can make it even lighter. So those kind of things we are working on right now in order to make it even better fitted. But when it comes to what is in the car and how it is prepared, everything is ready to go in the Midsize for L4.

Makes sense. So we have a little over 10 minutes left. I will ask maybe 2 or 3 questions, and then we will turn it over to the audience. So do prepare some questions. I guess let's switch into maybe I think one of Lucid's biggest differentiators is your relationship with the PIF, right, with the sovereign wealth of Saudi Arabia. So talk to us a little bit more about that.

How is that relationship going? What do you see as the biggest benefits from it? And maybe if we can just tie into that the fact that you are building your second facility in the region, the fact that you also have a contract with the government in the region. So just tell us a little bit kind of at a high level how that relationship is and then we can expand from there.

Yes. So PIF is a strategic and financial investor. So in that aspect, I mean, it's great to have someone who beyond the financial aspect has also a shared common vision and has the same ambition in terms of technology and so forth.

So we have a great working relationship with them. We are a financial priority for them, but we are also a domestic priority for them because, as you said rightly, I mean, we have a manufacturing facility in the Kingdom, which is strategic.

It will create jobs. It will bring new technology to the Kingdom. And obviously, with the PIF being behind it, it's a very strong catalyst to make things happen. So it's a great relationship. They have been very supportive. So far, we share the same vision, and I don't want to speak on their behalf. You spoke to them actually recently. So...

Yes, that's right. We did actually have a chance to speak to the PIF directly. And as it pertains to the relationship with Lucid, a big core focus based on our conversations is their mandate to diversify the Kingdom beyond oil. And it does help their fanatics of the vehicles as well.

Okay. And so maybe just give us an update on where are you on your AM-2, your second manufacturing facility remind us what is the time line for that? And what will that do to your production capacity?

Well, M2 is on track to be ready to go for the SOP of our first Midsize model by the end of this year. So it's all still on track. And I mean, you might now ask, okay, what are the current events in the region change on that. So far, everything remains the same.

Obviously, we don't know how things are developing. But so far, the impact -- I mean, it is on the other side of Saudi Arabia in general, it's not necessarily closer to Iran. And right now, we don't see a lot of impact there, and we're confident that we can just continue with getting everything ready.

And the capacity that we're planning to build there is 150,000.

Say it again, 150,000.

150,000, yes, capacity for -- and it will always -- all the vehicles being built, there will be actually the Midsize, different versions of the Midsize. But we're not planning to have full production. We actually have a so-called SKD production already for the Air and Gravity there, where kits that we are building first here in Arizona go to KSA and then are being reassembled. So that's already in production since 2 years. But full buildup will be Midsize only.

Got it. Taoufiq, maybe one more for you. Remind us the Lucid contract with the government of Saudi Arabia, what is that contract for? How many vehicles? What's the time line? How is that going?

Yes. So over time, the contracting is expected from once we deliver 100,000...

100,000 vehicles...

100,000 vehicles. So the deliveries have already started obviously, with the Air and the Gravity, but the big bulk of the deliveries will be with the Midsize of the different iterations of the Midsize. So it's fair to assume that there will be a ramp-up of these deliveries once the Midsize is up.

Because Midsize is a big part of this contract. Midsize and Gravity is that maybe more so than Air. Is that fair?

Yes, I think it's fair to assume.

Yes. I actually need to correct that. Signed is 50,000 with...

Yes, that's correct.

50,000 with the... All right. So we've covered production. We've covered Midsize. We've covered Gravity. We've covered the PIF relationship. With that, we're going to open it up to the audience. And so let's see if we have any volunteers or questions I said before, if we don't, I will call out on folks. So -- and I know a lot of you...

All right. We'll start here.

Yes. So going from a low volume [indiscernible]

Yes. First of all, I would caveat the term mass market because we still will be a premium product if you are in below $50,000, but it's still compared to, let's say, what I would call mass market. It's still in the premium sector.

But the volumes are significantly higher. You're totally correct with that. The main thing what we have done is not only on the supply chain, but also basically simplification of the vehicle. The Air and the Gravity is really our engineers put a lot of thought and a lot of technology in those vehicles with also a lot of parts.

When you look at the part numbers of the Midsize, even versus current competition, you will be surprised. I'm not revealing this today because we're going to talk about this at the Investor Day in 2 days.

2 days?

Also in New York. But it's a completely different concept to make things much more simple to procure, but also to produce. So we really started with the Midsize platform with a blank sheet of paper and not a carryover from Air and Gravity because then you would have not been able to get down to the level of the bill of material cost and the unit cost as we are right now. And again, we are sharing more information about that at the Investor Day in 2 days.

Other questions? No, not going to call you again. Anybody else? Yes.

So you guys talked about how the Midsize will incorporate [indiscernible] Can you talk a little bit about the [indiscernible]

Well, I mean, first of all, a lot of things on the technology side when it comes to autonomy have changed. So right now, the plan is to have, again, still one LiDAR, not more than that. And when it comes to -- maybe their question relates to the cost for all this. It came down drastically.

And we have also our arrangement with NVIDIA helps us with actually reducing the BOM costs on the compute side. So it is something that is now in an area or in a cost point that actually makes sense to roll out to personal vehicles as well.

So yes, all in all, I think it really -- we still use LiDAR, several radars and cameras. So we really believe that this is necessary to be a full safe Level 4 vehicle. And yes, other than that, that's mainly what I can say.

Yes.

[indiscernible]

Pardon me.

What Was the question?

[indiscernible]

Basketball player for the New York.

I know who he is.

Yes, I hope so, yes.

Otherwise, I should know what we're doing in market.

You know where we are. So maybe with the last 1.5 minutes here, I want to turn it back over to you, Marc, and to you, Taoufiq, just for any closing remarks. Anything you're looking forward to, anything to share with investors? Obviously, some big catalysts coming this year with Midsize, with robotaxi. Just any closing remarks you'd like to share.

Well, maybe that I think that there is currently a bear case when it comes to EV. And I think that same as with our company, I think that the overall sector is also going through a pivotal moment. So I think that some of the assumptions -- bear assumptions attached to the EV, probably it's the right time to reassess them.

I think that there is stronger -- every day, stronger evidence that the growth potential for EV, not as a segregated product in opposition to the ICE, but more as something, which is a complementary technology, bringing completely differentiated competitive advantages, value and so forth versus ICE. I think that we need to reassess probably a bit more in detail the case when it comes to EVs.

Maybe I can add a few words on that. Well, first of all, I would like to really double down on what Taoufiq just said because if you look at the -- I always look at the EV market as a typical new technology adoption curve, the so-called hype cycle. And we are now in the trough of the hype cycle. And from here, even if you look at the projections, we will continue to grow.

EVs and everybody in the industry, even the incumbent OEMs are saying that is the long-term future. And we think doubling down on it is right now the way to do it. And even today, if you compare particularly our vehicles, a little bit of marketing here to internal combustion engines, and I posted yesterday something about that.

If you compare the specs and the capabilities of the vehicle, you actually get more for less money. If you look at our gravity and compare it to the real comparable vehicles, it's a bargain. And I think that is something that we actually need to make clearer because right now, everybody thinks, oh, EVs are so expensive and they have a downsize.

It has more range than any of the other comparable ICE vehicles have in the tank. Granted, you can obviously refuel faster with an ICE vehicle. I fully understand that. But after 450 miles, chances that somebody needs a break is pretty high. So I'm really wondering why this is such a big topic.

So we are very, very bullish on EVs in the mid and long term, and we will get through where we are today. Everybody expected that. And on top of this, now we have autonomy as a big topic, which is also a big catalyst for EVs because they are basically made for being a robotaxi, whereas with ICE vehicles, you can't really do that. So we are very bullish and hope people start thinking about it that way.

Excellent. Well, thank you very much, Marc. Thank you very much, Taoufiq. That concludes our fireside.

Thank you.

Good day, and welcome to Lucid Group's Fourth Quarter 2025 Earnings Call. [Operator Instructions] Please be advised that today's conference is being recorded.

I would now like to hand the conference over to your speaker, Mr. Nick Twork, Vice President of Communications. Please go ahead.

Thank you, and welcome to Lucid Group's Fourth Quarter 2025 Earnings Call. Joining me today are Marc Winterhoff, our Interim CEO; and Taoufiq Boussaid, our CFO.

Before handing the call over to Marc, let me remind you that some of the statements on this call include forward-looking statements under federal securities laws. These include, without limitation, statements regarding the future financial performance of the company, production and delivery volumes, vehicles and products, studios and service networks, financial and operating outlook and guidance, macroeconomic, policy and industry trends, tariffs and trade policy, company initiatives and other future events. These statements are based on various assumptions, whether or not identified in this communication and on the predictions and expectations of our management as of today.

Actual events or results are difficult or impossible to predict and may differ due to a number of risks and uncertainties. We refer you to the cautionary language and the risk factors in our most recent filings with the SEC, including our annual report on Form 10-K for the year ended December 31, 2025, and the forward-looking statements on Page 2 of our earnings presentation available on the Investor Relations section of our website at ir.lucidmotors.com. We undertake no obligation to revise or update any forward-looking statement for any reason, except as required by law.

In addition, management will make reference to non-GAAP financial measures during this call. A discussion of why we use non-GAAP financial measures and information regarding reconciliation of our GAAP versus non-GAAP results is available in our earnings press release issued earlier this afternoon as well as in the earnings presentation.

With that, I'd like to turn the call over to Lucid's Interim CEO, Marc Winterhoff. Marc, please go ahead.

Thank you, Nick. Good afternoon, everyone, and thank you for joining us. 2025 was a defining year for the industry at large. It was a year of extraordinary macro turbulences with the implementation of increased tariffs, the roll-off of federal incentives, shifting EV demand, and multiple supply chain disruptions that no one predicted at the start of the year. I'm glad to be able to say that we navigated those challenges quite well.

We nearly doubled production, we significantly grew deliveries, we reduced unit costs, we gained market share, and we continue to strengthen our financial position.

Let's start with production and operations. In 2025, we ramped up our first SUV, the award-winning Lucid Gravity. We about doubled annual production, and I will address why I'm using the term about shortly. Total units produced were not far off the expectations we set at the beginning of 2025. Despite unprecedented industry headwinds like tariffs, magnet chip shortages, even fires at 1 of our major suppliers, turning 2025 into one of the most challenging operating environments in recent industry history. I'm very proud of what the Lucid team was able to achieve given the manifold challenges and headwinds. I think we did pretty well in comparison with others in the industry. I'm not going to name names, but I encourage everyone to do your own research.

Specifically, I'm proud of us being able to double production from Q3 to Q4, clearly showing that our manufacturing system is capable of scaling when supply chain roles are resolved. During the year, we improved throughput, reduced rework, built repeatable processes and expanded our manufacturing workforce in a disciplined way to scale flexibly. We also overcame quality problems that hindered our Gravity ramp in the beginning, both related to hardware, but even more so related to software. We listen to our customers, acknowledge the problem and focused on solving it. To that end, this month, we rolled out a new software to all Gravities, which helped address a large number of these concerns, and we are grateful that this is recognized both by our customers and media.

We also achieved a meaningful reduction of the material cost for the Lucid Air and Gravity, partially offsetting the additional costs introduced by the tariffs. We implemented key organizational changes, streamlined decision-making, improved collaboration to drive efficiency and enable accelerated growth. We landed our second much larger technology partnership this time not only focused on EV components, but a broader partnership with Uber and Nuro, leveraging a whole vehicle, the Lucid Gravity. We see great long-term value there.

We also defined and executed on our plan for autonomy. Our approach allows us to provide highly competitive solutions, both for customer vehicles and robotaxis, designed to be executed in their shortest time possible with limited capital expenditure. We view the emerging global robotaxi market as a prime opportunity to utilize our leading technology for potential partners and their customers. This approach delivers a lower and industry-leading total cost of ownership, making new partnerships possible and significantly expanding our total addressable market.

Autonomy effectively expands our total addressable market to an estimated $700 billion by 2035. As a first step in July, we announced our agreement with Uber to develop a robotaxi based on the Lucid Gravity, leveraging Nuro's proven Level 4 stack and deploying at a minimum 20,000 autonomous Lucids on Uber's global rideshare platform, which included a significant equity investment by Uber. In Q3, we closed that $300 million investment from Uber and already began delivering the first engineering vehicles for evaluation at the dedicated testing facility.

In Q4, on-road testing of the robotaxi began in the San Francisco Bay area, which we also announced as the area of first deployment later this year. And at the CES in January this year, we unveiled the production intent design, the result of tight integration between our engineering team and our partners at Uber and Nuro. But advanced autonomy is not only enabling the new robotaxi market. It is also a key feature for our customer vehicles. Today, many of our customers are using our driver-assist feature, and we expect that in the future, the majority of our customers will want to be able to choose whether they want to drive themselves or being driven autonomously in the moment. To provide enhanced autonomy to our customers, we are partnering to offer highly competitive autonomous functionality as fast as possible in a capital-efficient way.

Our road map is clear: point-to-point autonomy rolling out in gravity late this year, L3 targeted for 2028 and L4 targeted for 2029 starting with our midsized vehicles, which not only provides leading autonomy functionality to our customers, but also enables new software revenue streams. We've proven we can compete and lead in luxury sedans and SUVs. Just as a reminder, the Lucid Air was the #1 selling EV in the U.S. in its segment in 2025. And in third place, in the whole large luxury car segment, including traditional internal combustion engine vehicles. With the midsize platform, we are getting ready to enter much higher volume segments with a price range beginning below $50,000, which is around the average selling price of a new vehicle in the U.S. since recently. The midsize platform expands our TAM from $40 billion currently to $350 billion by 2030. Over time, our involvement in the robotaxi market further increases this time to $700 billion, as mentioned earlier.

