管理層發言
Good day, and welcome to Lucid Group's second quarter 2026 earnings call. At this time, all participants are in a listen-only mode. After the speaker presentation, there will be a question and answer session. To ask a question during the session, you will need to press star one one on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, press star one one again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker, Nick Twork, Chief Communications Officer. Please go ahead.
Thank you and welcome. Joining me today are Silvio Napoli, our CEO, and Taoufiq Boussaid, our CFO. Before handing the call over to Silvio, let me remind you that some of the statements on this call include forward-looking statements under federal securities laws. These include, without limitation, statements regarding the future financial performance of the company, production and delivery volumes, vehicles and products, studios and service networks, financial and operating outlook, timeline and guidance, liquidity position, capital expenditures, macroeconomic, geopolitical, policy and industry trends, tariffs and trade policy, company initiatives and plans, leadership changes, and other future events. These statements are based on various assumptions, whether or not identified in this communication, and on the predictions and expectations of our management as of today. Actual events or results are difficult or impossible to predict and may differ due to a number of risks and uncertainties. We refer you to the cautionary language and the risk factors in our annual report on Form 10-K for the year ended December 31, 2025, subsequent quarterly reports on Form 10-Q, current reports on Form 8-K and other SEC filings, and the forward-looking statements on page two of our quarterly earnings presentation available on the investor relations section of our website at ir.lucidmotors.com. We undertake no obligation to revise or update publicly any forward-looking statement for any reason, except as required by law. In addition, management will make references to non-GAAP financial measures during this call. A discussion of why we use non-GAAP financial measures and information regarding reconciliation of our GAAP versus non-GAAP results is available in our earnings press release issued earlier this afternoon, as well as in the earnings presentation. Please note that today's agenda is longer than usual. We plan to reserve 20 minutes for questions at the end of the call, and we'll take them in the order received. With that, I'd like to turn the call over to Lucid CEO, Silvio Napoli. Silvio, please go ahead.
Thank you, Nick. Good afternoon, everyone, and thank you for joining us for my first quarterly results as Lucid's CEO. As promised today, I'll share my initial assessment, our midterm priorities, and the actions already underway. In my first two months as CEO with the company, I spent much of my time with the people who do the work in our factories, studios, service centers, engineering labs, and technology centers. My approach is simple. Listen first, understand what is happening on the ground, and act with urgency. Over more than 30 years, I've led complex technology-driven manufacturing and service businesses through many of the same fundamental challenges Lucid faces today. That experience is directly relevant to the work ahead and is one of the reasons I came to Lucid. What I've seen so far gives me confidence in Lucid's inherent value and potential. We have leading technology, compelling award-winning products, and deeply committed people. Potential is not performance, and effort is not the same as results. Now, before discussing our priorities, I want to be very direct about our situation. I came to Lucid with a mandate from the Board to do what is necessary to fix the business. My acceptance of this exciting challenge is based on the clear understanding that financial support is needed to provide the runway to make the company profitable and successful. Together with the Board, we are confident in our resolve, and that confidence is supported by the financial and operational measures that I will discuss today, which we expect will provide sufficient liquidity runway well into 2027. Let me be direct. The way we operate has to change. While there is no question that Lucid brought leading innovations and outstanding products to the market, we have disappointed on several fronts and for far too long. We have not executed consistently, we missed commitments, launched products before they were ready, under-invested in service, responded too slowly to quality issues, and allowed complexity to slow decisions down. Accountability has too often been diffused rather than clearly owned, and we have not operated as one team. The consequence is clear. We have strained trust. Trust with our customers, trust with our employees, trust with our suppliers, and ultimately, trust with you, our investors. I'm here because I'm convinced we can rebuild this trust. We will fix the business because the underlying causes are operational and largely within our control. To get there, we must go back to basics. All our work must be focused on three fundamentals and four must-win deliverables. We define our three fundamentals as our three Cs: cash and cost, customer and quality, and culture and team. The four must-win projects are, first, our plan to deliver $1.4 billion of cash flow improvement by year-end. Second, the Uber Nuro Robotaxi project. Third, the completion of our AMP-2 factory in Saudi Arabia, and fourth, our Midsize platform. Let me first provide some color on the three Cs, starting with cash and cost. During my first month as CEO, we reduced our U.S. workforce by one-fifth and eliminated the second shift at our Arizona factory. These two measures combined generated $115 million in projected annualized savings. The decision to separate ourselves from hardworking team members was not taken lightly. I would like to take this opportunity to thank them again for their contribution to make Lucid what it is today. That decision was necessary, and it was only the first step in our cost reduction efforts. We need to be direct about the scale of the challenge. Lucid continues to consume a significant amount of cash each quarter as we invest simultaneously in a manufacturing footprint, vehicle production, and future programs. That level of cash burn is not sustainable, and bringing it down is an immediate priority. We are therefore reviewing every major cost, each individual investment, and every single program across the company. Our objective is to reduce cash burn with urgency while protecting the