Lucid’s Gravity SUV arrives with high expectations, and big risks

Lucid Engines It receives rave reviews from critics. But there is a severe lack of customers.

This is a problem the company cannot afford.

The Arizona-based EV maker’s high-end technology, rich backers and highly praised cars. However, it struggled to meet production targets and failed to attract the attention of established luxury brands with a century-old history.

Lucid is ramping up production of its high-end three-row Gravity SUV, even though it has sold only a few hundred units so far in 2025. Gravity’s production ramp has faced a number of challenges, primarily supply chain shortages.

But the company already has plans for another vehicle aimed at the mid-market that could compete with the best-selling model. Tesla’s Model Y SUV. It is investing in self-driving cars for consumers while working on a robotaxi fleet. Uber and driverless technology maker Nuro.

In this process, Lucid wastes a lot of money. The company’s third-quarter results were worse than Wall Street expected, with a net loss of close to $1 billion.

“Their gross margin is getting a little bit worse,” RBC Capital Markets analyst Tom Narayan said. “A lot of people are doing the math on this. How long can the company continue to lose cash?”

Adding to the challenges is a tougher environment for all EV manufacturers. Demand fell short of expectations and many automakers withdrew. EVs have lost significant support from the federal government, including a $7,500 tax credit, charging financing and restrictions on state-level programs that encourage automakers to produce zero-emission vehicles.

‘A great car’

Lucid’s first vehicle, a sedan called Air, is the most popular vehicle in its segment. Cox Automotive. It was the third-best-selling full-size luxury sedan and the best-selling electric sedan in the third quarter, according to the company. The Air is frequently a “critics’ pick.” No other EV can match the Air Grand Touring’s 512-mile range in one of its top trim levels.

Last year, Lucid delivered 10,241 vehicles, mostly Air sedans. 71% increase compared to 2023. US EV leader Tesla delivered 1.8 million units.

Unfortunately, sedans are constantly compared to SUVs, crossovers, and pickups; These now almost dominate the roads. According to Edmunds, seven of the 10 best-selling models in the United States are from these three segments.

“It was a great car,” said Sam Abuelsamid, telemetry vice president of market research. “It’s still a great car. But it came out a little at the wrong time.”

According to JATO Dynamics, Tesla’s Model Y became the world’s best-selling vehicle in 2023. It has sold more than 265,000 units in the US by the third quarter of 2024. According to Cox AutomotiveThat’s about 100,000 more than the Model 3 sedan. Among electric vehicles, the Model 3 is unusually popular for a sedan. Rounding out the top five behind the two Tesla Models are crossovers: the Chevrolet Equinox, ford Mustang Mach-E and Hyundai Ioniq5.

The Model S, the Air’s closest Tesla rival in terms of size, performance and price, sold just over 4,500 units during the same period.

Top-volume EVs like the Model Y are also cheaper than the Air, which starts at just over $70,000 and goes up to around a quarter of a million dollars. The Model 3 is nearly half that. The average EV transaction price in November was just over $59,000, according to Cox Automotive.

“There’s not enough market for these premium electric sedans right now,” Abuelsamid said.

Lucid has sold just over 300 Gravity SUVs in the U.S. through the third quarter of 2025, according to Cox Automotive. Like Air, Gravity has a high price tag. However, the company said Gravity would attract six times more customers than Air.

“We’ll see if that’s the case,” Narayan said. “The last numbers I’ve seen show that this is equalizing sedan sales.”

Lucid’s interim CEO Mark Winterhoff told CNBC in an interview that the company is seeing “very good demand growth for Gravity compared to Air.” He added that most customers configured the car to push the price above $100,000.

production problem

Demand may be strong, but Lucid also needs to get the tool into customers’ hands. Gravity’s early 2025 launch was due to shortages of key materials such as magnets, aluminum and chips, Winterhoff said in the company’s third-quarter earnings call.

“Up to this point, we haven’t been able to produce as much as we would like,” Winterhoff told CNBC. “We are very confident that we have resolved these issues at this time.”

Deliveries have increased for seven consecutive quarters, resulting in a 47 percent increase over the third quarter of 2024. Lucid added a second shift in the final assembly section of its factory to meet demand.

The company said demand remains resilient despite concerns that the EV market will stagnate after the federal EV incentive ends on Sept. 30.

“Our delivery numbers increased in October,” Winterhoff said. “Whereas many other pure EV players and even EVs from established players also have [internal combustion] Deliveries in vehicles have dropped dramatically.”

