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UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(MARK ONE)

x			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
			For the quarterly period ended September 30, 2023

or

o			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
			For the transition period from              to

Commission File Number: 001-39408

Lucid Group, Inc.

(Exact name of registrant as specified in its charter)

Delaware			85-0891392
(State or other jurisdiction of incorporation or organization)			(I.R.S. Employer Identification No.)

7373 Gateway Boulevard, Newark, CA 94560

(Address of principal executive offices) (Zip code)

(510) 648-3553

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class			Trading symbol(s)			Name of each exchange on which registered
Class A Common Stock, $0.0001 par value per share			LCID			The Nasdaq Stock Market LLC

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    x  Yes   o  No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    x  Yes    o  No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large Accelerated Filer

x

Accelerated Filer

o

Non-accelerated Filer

o

Smaller Reporting Company

o

Emerging Growth Company

o

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act).    o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). o  Yes    x  No

Number of shares of the registrant’s common stock outstanding at November 1, 2023: 2,289,429,227

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INDEX TO FORM 10-Q

									Page
PART I. FINANCIAL INFORMATION
						Cautionary Note Regarding Forward-Looking Statements			3
						Frequently Used Terms			4
Item 1.						Condensed Consolidated Financial Statements (Unaudited)			6
						Condensed Consolidated Balance Sheets as of September 30, 2023 and December 31, 2022 (Unaudited)			6
						Condensed Consolidated Statements of Operations and Comprehensive Loss for the Three and Nine Months Ended September 30, 2023 and 2022 (Unaudited)			7
						Condensed Consolidated Statements of Stockholders’ Equity for the Three and Nine Months Ended September 30, 2023 and 2022 (Unaudited)			8
						Condensed Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2023 and 2022 (Unaudited)			10
						Notes to Condensed Consolidated Financial Statements (Unaudited)			12
Item 2.						Management’s Discussion and Analysis of Financial Condition and Results of Operations			34
Item 3.						Quantitative and Qualitative Disclosures About Market Risk			44
Item 4.						Controls and Procedures			44
PART II. OTHER INFORMATION
Item 1.						Legal Proceedings			46
Item 1A.						Risk Factors			46
Item 5.						Other Information			93
Item 6.						Exhibits			94
SIGNATURES									95

2

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CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q contains statements that express our opinions, expectations, beliefs, plans, objectives, assumptions or projections regarding future events or future results and therefore are, or may be deemed to be, “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933 (the “Securities Act”), and Section 21E of the Securities and Exchange Act of 1934 (the “Exchange Act”). Forward-looking statements may be identified by the use of words such as “estimate,” “plan,” “project,” “forecast,” “intend,” “will,” “shall,” “expect,” “anticipate,” “believe,” “seek,” “target,” “continue,” “could,” “may,” “might,” “possible,” “potential,” “predict” or other similar expressions that predict or indicate future events or trends or that are not statements of historical matters. They appear in a number of places throughout this Quarterly Report on Form 10-Q and include, but are not limited to, statements regarding our intentions, beliefs or current expectations concerning, among other things, results of operations, financial condition, liquidity, capital expenditures, prospects, growth, production volumes, strategies and the markets in which we operate, including expectations of financial and operational metrics, projections of market opportunity, market share and product sales, expectations and timing related to commercial product launches, future strategies and products, including with respect to energy storage systems and automotive partnerships, technology, manufacturing capabilities and facilities, studio openings, sales channels and strategies, future vehicle programs, expansion and the potential success of our direct-to-consumer strategy, our financial and operating outlook, future market launches and international expansion, including our planned manufacturing facility in Saudi Arabia and related timing and value to us, and our needs for additional financing. Such forward-looking statements are based on available current market material and our current expectations, beliefs and forecasts concerning future developments. Factors that may impact such forward-looking statements include:

•changes in domestic and foreign business, market, financial, political and legal conditions, including government closures of banks and liquidity concerns at other financial institutions, a potential global economic recession or other downturn and global conflicts or other geopolitical events;

•risks related to changes in overall demand for our products and services and cancellation of reservations and orders for our vehicles;

•risks related to prices and availability of commodities, our supply chain, logistics, inventory management and quality control, and our ability to complete the tooling of our manufacturing facilities over time and scale production of the Lucid Air and other vehicles;

•risks related to the uncertainty of our projected financial information;

