Hello, and thank you for standing by. Welcome to the Lucid's Third Quarter 2022 Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speakers' presentation, there will be a question-and-answer session. [Operator Instructions] I would now like to hand the conference over to your speaker for today, Maynard Um. You may begin.

Thanks, Towanda, and welcome to Lucid Group’s third quarter 2022 earnings call. Joining me today are Peter Rawlinson, our CEO and CTO; and Sherry House, our CFO. Before handing the call over to Peter, 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, macroeconomic and industry trends, company initiatives and other future events. These statements are based on predictions and expectations as of today and actual events or results may differ due to a number of risks and uncertainties. We refer you to the cautionary language and the risk factors in our quarterly report on Form 10-Q for the quarter ended September 30, 2022, and the forward-looking statements on Page two of our investor deck available on the Investor Relations section of our website at ir.lucidmotors.com. In addition, management will make reference 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 investor deck. With that, I'd like to turn the call over to Lucid's CEO and CTO, Peter Rawlinson. Peter, please go ahead.

Thank you, Maynard, and thank you, everyone for joining us for our third quarter earnings call. Now, I'm delighted to say, that we've made significant progress towards achieving our 2022 production targets of 6,000 to 7,000 vehicles. In Q3, we achieved a record quarterly production of 2,282 vehicles, more than triple that of and deliveries of 1,398, which is more than double that of Q2. I want to extend a heartfelt thank you to everyone at Lucid, your collective efforts, which has been central to driving these meaningful increases, as we scale and ramp production and deliveries. You continue to play a key role in the progress of our production ramp and in so doing, help getting more customers behind the wheel of their new Lucid Air. Now, in Q2, we weren't in a position to give you a figure for a weekly production number. But today, I'm pleased to announce that we've now proven our ability to produce 300 cars a week. And even more importantly, we have a visible pathway to our next incremental production rate. And this has been a huge team effort drawing upon talent from right across the company. We've made some difficult decisions and some systematic changes to the organizational structure. And I think now that the results are beginning to speak for themselves. We're working very hard to control what we can control, but the supply chain situation remains fluid. In fact, even now, we're experiencing a challenge with one particular item that will lead to some very temporary time-out for the line. However, we believe we can still achieve our 6,000 to 7,000 production guidance for 2022 despite this particular issue. And during this time, we'll implement a whole batch of improvements that will further enable us to produce even more cars. Now, turning to logistics, we believe we've made significant progress in our plan to bring our logistics operations in-house and to restructure our logistics and manufacturing organization. We addressed some of the primary gating factors that impacted production in the second quarter. Steve and David and the new leaders we put in place, have been doing a very good job, providing valuable leadership in executing this transition. But, whilst I'm pleased with our progress, we do have more work to do, but it is my privilege to continue to personally lead this important team effort alongside incredible team here in Arizona. So in fact, I'm joining today's earnings call once again from AMP-1 in Arizona, right off the factory floor where we've been very busy. Just last week, we commenced production of a Lucid Air Touring that I'm looking forward to personally deliver to the very first who want to be customer next week. Touring is around 620-horsepower dual-motor, all-wheel-drive version of the Air with a zero to 60 of around 3.2 seconds. And whilst I'm very excited to be able to offer a more affordable version of Air with Touring, I'm equally as excited by Lucid Air Pure, which will be our most affordable Air variants with up to 480 horsepower. We're on track to start production of Pure soon and expect to start delivering the first of these vehicles before year-end. So stay tuned next week for our Lucid Launch Event for a lot more details. But I'll give you a little sneak peek with some numbers. We talked about Grand Touring getting the industry net leading 4.6 miles per kilowatt hour. And now I'm happy to say that Touring will be able to match the landmark 4.6 miles, per kilowatt hour efficiency of Grand Touring, albeit at a more affordable price point. And that's an important incremental step to bringing ultra-efficient EVs more attainable. And we will continue to push relentlessly to get closer to what is our aspirational target of close to five miles per kilowatt hour for Lucid Air. Now, this incredible efficiency is driven in large part by our in-house developed Powertrain Tech. Many of you heard me say this before, this truly is a technology rise and not all EVs are created equal, yet Lucid enabled more miles per kilowatt out of battery. And this allows us to provide world-leading range with a smaller battery and so offer exceptional rear seat ergonomics with a deeper footwell in both the Touring and Pure models. And we continue to garner external validation of our technology progress, through such recent awards as Top 10 Best Engine and Propulsion Systems from WardsAuto. But we're not stopping there. In Q3, we introduced the Sapphire Brand, Lucid's new high-performance, driver-focused brand. Sapphire represents the pinnacle of electric performance, finally achieving the satisfactory performance that I so long searched for. Air Sapphire will be the very first Lucid product to bear the Sapphire name, and we'll build upon our technical prowess to take electric high performance to next level. At the heart of Lucid Air Sapphire is the three-motor powertrain, the first from Lucid, featuring a brand-new twin motor rear drive unit and a single motor front-drive unit. All developed and manufactured enhanced by Lucid. And make no mistake in terms of performance, efficiency and compactness, I believe these are truly state of the art. The twin rear drive unit introduces new heat exchanger technology and