initiatives that are most critical to Lucid's long-term value. We've already identified approximately $1.4 billion of cash flow improvement in 2026 across operating costs, capital spending, and working capital. We deliberately reduced production by eliminating a second shift because building vehicles faster than we could deliver them was consuming cash and increasing inventory. Today, our priority is to convert inventory into deliveries and cash, aligning production with demand to improve working capital. We will continue to selectively use incentive programs, but we will not buy volume at the expense of cash or vehicle economics. Here, I also want to address the speculation surrounding our work with AlixPartners. Their engagement has been focused solely on supporting our cost savings plan and streamlining our operations. We will be wrapping up their assignment once that work is complete, which we expect at the end of this month. Moving on to the second C, customer and quality. Frankly, this is not optional, but a must for every business, including ours. Let's be honest, we have exceptional vehicles, but the ownership experience has too often come short of the promise of the product. That's why we created the Chief Customer Officer position and hired Billy Hayes, a highly respected automotive industry leader with a unique understanding of the customer experience in our sector. With him, we're assigning clear ownership to each major customer pain point and creating a closed loop from customer feedback to corrective action. We are making significant investments in service. By the end of the year, we plan to increase the number of technicians and dedicated staff supporting our customers by 35% and mobile service capacity by more than 20%. Together with improvements in parts availability, service operations, and capacity, we expect these actions to reduce wait times by more than 30%. Our objective is to make the full experience of buying and owning a Lucid match the strength of the vehicle. We will continue to invest in innovation and bring outstanding products to the market, but only after passing rigorous quality gates. We created a Chief Technology Officer position and hired Raja Macha, a proven technology leader and accomplished scientist with extensive industrial experience, including the automotive sector, to take our innovation to the next level and enable the quality our customers expect. Even prior to Raja's joining, we knew that software was a common root cause for customer dissatisfaction. To address this pain point, we immediately deployed measures to strengthen our software rollout process, and we're already seeing progress. During the quarter, software quality improved across Gravity and Air, with work focused on infotainment stability, access control, and OTA reliability. We strengthened our validation and release processes, reduced software-related customer issues, and established more rigorous quality disciplines. At the same time, we continue to bring innovations to the market. Our latest software release, Gravity UX 3.6, added hands-free drive assist in combination with other customer features and stability improvements. I'm excited to share that in a few days, at Monterey Car Week, we will unveil a new, sportier version of the Lucid Gravity. Coming to the third of our Cs, culture and talent. Without the right team and the right culture, no plan can succeed. That's why culture and team must be one of our top priorities. Last July 2nd, in my second month on the job, we introduced a new simplified organizational structure which halved the number of direct CEO reports. To enforce accountability and foster transparency, we introduced a true C-suite to lead the company. To accelerate decision-making, we're greatly reducing the number of committees except for legally mandatory ones. In just a few weeks, we began a major transformation of Lucid as a company and as a team. To keep the momentum going, we created a Chief Transformation Officer role and appointed Hugo Martinho, a proven leader with deep expertise in driving organizational change across global businesses. We will establish the Lucid business process function led by Hugo to enforce process discipline across everything we do. Lucid needs leaders who are fully present and working side by side with their teams. That is why we asked a new leadership team to work in person from one of our main locations close to our customers and teams in manufacturing, supply chain, and engineering. My expectation is straightforward. Tough medicine first, clear ownership, fast action, and unity of effort. The people closest to the work will diagnose the problems and design solutions. Leadership sets priorities, removes obstacles, and holds individuals accountable, starting with me and our executive team. Alongside this fundamental reset, we identified four must-win deliverables that will shape Lucid's future. I've already addressed the first one, a spending reduction plan which delivers approximately $1.4 billion in cash flow improvement in 2026. The second one is a robotaxi project with Uber and Nuro, a top priority and indeed a must-win project for Lucid. Lucid's capabilities are recognized not only through independent awards for our products, but also through partners choosing our platform for their own strategic platforms. The work between Uber, Nuro, and Lucid is one example and demonstrates the potential of our technology beyond privately-owned vehicles. Brand recognition and committed sales aside, this project applies our technology in a new, fast-growing sector. Independent estimates project that 2.5 million robotaxis will be operating globally in 2035. That is less than 10 years from now. The total addressable market for robotaxi vehicles will grow to $600 billion by 2040. Given Lucid's differentiated technology, the robotaxi ecosystem also creates opportunities beyond vehicle sales, including recurring software services and mobility revenue. Over time, Lucid has the potential to participate across a broader share of the robotaxi value chain, which some industry estimates value at approximately $1 trillion. These exponential growth prospects are not the only feature that makes the robotaxi market so attractive. Equally compelling, if not more so, is the profit potential. We project the margins vastly exceeding those of the traditional retail model. As a native software-defined vehicle company, Lucid is ideally positioned to capture a large share of this rapidly emerging market. Lucid's technology platform, combined with our vehicle space efficiency and lower operating cost, provides a clear