•risks related to the timing of expected business milestones and commercial product launches;

•risks related to the expansion of our manufacturing facility, the construction of new manufacturing facilities and the increase of our production capacity;

•our ability to manage expenses and control costs;

•risks related to future market adoption of our offerings;

•the effects of competition and the pace and depth of electric vehicle adoption generally on our business;

•changes in regulatory requirements, governmental incentives and fuel and energy prices;

•our ability to rapidly innovate;

•our ability to enter into or maintain partnerships with original equipment manufacturers, vendors and technology providers, including our ability to realize the anticipated benefits of our transaction with Aston Martin;

•our ability to effectively manage our growth and recruit and retain key employees, including our chief executive officer and executive team;

•risks related to potential vehicle recalls;

•our ability to establish and expand our brand, and capture additional market share, and the risks associated with negative press or reputational harm;

•our ability to effectively utilize zero emission vehicle credits and obtain and utilize certain tax and other incentives;

•our ability to issue equity or equity-linked securities in the future;

•our ability to pay interest and principal on our indebtedness;

•future changes to vehicle specifications which may impact performance, pricing, and other expectations;

•the outcome of any potential litigation, government and regulatory proceedings, investigations and inquiries;

•the impact of the global COVID-19 pandemic on our supply chain, projected results of operations, financial performance or other financial metrics, or on any of the foregoing risks; and

•other factors disclosed in this Quarterly Report on Form 10-Q or our other filings with the Securities and Exchange Commission (the “SEC”).

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The forward-looking statements contained in this Quarterly Report on Form 10-Q are based on our current expectations and beliefs concerning future developments and their potential effects on our business. There can be no assurance that future developments affecting our business will be those that we have anticipated. These forward-looking statements involve a number of risks, uncertainties (some of which are beyond our control) or other assumptions that may cause actual results or performance to be materially different from those expressed or implied by these forward-looking statements. These risks and uncertainties include, but are not limited to, those factors described under the heading “Risk Factors” in Part II, Item 1A. Should one or more of these risks or uncertainties materialize, or should any of the assumptions prove incorrect, actual results may vary in material respects from those projected in these forward-looking statements. There may be additional risks that Lucid currently does not know or that Lucid currently believes are immaterial that could also cause actual results to differ from those contained in the forward-looking statements. In addition, forward-looking statements reflect our expectations, plans or forecasts of future events and views as of the date of this Quarterly Report on Form 10-Q. We anticipate that subsequent events and developments will cause our assessments to change. However, while we may elect to update the forward-looking statements at some point in the future, we do not undertake any obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as may be required under applicable securities laws. The forward-looking statements should not be relied upon as representing our assessments as of any date subsequent to the date of this Quarterly Report on Form 10-Q.

Frequently Used Terms

Unless otherwise stated in Item 1. Financial Statements and accompanying footnotes, or the context otherwise requires, references in this Quarterly Report on Form 10-Q to:

“2026 Notes” are to the 1.25% Convertible Senior Notes due 2026;

“AMP-1” are to our Advanced Manufacturing Plant 1 in Casa Grande, Arizona;

“AMP-2” are to our planned Advanced Manufacturing Plant 2 in Saudi Arabia, which consists of a semi knocked-down (“SKD”) portion that has been completed and a completely-built-up (“CBU”) portion that will be constructed;

“Ayar” are to Ayar Third Investment Company, an affiliate of PIF and the controlling stockholder of the Company;

“Board” or “Board of Directors” are to the board of directors of Lucid Group Inc., a Delaware corporation;

“Churchill” or “CCIV” are to Churchill Capital Corp IV, a Delaware corporation and our predecessor company prior to the consummation of the Transactions, which changed its name to Lucid Group, Inc. following the consummation of the Transactions, and its consolidated subsidiaries;

“Churchill IPO” are to the initial public offering by Churchill which closed on August 3, 2020;

“Closing” are to the consummation of the Transactions;

“Closing Date” are to July 23, 2021, the date on which the Transactions were consummated;

“common stock” are to the common stock of Lucid Group, Inc., par value $0.0001 per share;

“ESG” are to Environmental, Social and Governance;

“EV” are to electric vehicle;

“Investor Rights Agreement” are to the Investor Rights Agreement, dated as of February 22, 2021 and as may be amended from time to time, by and among the Company, the Sponsor, Ayar and certain other parties thereto;