heightened coolant flow rates. In addition, the battery system is upgraded for higher power and more precise thermal logic. And with over 1,200 horsepower, Lucid Air Sapphire is not only the most powerful electric sedan in the world; it is the most powerful sedan in the world. We're regularly testing Sapphire now. In fact, I'm currently personally test driving Sapphire, and I'm satisfied with the progress it's making. We expect to start production in the first half of 2023. We're also delighted to say that Project Gravity SUV will be ready to be unveiled soon. We're planning events in early 2023, and we'll begin taking reservations from that moment ahead of the start of production in calendar year 2024. So I'd go so far to say that I believe the performance metrics of Gravity are going to be unsurpassed within its class, further demonstrating our technology prowess. We're going to take some -- the same space concept, the range, the efficiency, technology, design elements and performance and apply all that to create, what I believe, will be truly a landmark SUV. We're readying our factory through Phase 2 here at AMP-1 in Arizona. Specifically, we're expanding the north end of the body shop to get ready for Project Gravity and the south side of the building. The new assembly halls where we'll run both Air and Gravity down that line. Now, I believe Gravity can have as much, if not, even greater impact upon the SUV market than that Air has for the luxury sedan markets. And I cannot wait to share more details in the not too distant future. Stay tuned for our launch event next week, where we will go through the Lucid Air line and provide a sneak peek on the Gravity SUV. Now while I'm very excited by our vehicle roadmap, I'm also thrilled with our software progress and in particular, the latest UX 2.0 release. We made a very conscious decision to design Lucid Air from the beginning as truly software defined vehicle. The synergistic integration of software and hardware engineering results in a vehicle that can get better over time, long after customer takes delivery through simply receiving an over-the-air update. Now during the third quarter, we released 14 over-the-air software updates, more than one per week. Our latest over-the-air software update is the most extensive to date with significant advancements and improvements across the vehicle. New features include Instant-on Glass Cockpit and Pilot Panel displays, launch of highway assist for the DreamDrive advanced driver assistance system, improved on-screen layouts and indeed many other features. Well, I think it's very important to highlight that Lucid Air has always had world-class software you've likely just never seen it. It's a software that drives the powertrain, the software that manages the batteries, all the software that controls the critical components of the vehicle. In addition to our in-house manufactured technology, software is a key element for Lucid Air's unheralded performance and efficiency. Put simply, we've never achieved an EPA estimated 520 miles in the case of the Dream edition range had it not been for this software. Of course, these components are all over-the-air updatable as well. Our world-class software team led by Mike Bell will be releasing many more features in the very near future. In fact, just last week, we announced SiriusXM's radio -- audio entertainment experience will be a standard in-dash feature across the full lineup of Lucid vehicles. The beta will be available at no cost to Lucid owners and in 2023, we expect to deliver the full implementation. Lucid owners will receive a full three-month trial subscription. As everyone may be aware, my bigger picture vision has always been to establish a Lucid group of companies that encompass not just cars but an energy ecosystem as well as a technology licensing. And these are the three pillars, if you will. So we recently launched our Lucid vehicle accessories, which includes the Lucid Connected Home Charging Station, the first step into the company's future energy ecosystem. Lucid's Home Charging Solution can support up to 19.2 kilowatts of electrical power which enables charging of up to 80 miles per hour to match Lucid Air's industry-leading fast AC charging rate. The Home Station will effectively double the rates at which the Lucid Air can be charged when installed at full power compared to the included charging cable. Now the Charging Station is also equipped with hardware ready for bidirectional electric power and is Wi-Fi enabled for the future over-the-air updates. Turning to our battery strategy. I'm delighted to announce that we recently validated battery cells with another global battery supplier. We expect this agreement along with our existing agreements with LG and Samsung to give us sufficient cell supply both in 2022 as well as 2023. And we're working on long-term supply arrangements with numerous suppliers. Indeed, I'd like to take this moment to thank all our suppliers who work very hard with us during these challenging times. So to sum up, I'm incredibly proud of the Lucid team and what we've accomplished despite the many challenges that we and the industry faced. In just a short amount of time, we brought our logistics operations in-house. We restructured our logistics and manufacturing operation. We brought in exceptional leadership. We've addressed some of the gating factors impacting Q2 production, and we delivered on the software experience, one would truly expected Lucid Air and launched our technology division. I believe we're only just getting started. We'll deliver variance across the performance and affordability spectrum with Sapphire, Touring and Pure. We'll begin on our global expansion with the first deliveries into Europe and into Saudi Arabia by the end of the year. We'll unveil Project Gravity SUV early next year, and we'll continue to focus on extending our unsurpassed technology leadership. Lastly and most importantly, I'd like to thank our customers for your faith in us. I've met a number of you and your families and your feedback and delight are really a part of what drives me and the whole team here to deliver the quality and experience you truly deserve. We're ramping production as quickly as we can to get more vehicles into the helm of our customers. And I want to reiterate that, I firmly believe we're track to achieve our 6,000 to 7,000 vehicle production guidance for 2022. And with that, let me turn it over to Sherry for an update on our financials.