advantage over legacy car makers. The success of the Uber Nuro project will demonstrate the value of our platform at scale. Our program is deep into the testing and validation phase with an active engineering fleet of nearly 100 vehicles across the San Francisco Bay Area and Houston. Last month, we began delivering to Uber and Nuro production validation vehicles assembled at a facility in Coolidge, Arizona. This will be followed by regular vehicle production in Q4, which in turn will be followed by a launch in late 2026. While we progress towards this milestone, the robotaxi industry is at a pivotal juncture, Lucid is resolved to fully capture this historic opportunity. That's why we're creating Lucid Technologies, a new business unit with its leader, Kay Stepper, reporting directly to me and driving our efforts in robotaxis and other high-potential technology opportunities. Lucid Technologies brings together AI, ADAS, and our broader digital functions under one single structure to improve resource and capital allocation. Kay previously led our ADAS and autonomy organization and now serves as President of Lucid Technologies and Chief Digital Officer. With more than 25 years of experience spanning autonomous driving, advanced vehicle technologies, product development, and strategic partnerships Kay is ideally positioned to help Lucid capitalize on this emerging opportunity. Moving on to our third must-win project, AMP-2. AMP-2, our new factory in Saudi Arabia, is steadily transitioning from construction to industrialization. Last April, in my second week with Lucid, I traveled to Jeddah to see the factory firsthand and get a sense of construction progress and factory readiness. I was impressed by the progress achieved despite the geopolitical situation. All buildings are functional, manufacturing systems installation and equipment testing is happening across stamping, body, paint, and final assembly in preparation for production trials. These pictures also attest to the heroic effort by the Lucid team and our supportive Saudi government partners who continue to work to meet the project milestones. I'm due to return to the Kingdom this month. I look forward to seeing the continued progress over there. It is important to clarify that there are two distinct components to our readiness plan. The first is the factory itself, which is within our control. Based on the work underway today, we expect AMP-2 to be ready for production in early 2027, ready to run Midsize production in the second half of the year. The second component is the surrounding supplier base and supporting infrastructure required to enable a sustained production ramp. We are closely working with the Saudi authorities, suppliers, and other partners to ensure that this ecosystem is ready to support a planned ramp. The Saudi authorities continue to be a strong partner, helping to advance the road, water, electrical, and telecom infrastructure. We're also evaluating supply localization timelines and identifying actions to mitigate potential delays. Importantly, this does not change our commitment to the Kingdom, to the local supply chain networks, to our broader industrial strategy. We look forward to updating you as the work proceeds. Speaking of progress, I had the opportunity to drive our latest Cosmos prototype at our Arizona test track last week, and I have to say, I came away extremely impressed. This new model delivers everything you would expect from a Lucid. The acceleration is remarkable, the handling is precise, and it remains unmistakably true to the Lucid DNA. Really, I cannot wait for you to experience it yourselves. Cosmos will be the first vehicle produced at our new AMP-2 factory and the first model from our Midsize platform. This Midsize platform remains an essential element of Lucid's strategic plan. That is why it must be one of our must-wins. While the EV market is experiencing near-term demand uncertainty, we remain confident in the long-term transition to electric vehicles. EV adoption continues to expand globally, and we believe the Midsize segment represents the largest opportunity for Lucid to bring our technology to a broader EV customer base. I am encouraged by the progress across the program. Atlas drive units and prototype vehicles are already in advanced stages of testing, with work underway across chassis, drive units, battery pack manufacturing, and on-road and test track validation. We are also carrying out crash testing, aerodynamic refinement, and durability testing with cold weather evaluation in New Zealand. The next major phases of the program include additional prototype and quality launch builds, completion of the regulatory and homologation activities, expanded manufacturing validation, and preparation for the start of production. To lead the process and coordinate actions across functions, we have promoted Christian Appel to VP of Program Management. Based at our AMP-1 factory in Arizona, Christian is responsible for the program while ensuring discipline and coordination across the company to deliver top quality. With a strengthened team and additional resources, he and his team are performing a comprehensive review of the program and will implement any changes needed to ensure a successful launch. Our objective is clear. Midsize will launch only when every process and quality requirement have been met. We will not repeat the mistakes of the past by bringing a product to market before it is ready. Once more, we remain confident in Midsize as a core enabler to scale, improve unit economics, and ultimately profitability. Finally, moving on to outlook. Today, I have provided an update on my ongoing assessment, our near-term priorities, and several of the actions already underway. As you will understand, we are not yet in the position to provide detailed guidance. We will set formal guidance once the leadership team has completed the strategic planning process. In the meantime, we want nonetheless to offer some directional context. In particular, I want to stress how current consensus estimates for production and deliveries are based on operating models that no longer reflect the figures we anticipate today. Consequently, based on our ongoing assessment, production and delivery figures are expected to come in below current consensus estimates. Specifically, production in Q3 and Q4 is expected to be below Q2 levels, reflecting AMP-1 transition from two shifts to a single shift configuration through year-end. On the other hand, given the availability of existing inventory, delivery should be above the deliberate reduction in production. Deliveries in the