Lucid – the next EV challenger, or just a lucid dream?
With the industry transition to electric vehicles very much underway and investors clamouring to find the ‘next Tesla’, there is no shortage of new EV startups vying to generate new fundraising. In this field of relative newcomers, US EV startup Lucid is almost prehistoric in comparison, having been founded in 2007, years before Tesla and electric vehicles in general enjoyed the kind of recognition they do now. Now, a successful listing on the Nasdaq stock exchange means the company probably has enough capital to finally put its long-awaited Air luxury sedan into production later this year.
Lucid’s early years were spent under the name Atieva where it developed EV components for other manufacturers. During this period, its most notable achievement was being selected as the supplier of the battery pack for second-generation Formula E electric race cars. These packs used commodity cylindrical cells provided by Murata – which took over part of Sony’s lithium-ion battery business – and are both designed and assembled by Atieva, with McLaren handling the integration of the pack with the rest of the race car. Atieva’s 54kWh pack meant the second-generation Formula E cars were the first in the sport’s history that were able to run for the entire race distance without needing a car change halfway through.
However, unsatisfied with merely designing EV parts for others, the company changed its name to Lucid in October 2016 and announced that it would design and build its own luxurious, high-performance electric vehicle. Months later, Lucid finally revealed the first images of its Air concept luxury sedan. The dramatic new model was aimed squarely at the Tesla Model S, which had been on sale for around four years at that point and had, arguably, been the catalyst for resurgent interest in modern electric vehicles.
The Air was scheduled to go into production at the end of 2019 and promised industry-leading performance of up to 1,000hp and a range of more than 400 miles. For comparison, a Tesla Model S in early 2017 could only muster a range of 315 miles with performance hovering around 750hp – impressive figures in their own right but far behind what Lucid was targeting.
Pressure began to mount, however, in 2017 as the cost of developing the new vehicle began to bite. Lucid even entered talks with Ford Motor Company about a potential complete buyout. The Blue Oval ultimately decided to pass on the offer, however, due to its own ongoing distractions at home with the ousting of former CEO Mark Fields and a company-wide review of its strategy and priorities.
Considering how expensive the business of designing a new vehicle is, Lucid needed to raise significant capital as its plans for the Air sedan evolved. This saw it sign an agreement with the Saudi Arabian Public Investment Fund in late 2018 that was finalised in April 2019 – the funding did not take the company public but put an extra $1 billion in its pockets. This was used to help accelerate construction of the company’s Casa Grande, Arizona factory, where Air production is scheduled to begin.
This kept the company ticking over but would not be enough to finally take the Air to market. For that, it would need to access some of the plentiful investor capital that is still flooding into the EV space. So, like many recent EV companies including Faraday Future and QuantumScape, Lucid took the decision to publicly list on a stock exchange through a merger with a Special Purpose Acquisition Company (SPAC). This was completed in July 2021 when Lucid merged with the Churchill Capital IV fund to list on the Nasdaq exchange as LCID. The capital raise is thought to have generated around $4.4 billion of cash for the company, which will be used to finally put the Air into production later in the second half of 2021.
Lucid settled on a location for its factory in late 2016 after first showing the Air concept – quite a few years before it had the funds to actually build anything there. Before it broke ground, the company expected the factory to be operational towards the end of 2019 with a capacity for 20,000 vehicles per year to begin with, and the option to expand production up to 130,000 units per year. However, Lucid’s ongoing battle to raise enough funds to fulfil its objectives meant this target kept getting delayed, with construction on the factory itself not starting until 2019 and the first models not due until late 2021.
While the Air concept was first shown in late 2016, it has taken five years to make it to production. The sedan follows a familiar format established by Tesla and similar ‘clean-sheet design’ EVs – a flat battery pack mounted in the floor connected to a powerful electric motor on each axle. A range of battery sizes and power outputs will be offered but the top-of-the-line model claims to cover around 517 miles on a charge on the relatively harsh EPA testing cycle, with up to 1,080hp available for rapid acceleration and a high top speed.
The battery pack design is expected to be similar to that employed by Tesla. Lucid’s 113kWh pack is known to use 2170-format cylindrical lithium-ion cells supplied by LG Energy Solution. This is the same format used by the current Tesla Model 3 and Model Y, and enables Lucid to mount hundreds of cells into a module and run cooling channels between the cell’s casings. This promotes good temperature control across the battery pack, which should prolong its service life.
Lucid currently has two vehicles in its planned lineup. As with Tesla’s fortunes with the Model S, it makes sense for Lucid to start by producing a high-value vehicle like the Air because the greater margins on offer make it easier to turn a profit from fewer units. To follow the Air, Lucid’s CEO Peter Rawlinson has confirmed that the company plans to launch an SUV by 2023, currently operating under the name ‘Project Gravity’. If these projects launch as planned, Lucid is likely to then release a more affordable vehicle intended for greater volume production to challenge the Tesla Model 3.