Thank you, Peter, and thank you to those who are taking the time to join us today. Before sharing our Q3 results, I'd also like to extend my sincere gratitude to our customers as well as our entire Lucid team members, our partners and our suppliers. In Q3, we scaled across every corner of our business, from manufacturing and engineering to G&A, sales and service. We've made tremendous strides in our production ramp. We launched our new Sapphire brand, introduced additional product features and worked to enhance our customer experience through our expanding sales and service network. All of this strong progress was only possible through the perseverance and collaboration of each and every one of you, and I'm incredibly proud to work alongside you. Now, turning to our third quarter financial results. As Peter mentioned, we produced 2,282 vehicles, more than triple our Q2 production numbers and delivered 1,398 vehicles, which was more than double Q2. The variance between production and deliveries was primarily a function of vehicles distributed across three areas of the delivery process, vehicles in transit, vehicles awaiting pre-delivery inspection and vehicles awaiting delivery to a customer. As we mature as a business, we'll continue to learn and refine our in-transit inspection and delivery processes. So in the near to medium term, we expect vehicles produced to placed at a higher volume than vehicle deliveries as we accelerate our production and we initiate international deliveries in the fourth quarter, the latter which requires longer in-transit times. We continue to have strong demand with more than 34,000 reservations as of November 7. To put the reservation number in context, this value equates to the amount of our current annual tool capacity in AMP-1. This also compares to the over 37,000 reservations we had in Q2. The reservation calculation includes new reservation, nets out all deliveries that we accomplished in Q3 and Q4 to-date and also net out cancellations. It's important to note that this number does not include the up to 100,000 vehicles under the agreement with the government of Saudi Arabia. We expect deliveries to start next year. Meetings have been ongoing with the government, and we're actively working on scheduling of the first deliveries. We also have not opened up reservations for Project Gravity SUV. We expect to start taking reservations in early 2023 opening up what we believe will be a very large and incremental addressable market for us. Our ultimate goal is to sustain a healthy reservation bank, balancing wait times and deliveries until our supply increases with our expanding factory footprint. Turning to our P&L. Q3 revenue was just over $195 million, which represented a quarter-over-quarter increase of 101%. We remain intently focused on scaling the business and continue to expect to see significant growth in revenue as delivery volumes ramp. We're also excited about our recent launch of Lucid vehicle accessories, an expanding line of accessories that serve as the stylish complement to the entire Lucid Air vehicle lineup. In addition to the Lucid connected home charging station that Peter mentioned, we also announced a number of other accessories, including a cargo capsule that many customers have been asking for. Turning to our cost of revenue. Cost of revenue was $492.5 million, which includes direct part, material, shipping and handling, IT costs, overhead, personnel costs, including wages and stock-based comp, estimated warranty cost and inventory write-down, primarily related to reducing inventories to their net realizable value. Similar to last quarter, this expected increase was primarily related to personnel and overhead costs as we ramp up production, offset by lower freight costs quarter-over-quarter, due to our ability to shift the vast majority of our international shipments from air to ocean freight. As we produce vehicles at low volumes on production line designed for higher volumes, we have and will continue to experience negative gross profit related to labor and overhead costs. Additionally, we recorded a lower of cost or net realizable value adjustment of $186.5 million in Q3. This amount contemplates the value we anticipate receiving upon vehicle sale after considering cost necessary to convert the inventory on hand into a finished product. During this quarter, our LC NRB [ph] impairment increased primarily due to product mix and an increase in inventory levels, including firm commitments. Moving to operating expenses. We're still in the growth stages of our company and investing behind our strategic priorities, but we're doing this in a prudent and methodical manner. As I said last quarter, we're instilling a culture of cost consciousness and we're working across the company to identify and execute on cost efficiency opportunities. R&D expense totaled approximately $213.8 million, up 7% sequentially. The sequential increase was related to the continued ramp-up of the Gravity and Sapphire program as well as headcount growth to support further investment into our cutting-edge tech and products, partially offset by lower stock-based compensation expense. SG&A expense was approximately $176.7 million, up 8% sequentially. SG&A consists primarily of personnel-related expenses, allocated facility costs and other general corporate expenses. As we continue to grow as the company, build out our sales force and commercialize the Lucid Air and planned future generations of our electric vehicles. We expect that our SG&A costs will increase. We ended the quarter with 29 studio and service centers, flat from Q2. We opened our first studio in Saudi Arabia, at the end of October as well as our first Texas studio in Plano. And we expect to strategically expand the number of studio and service centers with a number of new openings across North America and Europe through the remainder of this year. We increased our mobile fleet by nearly 10% in Q3, which is an important element in ensuring high customer satisfaction as the fleet of Lucid vehicles continues to grow. Our mobile vans can perform over 80% of the services that can be done in a service center. Stock-based compensation in the quarter was $83.3 million, approximately $10.8 million within cost of revenue, $34.1 million in research and development and $38.4 million within SG&A. Other income