Still, analysts say producing electric vehicles is a more difficult time than when Tesla developed the Model 3 and Model Y.

“They were the only game in town,” Narayan said. “So there was no competition there. They also benefited from battery prices coming down significantly. And they got a lot of government support. We’re in a very different world today.”

If gross profit continues to deteriorate, the company will eventually have to return to investors, Narayan said. Lucid is currently about 55% owned by the Saudi Public Investment fund, according to FactSet.

In the third quarter, Lucid and PIF agreed to increase its delayed term loan facility from $750 million to approximately $2 billion. DDTL is a loan that the company can avail over time rather than all at once. This brings its total liquidity to $5.5 billion. The company said it has enough cash to get through the first half of 2027.

“The Saudis have invested billions of dollars in Lucid so far and have been very patient with Lucid’s struggles as they try to increase production and sales,” Abuelsamid said. “It’s unclear how patient they will continue to be.”

The company is also accepted A $300 million investment from Uber in September to develop a robotaxi platform with a third partner, autonomous driving technology developer Nuro. Moreover, Uber plans to purchase 20,000 Gravity vehicles for its driverless fleet.

Separately, Lucid has a partnership with: Nvidia developing what it calls “the first true out-of-sights, out-of-hands, and out-of-mind (L4) consumer autonomous vehicle.” L4 means Level 4; This is almost the highest level of autonomy in the current system. Automotive Engineers Association.

“You have to invest first, and then you’ll see the benefits,” Winterhoff said. “And so we have to do a lot of things in parallel.”

Smaller SUV on the way

Despite Gravity’s production challenges, the company is already working on its next vehicle; It’s a midsize crossover priced close to the industry average of about $50,000.

This could increase volumes but deepen losses.

“If gross margin is negative on a vehicle that trades for $100,000 or more on average, which is what Lucid’s Air and Gravity is currently aiming for, what will it look like when the company sells a vehicle for close to half that?” Narayan said.

“One answer might be: It’s a much larger scale, so you have better operating leverage,” Narayan said. He said that the claim that Lucid’s technology allows it to get much more range from the battery than competitors stands out.

“Our vehicles are 30% to 40% more efficient than competitors, meaning they use smaller batteries to achieve the same range,” said Emad Dlala, Lucid’s senior vice president of engineering and digital. “This means lower [bill of materials] cost. That means better margins.”

Dlala says the Lucid Air Pure has the battery size of the Tesla Model Y, but 420 miles rangeabout a hundred miles more Tesla Model Y.

Lucid says the money it spent went towards developing a set of technologies and manufacturing processes that are difficult to copy.

“Lucid has about 10-plus years of powertrain history,” Dala said. “This didn’t come overnight. There are a lot of IP-patented technologies across powertrain, vehicle and software,” leading to “efficiency gains across the board,” he said.

This even extends to the way cars are made.

“We use manufacturing processes here in powertrains that no one else in the industry uses,” said Adrian Price, Lucid’s senior vice president of operations.

“Lucid has a very vertically integrated structure,” he said, meaning much of the car manufacturing process happens in-house. “We have a lot more of our own subassemblies. It’s also how we get performance that other people can’t get. A lot of that engineering is outsourced by other major automakers. We do not just the engineering, but the manufacturing, and we can control some of the Lucid secret sauce by doing it in-house.”

One area where Lucid outperforms its competitors is brand awareness.

“A lot of people don’t know what Lucid is,” Narayan said. “I think that’s their biggest obstacle.”

The company has placed more emphasis on marketing and raising its profile in the luxury market, where it competes with the likes of Mercedes-Benz, Porsche and BMW.

“The buyer of a luxury brand usually likes things like heritage,” Narayan said. “Brand is important. So how do you create that from scratch?”

“We are very well known and get tons of praise in the automotive press,” Winterhoff said. “So everyone who cares about cars knows that. But that’s not the majority of car buyers.”

So he launched a new marketing and advertising strategy for Gravity and became Hollywood actor Timothee Chalamet’s first “global brand ambassador.”

“We’re moving from focusing on our tools, the capabilities of our tools, to what does having a Lucid mean and what does it say about you?” Winterhoff said.

Winterhoff said he’s confident the company can successfully leverage Gravity as it builds and eventually delivers its mid-size vehicle.

“At this point I think this is a sustainable business,” he said. “We also have a clear plan for profitability.”

Watch the video to get an exclusive inside look at Lucid’s Gravity production and find out what the future holds for the automaker.