second half should benefit from recent product and service announcements and reflect sequential growth broadly consistent with the typical seasonal increase from Q2 to Q3. We expect growth to be more moderate than in the prior year period, which at the time also benefited from a pull forward of demand and the ramp of the Gravity model. When we are ready to provide formal guidance, it will be grounded in market-calibrated demand, lower inventory, and disciplined cash management. Above all, it will reflect commitments we are confident Lucid can deliver. For now, our business review remains underway, and Alexander De Bock, our incoming Chief Financial Officer, who joins us this week, will play a leading role in completing that work. What can you expect from us over the next two quarters in terms of further updates? In November, at our Q3 results, we will provide details on the progress of our $1.4 billion cash improvement for 2026, including a liquidity update. We will also provide a progress update on the Uber Nuro Robotaxi project and on the latest advancements of our AMP-2 factory readiness. At our year-end results, we will provide guidance for 2027 as well as midterm plan and targets. To wrap up, the work ahead is substantial, and rebuilding trust will take time. We have a clear understanding of the key issues. These issues are operational in nature, and we are fixing them. A deep transformation is in motion at Lucid, with a new team in place with clear priorities. The direction is clear. Focus on the fundamentals, execute the must-win projects, act with discipline, and demonstrate progress through results. Lucid has the technology, products, and people to succeed. Our responsibility now is to build a disciplined operating model that converts those strengths into consistent performance. We expect to be judged by the results. Before I turn over the call, I want to thank Taoufiq for his outstanding efforts and loyal service to the company. His contribution and partnership throughout this transition reflect his professionalism, commitment, and integrity. Thank you, Taoufiq, and over to you.
Thank you, Silvio. As Silvio outlined, we are focused on improving capital efficiency, preserving liquidity, and positioning the business for the successful launch and ramp of our Midsize platform and commercialization of our autonomous offerings. While our review of the business remains ongoing, we have already begun implementing actions. My comments today will focus on our liquidity position, second quarter financial results, the actions already on the way, and the priorities guiding our decision going forward. Turning to Q2 results, production was 4,774 vehicles, down 13% from 5,500 in the first quarter, a deliberate reduction and up 24% year-over-year from 3,863. We lowered production during the quarter deliberately to better align production with near-term demand, reduce inventory levels over time, improve capital efficiency, and preserve liquidity as we prepare for the launch and ramp of our Midsize platform and commercial robotaxi program. As Silvio and I have discussed, our objective is to stabilize the business and accelerate the path towards profitability. Looking ahead, we believe certain external expectations regarding our production levels do not yet fully reflect the operating assumptions guiding our decisions today, including the reduction of our manufacturing workforce to preserve cash. Our near-term focus is on improving unit economics, reducing cash burn, and progressing towards break even. Our objective is to allocate capital efficiently while maintaining readiness for the next phase. As we optimize incentives, improve product mix, and convert inventory into customer deliveries, we expect these actions to support average selling price, working capital efficiency, and operating cash flow. Q2 deliveries were 3,953 vehicles, up 28% from 3,093 in the first quarter and up 19% from 3,309 in the quarter a year ago. Lucid Gravity continued to be the majority of deliveries. Deliveries in the Middle East improved during the quarter. As a reminder, under our existing agreement, the government of Saudi Arabia has committed to purchase more than 4,000 vehicles during 2026 and annually through 2032, subject to the terms of the agreement. During the quarter, we continued working through the effects of the stop sales actions announced earlier this year. Deliveries improved as the quarter progressed, and we are focused on converting the remaining affected orders. As part of our back to basics priorities, we are determined to improve customer experience, product quality, and execution. Our focus remains on converting existing demand, shortening delivery cycle times, improving order to delivery execution, and restoring customer confidence through product and service performance. To be very clear, we are prioritizing margin, and we will not sacrifice pricing to chase volumes. Revenue was approximately $405 million, up 44% sequentially from $282 million in the first quarter and up 56% year-over-year from $259 million in the quarter a year ago. The increase was driven primarily by higher deliveries and improved product mix, reflected in a 3.7% overall sequential increase in average sales price, which was further supported by higher regulatory credit sales revenue by $25 million. Besides pricing, we expect revenue growth ahead will be driven by improved sales execution and mix, an expanding service footprint, recurring software and subscription opportunities, and finally, future vehicle programs. On top of traditional EV sales, revenue streams from robotaxis are expected to be a new source of revenue growth. Q2 gross margin was -105%, compared with -110% in the prior quarter and -105% year-over-year. Gross margin in the quarter reflects higher revenue sequentially, lower production volumes, which resulted in lower fixed cost absorption, and higher conversion cost per vehicle. Gross margin also reflects $300 million in impairment charges associated with inventory optimization actions, offset by a reduction in loss on firm purchase commitments as a result of lower volumes. This impairment has had a negative impact on gross margin of 74 percentage points in the current quarter. Gross margin also included $25 million of regulatory credit revenue. Adjusted EBITDA was -$901 million in the second quarter, compared to -$781 million in the first quarter. The sequential change was primarily driven by higher gross loss as we continue to ramp Gravity production through May, thereby increasing finished vehicle inventory. Operating expenses remained flat sequentially, reflecting reduced