We recently began production, validation builds for the first model of our midsized platform, and they came together seamlessly. The total cost of the source components to date from its size are below our initial cost estimates. And overall, our midsized BOM costs compare favorable to competitors.

The construction of our M2 factory in King Abdullah Economic City, Saudi Arabia remains slightly ahead of schedule with equipment installation having started in Q4 and progressing as planned.

Also, the local supplier ecosystem around M2 is developing rapidly with partners like Pirelli, Lear and Benteler and others localizing production. This is just the beginning. Startup production of the first of our midsized platform vehicles remain scheduled for the end of this year.

In Q4, we marked our eighth consecutive quarter of record deliveries, and we continue to take share. In our biggest market, the United States, in 2025, the Lucid Air was the #1 selling EV in its segment. And in third place in the whole large luxury car segment, including traditional internal combustion engine vehicles. Q4 deliveries were up 72.5% year-over-year and increased 31.1% from Q3, almost all other manufacturers reported EV sales declines and many of them were drastic. Only Lucid and another manufacturer reported a relevant increase in EV deliveries in the United States in the fourth quarter. Our full year deliveries increased 54.7% versus full year '24.

As expected, Lucid Gravity represented the majority of our deliveries in Q4, which was also a key reason for our significant ASP increase for the quarter. I also don't want to miss mentioning that the Lucid Gravity follows Lucid Air's tradition of collecting many awards. It closed 2025 with major accolades, Esquire Car of the Year, Good Housekeeping, Luxury SUV of the Year, and Car and Driver 10Best in its first year of eligibility. Actually, not only was Lucid Gravity named to Car and Driver 10Best for 2026, Lucid Air was also added to the list for the third year in a row, which makes Lucid the only manufacturer with all offered models on the 2026 list -- 10Best list. And we were the only EVs on the list as well. And for 2025, Lucid was named Best Electric Luxury Vehicle Brand by U.S. News & World Report.

Also, contradicting a common belief that EVs are not suitable for the winter in Norway's NAF winter test, Lucid Air once again proved its range leadership, driving 520 kilometers on a single charge in temperatures as low as negative 31 degree Celsius, nearly 100 kilometers farther than the next closest competitor.

In addition to gaining further accolades, we continued our momentum to build our brand awareness. We launched our global campaign with Timothee Chalamet, and expanded awareness through collaborations with NBA superstars Jalen Brunson and teammate Josh Hart. The Hard Launch campaign featuring those 3 stars was the best-performing campaign so far for Lucid.

To service the new customers we are attracting, we expanded our sales studio footprint in the United States, Europe and the Middle East. And I'm pleased to say that we have signed our first European dealer group agent in Germany and are in advanced discussions with more than 10 others as well as importer candidates for other European markets. We also expanded service lift capacity by 40% in the U.S. and Canada to better serve our expanding customer base.

And to make the ownership experience even better, we unlocked access to more than 27,500 Tesla Superchargers in North America, where Gravity is able to achieve some of the fastest charging speeds in the industry at more than 400 kilowatts. Altogether, Lucid customers now have access to more than 66,500 fast chargers across the U.S.

In December, we opened a new more accessible entry point to the brand by launching Lucid Recharged, our certified pre-owned program. Our operational progress and demand for our award-winning vehicles translated into financial improvements. I will let Taoufiq provide the details in a bit.

Before I leave 2025 and talk about 2026, I'd like to explain why I said about doubled our production in 2025 earlier. After we released our Q4 production and delivery numbers, we determined that 538 vehicles that were counted as factory-gated at M2 in Saudi Arabia in the last week of 2025 did not complete certain procedures as required by our standards to be counted as factory-gated. While those vehicles were already built completely in our plant in Arizona, shipped to KSA as kits and reassembled in M2 per our defined standards, we only count factory-gated vehicles as produced. Therefore, you will note that our final production number for Q4 2025 has decreased from what we had announced earlier this year, and those units are now instead expected to be considered factory-gated in 2026. To be clear, this had no impact on any customer deliveries. We are taking a number of additional steps to ensure the accuracy of our production numbers going forward.

Moving on to our outlook for 2026. We remain confident in our long-term growth opportunities, and I'd like to repeat what I said several times before. We're just getting started. The ramp-up of Gravity gives us ample opportunity to further grow production and deliveries in 2026. Our midsized vehicles will enable us to compete in a much larger TAM than the Air and the Gravity, and we made clear that we intend to play a major role in the developing robotaxi market. When looking at 2026, the macro environment remains uncertain. Hence, our approach for 2026 is grounded in prudence.

Our focus remains on execution. We are streamlining operations, managing costs and protecting the balance sheet while positioning the company for profitable growth. This includes the step we took last week to implement 12% reduction of our U.S. workforce, excluding hourly production employees in manufacturing, logistics and quality. We expect this measure to yield up to $500 million in cost savings over the next 3 years. This difficult but necessary decision was made to improve operational effectiveness and optimize our resources as we continue on our path towards profitability.

There has been a lot of EV winter narrative following the phaseout of federal incentives. We view much of that as an overreaction. Yes, there was demand pull forward in Q3. Yes, buying an EV has somehow become more than a technology decision. Yes, building awesome EV is hard. But instead of flip-flopping, our industry must do a better job to educate the customer that EVs are actually the superior technology and obviously build cars that live up to that claim and not rely on EVs as a sustainable choice, which are only price competitive through incentives.

I want to be clear, we are convinced that EVs are the future, and we are staying the course, but we don't see ourselves just as an EV company. Our customers choose Lucid because our cars are thrilled to drive because they outperform -- and because they generally believe they are the best vehicles on the planet, not simply because they're electric. And with our midsized vehicles, we will make that unique Lucid experience accessible to a much broader audience.

For 2026, we have 5 clear priorities: one, further grow production and deliveries by leveraging the full potential for Air and Gravity, expanding our footprint into new markets. In the U.S. and in our international markets, we plan to open 42 new locations in 2026.

Second, continue to enhance our vehicles through over-the-air updates. Given our recent software improvements, driving the Gravity is now even more a true pleasure, which has been mentioned by recent third-party reviews and our customers. Additional features will soon follow.

Third, start of production of the first model from our midsized platform by the end of this year. Midsize represents a radical shift in our variable and fixed cost structure, and we will share more details at our Investor Day on March 12.

Fourth, delivery of our first production vehicles to Uber to support commercial operations for our robotaxi partnership. We are currently delivering our final alpha test vehicles and remain on track for commercial deployment in San Francisco Bay area later this year.

Fifth, continue with prudent cost and cash management, but I will leave this to Taoufiq to share more.

In closing, 2025 was a year of progress against extraordinary macro challenges, and we met those challenges. We exited the year stronger operationally, financially and strategically.

With that, let me hand over the call to Taoufiq to walk you through our financial performance and outlook.

Good afternoon, everyone. The fourth quarter was about execution, improving operational stability, improving unit economics and improving liquidity to extend our own way. We scaled production, delivered strong top line growth, reduced cost per unit and maintain solid liquidity even in a volatile environment. After working through operational complexity earlier in the year, Q4 marked a clear step change in throughput consistency, cost trajectory and financial visibility. And importantly, the progress we made is structural, driven by better quality, higher yield, tighter cost control and disciplined capital management.

Let me walk through the key operating and financial results. Production in Q4 was 7,874 vehicles, up 133% year-over-year. Full year production reached 7,840 vehicles, up 98% year-over-year. Operationally, we addressed key throughput constraints in final assembly, increased system commonality and tightened configuration discipline. First time through improved, rework and scrap declined sequentially and software and process improvements reduced variability.

And in Q4, we did not experience the same degree of supply chain disruptions as we did earlier in the year, demonstrating the adaptability of our supply chain team. We exited the quarter with an underlying run rate that supports up to 7,500 vehicles per quarter, supported by higher yield and improved stability. This is not the result of temporary measures, it reflects a more repeatable operating cadence heading into 2026.

Q4 deliveries were 5,345 vehicles, up 72% year-over-year, our eighth consecutive record quarter. Full year deliveries were 15,841 vehicles, up 55% year-over-year. Gravity represented the majority of deliveries in each month in Q4. Operationally, we shifted to a more targeted build-to-stock approach to meet customer expectations for faster delivery of specific trends and configurations. Days on hand in December were 108, well within the industry range, and we expect this to trend down in Q1 2026.

On pricing, we remain disciplined. We will not chase volume at the expense of margin. As Gravity mix builds, particularly higher priced trims, and as conversion improves with expanded configurations, we expect mix and pricing to remain positive factors.

Q4 revenue was $522.7 million, up 55% sequentially and 123% year-over-year. Full year revenue reached $1.35 billion, up 68% year-over-year. We exceeded consensus expectations in both Q4 and the full year. Growth was driven by higher deliveries and higher ASPs, reflecting a richer mix and demand for higher value configurations.

Gross margin improved approximately 18 points sequentially in Q4. Full year gross margin improved meaningfully as well, though it remains below our long-term targets. The improvement was driven by higher production volume and improved fixed cost absorption, richer Gravity mix, yield gains, lower scrap and logistics and material cost optimization. Those improvements were partially offset by incremental tariffs, transitory ramping efficiencies and inventory impairments, factors we believe are unlikely to repeat or to repeat at the same magnitude. As throughput stabilizes and Gravity mix increases, fixed cost absorption improves and process efficiencies compound. We expect continued sequential gross margin improvement and OpEx will continue to grow at a slower pace than revenue.

Stepping back, 2025 represented a clear step change in scale and unit economics. We are on the journey of scaling, and we are clearly witnessing the benefits of it through improved fixed cost absorption. Given our investments in manufacturing capacity, we have made significant progress, reflecting our ramp in production this year. Looking ahead to 2026, we expect to realize further meaningful gains. In addition, we had transitory ramp inefficiencies and incremental tariffs of approximately $10,000 per unit that we do not expect in 2026.

Zooming in on manufacturing efficiency, our manufacturing cost per vehicle produced, including manufacturing and logistics, labor and overhead declined approximately 27% during 2025. These gains are coming from higher line rates, yield improvements and labor efficiency as the team gains experience. For 2026, we expect continued gains from Q1 2025 baseline, achievable through continued yield gains, production stabilization, labor productivity and logistics optimizations.

We've continued to exercise strict cost discipline as we scale operations and is showing up in the model. While revenue grew 55% sequentially in Q4, total operating expenses grew only 6% sequentially to $643 million, reflecting improved cost absorption and tighter discipline. R&D expense was $361 million and decreased as a percentage of revenue growth. R&D remains focused on high-return programs, including software, battery and powertrain improvements and our autonomy initiatives, which we'll discuss more at our Investor Day on March 12.

SG&A expense was $282 million, down from $283 million in Q3, and trending downward relative to revenue growth. Operating loss was $1.065 billion, reflecting meaningful improvement in margins in Q4. Adjusted EBITDA margin has improved by almost 50 basis points (sic) [ 46 percentage points ] in the prior quarter with adjusted EBITDA losses of $875 million, reflecting high ramp costs, partially offset by higher sales in Q4.

As volume absorb fixed cost and our cost actions continue to flow through, we expect margins to keep improving.

An important update on operating cost. Last Friday, we executed the reduction of our U.S. workforce by approximately 12% to reallocate resources following the launch of Gravity and to support the next stage of execution, operation and discipline and margin progression. Financially, this initiative is expected to deliver approximately $500 million in cost savings over the next 3 years with benefits weighted towards the near and medium term, supporting our path towards gross margin breakeven.

The action was taken with our U.S.-based operation, only production workers in manufacturing, logistics and quality are excluded from this action. These organizations remain fully staffed to support current and future production plan. Our ability to build and deliver vehicles is unchanged. This is a proactive step aligned with our long-term operating plan and our emphasis on disciplined execution in 2026 and beyond.

Moving to the balance sheet. We ended the quarter with approximately $4.6 billion in liquidity, $2.1 billion in cash and $2.5 billion in undrawn committed facilities. CapEx was $325 million, up 64% from the prior quarter, focused on the Gravity ramp, manufacturing efficiency, midsized tooling and capitalized investment in fixed assets. CapEx is front loaded for the manufacturing build out and ramp. And over time, we expect it to trend towards the more maintenance-oriented profile as volumes stabilize and we continue implementing CapEx-light growth initiatives with partners.

Free cash flow was negative $1.2 billion, primarily driven by ramp-related operating losses, working capital tied to production and mix shift, and the $325 million on CapEx mentioned previously. As production stabilizes, working capital normalizes and cost per unit continues to decline. We expect operating cash flow to improve sequentially. Under our current operating plan and CapEx profile, our runaway extends into the first half of 2027.

Robotaxi testing is underway with commercial deployment on track for 2026. Our agreement with Uber for a minimum of 20,000 vehicles adds long-term demand visibility. It supports production planning, improved fixed cost absorption, and creates more predictable fleet-based volume over time. On a related note, you might have seen our filing of a resale prospective supplement today relating to shares held by Uber and PIF. We registered these shares to fulfill contractual obligations. Registration of these shares does not mean they will be offered or sold in the near future. In fact, Uber is locked up until March 2027, and shares are not expected to be delivered to PIF until April 2030, subject to possible early settlements.

On the consumer side, hands of autonomy capabilities strengthens competitiveness and supports mix and pricing. The economics reinforce our cost per unit discipline and our partnerships support scalable returns with disciplined capital deployment.

To close, in 2025, we demonstrated we can scale production, improve unit economics and maintain strong liquidity at the same time. The progress we made is structural and designed to be repeatable. 2026 is about predictable execution and repeatable process improvements, not temporary actions. We will not chase volume at the expense of margins and we will expand and optimize liquidity while translating operational progress into a more predictable financial profile.