was favorably impacted by a non-cash impact, mark-to-market value of private warrants in the amount of $140.1 million. The value of the warrant can be influenced quarter-to-quarter by a number of factors, including Lucid's Group's end of quarter share price. Our overall performance in the quarter was a net loss of negative $530.1 million. Moving to the balance sheet, we ended the quarter with just over $3.85 billion in cash, cash equivalents and investments with total liquidity of $4.2 billion when considering our global credit facilities. To continue to drive our growth plan and capture significant market opportunity we see, we do want to maintain the flexibility to raise additional capital. Our major shareholder, the public investment fund, has expressed a willingness to support us in a future capital raise on a pro rata basis. We are incredibly grateful to have such a strong strategic investor as our partner. We are putting in place, a $600 million at-the-market program which will create flexibility for us to raise new third-party equity capital. Combined with a pro rata participation, by the Public Investment Fund, this would allow us to raise up to approximately $1.5 billion net of fees and other operating expenses. The ATM program provides us with an attractive option to raise capital, but we have no obligation to execute on the program, and we will continue to be opportunistic in our approach to financing. This is consistent with our historical funding actions, including raising funds last year with a green convertible bond and earlier this year securing a $1 billion ABL facility. Our strategy is to take a holistic approach towards funding the business. We believe we have access to a variety of available options in debt and equity markets as well as access to low-cost government programs. We'll continue to be opportunistic in raising capital, and this ATM program is one incremental tool in our broader funding strategy. Turning to inventory, Inventory in the quarter increased due to a combination of our production volume ramp and vehicles in-transit to customers. However, we reduced work-in-progress inventory by more than half relative to last quarter, as we made progress on completing production of in-process vehicles from Q2. In Q3, we secured approximately 495 acres of land, situated underneath our AMP-1 factory, and we also entered into an option to purchase additional land around our existing facility, further securing our future needs. Capital expenditures were $290.1 million in Q3. Year-to-date CapEx was close to $785 million. Our Phase 2 expansion at AMP-1 is progressing, and we expect to begin moving Air production to the south building in the first half of next year. Construction is ongoing, but we've started installing some equipment and as we discussed last quarter, we're using a portion of our expanded footprint for logistics. Now, moving to our international expansion efforts. Just recently, Peter and I, and some of the Lucid team went to Kingdom of Saudi Arabia, meeting with government and banking partners in conjunction with the opening of our studio in Riyadh. We're already starting to realize the benefits of the KSA relationship in the $3.4 billion economic support. We were happy to announce the signing of a memorandum of understanding with the Human Resources Development Fund for HRDF in Saudi Arabia as well as the receipt of the first grant from the Ministry of Investment of Saudi Arabia, also known as MISA. HRDF, which is part of the National Development Fund, will contribute 75% of the training costs and salary support for more than 1,000 employees, resulting in an estimated contribution of more than US$ 50 million over a five-year period. This collaboration and investment from HRDF will allow Lucid to provide essential and meaningful training opportunities for Saudi National, many of whom have not worked in the EV space previously and will be instrumental in making sure we have well-trained professionals as we launch Lucid's first internal manufacturing -- international manufacturing locations. We're thankful for the strong support and collaboration in the region and glad to see it all coming to fruition. Turning to the outlook. We're reiterating our 2022 production guidance of $6,000 to $7,000. We had strong production in Q3, and we believe we're on track to achieving this outlook. We ended the quarter with a little over $3.85 billion in cash and investments, which we continue to believe is sufficient liquidity at least into the fourth quarter of 2023. This assumes we are investing fully in accordance with our forward plan, which includes the Phase 2 expansion of AMP-1 in Arizona, the engineering and prototyping of Gravity, the continued build-out of studios and service centers in North America, Europe and Middle East and some early spend associated with entering the Asia-Pac and China market. Moving to CapEx. We expect capital expenditures for 2022 to be around $1.2 billion. The reduction in CapEx guidance for 2022 is largely a function of timing and does not represent an overall reduction in the budget. Any dollars not spent in 2022 are anticipated to be spent in 2023 and a corresponding shift from the end of 2023 into 2024 is likely to occur. In closing, we're excited about our progress in the many exciting coming milestones in our road map. By the end of this year, we will have introduced four of our Lucid Air vehicle variant: Grand Touring Performance, Grand Touring, Touring, Pure and Air Sapphire and Gravity are on the horizon. Our international expansion is also well underway, and you can see that we're starting to realize the benefits of our strong partnership with the government of Saudi Arabia. We can't wait to share more about some of these great projects that the Lucid's team is working on, including our Lucid Launch Event on November 15. With that, let me turn it back to Maynard to get your questions. Maynard? A - Maynard Um: Thanks, Sherry. We'll now start the Q&A portion of the call. Today's Q&A will feature some questions from some of our retail investors who are an important constituency of our shareholder base through the Say Technologies platform. We'll follow that by live analyst questions and close it out with a couple of statements if we have time. So let's start with the first question. What is the production target for 2023?

