Lucid Group is currently going through production hell, and in its earnings disclosures over the past few quarters, the company has been forced to lower its forecasts for electric vehicle deliveries throughout 2022. Yet after the company overhauled its logistics operations as well as its top management, Lucid’s most difficult period may finally be in the back window.
As a recap, in announcing its first quarter 2022 earnings, Lucid has cut its production target for the year from over 20,000 units to between 12,000 and 14,000 units. Then, in announcing its earnings for the second quarter of 2022, the company cut its annual production target to between 6,000 and 7,000 units.
Keep in mind that Lucid’s AMP-1 plant in Casa Grande, Arizona, currently has an annual production capacity of 34,000 units. The company is adding a second assembly line at the plant to handle production of the Lucid Gravity SUV, which is expected to launch in 2024. Once the upgrade is complete, the plant’s annual production capacity will increase to 90,000 units per year. In addition, Saudi Arabia recently awarded Lucid approximately $3 billion to build a plant in the Kingdom with a capacity of 155,000 vehicles per year. The Saudis have also signed an agreement to buy up to 100,000 electric cars from the company over the next decade.
Some of the major obstacles Lucid faced in expanding production at the AMP-1 plant included logistical constraints and a certain tribal mentality in which the production line was divided into smaller groups rather than working as a unit. To address these two issues, the company has now moved a significant portion of its logistics operations in-house and implemented a complete management reorganization, with at least six key production executives leaving the company in recent days.
Lucid’s production pace is now understood to have increased from its early run rate of only 5 to 15 vehicles per day to 40 to 50 vehicles per day. Assuming a 20-working-day month, Lucid Group could produce about 1,000 electric vehicles per month. However the current production rate is expected to increase further to between 50 and 60 vehicles per day in the near future. This means that the company now has a fairly good chance of meeting its own watered-down production guidance of delivering 6,000 to 7,000 vehicles throughout 2022.
