Peter Rawlinson, Chief Executive Officer and CTO, Lucid Motors Interviewer: Jason Del Rey, Fortune
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00:00So, yesterday I had the good fortune to partially interview a robot, which was staged over there.
00:08Today, not a robot, but in my layman's term, I'll call it an engine.
00:13But what do we have here?
00:14What are we looking at?
00:15Well, this is the drive unit from Lucid Air.
00:20This is the propulsion unit that takes the electrical energy from the battery and converts
00:26that into rotary motion, which powers the wheels.
00:30So we have three key elements, a motor, an inverter, and the transmission, all combined.
00:37This unit is capable of well over 600 horsepower, and it's created entirely in-house.
00:44It's mass-produced in our factory in Arizona.
00:48So let's set the stage a little bit.
00:52The company has now been producing vehicles for, are we on year four now?
00:57Is that right?
00:58Yes.
00:59And since late 21.
01:01And the differentiation you talk about is the technology, in large part.
01:09Can you help the audience explain a little bit why, when they think about EV innovation,
01:14they should be thinking about Lucid ahead of whether it's Tesla or some of the fast-growing
01:21companies out of China?
01:23Well, there's a general perception that all EVs are born equal.
01:28The gasoline cars are bad for the environment, and all EVs are good for the environment.
01:33And unfortunately, that isn't true.
01:35Just as there's a whole array of goodness within gasoline cars, or badness, and there
01:41are gas guzzlers, there are the equivalent of gas guzzler electric cars, and I term those
01:47electron guzzlers.
01:50And what's really important is that we recognize that, and we work assiduously to advance the
01:56state of the art of the electric vehicle.
01:59That's what Lucid's all about.
02:01That's why I'm here.
02:02That's why I'm still working like crazy, advancing the state of the art of the electric vehicle.
02:07And there's a reason for this.
02:09There are two fundamental widespread barriers to the widespread adoption of EVs.
02:15One is range anxiety, and the other is the cost of attainment.
02:20And range anxiety, just to make that clear, is the idea that I might not be able to easily
02:26get from point A to point B.
02:28You might not make it home, yes.
02:30I mean, I've had that happen to some relatives.
02:33They cannot afford a Lucid, but maybe another brand.
02:36Go ahead.
02:37So we've addressed range anxiety when we launched our first Lucid Dream Edition in late 2021
02:45with 520 miles of range.
02:49That's a lot.
02:50And I think that, I mean, it's still the longest range car.
02:54We still have 100 miles more range than the nearest competitor in the market today.
02:59So we've really addressed range anxiety in terms of that range.
03:03And also, we can charge 200 miles in just 12 minutes.
03:07So you could travel 700 miles in a day with just 12 minutes downtime.
03:13And I think that you'd need that for other reasons rather than the limit of the car.
03:18But the other aspect, the other main barrier to widespread adoption is just the cost of
03:25attainment.
03:26And when we look at why does an electric vehicle cost so much, a large part of it is the cost
03:32of the battery.
03:34In our cars, relatively high-end cars, the battery represents...
03:38Can you just let the audience know sort of your price range on your current vehicle?
03:42So a Lucid starts at $69,900 with a Lucid Air Pure.
03:48And it goes right the way up to $249,000 for our supercar, the Lucid Air Sapphire.
03:55Right in my journalist's salary range.
03:57Indeed.
03:58Yeah, just...
03:59Suits you.
04:00Yeah.
04:01And that's after a few...
04:02The lower end is after a few price cuts in the last year.
04:04Is that correct?
04:05Well, that's kind of misunderstood.
04:08What's happened is we've been able to bring out successively more affordable versions
04:13of the car, which has meant that we've been able to address a more attainable price point
04:18as a result of bringing those models out.
04:20So that's been a large reason for hitting the magic $69,900.
04:25Yeah.
04:26Got it.
04:27And where are you in this evolution of trying to both keep this technology differentiation,
04:34investing in it, and also making a car that maybe more than just the 0.1% can afford?
04:44Or is that your market and you want to stay true to it?
04:47No, not at all.
04:48So one of the biggest misunderstandings about Lucid is people think we're some niche luxury
04:53player and nothing could be further from the truth.
04:56I'm not here to operate in a niche.
04:58We want to be huge.
04:59We want to be a mainstream player.
05:01We had to start with a relatively high-end product because paradoxically, the cost of
05:07industrializing a car is inversely proportional to the cost of the car.
05:13So is that partially- It's very strange.
05:15I mean, so just looking at, you're a public company, looking at financials from last year,
05:20just to give context, around $600 million in revenue last year, is that, am I right
05:27there?
05:28Mm-hmm.
05:29Okay.
05:30And about $3 billion in operating loss.
05:31Mm-hmm.
05:32Am I right?
05:33Mm-hmm.
05:34So is that part of what, is that what we're talking about here?
05:35Well, it would be worse if we try to go with a relatively affordable car to start with.
05:41It's that bad when you go for a high-end product because the cost of a factory for a high-end
05:47car is significantly less than for a low-price point car.