So we will be providing a detailed outlook for 2023 today, we will likely provide this information in our next earnings call, which will cover our Q4 and full year performance and expectations for 2023. As we said in our prepared remarks, we're intently focused on ramping production. We have line of sight into our next incremental ramp-up, and we're delivering as many vehicles to our customers as possible. So by next year, we expect to be producing our full line of Air from our highest performing Air Sapphire to our most affordable Air Pure. And we plan to begin delivering some of these vehicle variants internationally. We're also planning on unveiling our Gravity SUV. So we're very excited about 2023.

Thanks, Sherry. We’ll move to the next question. When are you planning to start building and utilizing the railway transportation in the Casa Grande factory to reduce transportation costs for suppliers and cars delivery.

Yes. So as I mentioned, we're working across the company to identify and execute on cost efficiency opportunities generally. There's a number of opportunities we could pursue in which they make more sense to pursue as we ramp volume. If it makes financial sense, we, of course, will consider them, including the use of the railway transportation, which is right in our backyard.

Yes. I think I'd want to add that Arizona and the City of Casa Grande have been incredible partners, and we're always looking for additional opportunities to drive our business, whilst at the same time helping to spur jobs and economic growth in this region.

Thank you. And let's move to the next question. It looks like there's about 1,000 cars that have been produced and not delivered. Why is that? And where are these cars stored?

Yes. Well, I mean this is a function of the cadence by which we've ramped up. We've made a remarkable strides in ramping up. And naturally, there's going to be a phase lag between producing the cars and getting them out to our dear customers. So it’s very much a cadence issue and a phase lag phenomenon.

Yes. As I said in my prepared remarks, in the near to medium term, we expect vehicles produced to pace at a higher volume in vehicle deliveries is we're accelerating production, and we're also going to be initiating our international deliveries in the fourth quarter, and that requires longer in-transit time.

Great. Next question is, what is your current development progress of the current CarPlay version? Is it still planned to be released by end of year? And are you planning on partnering with Apple to add their upcoming fully integrated CarPlay in the next year?

Yes. Well, we're most cognizant of the demand for this and the team is working on it. All I can say right now is we are pushing hard to get it to market as soon as we possibly can.

Great. We'll move to the next question. The report of Q3 deliveries and confirmation of 2022 delivery targets was helpful. Going forward, does Lucid plan to provide more transparency to investors between earnings calls?

Yes. So it is our intention to release our production and delivery numbers each quarter ahead of earnings and the hope of providing greater transparency. We know this has been important to the retail and the institutional shareholders. And we really appreciate your feedback, and I'm glad to have the confirmation of this information was helpful.

Great. I think we'll move to questions on the phone in the interest of timing getting everyone's questions in. Operator, I just wonder if we could take the first question, please.

Thank you. Our first question, please stand by. [Operator instructions] Our first question comes from the line of John Murphy. Mr. Murphy with Bank of America, you line is open.

Good evening, everybody. Just a couple of quick ones. Sherry, can you remind us of what you think the minimum cash level is you need to keep on the balance sheet along with liquidity. And how do you think about the key drivers of the improvement of cash flow through the end of next year? I mean, there's a lot going on here on product investments, capacity expansion. So I mean it would be understandable that cash burn would stay fairly high in this growth mode, but it seems like you're indicating that improve materially as we go through the end of next year. So just curious on minimum cash and how we should think about cash burn improvement?

Yes. So as I said in the prepared remarks, John, we got cash of $3.85 billion already on the book. And then when you look at the availability under the ABL on available borrowing, that is shift to $4.2 billion. And as even before you look at the fact that we've access to the SIDF program and that's the Saudi Investment Development Fund, which has $1.4 billion loan capacity. We've drawn down on none of that. And so, as we expand next year, a lot of our CapEx is going to be kind of split between both Saudi and then also here in the United States, and so all those Saudi dollars were able to draw down against the loan as well. So as we said, we're good well into Q4 of next year, so you can kind of complete the math there kind of for yourself on minimum cash needs. As for key drivers of it, we're going to continue to keep a watchful eye on manufacturing overhead and labor, we’re looking at our bond cost reductions, keeping an eye on things like raw market -- raw material inflation. And then, of course, a big part of this is our intentional growth, right? We're deciding as a company to expand rapidly, quadrupling the size of our Casa Grande facility and then also the big build-out of our first international facility. So that CapEx spend is what's driving a lot of this spend for next year. And again, that is our decision.

Okay. That's helpful. And then just a second question around the product, Peter. You sound equally excited about the Sapphire and the Pure, which are kind of two ends of the spectrum for Air. I'm just curious, as you think about mix and pricing next year, if you balance the launch of those two products, ones at the high-end, ones at the lower end of the Air, still a high-mix product. How should we think about that, Peter? And if you look at Sapphire, are there volume limits on that, or if the order book is thousands and thousands, will you feel that? Is there a limit on where Sapphire volume could be capped?

Well, any quick side John, for different reasons. I mean the key message here is we're going to use our in-house technology to drive down the cost per mile of making an electric car through efficiency. And Pure is a big step forward in advance in that march. It's going to be an example of us making a more affordable car, a more attainable price point and a fundamentally better car, we're going to get match the 4.6 miles per kilowatt hour that you see with a more expensive model with Grand Touring. But we're also going to have a better rear seat ergonomics, because we have a smaller battery pack, we're going to have class-leading range from this thing. I think it's going to be an amazing product in a character of its own. And it's part of our relentless drive to make more affordable products. And I'll touch on that in my closing remarks. I think for Sapphire, it's really important, because it's a halo product. It's our performance driver focused brand. It shows how far the Lucid brand can go. But it's really important as a market to demonstrate to the world the sheer prowess, the Performance prowess, the drive-ability, that a state-of-the-art, high – ultra-high voltage, homegrown electric powertrain can deliver. I mean Sapphire is the most satisfying driving machine. I mean, I've driven -- I had the luxury of driving phenomenal cars, throughout my entire career. I think this is truly the pinnacle of driving machinery. So there you have a really nice bandwidth from right up to $250,000, and it's a great, great price range to operate in.

