In an email made public by the media Business Insider, crucial information on the financial health of Lucid Motors has leaked. Tesla’s rival is recording a significant number of reservation cancellations: out of 37,000 orders in the second quarter, there are only 34,000 left today. A drop explained by deliveries, but not only…
The information could have a snowball effect. Lucid Motors quickly went public and is highly dependent on investors. Their reaction could be brutal. And that was without counting on Elon Musk, who learned the news and who was quick to react on Twitter and drive the point home.
“They are not made for this world”, he wrote Friday morning in response to a Twitter account specializing in the news of electric cars in Canada. Lucid Motors was born in California, and has been marketing an electric sedan competing with Tesla’s Model S since last year. Between the two brands, a race for autonomy which is currently dominated by Lucid Motors.
They are not long for this world
— Elon Musk (@elonmusk) December 9, 2022
Believing (or not believing) in bankruptcy
Arguing over a few hundred canceled reservations might seem ridiculous. But the startup is not yet profitable and is going through a particularly critical period – Tesla can testify. In the internal email unveiled, Lucid Motors explains that each cancellation is a real failure and that to avoid them, a special service is responsible for maintaining the link by telephone call with them.
Does Lucid Motors risk bankruptcy? We will know more soon. Current investors are counting on the publication of the annual results, where we will discover in particular the number of sedans produced in 2022 – estimated between 6,000 and 7,000 copies. At the specialized media Electrek, we also qualify the words of Elon Musk by citing liquidity. Lucid Motors admittedly burned half a billion dollars last quarter, it still has a $3 billion cushion left.
External investments are not to be ruled out either as Lucid Motors has taken root via behemoths. First, the Saudi Arabian Public Investment Fund (fundraising of $1 billion in 2018 in particular). The Middle Eastern country is also a big customer, having ordered 50,000 cars with an option for another 50,000 last April.
On the rest of the market, competition comes mainly from Tesla and the breakthrough of traditional manufacturers like Ford. But the sword of Damocles is certainly materialized by the new Asian manufacturers who have a particularly aggressive strategy and which could quickly flood Europe.
To do it a favor, Lucid Motors could count on American protectionism. There, cars produced on the continent have priority. A tax credit of $7,500 is only granted to American factory cars. A strategy judged as unfair competition by Europe, and which threatens the industry of the Old Continent seeking to invest in the US market.