We have 4 priorities with clear outcomes. First, continue reducing cost per vehicle produced, targeting roughly an additional 20% reduction in manufacturing cost per unit by Q4 2026, along with continued progress in total cost per unit over the year. Then, we will continue the improvement in the bill of material costs, supported by ongoing efficiency initiatives and pricing benefits associated with higher volumes from upcoming midsized platform. Next, we will drive sequential gross margin improvement. And finally, we will maintain disciplined cash burn and tight working capital control.

Now on outlook. With the greater control over production and with an eye towards caution in 2026, as we focus on long-term sustainable profitability, we expect to produce between 25,000 to 27,000 vehicles for the year. We project CapEx at $1.2 billion to $1.4 billion. We believe we have liquidity into first half 2027. And we are reaffirming that we are on track to start production of the first model on our midsized platform this year.

We entered 2026 with a strong operational foundation and a clear path forward, and we look forward to providing greater insight to you at our upcoming Investor Day on March 12.

With that, I turn the call back to Nick to begin the Q&A.

[Operator Instructions] Our first question comes from [ Cahir A ]. Will Lucid earn ongoing revenue through its partnership with Uber and Nuro, such as fleet maintenance services, software licensing or subscriptions?

Thanks for that question. For this particular arrangement that we have with Uber and Nuro, we're basically selling the cars to Uber or one of its fleet partners. So there are no further licensing or subscription revenues involved. Having said that, this is only the start of our relationship, both with Uber or with other players in the markets. So we are working on other arrangements in the future.

Our next question comes from Sung K. When does the Board plan to appoint a permanent CEO?

That is a question for the Board, and I don't have any further updates to give today.

Our next question comes from Martina. What is the clearest path to positive gross margin? And when do you realistically expect to get there?

Great question, Martina. That's exactly where our focus is in 2026. After turning the corner on production challenges in 2025 in 1 of the most challenging macro environments in memory, we expect to deliver meaningful progress in gross margin in 2026 through improved cost of materials, absorption of fixed costs through scale and improved efficiencies. When you look at our gross margin currently, what you're seeing is a company with valuable assets that we are only beginning to leverage. At our Investor Day on March 12, we're going to show you our path to profitability. We expect to drive further cost reductions through improved bond costs, ongoing efficiency initiatives and other improvements as we continue to scale.

Our next question comes from Andrew Z. With Tesla scaling back the number of models they will be offering, what is Lucid's plan to grab market share?

Well, first of all, I would like to acknowledge the role that Tesla and also the Model S has played with paving the way for electromobility. And I would say we take it from here for the Model S, but also for the Model X. I think we are the natural successor of those 2 vehicles. And we are certainly seeing an uptake in customer inquiries from Model S and Model X owners. And we are working right now on plans on how to further accelerate that.

All right. Now I'd like to take questions from the phone lines. Operator?

[Operator Instructions] And our first question will come from the line of Itay Michaeli with TD Cowen.

Just the first question on the midsized platform. It sounds like you're still on track to produce it at the end of the year. Just kind of curious what sort of other milestones are there left to do between now and then are and how do you think about kind of the progress towards startup production today?

Just before we respond, I'd like to correct something I mentioned earlier in my prepared remarks, that's related to the adjusted EBITDA margin. It has improved by 46 percentage points from the prior quarter and not the 50 basis points that you might have heard earlier. With that, Marc.

Maybe I can take the question about the midsize. I mean there's a couple of milestones. First of all, we are, I would say, in the final stretch of their product development. We have built the first production validation vehicles, and there are actually 4 versions of that throughout the remainder until we go to the start of production. And we also have to finish the installation of the equipment in our plant in Saudi Arabia. So there are a number of key milestones, but we're well underway, both with the construction of the plant. And at the same time, also with finalizing all of the development and particularly the validation and homologation that we need to do.

Terrific. And then as a follow-up on Slide 13. With the launch of the point-to-point feature later this year, I'm curious whether you can share but maybe we'll talk about it on the Investor Day as well. How many miles and what the ODDs initially might look like for point-to-point as well as how you're thinking about charging for the future?

Yes. Well, we actually will talk about this more at our Investor Day on March 12. But I mean, it will be a rollout. It will not be a big bang where we have basically serve the whole world basically with -- on one day. So there will be a little bit of cadence, and yes, we will talk about that later. Same for the pricing. That's also something that we will talk about in the near future.

Perfect. I could sneak one last one in on the outlook. I'm just curious if you're seeing any constraints with DRAM memory at all in production. Just kind of curious what you're seeing out there with that situation.

Yes. Not right now. Not right now. I mean obviously, we are monitoring this situation very, very closely. We have seen cost increases, but at the same time, not a shortage. And the cost increases, given the percentage of the overall BOM cost, they are [ negligible ]. So really on a small level compared to the overall cost. So, so far, we are in good shape, but that is absolutely one of the topics that we are monitoring on a daily basis.

And our next question will come from the line of Andres Sheppard with Cantor Fitzgerald.

Marc and Taoufiq, congratulations on all the great progress. I want to maybe come back to the production guidance. I'm wondering if you can maybe help us -- how should we think about the unit mix for that guidance for this year between Air, Gravity, possibly some midsize? And should we assume anything from M2 or from robotaxi in that guidance?

Yes. Thanks, Andre. I can definitely answer that. I mean just like in Q4 last year, the main answer is the majority of our production and then also the deliveries for next year is going to be the Gravity that actually happened also in Q4. When it comes to midsize, there will not be because it's very late in the year when we start of production, there will not be any meaningful numbers to be reported. I mean the vehicles that we are building right now, the production validation vehicles and so on, they don't count. Robotaxis as well, it's a small number in 2026, and then there is ramp up next year and then following.

Got it. Super helpful. And maybe just as a quick follow-up. Taoufiq, can you just remind us now with the total liquidity of $4.6 billion funded into first half of '27, how are you thinking about capital needs and maybe cash burn between now and then?

Well, I mean, I think that the $4.6 billion and the guidance that we gave that it covers our needs until the first half 2027. Can give you an approximation of the cash burn that we will have in the upcoming quarters. So I mean, we are not guiding specifically, as you know, for the cash burn or cash usage within the year. We're providing this directional comment. So for the time being, I mean, again, that's all the information we can really share. We will be further elaborating on that during the Investor Day, but it's really all we can say at this stage.

[Operator Instructions] Our next question will come from the line of Andrew Percoco with Morgan Stanley.

Great. Maybe just to start on the margin cadence throughout the year. I know you'll probably give some more details on this in a week or 2. But -- can you just help us bridge some of the moving pieces for 2026? Obviously, you'll have an increase in production based on your guidance, but presumably, there's also some ramp cost headwinds and maybe some commodity headwinds just given where steel and lithium and memory prices are going. So just help us square that circle a little bit here in terms of what the bridge is for 2026 on some of those margin drivers.

Well, I mean, there are different moving pieces associated with the margin progression and the trajectory that we're expecting. So the first thing that I think it's important again to put emphasis on is that we're expecting an improvement overall in gross margin, '26 versus 2025. Different levers that will be activated. The first one is volume driven. So the ramp and incremental volumes have definitely an impact on our margin, and that's something that we have tried to explain in the deck that we have shared with you earlier. So fixed cost absorption is an important lever. We do expect as well significant progress when it comes to our ramp to our efficiency. So we're expecting to improve -- to continue improving our productivity in the plant. So when it comes to the throughput, the first time through and so forth, these are important KPIs that we will continue to leverage. We will improve the quality and all the costs associated with the reworks are supposed to decrease the scrap impacts, all this as part of the productivity bucket.

So you mentioned some of the constraints on the supply chain. I think that what we have demonstrated last year is the agility of the company when it comes to managing some of these headwinds. The plan that we currently have is still aiming at further improvements when it comes to the bill of material of the existing programs for the Air and the Gravity. So that's something that we will continue working on. And we have made an announcement recently about the appointment of our new Head of Supply Chain, and there is a renewed level of energy in looking at opportunities from that area. So that's some -- certainly not something that where we will relax our effort. So it's really a set of key actions that we will be activating. But the volume and the scale remains an important component of the overall package.

Got it. That's helpful. And maybe just to follow up, it sounds like Europe is becoming -- or has been, but feel it's becoming a little bit more of a growth strategy for you guys this year. Can you just elaborate in terms of what your expectations are there? I don't know if you can break out what percentage of your guide do you expect to be Europe versus U.S. But just trying to get a sense of your expectations there. There's obviously a lot of focus around what China is doing. And I know it's a different part of the market. But just generally curious what your expectations are for growth in that geography.

Yes, I can take that. I mean we are planning for growth, but in this upcoming year until we have the midsized available, we're not planning for a gigantic growth. Because our vehicles that we have right now with the Air and the Gravity, they're still actually on the large side when it comes to the vehicle demand in Europe. And so therefore, there's not a tremendous growth that we're attributing to that region, which will change with the midsize.

And you mentioned the Chinese and you're right, because we actually just checked the numbers. The vast majority of the growth of Chinese OEMs in Europe is linked to low-cost vehicles. When you look at the brands that are selling more higher-priced vehicles, they're actually not doing very well at all. And even, obviously, big players like BYD are, you're seeing some kind of slowdown in Europe in their expansion in recent weeks and months. So yes -- but again, from our side, when you look at our numbers, the Europe will play a much bigger role when the midsize comes around because that is also then a form factor and a size of a vehicle, which is more fitted to the European market.

[Operator Instructions] Our next question will come from the line of James Picariello with BNP Paribas.

Just first on CapEx. What portion of the $1.2 billion to $1.4 billion attributes to Lucid's M2 Saudi plant because theoretically, right -- that entire cash outlay -- well, the first phase of that cash outlay should be funded by the company's $1.4 billion SIDF loan that you have access to. Is that right?

That's correct. So the majority of CapEx that we see next year will be geared towards M2. So we will have some additional CapEx that we will do for M1. The rest of the CapEx spend will be mainly related to some vendor tooling and our commercial network. But to answer the question, the majority is M2.

And then there's just a 1 or 2 quarter -- I mean, you tell me, 1 or 2 quarter delay in terms of the accessibility of the SIDF loan?

Yes, that's about right, yes.

Okay. That's helpful. And then -- just on the OpEx savings of the $500 million over 3 years, in your prepared remarks, it did sound like it was more front-end loaded. I'm just curious on the cadence there because it sounds as though you've executed the full 12% workforce reduction already. So why does it take 3 years? And what's the approximate [ timing ] of that?

No, no, that's not the intent of the message. What we said is that the cumulative savings over the next 3 years would be the approximately $500 million that we mentioned. So it will be an equivalent proportional amount equivalent year-over-year and cumulative impact will be $0.5 billion. So there will be no specific impact from phasing other than the fact that in 2026 we will have some outflow associated with the severance related to the plan.

Right. But the $500 million in cumulative savings is achieved over 3 years. It's not all hitting in 2026, right?

Absolutely. Correct. Yes.

Yes. So my question was just like what's causing the 3 year -- if it's just workforce reductions, what's taking 3 years as opposed to it all happening this year? I'm just curious, you know...

Well, I mean, it's already happening now. So I mean the way you should look at it is $500 million divided by 3, and that's the yearly impact, and it will be the same for the 3 years.

Thank you. That is all the time we have for our question-and-answer session as well as our conference call. This concludes the program. Thank you all for participating. You may now disconnect.

Good morning, everybody. So I'm [ Ed Oba ] from Morgan Stanley. Today, I have the great pleasure to welcome Marc Winterhoff and CEO of Lucid; and Taoufiq Boussaid, CFO of Lucid. So thank you so much for coming to London to spend some time with us.

Maybe, Marc, if I can start with a relatively broad question, which is kind of where -- how does Lucid position itself within the overall EV segment?

Well, I mean, we started 3 years ago in the luxury segment. We started with the Lucid Air, which is by now the most award-winning EV in the space and actually also the market leader right now in our segment in the United States. That then in this year, throughout this year, we ramped up our first SUV, mainly also in the United States, but also in our markets in Middle East, which is the Gravity in the Lucid Gravity 7-seater. I actually recently saw an article with the headline, the first 7-seater supercar. So that's how we like also to talk about it. And it will also come very soon to Europe. We already opened the orders. And by the end of this year and beginning of next year, those vehicles will then come as well.

And we are working right now on our next-generation midsized platform that will then allow us to go into a segment which is more around USD 50,000 and therefore, also attracting bigger markets and bigger volumes at that point. It's not only 1 vehicle, it's actually 3 vehicles that are based on one common platform. Beyond that, we want to still stay in the premium/luxury space. So we don't have plans to go down to, let's say, $35,000 or something like this. We will remain in that area. And beyond that, this year, we started to open another addressable market for us with the whole robotaxi segment, where we did a -- we started out with a cooperation with Uber and Nuro and we will expand on that. And besides that, we also did a larger cooperation with NVIDIA.

Okay. Wonderful. Would it be fair to say that Lucid is no longer a start-up, but really properly a scale-up now? And I guess kind of related to that, kind of what's the strategic advantage does the majority ownership of PIF gives Lucid.

Yes. Yes, you're right. I mean we're in the scale-up phase, absolutely. And I mean, now living for many, many years in the U.S., I always use U.S. examples. Not everybody knows about baseball, but for those who know, it's a very long game, and it has -- it's counted in innings. And I think we are in the -- maybe still in the second inning maybe of a baseball game. Typically, it has 9, 10 or more. So we are still in the beginning. What we've done so far is we invested. We developed great cars. We started to launch them. We invested in our footprints in our plants. We are right now in the midst of creating a second plant, which is in Saudi Arabia, which also leads me then to the topic around our majority shareholder, the PIF.