Yeah. So we're going to continue to see strong mix with the nice mix of products. And just a helpful indicator to you for informing ASP is the reservations book. And so we've got the 34,000 reservation that equates to greater than $3.2 billion in corresponding revenue. And so that's a helpful indicator as you're looking to build out your models.

It's helpful. Thank you very much guys.

Thank you.

Thank you.

…Next question please.

[Operator Instructions] Our next question comes from the line of Andres Sheppard with Cantor Fitzgerald. Your line is open.

Hi Peter. Hi, Sherry. Thank you for taking my question and congrats on another strong quarter, I just wanted to better understand the CapEx. So it looks like the 2022 guidance was lower to $1.2 billion from $2 billion. You mentioned on the call that this reduction is primarily due to timing. So I'm just wondering I know you haven't disclosed the CapEx for 2023, but should we assume an additional $800 million in CapEx for 2023, or how should we think about that as we go into next year? Thank you.

Yeah. No, thank you for the question, I'd be thinking more of it in terms of a shifting in the way that we estimate for CapEx for both kind of 2022 and if we look at it in 2023, we took a really conservative estimate of all of the exposure that we would have. But as the payment schedules come in, the work is completed, it's been a little bit slower on the payment side. So that -- those dollars that are going to go into 2023, we see that a similar amount of dollars are going to exit 2023 and actually go into 2024. So we don't really see it as incremental per se. We see a little bit more as a shifting of dollars based on the way we did our computations for CapEx. So we'll be giving some more guidance on that in February, when we do our Q4 performance and then also providing some guidance for 2023 then.

Got it. Thank you, Sherry. That's very helpful. And maybe for my quick follow-up is just in regards to the agreement with the government of Saudi Arabia for the up to 100,000 vehicles. I'm wondering if you can maybe give a bit more color there regarding the timing. I think in the past, you've said that, the vehicle deliveries for the agreement are expected to begin no later than second quarter of 2023 with initial orders in the range of between 1,000 and 2,000 vehicles annually. Is there any additional color there that you could provide, or just trying to get a sense of how to think about it going forward. Thank you.

Yes, I would say that that's exactly right. I don't have any updates to that guidance. We were just over in Saudi a couple of weeks ago meeting with the Ministry of Finance on the very initiatives. So we're firming up the details. They're starting to pick trends. We're working on schedules. So all of the others coming together really nicely and that same number that we said, it's going to start a little bit slower. And remember, this is a 10 year agreement that they're next making with us. So just a tremendous commitment from KSA, and that's going to extend across multiple of our vehicle variants. It's going to start with the Air and then move to the Gravity and also to the Lucid platform thereafter.

Yes, indeed, I think that that 10-year commitment just underscores what a great long-term partnership that we've got, particularly with the Public Investment Fund, this is a long-term relationship we're planning for a very successful long-term future together.

Wonderful. Thank you so much and again, congrats on the quarter. I will pass it on. Thank you.

Thank you.

Thank you.

Thank you. [Operator Instructions] Our next question comes from the line of Charles Coldicott with Redburn. Your line is open.

Hi. Thanks for taking my questions. My first one was on the order book. So maybe it was a bit surprising to see it decrease in length since [Technical Difficulty] I appreciate deliveries were higher in the past three months than in prior periods. But I guess that still implies that order intake has slowed materially. Why do you think that is? And do you think that the order backlog will continue to decrease as you deliver more vehicles in Q4. Perhaps you could comment on what you think is ideal order backlog is for Lucid either in units or days of sales?

Yes. So let me just add a little bit. Yes, you absolutely understood it correctly. The reservation does net out all of the deliveries that we had in Q3 as well as up to now in Q4. We did have some cancellations as well. So they've continued to be quite modest, low single-digit level of -- low single-digit percentage amount of cancellations. What we did see, just to give you a little bit more context and a lot of people are asking about this is in August after we announced the bring down to the 6,000 to 7,000, we think some of the folks felt that they might be pushed out a little bit too far, and we did see a bit of a spike in August, the still low single-digit in terms of cancellations. But now that's normalized to a much more normal rate. We also think folks are getting excited for Gravity, and that's going to be coming here in early 2023. We're going to be opening up the order book. So, frankly, Peter can speak to this as well, but I'm quite satisfied with where we are when you think about.