05:53Why is that?
05:54Because that's all about volume.
05:56So if you're going to make a Rolls Royce, not many people can afford a Rolls Royce.
06:01So the factory's pretty small.
06:02You don't need a tooling that's going to be really hard and make thousands of parts.
06:07So the tooling costs can be less.
06:09You can have a lot of it hand-built.
06:11So the cost of a Rolls Royce factory is low, but the price of a Rolls Royce is pretty high.
06:17And conversely, if you're making a Volkswagen Golf, that's all about numbers.
06:21You need to spend zillions on a huge factory with a huge degree of automation.
06:26I would have had to, lucid as a startup, I would have had to raise an exorbitant amount
06:30of extra $10 billion if I were to take that route.
06:34It would have been prohibitive.
06:35I wouldn't be speaking to you now.
06:37So we had to start with a high-end product first.
06:40And this is a well-trodden path in Silicon Valley.
06:43And so a next product that you will be starting to deliver or rolling off the line this year
06:49is an SUV.
06:50Yes.
06:51I think we have a video to show.
06:53Is that correct?
06:54Please, yes.
06:55Indeed.
06:56Okay.
06:57Let's see that.
06:58So let's talk about what we're watching here.
07:05This is the earliest days of, what would you call it?
07:08Well, this is our Gravity SUV, and this is in our design studio.
07:13This is the interactive process between design, styling design, and engineering in creating
07:19a car.
07:20We still use traditional clay modeling techniques linked with a completely digital array of
07:28tools, from digital wind tunnel to digital crash analysis, for example.
07:34So there are a lot of experts and industry analysts who believe that you need to nail
07:41this vehicle in terms of both, yes, the supply, but the demand side for Lucid to have a long
07:50term future.
07:51Totally.
07:52Is that fair?
07:53Yeah.
07:54So our finances are really, I mean, you touched on our finances.
07:57They're dominated by scale.
07:59We need more scale, and that way we can amortize our fixed cost, and that is the route to profitability
08:06for us.
08:07And there are four steps to achieving scale.
08:10We need to grow the word that we've got the best car on the planet available now in the
08:15Lucid Air.
08:16More and more people are recognizing this.
08:19We've just come off record quarterly sales.
08:22We're up 70% year on year.
08:24We're bucking that EV trend.
08:26Sell more airs.
08:27Get gravity of the SUV into production.
08:30That's got about six times the total addressable markets.
08:34Then we move to the big one, which is ... And what's the price point there?
08:36Well, it's going to be from just under 80,000.
08:39So it's still relatively high.
08:41And is that price point related to tax credits or ...
08:46Unfortunately, it's above ... The air is above the tax credit threshold, but the lowest
08:53end version of gravity just gets it in to the 7,500 federal tax incentive by virtue
09:00of it being an SUV.
09:02Okay.
09:03Yeah.
09:04I interrupted you.
09:05You were in the midst of something.
09:06No, I was in full flow there.
09:07Yeah.
09:08Yeah.
09:09So we move to the big one.
09:10I'm going to say it.
09:11The exciting one, ladies and gentlemen.
09:12We're in the late 26, where our midsize platform vehicle is scheduled for start of production.
09:19That's where we compete with Tesla Model 3 and Model Y.
09:23Price point from about $48,000.
09:27And we're designing that to be capable of a million units per annum.
09:32I mean this in the most respectful way possible.
09:35Is that 2026 date reality?
09:40I believe it is.
09:41I wouldn't say so otherwise.
09:43I also do want to field some questions from the audience.
09:46So I'll come back to you in a minute.
09:50I have to ask you about a certain person who you once worked for and his name is Elon Musk.
09:54Over the last few years, he has taken a few opportunities to come at you in a couple of
10:00ways.
10:01One has been related to trying to minimize the role you had in the creation of the Model
10:06S. Another was at one point related to a stock
10:11compensation package you had right after, I think shortly after the IPO and the SPAC.
10:21Two questions about Elon.
10:22One is, what do you think is behind that?
10:26And then the second question is, when was the last time you talked to him?
10:30Well, it's surprising that little Lucid has attracted so much of his attention.
10:35We must have something going on to do that.
10:40Yeah.
10:41And regarding my package, which has been so, so misreported, the package that you're referencing
10:52was all very, very substantially, very high percentage in shares.
10:58And I've sold not one of those.
11:00And it was all performance based because I co-founded the company, took it public, and
11:08it was a recognition of all that good work.
11:13Yeah.
11:14I made the journalist error of asking two questions at once.
11:17So I'll restate my second one, which was, when was the last time you've spoken to him?
11:22That was when I handed my resignation to him when I was at Tesla.
11:26How did that go?
11:27Well, you might imagine.
11:29Okay.
11:31One more Elon-related question because it's very newsy.
11:34In the last day or two, he has come out with a sort of full-fledged support of former President
11:41Trump in his re-election campaign.