The PIF, and I should also say Saudi Arabia, they are a long-term partner supporting us. And they also know that automotive is a very investment-heavy business. You need to do in the beginning investments until you can then really reap the benefits later on. We are very thankful for this long-term perspective. And they have been a great partner, and I anticipate them to be good partners in the future.

Great. Talking about your model. So Gravity was the first SUV you launched. It was, I guess, basically same time last year, November '24, if I'm not mistaken. Could you give us a bit of an update in terms of the ramp-up you had over the past kind of 12 months? I think you had some production and suppliers issue initially. But to what extent you overcome these issues and things are running smoothly and also kind of in terms of the -- again, the production, the volume in the second half of the year and next year?

Yes. Well, I mean, we have -- this year 2025, I think in the whole industry, but also in particular for us, there was no shortage of challenges. We all know that particularly for us, where all of our vehicles so far at this point are being built in the United States. In March, first of all, then we got the tariffs, and we had to then rethink, okay, what does that mean for our supply chain. Then later in Q2, we had based on the trade war evolving further, the whole topic around unavailability of magnets out of China, which also caused us at least to make changes in our build plans, which we were actually able to still build the vehicles, but not to sell them when we want them because we had to change to vehicles that go to the Kingdom, which then are obviously a couple of weeks or months actually longer on the boat.

Then on top of that, all of a sudden, our largest aluminum provider had a fire in one of their biggest plants where they do the aluminum for us. And last but not least, then an Experia topic that probably everybody knows here as well that shook the automotive industry. So there's no shortage of challenges. Nevertheless, we are on track right now to get to our guidance, we basically in the last earnings call, we guided between 18,000 and 20,000. And we also said it's going to be given the situation more on the lower end, and we do everything right now to make sure that, that happens. And as an information, we have now weeks where we are producing 1,000 vehicles in a week.

In a week. Okay. Impressive. So I think one of your next projects you've talked about is you going -- the launch of the midsize. So you have advanced sedan in terms of EV, one of the most advanced in the market in the SUV, you talked about it. Kind of what's the next step with the midsized vehicle? It's a more competitive segment of the market? Why is it an opportunity for you?

Well, I mean, it's -- the main reason is it is a much bigger segment. The Air segment with the luxury sedan, it is actually not a big segment in the market. And it's also in the last 5 years, it has not been growing. It actually has been shrinking. More and more people moved from that area to crossovers or also to SUVs. Now with our Gravity, the SUV, we have the first, let's say, foot in the SUV segment, but still on a relatively high price level. And so with the midsize, we're kind of like when I use U.S. as an example, in the middle of the market, 2 weeks ago or so it was when for the first time, the average selling price of a car, not only EV but all cars in the United States crossed $50,000. And that's not the area where we want to be with our midsize.

It will again have the same amazing technology performance combination of that drive handling, driving comfort, space, all the things that people know from our Air and our Gravity, we also will pack again into our midsized vehicles.

And in the midsized segment, will competition be tougher with the Chinese competitors or with the local domestic players.

Well, it depends where you play, right? We have no plans to go to China. I want to make that very clear. And when you think about where the Chinese competition is most fierce, it is clearly in China. I mean the price points, price levels in China are not even sustainable for the local players. There are 2 automotive players that are, one, allegedly, are not really believing that are profitable right now. Everybody else makes no money. So that's nothing for us what we want to entertain and work in.

And obviously, they also then try because there is so tough competition in their own market, they try to get into other markets. But most of the volume that we see right now would be in lower segments than what we want to play when it comes to a price point. And when I see the current uptake of, let's say, more luxurious vehicles, Chinese vehicles outside of the -- of China, it's not that high. They are not very high sales numbers. So I'm confident that there is a good position for us. And so we see ourselves competing more against the established players. And obviously, there, we see also many of the established players currently retracting and not really investing into EVs, which, in our opinion, is, a, a big mistake and, b, opens an opportunity for us because we think that EV is the technology of the future. And if you take the foot off the pedal, it will bite you in 5 years from now.

Got it. Moving on to autonomy, which is a very exciting development, obviously, for the industry. So I guess one of the interesting development is the robotaxi. So you signed an agreement with Uber. I think they are going to deploy, if I'm not mistaken, 20,000 Lucid Gravity vehicles equipped with the Nuro drivers over the next 6 years. I think they are starting in the Bay Area, area next year. If you could talk a little bit about why the deal, the economics to start with on the robotaxi, that would be helpful.

Yes. I mean, in general, I would like to explain a little bit our strategy around autonomous driving and advanced driving system levels. In the past, we have focused very much on creating the best driving vehicles. That established us on the map in the industry as the EV technology leader. But going forward, particularly when you look at the segments that we want to play in, we had to start to invest and advance what we already have. It's not that we have nothing. We actually have a good, we call it DreamDrive Pro Level 2 system that works on highways even in the Air with hands off. You don't actually have to put your hands on the steering wheel. But we realized that we need to double down on that and accelerate.

And then when it comes -- that's one element when you look at the vehicles that we are building ourselves for right now. But then when you look at robotaxis, we didn't even think about that segment as something for us. And that came about Uber actually reaching out to us and say, okay, can we do something together here because they realized when they looked into the market that we are a great fit for them from a technology point of view and also from a speed to market, how fast we would implement things. So that's why we are focusing right now on partnerships.

It's basically to enable speed to market. We have done already things in the past, but we really have high ambitions. We want to have a very, very competitive solution by the end of next year. And we basically looked internally, okay, what will it take to do this internally? Is this even possible in that short period of time? Or should we partner for now? And the decision was to partner for the sake for our customers because we want to offer something that works great. And then also from an economics perspective, it was actually almost like a no-brainer for us to do that. So that's why we went in that area.

When it comes to robotaxis, for us, this is a starting point because when you just look at the numbers, I mean, 20,000 over 6 years is compared to what we want to produce by in not-so-distant future is a little bit of a drop in the bucket. So for us, we have bigger plans, and there's things obviously in discussions going on that will come. And we think it is actually a very important market. We are on the verge that this really becomes viable. And we've been talking about this now since 10 years. It's coming, it's coming, it's coming. Now I'm also convinced it will in the not-so-distant future. And I think with our technology and with our partners, we are in a good spot.

Okay. We'll open it up to the audience in a few minutes. I'm sure you're going to get more questions on that because that's a very exciting development. Just to finish on the autonomy on the consumer autonomy front, so Lucid announced kind of a strategic collaboration with NVIDIA to co-develop the next-gen L4 autonomous driving tech that will integrate NVIDIA DRIVE AF system. So yes, could you again come back on kind of the deal, why the deal and what the opportunities could be generated?

Yes, I need to -- let's take on what I just said. It's really for us, the decision was speed to market and also the second piece was the required investment. It is actually, from our perspective, very affordable. It's -- normally, you would do this all in-house, you would spend billions until you get to where we want to be. And when you compare that, what -- I cannot obviously disclose the numbers, but it's a very -- from an economic point of view, a very attractive decision that we made.

I mean, as a comparison, we're spending on developing the seats for our upcoming midsize. We're spending about as much money as what we're investing in that, which tells you a little bit that's actually a quite good deal. And so I'm very, very looking forward to work with NVIDIA on that.

Okay. Wonderful. I don't know if there's a mic or if there are questions from the audience. Any questions?

Just wondering if there's any -- if you could provide some comments on the capabilities that you have regarding the ADAS and kind of autonomous vehicles. What really -- I mean, as an EV player, how did you decide to go after this? And maybe relative to kind of a Google who are Waymo who had a head start, where do you position? And what do you have to do to catch it?

Yes. I mean first of all, what we started with, and as I mentioned, we already have an L2 solution, which is basically highway assist or driver assist, how we're calling it, hands-free for the Lucid Air. So you don't have to have the hands on your -- on the steering wheel and obviously, you need to be able to -- actually, you need to look forward. Otherwise, it will -- so that's what we worked on.

The other thing that we worked on extensively is in our vehicles, they are already very much prepared when it comes to the sensor set. We have radar, we have obviously cameras, and we also have LiDAR in our vehicles, both in the Air and in the Gravity. So we have created all of the infrastructure needed in order to do that. So then what I mentioned before, we were focusing actually in the last couple of years on, yes, getting to hands-free L2, but not making enormous additional investments like, for instance, like Google did with Waymo. So -- and therefore, beginning of the year, I looked at the market and said, okay, we need to do -- we need to get closer there. So how do we get there?

And that's why we started to have conversations with partners like NVIDIA. And we're already using actually their technology in our cars anyway. So the technology in our vehicles in the Gravity is NVIDIA based. But then on top of that, partner with them from the software side. And we are very confident that we will have something very attractive very soon in our vehicles. And when it comes to the robotaxis, what Google does, what they do with Waymo, we are doing the same right now with Nuro, which is our partner there. And we will get to a solution that we can deploy by the end of next year. That's the plan.

You touch on the liquidity and funding.

I would hand this over to you.

So liquidity, so we already gave some colors around where we stand in terms of funding. So I mean, we finished the Q3 pro forma with $5.5 billion, which takes our funding well into 2027. Recently, we have refinanced a 2026 maturity convertible bond. So we have raised just short of $1 billion to do this refinancing. The PIF continues to show strong support to the company. So we have a deferred draw term loan with them, which was initially just below $1 billion, which has been doubled and which is now standing to $2 billion that we are not planning to draw on.

So I mean, in the context of the investment that we still have to do next year, which are mainly related to the plants, the plant in KSA that we're finalizing, we're completely covered in terms of liquidity.

Maybe just if we look out to the end of the decade, given your investment plans, how many vehicles do you think will be rolling off your production lines per week? You gave us a stat of 1,000 per week. Obviously, you're bringing in this new mid-market vehicle. I think in the context of a competitor of yours trying to get 1 robotaxi off the line every 10 seconds, which is obviously potentially a pipe dream. Maybe interesting to hear your thoughts on where you might be in the 2030s.

So I have to admit, I haven't made that math or what it will be per second. And we haven't yet disclosed that. I actually have to pump the answer to an Investor Day that we are doing in Q1 next year, where we want to lay out all of that strategy, including also what it means, where do we want to grow into. And by then, I will make that calculation as well how many seconds it's going to be. Maybe if you allow me also because on the -- there were a couple of questions on the autonomy strategy and why are we doing what we're doing?

And it's actually 2 things. It's -- for us, it's smart capital allocation. In order to get to high levels of autonomy, we are talking really about billions of investments. And obviously, right now, we don't want to have to raise a couple of billions. At the same time, when you look at even the biggest and most successful companies in the world have once in a while sidestepped and used our partners for their technology. One very simple example is Apple. To this day, when you search on your phone, the search results don't come from Apple. They come actually from Google. That's number one. Number two is, and it was probably like 15 years ago, when they realized that, oh, our investments into the power PC chips were not enough, they went with Intel for a long period of time in order to be competitive. While they were figuring out, is it worth for us to invest into our own silicon level and then they switched.

And at the same time, they delivered fantastic products in that meantime, by the way, even they used Qualcomm modems that they also now in-sourced. So they did a lot of changes over time once they realize there is a value of doing it. But we are in a very similar situation. I wanted to make smart investment allocations. And then we monitor and see, is that something that we should actually own in-house. And if you just look at autonomy as a very good example, if we would have made an investment -- started the investment 5 years ago, where would we be right now. We probably would be $5 billion at least poorer than we are. And at the same time, we would have something that somehow works. And with the new AI models, now in a year or 2 from now, things look completely different with less investments. So we think that is a very simply smart way of approaching things to provide something for our customers and at the same time, monitor how things develop and what we should be doing and where should we place our bets in the future.

Other questions? Just maybe related to that and the way you grow by partnering with some other players. In terms of coming back on the robotaxi, as you said, you have big ambitions going forward. Should we -- are you in discussion. Obviously, you're limited in terms of what you can disclose, but are you in discussion with other market participants?

We are, but I'm very limited to disclose anything. And I mean, there are also continuous discussions with Uber. But yes, there are more discussions than that, either here in the U.S., but even internationally. And I really hope that by actually that Investor Day in Q1 that we are able to talk more freely about additional things.

Got it. Sorry, another question.

I guess conceptually, we're now seeing the pace of rollouts across cities, across in the States and also in Europe faster. They seem to have accelerated. So what is the gating factor for your partnership with Uber in San Francisco expanding more broadly? Is it -- is it availability of vehicles? Or is it regulation? Maybe you could just explain how that evolves?

Yes, it's a combination of things. Well, first of all, and I think it's a good thing because now I can explain a little bit more how automotive works. You don't sign a partnership and then you start rolling out things the next day in automotive. There's actually from -- even with our vehicles that are well prepared, we have to add additional technology to the vehicles. So there's a development phase that still has to happen to integrate the Nuro driver into our vehicles. And on top of that, there's a long validation cycle that you can make 100% sure it works every time, everywhere.

So the gating factor right now is simply to go through that process, finalizing the development. We have recently handed over the first development vehicles, which we outfitted with everything. And I think by the end of this year, we will have delivered all of the 75 that we are planning to have. And from there, it's training the algorithm based on that new vehicle together with the driver. And then it is about validation and also regulation. There are still 1 or 2 hurdles to overcome on that area.

When this is done once, then it's simply compute power and training the vehicles in other locations. That is something that with the new technology, AI-based technology works much faster than it used to in the past.

Okay. Maybe one last question, if any. No? Okay. I think it's noon. So noon, I mean, if delegate could please head upstairs for lunch. I think it's the Danzig suite. Lunch will be served. Thank you so much. Thank you.

Thank you.

All right. Welcome back, everyone. We're going to continue on with our presentations here today on the AutoTrak at the UBS Industrials Conference. Very pleased to have with us Lucid. We've got the CFO, Taoufiq Boussaid, with us.

