What is happening with Lucid?
Lucid was set to be Tesla’s biggest competitor but after a barrage of challenges, the company might be on track to go out of business.
Lucid, backed by wealthy funds from Saudi Arabia, was set to directly compete with Tesla’s higher-end models. However, after a series of struggles, the company is not in good shape.
Lucid is losing customers
Lucid started deliveries for their early models last fall but hasn’t even come close to the production goals and timelines they set. They decreased their expected production for 2022 to about 2,282 cars, down from their initial goal of almost 7,000 cars. This, along with other news from the company has customers canceling their orders. According to internal emails to employees, Lucid says that “Every cancellation is a failure.”
When someone cancels their order, Lucid calls them 14 times to attempt to stop the cancelation. First, the case gets assigned to a case manager, who must call the customer within 24 hours to try to salvage the order. If they don’t reach the customer, they must try calling again three more times on consecutive days. After this, the case is passed up to a manager to review “logged activities,” and the manager has to try calling within 24 hours, and if they don’t reach the customer they have to try five more times on consecutive days. Finally, the case moves up to a regional manager, who has to try calling the customer within 24 hours and then three more times on consecutive days. Finally, if those 14 calls didn’t change the customer’s mind, the reservation is canceled.
Currently, reservations are down 3,000 from the 37,000 reservations in August.
Each car costs the company money
Normally when a company sells a good, it should produce profit for the company. That’s the basic way businesses work. At the end of the year, they may invest in R&D or pay dividends to end in the red to avoid taxes, but every product should be marginally profitable. However, Lucid continues to lose money with each car. Additionally, each quarter ends with more losses, going deeper and deeper into the red. Currently, they have enough money in the bank for another year. However, by the way, things are going, the chances that they last another year are diminishing as well.
Employees are also taking a hit
The problems are also taking a toll on employees. Lucid blocked end-of-year vacations. They can’t take vacation days between November 24th and 27th, and December 17th through 31st.
Lucid’s Stock is down 81% in the last year
The Stock is taking a big hit
All of this has caused the stock to tumble. Lucid hasn’t seen a green day, let alone a green week in months. With costs for materials rising, exports from China being delayed, and other problems, Lucid’s stock is down 81% in the last year and continues to go down every day.
All in all, the future isn’t bright for Lucid. The company is trying to keep up its public appearance, but investors and customers have lost confidence and its showing.
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