Lucid cuts its production forecast, cites supply chain woes

Yahoo Finance’s Pras Subramanian joins the Live show to discuss Lucid cutting its production forecast.

Video Transcript

- We've got to talk about what's going on in the electric vehicle space today. Lucid is falling on news that it's cutting production, its outlook, in half. That's ahead of Tesla's shareholder meeting. They're going to vote on a possible three for one share split. And that's happening today as well.

So a lot to go over in EVs. Our Pras Subramanian is here to talk about this. Lucid, now Lucid, is obviously not a mass market EV maker. It is a luxury EV maker. But still, this production cut is pretty astonishing.

PREAS SUBRAMANIAN: Yeah, it was surprising. A lot of people were expecting them to hopefully maintain their already lowered production forecast of $12,000 to $14,000 for 2022.

They cut that in half, missed badly on top line revenue. And then talking about how they have still supply chain and component bottlenecks that they're still trying to alleviate.

They only made about 1,400 vehicles so far this year. Originally, they had a goal of 20,000. So these are expensive cars. They're not cheap cars. They're at the 100,000 plus range. So they're actually quite nice.

And look, this car won Motor Trend Car of the Year. It is a nice car. It is a performance oriented car. It looks--

- It's not an eco truck.

PREAS SUBRAMANIAN: Not an eco truck. 1,000 horsepower, that sort of thing. So this is a very aspirational product, backed by the Saudis, unlimited money. Right? So it's not like the company's going to go away.

But they're really kind of struggling with their factory in Arizona. And I'm not sure what's happening, why they can't really push through.

- How annoyed are you if you have spent $100,000 to get your Lucid, or put in whatever deposit you have to put in, and you're not getting your-- Man, I would--

- You're not getting it until sometime, what, late 2023?

PREAS SUBRAMANIAN: I mean, they have 37,000 pre-orders now.

- At the current pace, maybe 2024.

PREAS SUBRAMANIAN: Maybe you'll lower 50 sides there.

- But on a positive side of this, the demand looks strong. So this week, we had strong Lamborghini sales. Lucid looked to be OK. Orders at Fisker, we'll talk about them in a second, looked pretty good.

So despite this market plunge, despite crypto bros losing a lot of money in the crypto crash, the high and the very high end of the auto market seems to be doing OK.

PREAS SUBRAMANIAN: So many points there, Sozz. Mercedes also pushing out their car because they see that happening too. They're focusing more on the higher end consumer.

Even Ford and GM are talking. They're talking about higher prices for vehicles, higher average selling prices, lower in quantity because they see that that's where the market's going.

Maybe, perhaps, we're going to be in a world where only these higher priced cars are sold and you're seeing fewer and fewer economy type cars. Fisker, who we have on later today, they sell a very cheap EV. And that has crossed 56,000.

- That's the new cheap. 50,000 is the new cheap.

PREAS SUBRAMANIAN: Yeah, exactly. But they crossed 56,000 preorders, 5,000 of which have put down $5,000 in payment, as an upfront payment. So they're doing quite well.

So there's definitely various kind of strategic gratification in that world. But you're absolutely right, the higher end models are sort of safer at this point.

- Fisker is even further back in the production schedule compared with Lucid. Right? Is anyone driving a Fisker on the regular-- are they out there in the wild yet?

PREAS SUBRAMANIAN: No, but this is a good point, though, because they have this asset light business where they have a contract manufacturer making their cars in Europe. They've actually hit all their production goals.

And they have like 50 pre-verification builds on the roads that they're working on right now. On the other hand, Lucid, which went with we're building our own factory in Arizona, we're going to build a factory in Saudi Arabia, very asset heavy model, missing all kinds of deadlines.

So maybe this is kind of the future of new cars, is use a big, use a Foxconn, something like that, to build your cars in the future.

- Does Lucid have enough cash to be making all these cars they have on order?

- They say they do.

PREAS SUBRAMANIAN: They do. I don't know the cash. But I mean, they are 64% owned, I believe, by the Saudi government, by investment funds.

- Yeah, they said 4.6 billion in cash and equivalents at the end of the quarter.

PREAS SUBRAMANIAN: So I think they'll be OK.

- Yeah, especially backing by the Saudis.

- And then, well, we mentioned Tesla too. So just quickly to put a pin in that one. So they're basically the biggest thing that's expected today at the shareholder meeting is the vote on that share split. Right?

There's no other-- I mean, there's this sort of Twitter stuff in the background, which we're going to talk about later in the show. But that's the main thing happening.

PREAS SUBRAMANIAN: That's the main kind of point of business, the three for one stock split, which seems like it's going to be a formality. A lot of Tesla bulls and Tesla shareholders are behind it.

But we're talking about what's Elon going to say about production in a record July. Are we going to see information on the ramp ups in Berlin and Shanghai and also Austin? Are we going to talk about pricing?

Elon tweeted last week about how he's seen prices come down for certain components, which is kind of a surprise. So will he give us a bit more on that and maybe a product roadmap update?

And AI Day is coming up. We'll talk about AI Day, you know, what's going to happen there. Is it dancing robots, maybe? I don't know.

So some things on order there for tonight. But yes, that stock split is the main.

- Yeah, and if price of components are going down, are prices for Tesla going to stop going up?

PREAS SUBRAMANIAN: Right. Right, and that's--

- I am ready for more dancing Tesla robots. I need those photos. I need those images. Pras Subramanian, thanks so much.