And I do want to just make a little bit of a PSA for those of you here. We do have a couple of Lucid vehicles, including the Air and the new Gravity. So you'll be able to go test drive them. I encourage you to do so. I just got out of one myself. Really, really great ride, great vehicle. So thanks for that opportunity and experience at bringing that to clients here at the conference.

I'm very glad you enjoyed it. Thank you for having me today.

Great. So I guess we want to -- just to get started here. It's a rapidly changing world, especially from a policy perspective, but also from an economic perspective. So at a high level, right, what we're seeing is affordability becoming a little bit more of a concern. The vehicles you do sell today are more on -- in the expensive side.

You have the pullback of some tax credits, at least in the U.S. So just level set for everyone sort of how you sort of see that impacting not just the near-term demand, but sort of how you sort of see demand for your vehicles playing out over the short term to sort of bridge that gap to some of the future products that we'll talk about in a little bit.

So maybe starting with the short term. So now with the cars that we're currently selling, with the Gravity and the Air, I mean, we're positioned in a premium segment. And the premium segment turned out to be much more resilient than some of the older EV segments. So -- and on top of that, I mean, we've been seeing a constant and very pleasing improvement in terms of market share. So some of the impacts that the industry are referring to, I mean, let's knock on wood, for us, I mean, we don't see the impact for the time being.

What percent of your vehicles in the U.S. are leased roughly?

So it's around 70% -- 70% is leasing. So again, I mean, the momentum seems to be there for us. So obviously, I mean, the whole industry is impacted. As I said, I mean, we're seeing very encouraging signs. I mean the test drives are increasing. The traffic as well, as I mentioned, the market share is moving in the right direction. So I mean, Q4 might be a good quarter for us. So it's something that we're looking forward to close the year. But for the moment, the indicators are great.

And is that in part driven by luxury also tends to sort of have a better fourth quarter performance? Like are you sort of seeing seasonality in the business? Or what is sort of driving some of that?

There is definitely some seasonality. There is some seasonality. So we tend to compare versus last year, obviously, versus previous quarter. So as it trends now, I mean, we will see quarter-over-quarter growth.

Yes. And I just mentioned I was in the Gravity and the other vehicle has been out for a little bit now, but can you sort of talk about any sort of reception in the marketplace and orders?

Well, yes, absolutely. So first of all, I think just referring to the way the cars have been received, I mean, you see the many accolades that we have received, it's an absolutely gorgeous product, I mean, in terms of comfort, in terms of finishing, in terms of performance. So -- and I think that the public recognizes that.

So the orders are trending the way we expected them to trend. So we are not disappointed. So I mean, one of the things that we needed to do is to satisfy all the demand that we've been building since we announced the launch. And this is what we're doing in Q4. So Q4 will be primarily the Gravity quarter. It will represent the majority of our production and our sales. And again, as I said, this is as per our initial expectation and plan.

And can you shed a little bit of light on the economics of the vehicle from a profitability or sort of loss perspective and how you sort of see that trending over time? Like can -- where can this vehicle actually go? And I think even more importantly, like what lessons were learned from Air to Gravity that you could sort of take on from Gravity to a new mass market vehicle?

Well, I think that it always come -- it all comes back to simplification. So simplification does derisk the program. It does allow us to maximize the economics of the program because you simplify, you reduce the part counts in the car, you make the operations and the manufacturing of the car faster and more easy. So this is the learning journey that we've been through. So we started with the Gravity where the motto was compromise nothing. And what we really wanted to do is to bring the demonstration that we can build the best car out there. And that's what we did.

But we needed to iterate on a constant basis. We know that as we're growing into scale and that we're going into mass premium market, that's something that we cannot be able to afford anymore. So we needed to get it right the first time. And that's what our engineering organization has been doing relentlessly, how to learn or to combine all the learnings from all those years, making the best product right the first time without this need to constantly iterate. And obviously, this has a direct impact on the cost and the economics of the program by simplification, you reduce risk, you reduce the bill of material, you reduce the time needed and you ensure that you can maximize the production output at the very first stages of the production.

Yes. And it should go -- well, it went unsaid, but obviously sort of implied in my comments to -- or question to you earlier about some of the change in dynamics. I was -- that's a very sort of U.S.-centric focused sort of comment, which is true. But I'm curious sort of what you're seeing for both the Air and Gravity in some of the international markets, whether Europe, Middle East or Asia.

Yes. So Gravity is starting now. So we're seeing a very positive momentum in Europe and in the Middle East as well. So we will need to see how this builds up in the next coming quarters. I think that the Air is a good selling car overall. So I mean, it's -- when you combine for the premium segments and the very wide segment and the car composing the premium segment. We are the third best-selling car overall for the Air.

So it's a very good performance. So for the moment, again, we do see the momentum. The car is very well received, a lot of engagement from existing customers and new customers for the Gravity. So again, we're building our brand equity. We're building the brand awareness, and we're getting ready for the midsized platform.

Do you have any insight you could share as to sort of where the Gravity customer is coming from? What car are they coming out of?

Well, I mean, if we look at the profiles of our customers, and that's probably mainly the U.S. It's really a mix. We have former Lucid owners who want to move to a bigger car and they go, but we also have a lot of customers who used to own SUVs in the past and who are looking for upgrades.

Electric or ICE SUVs?

It's a combination of the 2. And I think it's a very important question because, I mean, the way we want to position the Gravity, it's not an EV SUV only. It's an alternative within SUV. It brings different value type of value propositions. And I think that people now with the charging networks becoming more and more widespread. I think that the TCO equation becomes more visible. And I think that we're able to attract new SUV customers probably coming from ICE on the back of the value proposition of the car itself, putting aside maybe just the UBS aspect of it.

Now obviously, the TCO or total cost of ownership equation, value equation you sort of just talked about is even more relevant in the mass market than on the luxury side. And so that's a good sort of transition to sort of talking about the next-gen vehicle. Maybe just for the benefit of the audience, remind everyone what the plans are for the new platform in terms of what the vehicle is aiming to be, what the timing is and then we could sort of get into some of the production.

Absolutely. So our next iteration as it stands now is called the midsized platform. So it's a platform. So it's aimed at being translated into 3 different cars with 3 different top hats. So it will be the first time that we will be building on the back of a platform with all the benefits that it has in terms of unit economics, ability to leverage the bill of material, the parts and so forth.

So we will be moving from what we have been doing so far, targeting a different type of market. It will still remain a premium product because that's the DNA of the company, but it will be positioned at a price tag, which is where we currently sit at the heart of the market, which is around the 50,000, which makes it much more accessible.

That's the starting point?

But that will be the starting point, absolutely. So it will be more accessible than the offering that we currently have. It will be targeting the heart of where we see the midsized type of cars currently at the 50,000, as I said. But we will keep and we will be very, very focused on keeping what makes Lucid DNA, the design, the quality, the equipment. So -- and that will be the value proposition, how to bring something equivalent in terms of touch and feel to the Air and Gravity within a segment, which is more in the mid-market.

And I think an important characteristic of the midsized platform, right, is where you plan to at least initially produce it in Saudi Arabia. So -- and look, we've seen EVs and really particularly the Chinese started to do very well in the Middle East broadly. So there's definitely an opportunity there. Can you talk about the decision in some of the pros, but also the -- I don't want to say cons, but maybe some of the challenges that sort of might emerge from at least starting production there?

Yes. Well, I mean, if you look at the pros, they're mainly triggered by the macro. So -- and I mean, we didn't obviously looked at it that way before we find out about all the implication that the shifting policy had in terms of impact, in terms of tariffs and so forth. But we found ourselves in a fortunate space having the option to manufacture a car in KSA. And what it does is that it allows us basically to import from China part of the bill of material without having to incur the significant duty.

So again, it will be a transition. Things will be shifting. I mean, OEMs and Tier 1s, Tier 2s, Tier 3s are looking at options and relocating their supply chains in North America. It's not something that can happen overnight. It will take some time. But for the time being and given the time frame that we have to get this car ready, we find ourselves in a very comfortable spot being able to import this bill of material out of that.

And sorry, before we sort of move on to some of the other pros and challenges. But when you say parts, are you mainly talking batteries?

Well, batteries are part of it, but I mean, there are many other equipments which would be sourced.

But the motors you currently make where?

Well, the motors are Lucid motors. So we manufacture them in the U.S. for the time being.

And then for the next-generation platform, those motors will be?

They will be manufactured and mounted in KSA.

Manufactured in KSA. So you have to build a motor there. Okay. And sorry, so go ahead...

So I mean, again, just to elaborate a little bit on the pros. So I mean, we will be operating within a purpose-built ecosystem in KSA. So we will not be alone there. So I mean, the authorities in KSA are very adamant about their plans to develop a fully dedicated ecosystem. So over time, we will have access to Tier 1s and Tier 2s just next door.

It will take some time, but the plan is there. In terms of unit economics, I think that for the time being, this is the best option that it gives us the flexibility, at least things might change over time. So in terms of challenges, so I mean between the brand new plants, it would be full automated. So I mean it will take some time to maximum the capacity usage and the ramp up, so the plan is sort of adoption as per our initial guidance towards the end of 2026, '27, '28, we will ramp up '29 full capacity.

So you mentioned fully automated. And maybe that's what I'd like to sort of spend a minute on before we move on to some other topics here. But it's not too long ago, right, where you opened your facility here in the U.S. for the first vehicles. And granted that was the first time Lucid as an organization made cars.

So I'm sure there were lessons along the way. But what can you tell us about some of those lessons? Maybe a couple of anecdotes of sort of what's done differently that you learned can sort of be improved as you sort of get a fresh start here at sort of how to most ideally sort of lay out and sort of build a factory?

Yes. Well, I think that the biggest learning that will serve us immediately is how to drive quality when you manufacture a car. I think that because we didn't want to compromise on quality, it turned out very complicated to get the car right when we first started here in the U.S. So I wasn't there, but I mean, I hear stories from my colleagues where a car at the end of the chain needed to go back several times back to the start of the chain to be reworked, readjusted, repeated, all those things.

So these are things that now we have learned that we know. I mean, we have our own processes. We have the people who are trained and who know how to manage all those things. And these were things which are part of every maturity cycle, I would say. We were learning how to do our job. And I think that we have reached the right maturity. And now we're able to duplicate all these learnings into a new environment.

So when you say fully automated, certainly more and maybe is it possible sort of if you could put on the scale of 1 to 10, 1 being no automation, 10 being completely dark factory, where would you put your sort of current U.S. facility? And then where would you put the -- where the...

Well, they will be comparable in many aspects in terms of level of automation. So you cannot look at automation from the same standpoint throughout the process of manufacturing a car. I mean manufacturing car comes in different steps. Some steps are more automated than others. So if you take what we refer to as the body-in-white part of the process, this is a fully automated process. But then you have the amount, the fit and finishing, which is also relying heavily on manual workload and this thing will remain as such. So it's really how you maximize the parts of the process, which can be...

So it's a similar level of automation to what you have now? Or there's -- that's what I'm trying to understand. Are there elements of the production system that you said, we could do this a little bit better as we sort of rebuild ourself.

Well, I mean, we can definitely do things better. So I don't know if you've heard about the second part of the partnership that we're doing with NVIDIA. I mean we will be in-sourcing a lot of the NVIDIA solutions in our plants to help us, for example, with the digital twins and back to the issue that I was referring to with the quality, I mean, having the possibility to develop -- to manufacture a car while operating in a digital twin does allow us to gain a lot of efficiency in terms of automation and optimization of the automation.

Yes. Well, you sort of did -- helped with my transition here to the next topic, which is the autonomy and some of the autonomy announcements and partnerships you had. And so I guess the first one is, I know you sort of mentioned NVIDIA, but I first sort of want to talk about the Nuro partnership and Uber. So how did that come about? How did you sort of decide that Nuro was sort of the right partner for what you want to accomplish? And then I guess the third element of this is Uber, right, and sort of why were they looking for the Lucid vehicle on their network?

Well, let's start maybe with Uber. I think that Uber, because of the scale of Uber, because of the fact that they own the biggest rideshare platform, made it somehow obvious in terms of decision process. So it was a joint decision to work together. But then the question is also why did Uber pick Lucid -- and they picked us because, I mean, we have a fit-for-purpose car with a redundant architecture with all the safety, which is required for this type of application.

So we had an available solution, which required minimal changes, minimal fitting to operate as a robotaxi as opposed to some of the existing solutions right now where you have to add a lot of sensors, LiDAR and so forth. I mean, I guess that we have some rendering of what the robotaxi looks like. It's a gravity with a very slick on top of it, and that makes it work.

So it was really the ability to have a car which is fit for purpose very soon, which can adjust to all the software requirement coming with the Nuro platform and which can be operationalized as fast as possible. And again, the Gravity is the first start. I mean it's a big car. It's an expensive car. It might not be the obvious choice for a robotaxi service. But the next step of the program will be with the midsized as that will be even more advanced in terms of its ability to serve this type of application.

So I guess maybe a little bit more curious just on a final part of this point, which is like how it came together? Like I understand the need or the imperative for Uber to sort of say, like we want to get more robotaxis on our network, and we also want some diversity of supply, maybe we could use a Lucid for sort of a very upscale type of product.

And just like now you have Uber Black, UberX, UberXL, right, different sort of tiers. How did it get arranged? Were you talking to Uber and then looking for an autonomy partner? Were you talking to Nuro first and then sort of decided to go to Uber? Like how did the sort of marriage come together?

Well, I think that it was really Uber who brought us together. Obviously, I mean, we know each other. We have been discussing for quite some time. And I think that knowing each other and having the same perspective about what should be the next stage of this type of industry and market, this is how we brought it together.