payroll from lower headcount, and the absence of certain one-time costs recorded in the first quarter. These benefits were partially offset by increased prototype parts and tooling for our Midsize platform, as well as sustained cost and investment related to the construction of our AMP-2 factory. Our focus during the quarter was not simply reducing inventory balances, but improving inventory quality. As noted previously, the $300 million impairment in the current quarter reflects a reassessment of carrying values and expected demand. We cut firm purchase commitments, proactively reducing future inventory obligations and cash requirements. Inventory conversion remains one of our most significant opportunities to improve working capital, free cash flow, and capital efficiency. A large part of our inventory has already consumed cash. Converting it into deliveries unlocks working capital and reduces our cash requirements. The efforts initiated as of June have not yet been able to offset the created inventory increase during the first five months of the year, during which Gravity production outpaced demand. Together with the impairments and lower purchase commitments, the inventory reduction improves the quality of our working capital position. Our objective is to accelerate the order to delivery to cash cycle and improve inventory turnover. As we convert finished inventory into deliveries, we expect stronger working capital efficiency, liquidity, and free cash flow. Free cash flow was -$1.476 billion during the quarter. A meaningful part of this is working capital trapped on the balance sheet rather than permanent burn. As we convert that inventory to cash, our free cash flow is positively impacted. The actions underway today are specifically designed to improve cash generation and reduce capital requirements going forward. Free cash flow was primarily affected by working capital investment, including the inventory built into finished Gravity vehicles ahead of deliveries, lower accounts receivable collections, accelerating the conversion cycle and increasing inventory turnover. More broadly, our operating assumptions today prioritize liquidity preservation, cash generation, and disciplined capital allocation. Investors should expect a measured operating approach as we improve unit cost economics and progress towards profitability. In June, we launched a comprehensive review of the business to identify opportunities to reduce cash burn and improve cash flows while preserving our most important strategic initiatives. To date, we have identified approximately $1.4 billion in cash flow improvements for 2026. Implementation is already underway on many of these. The review continues. These opportunities span inventory, capital expenditure, and operating expenses. Together they are intended to improve liquidity, reduce cash burn, and increase capital efficiency while preserving key growth programs, including our Midsize platform and autonomous commercialization initiatives. Turning to our liquidity position and financial flexibility, as of June 30th, we had $3 billion of total liquidity, including $800 million of cash and investment, $2.2 billion of available borrowing capacity through our credit facilities. Following the quarter, we drew an additional $800 million under our Delayed Draw Term Loan Facility. This strengthens our cash position, increases financial flexibility, and supports execution of the actions on the way. This transaction reflects continued support from our stakeholders and provides additional flexibility as we complete the construction of our AMP-2 factory and prepare for the launch and ramp of our Midsize platform. It also supports our autonomous initiatives and robotaxi programs, where we continue to work alongside strategic partners towards commercialization. Our priority remains maintaining adequate liquidity while preserving investments that are strategically important to Lucid's future. We continue to expect liquidity to extend well into 2027, further supported by ongoing organic improvements, including the announced $1.4 billion in cash savings in 2026. This gives us the flexibility to select the right timing to raise further additional funding while ensuring that we optimize the execution, pricing, and capital structure. Lucid will provide an updated liquidity outlook with its Q3 results. In closing, while our review remains ongoing, we have already moved from identifying areas for improvement to executing actions across the business. Manufacturing actions have been implemented, organizational changes have been announced and are being executed, cost reduction initiatives are underway, and additional opportunities across inventory, CapEx, and OpEx continue to be identified and implemented. At the same time, we are preserving investments in the program and technologies that strengthen the foundation for our next phase. We are not providing quantitative financial guidance at this time. However, we believe external estimates do not yet fully reflect three things: the lower near-term anticipated production given the reduction in the manufacturing workforce, the improved cost structure and cash preservation from recent workforce reductions and updated operating assumptions, and the upside to gross margin as we reduce inventories and release impairment provisions. We are confident in the direction of the company and will provide additional updates and guidance as we are able. Looking ahead, we remain on track for the launch of robotaxi service with our partners, Uber and Nuro, we continue to advance AMP-2 and our Midsize readiness plan. We anticipate multiple opportunities to extend Lucid's technology platform to new applications over time. In closing, I would like to thank my colleagues at Lucid, partners, investors, and analysts for their engagement and support. It has been a privilege to serve as Lucid's CFO during this important chapter in the company's journey. I remain deeply confident in the strength of Lucid's technology, products, and people, and I look forward to watching the company continue to execute against the significant opportunities ahead. Thank you for your partnership and support. With that, I turn it back to the operator.
分析師問答
Thank you. We will now begin the question and answer session by taking questions submitted through the Say Technologies platform first. Our first question comes from John R. "Thanks for stepping in as a legit CEO, Mr. Napoli. How confident are you and your team today in bringing Lucid Motors to a stable company? What message would you deliver to people who love and are loyal to Lucid Motors?"