11:44He has also, there's reports that he is now, I guess, giving 45 million a month to a Trump
11:53associated PAC.
11:55I'm curious, there are some Tesla customers who may be fine with that or like that, others
12:01not so much.
12:02I'm curious if you see any impact on your business potentially from Elon sort of stepping
12:09into politics in a big way.
12:10Well, I think this is another salient example of his level of distraction.
12:18Tesla used to have the lead in electric vehicle technology.
12:23They truly were the pathfinder.
12:24There was an absolute laser focus there.
12:28I think that now the mantle has passed to Lucid.
12:32Just this morning, we formally announced a landmark, a technological landmark that we
12:38were able to achieve 5.0 miles per kilowatt hour for an electric vehicle.
12:45This is a major step forward in saving the planet.
12:49This is the most efficient use of energy achieved by any electric vehicle.
12:54We've registered also a record 146 MPGE.
13:00These are not claims by Lucid.
13:02These are validated by the Environmental Protection Agency.
13:07This puts Lucid at least four years ahead of Tesla in what I think is a critical technology
13:13race to help save the environment.
13:17Do we have any questions from the audience?
13:19I have a few more.
13:20I saw one back here first.
13:24Please just tell us who you are and try to keep it concise if possible.
13:29Venk Bharthan, co-founder and CEO of NanoWare.
13:31Jason, you touched upon in the beginning, and Peter, you were just ending on it, your
13:36discussions with regulators in DC in this space with transportation, not only the Department
13:40of Transportation, but also Congress.
13:42How has that evolved?
13:43Because they have to be your partners in this.
13:46And is that 2035 goal, Jason, that you touched upon, having discussions in DC on a federal
13:52level?
13:53Totally.
13:54I will be on my way towards DC next week, because I see a responsibility from someone
13:58like myself to help guide the knowledge of the EV space.
14:06Because the decision makers, they're making decisions which will last potentially a generation
14:12or more.
14:13They need the wisdom of Solomon.
14:15And it's very difficult to get their heads around this weird and wacky world of EVs.
14:21So I'm delighted that we can play our small parts in providing technical data so that
14:28their decisions can be based upon facts and best evidence.
14:34Does another Trump administration potentially help or hurt your vision for Lucid?
14:43Look, I'm politically agnostic.
14:47My vision is to really accelerate the uptake of not just sustainable EVs, but the EVs which
14:56are affordable via their sustainability.
15:00And this is critical.
15:01This isn't just chasing the semantics of a technical solution with technical excellence.
15:08If we can build EVs which go further with less batteries, we go to the very heart of
15:13the main barrier for EV adoption, the cost of the battery.
15:20And that's what my focus is, not politics.
15:23I'm going to come to you in one second.
15:25I do have one more question.
15:26You know, you're a public company, but you are 60% or more owned by the Saudi Arabia
15:34Sovereign Wealth Fund.
15:36They've invested more than $6 billion in your company.
15:41I think you have enough cash right now to sustain the company through the middle of
15:46next year.
15:47That's right.
15:48Is that correct?
15:49Yes.
15:50What kind of guarantees do you have from them that they won't walk away at a certain point
15:55and go to plan B?
15:57First of all, they have been the perfect partner long term.
16:01And this partnership transcends a mere financial investment because we're in this together
16:06long term.
16:08They have a vision for their country, and it's a bold vision, to transition their country
16:14away from fossil fuels to a sustainable economy for 2030.
16:19We are a cornerstone of that.
16:21We're in this together.
16:22So you don't fear them walking away?
16:24They want our cars as much as we want them, maybe almost as much as I want to do this.
16:31We're in this together.
16:32Now, I can't make promises for them, absolutely not, and it would be very imprudent for me
16:37to do that.
16:38But to date, they have been wonderful and outstanding and strong long term partners
16:44with a shared vision.
16:46Let's try one more quick question here.
16:47We have about a minute.
16:48Hi.
16:49Thanks for the opportunity.
16:50I'm a co-founder, CFO of the next-gen battery company.
16:54And two questions.
16:55One is I heard because of the more and more harsh competition for the price, particularly
17:00with the Chinese EV makers, nowadays the car OEMs are more interested in cheaper battery
17:07rather than high energy density battery that was very popular three, four years ago, if
17:13it's true or not.
17:15And secondly, unlike also we say battery or lithium metal batteries that may or may not
17:21take 10 to 15 years for the commercialization, what if you have the battery with high energy
17:27density, high power density, with safer features, with a cheap price, and mass production feasibility
17:34within two, three years, is it your interest or not?
17:39Well, of course, that's a panacea.
17:41Is it my interest?
17:42It would be.
17:43It's music to my ears.
17:44So we have to trade multiple attributes, cost, gravimetric energy density, and just the scalability
17:55of that.
17:56So our technology, our advancements works with high energy batteries or low energy.
18:01It's equally applicable.
18:04We're out of time.
18:05Thank you so much.
18:06Thank you for the great questions as well.
18:10Thank you so much.
18:11Thank you for the discussion.