Okay. And can you just remind us plans to deploy like timing, location, sort of initial number of vehicles?

Yes. So I mean the contract as it stands now is for 20,000 cars over 6 years. But again, I wouldn't like to caveat this figure because, I mean, 20,000 cars over 6 years is not really relevant in the grand scheme of things for us. So it's just an indication that this is the first step. So we will have other iterations coming up probably with other type of constructs. But for the time being, for the contract that we have announced, it's 20,000 cars over a period of 6 years. The first city where the robotaxis will be deployed will be in the San Francisco area.

We have successfully completed the first milestone, which is the delivery of the first so-called engineering vehicles to Nuro so that they can do the additional fitting. So we're progressing as per initial time frame and the project is going in the right direction. So what is interesting is what's next. And I mean, there will be more. I think that we need to look at the first 20,000 as a trial test in a specific environment of the San Francisco area before it expands to other metropolitan areas.

So now how do we move from sort of the Nuro partnership over to the NVIDIA announcement and sort of the sort of autonomy path going forward for Lucid?

Yes. So what we have been very adamant in doing is making sure that we cover the broad spectrum of the robotaxis or so-called autonomous driving in general. So the Uber Nuro Lucid partnership is serving the B2B business. What we will be doing with NVIDIA we will be primarily aiming at the B2C. So -- and the purpose of the partnership with NVIDIA is to bring the Level 4 autonomous driving, minds off, eyes off, hands off and point-to-point driving. So that's the end game with intermediary steps. So with Nuro, we will be also developing the L2++ and the L3 as an intermediary step before moving.

Yes, that's why I was going to ask you sort of preempted the question a little bit. It's like -- is there something sort of preventing a -- either scaled-down version of the Nuro stack or even a version of the Nuro stack that is sort of more for sort of personally owned Level 4 autonomy?

Yes. Well, there's nothing really preventing it. I think, as I said -- I mean, it's in the test phase right now. So I think that the philosophy of the architecture has been developed to serve the specific needs of a robotaxi services. I think that as a consumer, the needs might be different. And that's why we have this partnership with NVIDIA, really aiming at having a full coverage of the spectrum of the different [indiscernible].

So obviously, NVIDIA is providing the compute and probably some reference design. But then is there a Lucid team who's sort of working to sort of build on top of the [indiscernible] and is that in conjunction with the team from NVIDIA? Or there -- is it really sort of more of the hardware provider?

No, no, it's a joint collaboration, it's a joint collaboration. So I mean, we will be working with the common teams to develop the solution.

I'm not sure if you get asked this a lot, but it is sort of like a dual path strategy, which has -- it could seem sort of duplicative, but then also is sort of somewhat maybe hedging bets, right, if you think. So like how do you view that sort of dual strategy?

Well, it's a way to derisk the strategy and to control the capital allocation associated with this type of investments. So when you want to do that, it's very heavy investments. I mean you need to invest in compute capabilities, in data storage, you name it. And following a route where you partner and you learn along the way. It's really a way of achieving the same end results without having to engage since day 1 significant amount of cash as an investment.

So yes. Is there a world where, for instance, you may decide that the -- some Nuro version for the consumer product works and you go down that route or vice versa or how do you...

No, no. I mean, again, the approach of the company has been, okay, what do we want to achieve? What we want to achieve is to have an L4 and to have a fit-for-purpose working solution for robotaxi. Mixing partnership and things like that or adding new partnership is something that we will be looking at.

I mean, we're very opportunistic in the way we want to approach our development into this segment. I mean the key driver for us is to make the best use of the cash of the company, making sure that we maximize the ROI. If we have to split revenues or things like that, that's something that we're open to. But it's really about derisking the capital allocation.

And is there any regional strategy with autonomy? I mean, like we spoke, I think, implicit in our conversation today was that this is for the U.S. market. You mentioned the Uber partnership in San Francisco. As you move more into personally owned Level 2, Level 3, Level 4 autonomy, that's expected to be in the portfolio on a global basis.

Yes, absolutely. So I mean, again, we will always be constrained by the regulatory environment. So even here in the U.S., I mean, some states, even cities will be moving faster than others. So it's something that we will be closely monitoring, obviously. But that would be actually the main constraint for us.

How do you -- one of the considerations you mentioned for the midsized platform was greater affordability, right? It opens up the addressable market. I'm curious how you sort of think about that in relation to on the sort of new midsized platform offering the hardware that enables this autonomy similar to what sort of a Tesla has done where they just put on everything, bear that cost and then you could have customers subscribe or not. Is that the approach you'd like to take, which does sort of raise your bill of materials a little bit, but then you sort of get the potential revenue? Or is it sort of more an option package?

For the midsize, that would be exactly the approach. As you said, it does marginally increase the bill of material, but it creates the revenue for the customers to go for additional features within the car. And I think that the more we will see them on the road, the more you will see the first consumers or customers buying these cars wanting to have the same solution. So we want to keep this as an opportunity for us, absolutely.

Yes. Any meaningful changes to sort of the architecture or sort of the zonal approach of the vehicle as you move from the Air and then Gravity platform to the sort of midsized [indiscernible].

Well, it will be the next generation when it comes to, obviously, all the sensor, but I think that the key difference will be the compute power within the cars because we will have an NVIDIA platform with very heavy real-time compute with richer data analysis on real time, and this will be the main differentiator.

And sorry, I know we spoke briefly about the motors before, but is it the same generation motor? Or is it...

It will be the next generation.

So how much more efficient? You already have the most efficient motor out there, right?

Yes, we already have the most efficient motor out there, and we have gone through the challenge of making it even more efficient.

And so it's like a good challenge, right?

Absolutely. So -- and I think that we showed some rendering actually of what this motor looks like, and it's much more compact, smaller than the existing [indiscernible] generation. So with all the benefits it brings in terms of weight, part counts, ability to manufacture them at the right cost and so forth.

Okay. I think -- by the way, I should mention to people in the audience, if you do have a question, you could use the QR code, and it will pop up here, and I'm happy to ask on your behalf. The QR codes are on your tables. The liquidity and cash flow, obviously, over the years, again, even sort of before your time, this has sort of been a topic of discussion with investors. Can you just, again, remind us sort of what you're seeing in terms of free cash flow, cash runway, capital needs? And is there sort of an updated time frame for when we think cash flow breakeven is possible?

Well, that's something that we will be discussing during our upcoming Investor Day, so...

Could give me a chance to go plug that event?

Absolutely. So we will be organizing an Investor Day during the first half of 2026. The plan is to explain our road map and how we will be getting there and when. But having said that, I think that what we have been doing so far is investing a lot in building the capacity and developing the programs. Now the programs have reached maturity. So the midsize will start production in 4 quarters from now. Gravity and Air are already there.

So the CapEx, I mean, we have completed our plant in Arizona. We have built the plant in KSA. And next year, we will be installing the equipment. So just organically, I mean, the expectation is that the cash usage or the cash need will dramatically reduce. So we will have new areas where we will need to invest with all the activities and the opportunities that we see around autonomous driving and robotaxis. But as far as the assets which are needed to produce these cars, these platforms are concerned, I mean, most of it is done.

We still have 1 year of additional investment in 2026 and then we will be -- we will have this story behind us. So the narrative will become, okay, how do we maximize, what we're doing to maximize the cash extraction from what we're selling. And that would be really the focus of the company. And we are already implementing a lot of changes.

So with the help of the management team, we're putting a very strong focus on working capital. We're tightening inventories. We're maximizing the returns from all the investments that we're doing, selecting really what is needed. So it's a change of culture, which takes time. So moving from a start-up many years ago where you have to spend to build capacity to a business where you need to generate cash and return value. It's a journey, and we're doing good progress on that.

Should we -- at the time of this Analyst Day, sort of first half, will investors and the public also be able to get a look at the car by then? Or is that a separate event?

I'm negotiating that. But I mean, we have a tentative official reveal date. So somewhere mid next year.

So similar timing potentially?

Well, I'm trying to have an exclusivity for analysts and investors, so...

But when it's open to the general -- when you reveal it to the general public, it will open up for orders right there and then.

Well, yes, that's something to -- we don't want to do reservations. We will go straight for orders. So yes, timing should be more or less in line.

So -- and like roughly like 4 to 6 months ahead of start of production is when you think is okay. Perfect. I guess just to go back to the KSA factory. How -- and correct me if I'm wrong, but I don't think there has sort of been historically very much sort of vehicle production there. I think there's been some sort of knockdown in assembly, right, more historically in.

So -- now there are suppliers in and around the Middle East and Northern Africa, so not too far. But what parts are sort of most critical for you in the value chain for those suppliers to sort of get up in speed such that like it doesn't cause a headache for you as you begin to ramp production?

Well, it's very interesting because when we think of it from the angle of the headache to use your terms, I mean, the parts which have generated the biggest headache in the Gravity and the Air are probably some -- of the one we did least think of. To give you an example, we struggled with the seats. So the headache doesn't always come with the level of complexity.

I see.

It's very often really.

It could take any part to sort of slow production.

Absolutely. Absolutely. So when you're dealing with cars, which has several thousands of parts, just one part missing and then the whole chain has to stop. So that's why it's a very complex business.

Yes. And then I guess just final question. I know the KSA also has plans to sort of for there to eventually be battery factories and maybe potentially semi fabs and everything like -- do over time eventually believe you will sort of source batteries more locally as well in the region?

Well, yes, I mean, if we have the right solution at the right price, we will definitely consider it. I mean, again, we need to look at it from the perspective of a complex geopolitical environment. And when you are a car manufacturer, the key target is to derisk the supply chain. So if this contributes to derisking the supply chain, absolutely, yes.

And the midsize initially, again, you plan for that to be a global vehicle. With time, do you also expect to make that vehicle in the United States?

Yes, absolutely. Great.

Well, I think that's about it. We're about time, so I really appreciate you coming to the conference. Pleasure for having you, and thanks again for bringing the cars. And again, to everyone who hasn't had an opportunity, if you still have -- I think they're here for a little bit longer. If you still have some time in your schedule, I urge you to take a ride. So thanks so much.

Thank you for having me. Thank you.

Good day, and welcome to Lucid Group's Third Quarter 2025 Earnings Call. [Operator Instructions] Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker, Mr. Nick Twork, Vice President of Communications. Please go ahead.

Thank you, and welcome to Lucid Group's Third Quarter 2025 Earnings Call. With me today are Marc Winterhoff, our Interim CEO; and Taoufiq Boussaid, our CFO. Before handing the call over to Marc, let me remind you that some of the statements on this call include forward-looking statements under federal securities law.

These include, without limitation, statements regarding the future financial performance of the company, production and delivery volumes, vehicles and products, studios and service networks, financial and operating outlook and guidance, macroeconomic policy and industry trends, tariffs and trade policy, company initiatives and other future events.

These statements are based on various assumptions, whether or not identified in this communication and on the predictions and expectations of our management as of today. Actual events or results are difficult or impossible to predict and may differ due to a number of risks and uncertainties.

We refer you to the cautionary language and the risk factors in our annual report on Form 10-K for the year ended December 31, 2024, subsequent quarterly reports on Form 10-Q, current reports on Form 8-K and other SEC filings and the forward-looking statements on Page 2 of our quarterly earnings presentation available on the Investor Relations section of our website at ir.lucidmotors.com.

We undertake no obligation to revise or update any forward-looking statement for any reason, except as required by law. In addition, management will make reference to non-GAAP financial measures during this call. A discussion of why we use non-GAAP financial measures and information regarding reconciliation of our GAAP versus non-GAAP results is available in our earnings press release issued earlier this afternoon as well as in the earnings presentation.

With that, I'd like to turn the call over to Lucid's Interim CEO, Marc Winterhoff. Marc, please go ahead.

Thank you, Nick, and thank you, everyone, for joining us. First, I want to acknowledge all our employees, customers and partners. We appreciate your commitment and support. Secondly, I'm pleased to point out that in Q3, despite all of the headwinds, we delivered our seventh consecutive quarter of record delivery numbers.

With that in mind, I would like to reiterate the near-term priorities we are focused on, which we laid out earlier this year, disciplined execution and scaling production, building our brand and further driving consumer demand and advancing our technology leadership, and this has not changed.

We remain focused on designing and delivering the best cars period. This is the core of our business, and in a moment, we'll review our progress against these near-term priorities. But before I talk about the near-term priorities, I'd like to share how our strategy has evolved from the beginning of the year and how we have been executing that strategy with intention.

Beyond expanding our core business, we are pushing hard on what will be our next chapter, a push into new markets and high-value adjacencies. So before reviewing the quarter with you, I want to explain to you a bit about the next stage of our strategic evolution where we have already been working hard building block by building block towards the future of Robotaxis, Level 4 autonomy and new opportunities for revenue.

Our vehicles are not only awesome driving machines, but built on industry-leading EV technology but also a platform for delivery of new customer service and next-generation customer experience, and we're starting with autonomy.

As you all know, we announced in September that we closed a $300 million strategic investment from Uber as part of our partnership to deploy 20,000 robotaxis or more. We already reached a first milestone, we're successfully delivering the first batch of robotaxi engineering vehicles to Nuro. Nuro is now finalizing their integration and will begin further testing activities.

And we announced last week that the San Francisco Bay area has been chosen as the first location to [indiscernible] 2026. Uber is a global leader in ride sharing in their scale, brand and global reach help position Lucid at the forefront of the B2B Level 4 market. Their strategic investment in Lucid validates our highly advanced technology platform and aligns with our strategy. But we don't stop at robotaxis because we believe demand for high levels of autonomous driving will grow as consumers have the opportunity to experience this technology and that they will not only choose vehicles that have these capabilities over those that don't, but also are willing to pay for this capability.