Thanks for stepping in as a legit CEO, Mr. Napoli. How confident are you and your team today in bringing Lucid Motors to a stable company? What message would you deliver to people who love and are loyal to Lucid Motors?
Thank you, John, for your question, your support, and your engagement reflected in your statement. If I'm here, it's because I'm extremely confident in Lucid's future. The one thing that impressed me the most in joining is the depth of our technology, the strength of our people, but also the engagement and loyalty of our customers. You are a perfect example, and I think now is the time that we reward this loyalty with performance. I am absolutely confident, and that's why we launched these priorities and must-win projects. Delivering on those will set the platform for our success going forward and for a company that will always be stronger, closer with its customers, with new products, and also a much stronger service. Again, thank you for your question, and I look forward to providing more products and more technology and more service to you.
Thank you. Our next question comes from Vikas A. "How is the restructuring of your expenses, manufacturing, and software coming along with new leadership in place?"
How is the restructuring of your expenses, manufacturing, and software coming along with new leadership in place?
Thank you, Vikas. I'd like to focus more on the aspect of software. I mentioned in my statement how we are reviewing the whole software lifecycle from conception to coding, installation, and service. I was at our factory last week, and I witnessed firsthand how we are bringing software engineers and manufacturing line experts together in order to improve the process. As an example, we totally changed the way we do over-the-air upload of our software in our vehicles. By having these workshops, we improved our performance in terms of both efficiency of the upload and quality. We received very good marks on, for example, the Gravity UX 3.6 release that just came out, and I'm very positive this will continue going forward. We are very conscious that software is a key element and a key opportunity for us to improve our performance, and we'll continue doing so. Vikas, thank you for your support, and I look forward to showing results going forward in that regard as well.
Thank you. The next question comes from William I. "Is Lucid ready to become more than just a car company by branching into ESS where it could see huge growth, especially if working with Saudi Arabia to achieve its 2030 goals?"
Is Lucid ready to become more than just a car company by branching into ESS where it could see huge growth, especially if working with Saudi Arabia to achieve its 2030 goals?
William, thank you for this question. I think you point to a very important opportunity which I strongly believe in. That's why we created Lucid Technologies, which is meant to drive these opportunities, starting with the robotaxi, which I addressed during my remarks, which is an immediate big opportunity. There will be others, many more, thanks to our technology. At the same time, before we get there, we need to stabilize the business. This is our priority today: our three Cs and our four must-wins. Then we create the platform. We have to be disciplined in not going after other things today which may further strain our resources. ESS is definitely one of those opportunities. There are, in fact, many more, and I look forward to putting ourselves in a position to address all of them. Thank you for the confidence shown in your question. That indeed shows a big opportunity for Lucid going forward. We are resolved to get there by first strengthening and stabilizing the business.
Thank you. Our last question from the Say Technologies platform comes from John R. "I purchased the AT, and I love to drive every day. Kudos to the teams. What is the plan to improve the quality of software issues/bugs? Could we stop tarnishing the brand name with the bad quality of the vehicle?"
I purchased the AT, and I love to drive every day. Kudos to the teams. What is the plan to improve the quality of software issues/bugs? Could we stop tarnishing the brand name with the bad quality of the vehicle?
John, thank you for this. This is another question that I really appreciate because it's direct and specific and clearly addresses a major opportunity. I addressed it in my answer to Vikas a moment ago, but to reinforce: we are improving software processes across conception, development, validation, and deployment. That's why we created the Chief Customer Officer role to ensure accountability and why we invested in service. Customer and quality are central to our strategy. They are the best investment we can make in our brand. We are assigning clear ownership, strengthening validation and release processes, and improving OTA reliability and infotainment stability. Many other aspects of customer service are being improved as well. Reestablishing our brand and rewarding our customers is my absolute key priority.
That concludes the questions from the Say Technologies platform. We will now take questions from the phone lines. As a reminder, if you would like to ask a question, please press star one one. Our first question will come from the line of Andres Sheppard with Cantor Fitzgerald. Your line is open.
Hey, everyone. Good afternoon. Congratulations on the quarter, and thanks for taking our questions. First, I just wanted to quickly thank Taoufiq as well for all his contributions. It's been great working with you, and you will be missed. Regarding questions, Silvio, I wanted to maybe touch on AMP-2 and Midsize a bit further. I realize you talked about it in your prepared remarks. I guess as we move closer to production of Midsize starting in early 2027, curious if you can maybe help us understand what are the milestones that are left regarding the completion of the Saudi plant? Separately, how should we think about those initial deliveries in the first half before ramping up in the second half of next year? Thank you.
