Gary Zhou 
Lucid Group (NASDAQ: LCID) held its Q4 2021 Earnings Call last evening, where it revised its 2022 production forecast from around 20,000 vehicles to between 12,000 and 14,000 units this year. The adjustment was unforeseen as Lucid has been slowly but steadily ramping production of the Air, its first vehicle. However, the company’s call last night clarified what the automaker expects for the future, looking at 2022 and 2023 as perhaps the company’s most crucial for any possibility to compete with industry leader Tesla.
Lucid said on its Q4 2021 Earnings Shareholder Deck that it would be revising its 2022 targets, reducing them by around more than 20 percent. Lucid will aim for 12,000 to 14,000 units, citing supply chain constraints and “a continued focus on quality.”
CEO Peter Rawlinson said the company’s insistence on the highest quality parts, along with logistics issues, has been the biggest bottleneck in Lucid’s ramp-up of the Air. The pandemic also limited visits to supplier facilities. However, the shortages are not for crucial parts like semiconductors or batteries, which have been in short supply since the COVID-19 pandemic started in early 2020. Instead, the issues come from some interior and commodity items.
“In some cases, the pandemic meant that our teams could not visit our suppliers in-person to ensure alignment on engineering specifications and tooling,” Rawlinson said. “As travel has opened back up, our supplier quality teams have been able to address many of these issues. I will note that these issues are impacting only a handful of our approximately 250 suppliers and are not affecting critical single-source or dual-source components like semiconductors or batteries. Instead, it’s been commodity items like glass and carpets, and we’ve adapted by changing our specifications or indeed switching vendors if needed.”
The adjustment in production output for the year has analysts revising their outlook for Lucid Group for the year.
Bank of America analyst John Murphy said the change was “somewhat surprising in magnitude,” although the firm expected the output rate to decrease at some rate. Despite this, Murphy still holds the same $60 price target and maintains a “Buy” rating on $LCID stock, citing the company’s new Saudi Arabia factory as a chance for more international expansion and Lucid’s strong financials, backed by 25,000 orders of the Air sedan.
“Capacity from this facility is targeted to be 150k vehicles per annum, initially to fulfill the Saudi Arabia market demand, but eventually to export to other global markets, and construction is targeted to commence in 1H:22,” Murphy said in the note (via Benzinga).
At the time of writing, Lucid shares were trading at $24.50, down over 15 percent.
Murphy is ranked 640th out of 7,793 analysts on TipRanks. He has a 60 percent success rate and an average return of 12.2 percent.