And that's why we are very excited about our collaboration with NVIDIA to deliver full Level 4 eyes, hands and mind-off point-to-point autonomous driving capabilities to our consumers. We are playing to win. We plan to leverage our agility and focus to be the first to bring full level 4 capabilities to the B2C market, and we couldn't ask for a better partner than NVIDIA.

Lucid's vehicle platforms and safety architectures, combined with the world's AI computing leader will result in a vehicle with formidable performance and intelligence. We will jointly develop L4 capabilities enjoying on years and millions of miles of data and continuously update software as technology improves to remain at the forefront of the industry.

To be clear, while we are pushing for L4, with this partnership, we plan to provide significant upgrades to our advanced driving is the functionality beyond what we're already doing in-house as early as end of next year. For decades, cars have been a symbol for freedom to go anywhere at any time.

With autonomy, this freedom expands by being able to be productive during your commute or being driven home safely after dinner with friends, and of course, with Lucid's exceptional driving feel, you always have the option to experience the thrill of driving your usage yourself whenever you choose.

So in a nutshell, we continue to develop the best driving vehicles. providing the most advanced EV technology, significantly advance our autonomous driving capabilities and unity experience, expanding into new businesses and optimizing our operations to become leaner and more efficient.

Now maybe there's a question about developing autonomous technology fully in-house versus working with partners. Well, Lucid's strategy here is clear and very intentional. We are doing both. Developing higher levels of autonomy, especially true for L4 requires enormous investments. And while some of our peers spend as for in-house development to provide this functionality to their customers, our focus is to provide a high level of autonomy to our customers as soon as possible and with optimized CapEx spend.

Our partnerships are enabling us to do exactly that. Having said that, we are continuing our in-house development but with a smart and resource-efficient approach. In early Q3, we already rolled out hands-free highway driving for the Lucid Air via OTA, and we will bring the same to the gravity soon, fully developed in-house.

The verdict is still out on whether owning autonomous driving technology in-house will be a sustainable differentiator or will become commoditized in the long run. Working with our partners allows us to monitor how the technology develops and make focused in sourcing decisions once the future part becomes clear and avoid costly investments.

I hope this gives you some insight into where Taoufiq d I and the leadership team plan to take lucid. We are fully committed to technology leadership and innovation, but at the same time, we are committed to efficient and smart capital allocation.

Now let's turn back to the progress on near-term priorities. First, let's talk about our operational execution. As mentioned in the beginning, we achieved the seventh consecutive record quarter for deliveries. I've said before that our delayed ramp-up of the gravity is mainly due to a small number of suppliers not able to ramp as expected.

On top of that, we had to cope with a number of extraordinary external headwinds that threatened to shut our production down several times throughout the year. That's why we are not where we want to be. Let me elaborate a bit on this to give you a flavor of what our teams are working through each day.

Over the last 6 months, we have contended with 3 consecutive industry-wide supply chain crisis, magnets, aluminum and chips. These are crisis that set even far bigger competitors on their heels. However, thanks to our vertical integration and our team's agility and resource on this, we have been able to problem solve our way through each one to limit impact.

First, the magnet shortage in Q2. The magnets we were able to get and were incompatible with our unique next boost charging drive units for gravity. Hence, we had to temporarily shift our production plan from the grand touring trim for North America to the touring trim for export to Saudi Arabia until magnet availability improved.

Unfortunately, that impacted our Q3 production and delivery numbers simply because the additional transport time needed. After we successfully crossed that bridge, a fire at our aluminum suppliers planned shut other OEMs down, but we were once again able to minimize the impact. And right after this, ship supply threatened the whole industry.

While once again, our team is on the job, we are still working through it. I hope this gives you some insight in what our teams are able to navigate on a daily basis. And I'm very proud what they have been able to accomplish and continue to accomplish. Having said that, I want to assure you that we hold ourselves to a high standard and constantly evaluate how we can improve as an organization.

So today, we are making some key organizational changes to streamline decision-making, enhanced accountability and accelerate growth as the company scales globally. To support these objectives, we are making the following organizational changes. Emad Dlala has been appointed Senior Vice President, Engineering and Digital. In addition to leading the powertrain organization, he will now oversee all product development functions, including vehicle engineering, digital systems and software.

In his expanded role, he will continue to drive Lucid's technology leadership, lead vehicle development, improve cost efficiency and manufacturability and advanced Lucid software-defined vehicle architectures. Emad has made remarkable contributions to lose its technology leadership over the last 10 years.

And we expect this leadership will have a similar impact on the vehicle development. Yes, he will now have end-to-end responsibility. Erwin Raphael has been elevated to Senior Vice President revenue with expanded oversight of Lucid's global operations. Since Urban has been a lucid, he has driven consecutive record results every quarter.

He will now lead global sales and services, operations, driving accountability for revenue and customer experience as Lucid expands further into new consumer markets worldwide. We are also appointing a new seasoned quality leader to our executive team. Marnie Levergood is appointed Senior Vice President, Quality and will lead efforts to ensure Lucid delivers vehicles that meet the highest standard of quality and craftsmanship, working in close concert with engineering and manufacturing.

She previously held quality and manufacturing roles at Scout Motors, Stellantis and Magna. Levergood's succeeds Jerry Ford, with retiring after more than 35 years in the automotive industry. We thank Jerry for her service to Lucid. These organizational changes are designed to capitalize on opportunities to strengthen our business, and we are confident that they will help drive the results we need moving forward.

Before I hand over to Taoufiq, I'd like to share a few points on our efforts to boost awareness and strengthen our brand. In Q3, we accelerated our focus on building the Lucid brand and increasing awareness among luxury EV in tenders, and we are already seeing results. In the United States, brand awareness jumped 8 points month-over-month among consumers who plan to purchase an EV.

This improvement was driven by the launch of our new brand campaign titled Driven staring our first global brand investor [indiscernible] and directed by Academy Award-nominated director, James Mangold. [indiscernible] is now the most successful brand campaign in Los its history with more than 7.2 million views on YouTube and over 1 billion total impressions in the U.S. Lucid's culture relevance continues to grow.

In October, we launched the rewrite for New York campaign featuring NBA All-Stars Jalen Bronson and Josh Hart with billboards across New York City and global extension in Abu Dhabi during the next preseason game and we are just getting started. Stay tuned for more to come.

We also received another award, our whole Lucid team is especially proud of. The Lucid Air Sapphire was selected as this year's German performance Car of the Year by 30 leading German motor journalists let this thing in for a moment. The German performance car of the year is designed and built in America.

To my dear fellow countryman sorry to wrap that in, but you probably can imagine how proud the Lucid team feels about that. Last, but certainly not least, on midsize. SOP of the first variant of our all-important midsize platform remains scheduled for the end of 2026. And I can share that we are very pleased with the progress of sourcing and cost structure the team is able to achieve.

And on our Atos drive unit family, it is on track with again class-leading efficiency, much fewer parts, lower BOM cost, lower weight, and it will include also a rare earth [ fee ] variant. With that said, we are entering a new phase and looking forward to a very exciting year ahead. One were Lucid's award-winning vehicles, our leading technology, thoughtful partnership brands and focus on execution come together to define the next generation of mobility.

Thank you for your continued support and confidence in Lucid. With that, I'll turn over the call to Taoufiq to discuss our financial results and outlook.

Thanks, Mark. Good afternoon, everyone. Q3 for Lucid was really about progress, preparation and stabilization in what continues to be a complex and volatile environment. We pushed through those headwinds and kept the plan moving. Revenue was up 30% sequentially and 68% year-over-year, which is a strong result.

Just as important, we strengthened our balance sheet. Today, I will cover the strategic actions we took and why they matter, how the quarter played out and how we're thinking about the months ahead. On strategy, Mark already touched on our partnership with Uber Nuro and NVIDIA these collaborations are important because they reshape our financial model in a very meaningful way.

They give us a capital-efficient path to growth and open the door to new recurring revenue streams in advanced driver assistance, software and data services. At the same time, they help us optimize cost through smarter manufacturing and operational efficiencies. These partnerships are a key part of our midterm plan to strengthen our path to profitability and deliver long-term shareholder value.

We expect them to improve margins, support scalable growth and drive returns aligned with disciplined capital deployment. Now we all know the industry and geopolitical headwinds are real, but what matters is execution and our team is delivering. We hit record deliveries, improved our product mix and set new highs for average selling prices.

Production rates picked up towards the end of the quarter which is especially important in a context where the rest of the industry is reporting major headwinds. On top of that, we expanded internationally and build strong consumer awareness ahead of next year's midsized launch.

All of this puts us on a solid trajectory for Q4. And here is the big milestone. For the first time, Lucid gravity is expected to make up the majority of our production in Q4. And the momentum is already here. October deliveries are climbing, especially for gravity and that gives us confidence that this quarter is going to be a turning point for Lucid.

We also announced today that we strengthened our liquidity subsequent to quarter end to an increase of our delayed draw term loan facility with our majority shareholder, the public investment found from $750 million to approximately $2 billion all of which remains undrawn. This increase lengthens our runway into the first half of 2027 and provides Lucid with stable access to liquidity. This underscores PAF's ongoing support of Lucid and their strong commitment to our business and confidence in our long-term strategy.

We are committed to maintaining a healthy liquidity position, and we'll continue to evaluate all financing and liquidity options, including in the public markets when the appropriate conditions materialize. Now, moving to our business performance in the third quarter. Demand once again exceeded our production.

We delivered 4,078 vehicles, our seventh trade quarterly record and a 47% increase year-over-year. ASP moved higher with gravity mix and more high-value configurations. On the production side, we built 3,891 vehicles and produced over 1,000 additional vehicles for final assembly in Saudi Arabia.

During the first 3 quarters, we produced 9,966 vehicles to short of 10,000 units, excluding additional vehicles in transit to Saudi Arabia for final assembly. Our second shift that came online in October is expected to further accelerate our production growth. Our exit rate improved late in the quarter, and we plan to carry that momentum into Q4.

Now as Mark mentioned earlier, the supply chain remains challenging, not just for us, but across the industry. We're working to issues one by one, but we can't completely rule out further at further volatility. On the financials, revenue came in at $337 million, up 68% year-on-year and roughly 30% sequentially, driven by deliveries growth and gravity mix.

Gross margin improved about 6 points sequentially as mix improved and productivity and cost reduction actions to call. Margins are still below our long-term goals as we work through tariffs and input costs. Adjusted EBITDA was negative $78 million, reflecting our increased sales and marketing effort and ongoing investment in our midsized platform, the Atlas power train platform and our autonomic initiatives.

Free cash flow improved to negative $955 million on tighter working capital and execution discipline. On liquidity, we ended the quarter with $4.2 billion, $3 billion of cash and investment and $1.2 billion of credit facilities. That includes the $300 million strategic investment from Uber. After the quarter closed, and as disclosed earlier today, we agreed to increase our delayed draw term loan with the PIF from $750 million to about $2 billion. it's undrawn and extends our runway into the first half of 2027.

This again underscores PAF's ongoing support and strong commitment to our business and confidence in our long-term strategy. We are committed to maintaining a healthy liquidity position, and we'll continue to evaluate all financing and liquidity options, including in the public markets when the appropriate conditions materialize. Now on the outlook.

We're entering Q4 with stronger visibility and a solid foundation for growth. Over the past quarters, we made real progress, refining processes, tightening quality controls and ensuring supplier readiness. We exited Q3 with higher production run rate. And in October, we successfully launched the second shift that we trained during the third quarter.

We also have units already in transit to Saudi Arabia for finalize assembly along with the vehicles produced so far this month. Assuming no unexpected disruption from supply chain factors, we expect total production at year-end to be around 18,000 units. This is in the range of our guidance and it's a strong outcome given the complexity of the macro environment.

Looking ahead, while the industry expects a continuation of the effects on the demand related to the tapering of incentives and the expiration of certain U.S. tax credit which pulled some demand forward in Q3, we do see this as a temporary dynamic, and we expect a significant delivery growth in Q4.

We anticipate demand to normalize in early 2026, and supported by expanded marketing campaigns and the broader availability of lucid gravity across multiple trims. In October, while U.S. EV sales in general have dropped our deliveries and market share have increased, showing strong demand for lucid vehicles. While other OEMs are slowing down EV investment, we believe we can turn the current challenges into an opportunity, continue to grow market share capturing shares from other luxury makers.

We are already seeing encouraging signals. European orders are up year-over-year and North American traffic and test drives in October were solid compared to historical levels. Gravity orders becoming a larger portion of total order intake will help to drive higher ASPs and revenue. These trends are confirming the strength of our brand and position us well to capture growth as the market stabilizes.

We believe the steps we've taken this year, including operational improvements, disciplined in incentive management and strategic product expansion are setting the stage for sustainable growth and margin improvement. As the gravity touring launches and our marketing reach expand, we expect to unlock new demand opportunities globally, reinforcing our long-term trajectory.

For 2025 CapEx, we are planning $1 billion to $1.2 billion. We will continue to focus on scaling production, midsize development, automation and cost reduction initiatives. We intend to lower capital intensity per unit as we move through the year. Directionally, the goal is clear move towards breakeven as mix scale and cost actions compound. To close, showed that we can grow, derisk and strengthen liquidity at the same time.

Orders and delivery with record levels, mix improved, quality and exit rate move the right way despite higher complexity and we extended the runway with an undrawn facility that takes us into first half 2027. Our focus remains the same: compound liquidity, the risk ramp and improve unit economics every quarter. I want to thank our teams for their execution and our customers, investors and partners for their continued support.

With that, I will hand the call back over to Nick.

Thanks, Taoufiq. We'll now start the Q&A portion of the call. Before we take questions from those on the phone, I want to pose some of the questions that our retail investors send in through the Say technology platform. The first 1 comes from Patrick M. Please share Lucid's plan to increase the market cap and the shareholder value within the next 12 months.