Andres, thank you for your question. Starting with AMP-2, there are components that are within our control and some that are outside our direct control. In terms of what we control, the remaining items are industrialization testing of the different parts of the production line: painting, body-in-white, final assembly systems—those are in final testing with suppliers and on track. Of course nothing should be taken for granted, but we are confident we should be able to close these as planned by year-end. Outside our direct control are certain local certifications and access to utilities such as power, and the build-out of the local supplier base and supporting infrastructure. The Saudi authorities have been extremely supportive, and we are working closely with them. We also have contingency plans: if local suppliers are delayed in localization, we can import parts to proceed with production. Regarding Midsize, we are progressing through certifications and validation: prototype builds, chassis and drive unit testing, battery pack manufacturing validation, crash testing, aerodynamic refinement, durability testing including cold weather evaluation in New Zealand. My personal experience driving a prototype last week was very positive, but in automotive you only know once you have produced the car and completed all internal and external certifications. That takes time, and we will not launch until quality and processes are fully met. The target remains in 2027, with AMP-2 ready for production in early 2027 and Midsize production in the second half of 2027, but I will confirm exact dates when we are certain.
Excellent. Thank you, Silvio. I appreciate all that color. Maybe just as a quick follow-up: You highlighted a $1.4 billion cash flow improvement for the year, which is excellent. Now with $3 billion in total liquidity as of the quarter, just curious if you can maybe give us a sense of how you're thinking about capital needs going forward. Thank you.
Andres, thank you for the follow-up question. Capital needs going forward will be a function of the business planning we are completing now. Once we finalize the planning and have clarity on the top and bottom line, we will assess balance sheet needs. We have different options, and a very supportive Board. When we have a concrete plan, we'll communicate the approach to managing capital structure and any further funding requirements.
Wonderful. Thank you again. Congrats on the quarter. Looking forward to working together. We'll pass it on.
Thank you. One moment for our next question. That will come from the line of Alex Perry with Bank of America. Your line is open.
Hi. Thanks for taking our questions here. I guess first, I just wanted to ask, what milestones should investors be monitoring to measure progress in robotaxi? Maybe talk through some of the key learnings from your testing and validation in San Francisco and Houston. Thanks.
Thank you, Alex. There are two elements to the robotaxi program. It's a tripartite partnership where Lucid handles the vehicle engineering and validation while our partners manage the software and operational aspects. On the vehicle side, integration with partner software requires careful validation of checks, redundancies, and safety systems. Certification and validation are dependent on accumulated miles—both on-road and virtual—plus system-level testing. We currently have an engineering fleet of nearly 100 vehicles across the Bay Area and Houston. We began delivering production validation vehicles assembled in Coolidge, Arizona, and we expect regular vehicle production in Q4 ahead of a late-2026 launch. To be clear, I regularly review project status with our partners and there are no engineering red flags so far. The next stages are continued vehicle validation on the road and completing certification milestones alongside our partners.
That's really helpful. Then my follow-up question was just on inventory and how you're thinking about inventory. How much do you plan to under-produce relative to deliveries? What is the ultimate goal? I think you actually produced more than deliveries in the second quarter; is the expectation that that sort of reverses as we move into the back half? When should we expect the inventory right-sizing to be complete?
I'd like to pass this detailed inventory question to Taoufiq, but from a high level our priority is to align production with demand, reduce finished goods inventory, and accelerate conversion of inventory into deliveries and cash. We deliberately reduced production by eliminating the second shift for that reason.
Hi, Alex. As we said, we're not providing detailed guidance by bucket today, but our plan is to normalize inventory levels by year-end. This normalization is a key component of the $1.4 billion cash optimization plan. Production has been intentionally slowed to allow deliveries to catch up; combined with normal seasonality, we expect second-half deliveries to grow and for inventory to be reduced, unlocking working capital and improving free cash flow.
Perfect. That is all incredibly helpful, best of luck going forward.
If I may add to that, Alex: don't forget the Uber Nuro project. For the partners, the program contemplates significant volume over time—this is a structural new source of demand and margin for Lucid. The project provides an opportunity to position Lucid for additional high-volume, higher-margin business beyond the traditional retail channel.
One moment for our next question. That will come from the line of Andrew Percoco with Morgan Stanley. Your line is open.
Great. Thanks for taking the question. Taoufiq, great working with you and wishing you the best in your next endeavor. I guess, maybe to start, just where we kind of left off with that last question on inventory and the inventory turn, can you provide any more clarity or color around within the buckets of inventory you put in the deck—raw materials, WIP, and finished goods? What's the proportion and split between Gravity and Air within that?
Hi, Andrew, and thanks for the kind words. We are not breaking down inventories by category in this call, but we have said that the majority of production and finished inventory is Gravity-related. A reasonable assumption is that the large part of what we have on hand today relates to Gravity.
Okay, got it. That's helpful context. Then maybe just one question on manufacturing strategy. Obviously, right now running AMP-1 at a pretty low utilization rate, and you're still ramping AMP-2. I'm just curious what your philosophy or your strategy is in terms of potentially consolidating Midsize production into AMP-1 and maybe mothballing AMP-2, or just like, what are your thoughts in general about trying to be more capital efficient and running a higher utilization rate to optimize that fixed cost structure while demand is relatively de minimis in the near term?