Charles, yes. I mean there's a good number to hear. We don't want people working too long. There's a perception here, the more is better. I think, there's a good number. We've got great, great order book here. I think that, some folks we might have lost a few because our Q2 production was lacking, and there was perhaps an anticipation that the wait would be too long. But we're addressing that now with a dramatic increase in production rates. And also, as Sherry has said, I think the big one for us is going to be Gravity. Gravity is absolutely going to be awesome. And that many people are saying, look, I'm just holding back now. I want to see what this Gravity is going to be like because it's really SUV that I'm hankering after. And if that can deliver the same sort of space concept, the range, the efficiency, the performance, I'm waiting for the order book to open on that one.

Okay. Understood. Thank you.

The cancellations to, we're finding as we do research on that, a lot of it's from the people that order early. So what Peter is talking about that wait time and the proper size that really is important for us to manage.

Got it. Thanks. And then my second question on the gross profit margin. So despite the increase in volumes, there wasn't much improvement in the gross margin versus Q2. Could you maybe comment on that? And sort of more big picture. During the SPAC process, I think your financial guidance at the time indicated that the gross margin would be positive once you were delivering 20,000 units a year. Obviously, a lot has changed since then, including the material costs. But is 20,000 units anywhere near the scale that you think you require to get to gross margin breakeven? And if not, how much higher?

Yes. So first, let me comment on the quarter. So you're right, the gross margin to go a little bit more negative. But a lot of that is related to us ramping up the business, increasing the inventory, the way that lower cost or net realizable value calculation works is you got to take your inventory, you got to then assume that you put into that all the additional dollars needed to make it scalable. You look at what your mix is and then you do that analysis for the impairment. So the impairment had gone up, which is a big kind of driver of that number. We are seeing a lot of positive progress on the gross margin as we go into next year, I'm not ready to comment on that fully yet. We're working through the budget, we might provide some guidance on that in February. But a lot of the things that we're looking at is we're looking at for continued ability to bring our bond cost down, which we're continuing to see. We're also seeing that really coming into effect with our gravity program as well as we're sourcing some of the components. So as we're moving into the future, we're seeing that as well. And you're right, there are some things that are different than when we went out with the SPAC. The raw material prices have been high. We think -- they may have peaked in Q3, and we're starting to see what we believe is going to be some settling in Q4 and beyond, but that definitely hit us hard. And then also freight cost, although we've been able to do within our control to take anything that was an air and transported to sea, freight costs are still high. So we're looking for that to continue to normalize, which is going to really start to enable the types of numbers that we were thinking about previously. So more to come on that probably in our next call. Thank you very much for the question.

Can I just sneak one last one in. The CapEx reduction for this year, what are the projects specifically that have been delayed into next year?

So it's more the payments and most of the spend this year is based on our AMP-1 facility. So this whole quadrupling of the facility that's happening here in Casa Grande, Arizona that's where most of it's happening. Q – Charles Coldicott: Got it. Thank you.

Thank you. Our next question comes from the line of Adam Jonas with Morgan Stanley. Your line is open. Q – Adam Jonas: Thanks, everybody. Just a question on cost cutting. You added about 1,000 new employees in the quarter. I'm just wondering, in addition to some of the delayed CapEx into 2023 and 2024, whether there is an opportunity to maybe slow that pace of hiring? Could we see some of the OpEx or the curvature of it also maybe be flattened a bit sequentially, or how should we think about that as you kind of plow forward with the quadrupling of the size of the facility? A – Sherry House: Yeah. I think that's a keen observation, Adam. I'd say that we're keeping a really watchful eye on this. So we want to make sure that we are scaling in the OpEx really commensurate with the progress in the business. And if the business is progressing at a certain level, we want to make sure that rate is making up. So we'll continue to look at SG&A in particular. But you remember, part of the SG&A is the sales component and so building out that footprint for our studios and our service centers, which is a really important part of our customer service experience. So we don't want to cut ourselves short there, but certainly in other areas of the business we're keeping a very watchful eye on spend. A – Peter Rawlinson: Yeah. I think that's absolutely right, Adam. I think we're balancing our growth trajectory with prudence here. A – Sherry House: You're going to continue to see as the revenue is going up and with a doubling of revenue that we have this quarter. Obviously, as a percentage, the OpEx came down quite a bit, as you would expect, and we continue to expect that type of improvement to happen over time. Q – Adam Jonas: Okay. Thanks, Sherry, thanks, Peter. Just a last quick one for me is thinking into 4Q, the LCNRV impact, you guided that you're still going to be having production over deliveries. And I think implying that as you ramp, you're still going to have the carrying inventory in the channel, even if it's not work in process inventory. But I'm wondering if the number you mentioned of, what was it, $180-some-odd million in the third quarter was something that could flatten increase or be a bogey we could think about as an impact into the fourth quarter as well? Thanks, everybody. A – Sherry House: Yeah. It's a complicated calculation, but I would say it's going to likely improve over time as we continue to grow into the full capacity of our facility and before we start to activate kind of new depreciation expense associated with future expansion. So given that wouldn't be activated probably in the end of the year, you're going to probably see quite a bit of improvement there. Also, as you start to maybe normalize some of the inventory levels as well because remember, a lot of this is kind of looking at inventory and taking kind of a reduction based on that as well. Q – Adam Jonas: Thanks, Sherry. A – Sherry House: Yeah. Thank you, Adam. Q – Adam Jonas: Thanks.