We appreciate the question, Patrick. What we drive market cap and shareholder value is profitability and cash generation. Short term, it's about executing against our plan to reduce cash usage and improve profitability. This relies on ramping the gravity and next year, launching and ramping the midsize with the right focus on capital allocation and spend.

Midterm, we want to further accelerate our cash generation. Mark has laid out some of the foundations of how we can achieve that. Technology and software will be key as they will allow us to maximize return in a repeatable model and with a low capital intensity. There are many exciting developments in the pipeline.

I strongly believe that if we continue to make progress against the strategy we laid out -- the results of these efforts will be reflected in the share price and the shareholders' return.

Our next question comes from Min. Any updates on the robotaxi partnership with Uber.

Yes. Thanks, Min. This is Marc. Yes, there's a lot of updates. There's a lot of progress being made between the teams at Lucid and at Neuro and we successfully delivered the first batch of the vehicles of the engineering vehicles to euro during the quarter for testing. We also announced that San Francisco is the first city we are working towards launching in 2026.

Subject to regulatory approvals. And we closed the $300 million equity investment from Uber during the quarter, which speaks to the level of confidence as Lucid as a partner.

Okay. Our third question comes from Vedula D. When will the company become profitable?

Well, we have an internal road map and stage gates against which we are executing. This plan is the north star for the company and our teams in everything we do. We haven't yet publicly communicated the timing for breakeven. But as a management team, we are continuously working towards this goal through a disciplined focus on executing our short-term plans and midterm strategy.

We have a bad way mapped out, and we continue to make significant progress on both short and midterm plans as Mark has explained. We are confident that in the short term, the combination of gravity and midsize will allow us to achieve the scale needed to become profitable.

Midterm, Marc has explained some of the strategies and plans we are executing the guns to further consolidate the cash generation capabilities of the company. One last information, we are planning to organize an Investor Day early next year which will give us the opportunity to explain our short-term plans and strategy as well as our road map towards cash generation.

Okay. Our next question comes from Nicolas. What is the time line of an affordable entry-level vehicle for Lucid?

Thanks, Nicolas. The first variant of our midsized platform remains gradual for the end of 2026. Nothing has changed, and we're working towards that goal.

All right. Now we'd like to take questions from the phone lines. Operator?

[Operator Instructions] And our first question will come from the line of Ben Kallo with Baird.

Maybe can we start with just where you are with choosing suppliers for the midsized vehicle -- and then if you could talk about any kind of overlap that can be leveraged from the air gravity suppliers. And then I have a follow-up as well.

Yes, Ben, yes, I can take this. So we have well underway with all of our sourcing for the midsize. So fully on track with what we -- where we want it to be at this point in time. And I also want to point out that we are very pleased with the BOM costs that we're currently seeing that it looks like that we can achieve. As a matter of fact, in many instances, we are coming in below our own should cost calculations, which is very, very good and speaks to our suppliers wanting to work with us.

And your second question is also something that we see and it's very positive that many of the [indiscernible] to suppliers. We are already working with for the air and the gravity are now also giving us relief on our pricing for the air and the gravity because of being awarded the programs for midsize.

So all in all, that is very, very encouraging development right now, and we are very pleased with the results.

Could you just talk about maybe about how you guys are prioritizing capital between what the work you're doing in autonomy and then also pushing forward with your technology, manufacturing, just how you prioritize or if you don't look at it that way then I'd love to hear that, too.

Yes, absolutely. I mean that goes very much in line with our partnerships that we have announced. I mean there are CapEx efficient. We don't have to spend a lot of CapEx. That's exactly why we're doing it. We want to be able to provide really leading-edge capability and features to our customers without having a very big CapEx outlay right now. That's why we did the Uber Nuro partnership for our B2B market, but also now the NVIDIA partnership when it comes to the autonomy for consumer vehicles.

So yes, I mean, that's exactly what we are planning to do. And while we are doing that, we are monitoring also where it makes sense for us to -- in the future, invest capital. But at this point right now, given the -- it costs a lot of money and very big numbers of investments in order to do this completely in-house, and that's why we chose that path.

One moment for our next question. And that will come from the line of Itay Michaeli with TD Cowen.

3

Great. Maybe just to start, a couple of questions on the L4 announcement with NVIDIA. Can you maybe roughly share how you're thinking about the time line for achieving Level 4 on consumer-owned vehicles. And then for the midsize, do you expect that the L4 hardware will be standard on the vehicle? And if so, does that have any impact on the projected price of the vehicle?

Yes. So on the LP side, I don't think that we have right now the number -- actually, we have internally obviously [indiscernible] but I would like to communicate that once we are a little bit further down the road in the project, and we have the first dots on the Board. What I can tell you is that the first result that we want to roll out of that partnership is basically an L2+, L2++ version for gravity and also for the launch of midsize by the end of next year.

So that's the first step. And from there, we will then roll out via OTAs additional updates. We will also already have all the hardware changes being made, but we will then roll out additional updates in order to get to L4 eventually. But I reserve the right now, not to say it's end of next year or next year, but rather come with a date when we are very confident that we can hit it.

But at the same time, both NVIDIA and ourselves have very ambitious targets. That's why we led this together with our, let's say, accelerated engineering approach in there, let's say, firepower when it comes to running the larger models and calculations, we are confident that we can do this sooner or later -- than later.

Terrific. That's very helpful. And then just as a follow-up, maybe just on the outlook. With the uptick in production in Q4, how should we think about just the deliveries with -- in relation to that production level as well as maybe the impact on kind of COGS per unit as you ramp production and of course, ramp the gravity as well?

Yes, I can take it maybe afterwards, you can also chime in to Taoufiq. But I mean when it comes to deliveries. We're not guiding deliveries, but obviously, we are expecting a significant ramp-up of the deliveries in Q4 and the majority being the gravity. And when it comes to COGS, I mean, obviously, the more volume we have in our installed factories with what we have there.

The lower the COGS will come, but time can Yes. I think you hinted at the key point. So it's really -- I mean when you think about the COGS directionally, obviously, we have a plan and the plan is that to continue progressing and reduce the cost per unit compared to the performance from last year. So that was the plan.

Directionally, we gave a direction when it comes to the gross margin, which is a good proxy to assess where the COGS will land. We didn't assume some of the -- the headwinds that we had to deal with like the tariffs, which are obviously impacting the this year. But directionally, the combination of the incremental volume resulting from the ramp of the gravity and some of the volume projections that we are currently assessing for next year.

Plus the benefits that we're getting from drill of material and our suppliers that Marc has touched on will help us crystallize some of these improvements that we're aiming at in terms of per unit in the short term.

And that will come from the line of Andres Sheppard with Cantor.

Congrats on the quarter Marc, I was hoping to maybe get a sense of how the contract with the government of Saudi Arabia, the one up for 50,000 plus another option for 50,000. If you can maybe give us an update on kind of where that stands. I think in the past, we've said most deliveries to that agreement will be the gravity and then the upcoming midsize.

So I know you're not guiding anything for 26, but should we expect some deliveries to that region next year? Or will that likely come after the completion of the IM2 facility?

Yes. Thanks for the question, Andres. Well, absolutely. I mean, as of now already, we are delivering vehicles to Saudi Arabia as part of that. arrangement. And it was always planned to be on a certain level, lower level when we only have the air. Then we're adding to the deliveries when the gravity becomes available.

I would say the big increase versus this agreement, the 50,000 that we have already will come with the size -- so -- but you will -- we will have higher deliveries to the government in -- now in 2026 with the ramp-up of the gravity, Absolutely.

Got it. Okay. That's helpful. And then maybe 1 for Cafe. So you've extended your capital runway looks like into first half of 2027 now. I'm curious if you could maybe refresh us on near-term capital needs. Does that extension now in the draw facility, does that account for the maturity in September of -- or how should we think about that?

No, that's 2 separate things. So the maturity, I guess, you're referring here to the convert. So the convert will need to be refinanced, and we have a plan we have a plan for that. So it's not directly related to the DTL.

Got it. Okay. That's helpful.

One moment for our next question -- that will come from the line of James Picariello with BNP Paribas.

This is Jake on for James. So first, I just want to follow up on the NVIDIA partnership. Obviously, you guys had a pretty ambitious goal being the first company to roll out consumer level 4 capability Virtually every major automaker has some form of kind of advanced ADAS program. And after billions of dollars invested, no one's really been able to move past Level 2 plus. So can you just provide some color on why you think you'll be able to succeed where everyone else is sale?

Yes, James maybe I can keep that. Well, I guess, Obviously, a lot of things have changed in the, I would say, in the recent year or so when it comes to approach to autonomy. I mean -- and that's actually a good point that you're saying because if we would have -- there was a question earlier about capital investments around this topic. If we would have done what others have done earlier, like 5 years ago, we would have probably invested billions and nothing to show for.

But the technology with the end-to-end models and the compute power in the meantime, has drastically changed. And the way those end-to-end models can be trained this is now completely different than how it was 2 years ago. And so that makes us confident with everything that we are seeing right now.

And obviously, in our conversations and our testing we see a path now to get there. And why we think we can be among the first. I mean, obviously, we cannot guarantee this. We can only -- we can only say that we are, together with NVIDIA, do everything to be the first. It has also a little bit to do with our vehicle cycle, where are we in the -- with the development versus others -- that are further out until they even can do something like that.

So yes, but given the drastic change in AI technology and approach to autonomy. That's what makes us confident that it's achievable now.

And can you just provide some color on the new vehicle order trends you've been seeing since the expiration of U.S. EV tax credits in October. Obviously, the air and the gravity weren't eligible for the 3D credit, but it looks like roughly 65% of your U.S. sales in the third quarter came from leases where people were able to take advantage of the 45 W credit?

Yes. Well, I mean, what I can definitely say is that actually our delivery numbers in October, meaning the first month of the fourth quarter actually went up. And so that is a very encouraging trend compared to many of our, let's say, competitors that have EVs and ICE. There are several ones that reported, I think, [indiscernible] 50%. Our numbers went up and so did our market share. And we credit basically our vehicles, in particular, now the gravity becoming more and more available with us ramping up the production with that.

So we believe we're in a very good spot when it comes to sustaining the demand and then, therefore, the deliveries. And we also believe that this is a passing phase, meaning we think that by beginning of next year, the demand will normalize compared to what we are seeing right now or what others are seeing right now.

[Operator Instructions] Our next question will come from the line of Tobias Beith with Rothchild.

I have 3 questions, if that's okay. First one for Taoufiq to peak. The gross margin rate when adjusted for income from emission credit trading and depreciation improved by 8 points quarter-over-quarter and was possibly flat on a pre-tariff impact basis. My question is, why wasn't leverage on volume and the impact of products mix visible.

So the thing is that if you look at the production of Q3, the impact from mix was not as big as what we wanted it to be because we're still in a ramping ramp-up phase or the gravity. The numbers are improving versus Q2, but they are still at a meaningful level where they can significantly impact the volume.

But the real reason behind this flat or lack of improvement is mainly related to the increase of inventory and the impairment associated with that. So we have increased inventories in preparation of the ramp-up in Q4. We are in a loss-making situation and we needed to impair these inventories, and this is hitting the gross margin.

I see. I understand. Marc, what is Lucid's plan regarding the localization of production of the midsize platform, if at all? I appreciate that global automotive trade is in flux at the moment. But even an expansion of [ Ampon's ] capabilities would probably have a lead time of at least a year, if you started tomorrow.

Well, I mean, we have already made preparations for that to build the midsize in M1. So I actually thought that we talked about this some time ago, but maybe not. I mean one in Arizona is planned to produce the midsize as well. It's not only the power plant in KSA and one is also already being prepared. We will have still to make some investments, but it's actually not that much. much of the investments that are needed in order to produce the vehicle already there. So that's the plan.

I mean we're more talking about, okay, when would we have to expand that -- but for that, we want to be very prudent, and we want to see how everything goes before we pull the next phase. But yes, it is definitely planned to be also built here in endpoint.

And last question, the PowerPoint, it shows for the first time, I believe, a deceled render of the Atlas propulsion system still very impressive. It seems to show that there's a new inverter redesigned thermal management system -- and I know that the Atlas proportion system was mentioned in your prepared remarks, Mark, but I wondered if I could ask for even more of an update on the Atlas please, given its importance.

Yes. Well, I mean, what I can say is definitely it's totally on track. So that's why we are now starting to legal, not leak actually, a little bit of information. But I mean, it's -- it's coming out actually really great. I mean it's -- from a cost perspective, it's a material change, and we will also share soon, probably at the Investors Day that we are planning the details how far below of our current generation, the cost is we have much fewer parts, highly integrated, as you just mentioned, the inverter in everything.

So weight is lower, efficiency is even higher from what we have right now. So we are very, very pleased with that. And we also have different versions where we have also versions of the Atlas that doesn't have -- it doesn't need any rare earth. So I mean, we're really, very -- yes, very convinced that this is a big step forward for us.

Can I ask why not do all of the Atlas without [indiscernible] given it has caused problems for Lucid and the broader industries for the last 6 months or so.

That will be, let's say, the long-term plan, but certain applications, certain power requirements for certain trims require these at this time, still a permanent magnets. But that is the goal that we obviously try to figure that out.

And again, in the -- maybe in the Investor Day that we are planning, I mean, Emad will definitely be there. And you can probably tell you in a short explanation for over about 2 hours, what exactly we are doing there. But yes, I mean, happy to provide further insights on that.

Great. I'd like that, and I'm sure other people would too. Great car.

As I'm showing no further questions in the queue at this time. This concludes today's program. Thank you all for participating. You may now disconnect.