Andrew, thank you for the question. This is part of our strategic planning work. The current design of AMP-1 is optimized for Air and Gravity; introducing a new platform there could create inefficiencies. AMP-2 was designed specifically to accommodate the Midsize platform. Going forward, we will look holistically at capacity utilization—including robotaxi volumes and other potential uses from Lucid Technologies—to optimize fixed cost absorption and capital efficiency. We are evaluating options and will make decisions once we complete the strategic plan.
Okay. That's super helpful. Appreciate it.
Thank you. Our next question will come from the line of Stephen Gengaro with Stifel. Your line is open.
Thanks, and thanks for taking the question. Two things for me. First, when you think about the next couple of years, is the underlying business plan changing as far as willingness to license the technology as one thing I'm thinking of, and also just the focus and importance of the Midsize? Is there anything materially changing in the underlying plan? Is it all sort of financial and cost related?
Stephen, thank you. Licensing is absolutely an option we're evaluating as part of Lucid Technologies. We could license components or technology to other OEMs or industries. That said, these opportunities become more actionable once we stabilize the core business. Our immediate priorities remain the three Cs and the four must-wins. The strategic plan will detail how licensing, Midsize, and other initiatives fit into the long-term plan, but at this stage the core focus is operational stabilization combined with protecting strategic growth opportunities.
Okay, great. Thank you.
One moment for our next question, that will come from the line of Itay Michaeli with TD Cowen. Your line is open.
Great. Thank you everybody. It's been great working with you. Thank you for everything, all the best. Maybe first question: I'm curious what the go-forward kind of marketing and branding campaign might look like as you curtail production and hopefully can strengthen pricing. Just curious how you're thinking about brand positioning, particularly ahead of the Midsize launch.
Itay, thank you for the question. We just initiated a brand audit to reposition our brand in a way that is consistent with our product and customer experience. Our brand is a strength, but perception is not consistent across markets and internally. We will build a coherent positioning that emphasizes product strengths and customer experience. This effort will be independent of production volumes and is intended to clarify what makes Lucid unique in the eyes of customers, including emotional and experiential aspects that attracted me to Lucid in the first place. I look forward to sharing more on this as work progresses.
That's helpful. As a quick follow-up, you mentioned an effort to improve unit economics. Typically, there is some relationship between volume and unit economics. During this period where volume is a lull, how are you able to improve unit economics and perhaps any targets would be helpful. Thank you.
Itay, we're not providing specific targets today, but there are multiple levers beyond volume. Supplier negotiations and agreements, product configuration simplification, optimizing our configurator to favor trims and options that support better economics, and operating efficiencies across manufacturing and supply chain all drive unit economics. We are actively working supplier-side and internally to improve cost per vehicle and protect margins while we restore volume discipline.
Thank you.
Thank you. Our next question will come from the line of Michael Ward with Citigroup. Your line is open.
Thank you. Good afternoon, everybody. When I look at page 23, and you talk about $1.4 billion in cash savings by the end of the year, are those annualized savings or a 2026 impact? Is it all going to occur in the second half?
Hi, Mike. The $1.4 billion is the expected impact for 2026 between now and year-end. Some changes are structural and will reduce the baseline going forward. Part of the savings will be reflected this year and some actions may be phased into next year, but you should read the $1.4 billion as a 2026 impact.
It sounds like some CapEx is deferred, not eliminated, and inventory reduction is more structural. Is that the right way to read it?
That's absolutely right. We're taking structural actions to remove cash from the business where appropriate and optimizing timing of spend. For inventory, the key is accelerating conversion: reducing the time from raw materials to revenue and carrying the lowest sustainable level of working capital. This is an end-to-end approach that touches receivables, payables, and inventory.
It leads to a lower inventory write-down, correct?
That's right.
The second thing is on the Cosmos. Where are those prototypes being built? Are they in AMP-1 or elsewhere?
Cosmos prototypes and certain pilot builds are being assembled in Coolidge, Arizona, in a facility adjacent to AMP-1. We also have a test track in Arizona where we evaluate prototypes. There will be a technology and production transfer from Coolidge to AMP-2 in Saudi Arabia as part of the industrialization plan.
When will prototypes begin coming off AMP-2?
We expect AMP-2 to be ready for production in early 2027, with Midsize production ramping in the second half of 2027. Prototypes and industrialization testing will precede that in early 2027.
Okay. Thank you very much. Really appreciate it.
I'm showing no further questions in the queue. I'd like to turn the call back over to Silvio for any closing remarks.
Thank you. As we come to a close here, I'd like to thank you all for joining us today, for your engagement and for your questions. Our priorities are clear: reduce cash burn, improve quality and the customer experience, build a high-premium team and culture, simplify the company, and deliver our must-win projects. We know that rebuilding credibility will take time, and we intend to earn it through consistent results. Thanks again. I look forward to seeing you again soon and continuing our conversation. Goodbye.
This concludes today's program. Thank you all for participating. You may now disconnect.