Our next question comes from the line of Vikram Bagri with Needham. Your line is open.

Good evening, everyone. Thanks for taking my question. I wanted to quickly touch on order book and potential revenue as well. The potential revenues dropped $300 million from approximately $3.5 billion in 2Q to $3.2 billion in 3Q. Third Quarter revenues of $200 million do not explain the drop fully. I was wondering if -- what the gap of $100 million here is? Am I reading too much in these approximate figures or early high-priced orders were replaced by lower-priced orders during the quarter, or was there something else like impact of ForEx? What explains that $100 million additional drop in potential revenues?

I'm not necessarily following it. Our deliveries increased by about double and our revenue increased a little bit more than double. So we saw a really nice linear relationship between deliveries and revenue. Our reservation mix continues to be quite high right now because, remember, we've been largely producing the GTs, which is one of our higher-priced products, higher performance products. And as we move forward, we're going to start seeing more of the Touring and Pure entering into the equation. So you will see the mix changing over time, but then we're also bringing the Sapphire and some of the GTP as well there’s some counterbalancing. So, I didn't see any kind of disconnect from my vantage point between the revenue number and the delivery number.

Okay, great. And the second question was I wanted to ask about the resiliency of the 10,000 vehicle order from the Kingdom. There is a lot of talk about Kingdom looking to have their own EV brand. How does it affect your relationship with the government? Is there increased urgency to deliver those vehicles quickly? Are there -- is there a sense of urgency to have some safeguards in place to protect that order in any other way? How should we think about that large order from Kingdom of Saudi Arabia?

I think that it's a testament to the long-term relationship that we have and the support that we've enjoyed from Saudi Arabia. I think we typically, [indiscernible] here, the electric car company. And I think there are potentially some synergies with supply chain in the Kingdom as well. But I think that our relationship, it spans across many ministries within the Kingdom. They committed to 50,000 preorders and with an option up to 100,000 over long-term period of 10 years. So, I am very confident and I think we can very comfortably coexist and benefit, actually mutually benefit from each other's existence and growth.

And I see that they really view us as very vital to the growth of the auto ecosystem overall. And that's why we have such a strong relationship building across SIDF, the HRDF, the Ministry of Finance, the MISA organization and especially the Public Investment Fund.

Great.

I think the other thing to recognize is we're in different parts of the market where with the luxury on higher end. So I think we've got some sort of complementary strength here. But I just think that we can work together to reduce costs with the supply chain. I'm looking at a synergistic opportunity here.

Great. And if I can sneak one more in. Sherry, you mentioned that you will start international deliveries in the fourth quarter. I was wondering if you can talk about what does, it do to the margins, especially your cost of deliveries will go up and U.S. dollar is pretty strong. So how should we think about margins in fourth quarter with higher rte, higher headcount, international deliveries and so forth?

Yeah. So we're just going to be starting the international deliveries in Q4, and that's going to be going to Europe and Saudi Arabia first. So we haven't announced all of our pricing in those regions yet. So stay tuned for that, and you'll be able to see what we're going to be doing there.

It's a lot of opportunity. That's the way I'm looking at.

Great. Thank you.

I'm showing no further questions in the queue. I would now like to turn the call back over to Peter for closing remarks.

Great. Actually, before we go to the closing remarks and maybe we'll mix them together. Let's go to one more say question. And the last question in orders that you guys tend to make cheaper cars like Tesla in the future. But this wraps in, I think, very nicely to -- another question, which is what can shareholders expect within the next year to two years from Lucid Motors?

Essentially. I mean this is what it's all about. Our vision is to capitalize and inspire and accelerate the adoption of sustainable mobility, sustainable energy. And to do that, we're developing our own ultra-high technology in-house to create more efficient electric vehicles because not only these are created equal and that enables us to travel further with less, batteries, because batteries are the highest single cost item. That's where we can drive the cost of EVs down. That may seem a great paradox, because right now, we're making starting the luxury product, but mid-decade, we're going to bring our midsized platform in. That's going to be an awesome product and much more affordable. So watch this space. That's what this is all about, making EVs more affordable through high technology in this tech race? And maybe to that point, what do we expect to see? Well, I mean, this year, we're going to see Touring and Pure. Pure is a particular favorite of mine, it's elemental Air truly, and we're going to show more of that on our Lucid launch event in November 15th of this year. So please tune into that. And we're going to have Touring and Pure. Then we're going to have this monumental driving machine Sapphire, which I'm personally testing, finding the performance truly satisfactory at the moment. That's going to come out in the first half of next year. And then, the real big one on the near horizon, which is looming, is Gravity. And I think Gravity is going to be really transformative as a high-tech, high-efficiency, truly sporting SUV. It's a sporting SUV. And I just can't wait to show that to everybody. So that's planned for calendar year 2024. And we'll have a sneak peak of that on November 15. And then, we will move towards sort of late mid-decade, on midsized platform, which is what it's going to be about the real gelling of all this technology to make a car, which is truly much more affordable mid-price range.

Great. Well, thank you, everyone. This concludes Lucid's Third Quarter 2022 Earnings Conference Call. Thank you all for joining us today. And you may now disconnect.