“Legacy Lucid” are to Atieva, Inc., d/b/a Lucid Motors, an exempted company incorporated with limited liability under the laws of the Cayman Islands, and its consolidated subsidiaries before the Closing Date;

“Merger” are to the merger of a merger subsidiary of Churchill and Atieva, Inc., with Atieva, Inc. surviving such merger as a wholly owned subsidiary of Churchill;

“Merger Agreement” are to that certain Agreement and Plan of Merger, dated as of February 22, 2021, by and among Churchill, Legacy Lucid and Air Merger Sub, Inc., a Delaware corporation and a direct, wholly-owned subsidiary of Churchill, as the same has been or may be amended, modified, supplemented or waived from time to time;

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“PIF” are to the Public Investment Fund, the sovereign wealth fund of Saudi Arabia;

“Private Placement Warrants” are to Churchill’s warrants issued to the Sponsor in a private placement simultaneously with the closing of the Churchill IPO;

“Restructuring Plan” are to the Company’s restructuring plan to reduce the Company’s operating expenses that was announced on March 28, 2023;

“Sponsor” are to Churchill Sponsor IV LLC, a Delaware limited liability company and an affiliate of M. Klein and Company;

“Transactions” are to the Merger, together with the other transactions consummated under the Merger Agreement and the related agreements;

“Warrant Agreement” are to the Warrant Agreement, dated July 29, 2020, entered into in connection with the Churchill IPO by and between Continental Stock Transfer & Trust Company and Churchill; and

Unless the context otherwise requires, all references in this section to “Lucid,” the “Company,” “we,” “us,” “our,” and other similar terms refer to Legacy Lucid and its subsidiaries prior to the Closing, and Lucid Group, Inc., a Delaware corporation, and its subsidiaries after the Closing.

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PART I – FINANCIAL INFORMATION

Item 1. Financial Statements.

LUCID GROUP, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

(in thousands, except share and per share data)

						September 30, 2023						December 31, 2022
ASSETS
Current assets:
Cash and cash equivalents						$	1,164,391					$	1,735,765
Short-term investments						3,258,206						2,177,231
Accounts receivable, net						23,370						19,542
Inventory						798,974						834,401
Prepaid expenses						76,368						63,548
Other current assets						70,185						81,541
Total current assets						5,391,494						4,912,028
Property, plant and equipment, net						2,673,057						2,166,776
Right-of-use assets						221,657						215,160
Long-term investments						479,727						529,974
Other noncurrent assets						175,299						55,300
TOTAL ASSETS						$	8,941,234					$	7,879,238
LIABILITIES
Current liabilities:
Accounts payable						$	104,602					$	229,084
Accrued compensation						61,542						63,322
Finance lease liabilities, current portion						8,964						10,586
Other current liabilities						862,752						634,567
Total current liabilities						1,037,860						937,559
Finance lease liabilities, net of current portion						77,019						81,336
Common stock warrant liability						78,943						140,590
Long-term debt						1,995,673						1,991,840
Other long-term liabilities						345,724						378,212
Total liabilities						3,535,219						3,529,537
Commitments and contingencies (Note 11)
STOCKHOLDERS’ EQUITY
Common stock, par value $0.0001; 15,000,000,000 shares authorized as of September 30, 2023 and December 31, 2022; 2,290,134,335 and 1,830,172,561 shares issued and 2,289,276,510 and 1,829,314,736 shares outstanding as of September 30, 2023 and December 31, 2022, respectively						229						183
Additional paid-in capital						14,981,851						11,752,138
Treasury stock, at cost, 857,825 shares at September 30, 2023 and December 31, 2022						(20,716)						(20,716)
Accumulated other comprehensive loss						(10,363)						(11,572)
Accumulated deficit						(9,544,986)						(7,370,332)
Total stockholders’ equity						5,406,015						4,349,701
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY						$	8,941,234					$	7,879,238

The accompanying notes are an integral part of these condensed consolidated financial statements.

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LUCID GROUP, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

(Unaudited)

(in thousands, except share and per share data)

			Three Months Ended September 30,												Nine Months Ended September 30,
			2023						2022						2023						2022
Revenue			$	137,814					$	195,457					$	438,120					$	350,468
Costs and expenses
Cost of revenue			469,722						492,483						1,526,051						1,030,795
Research and development			230,758						213,761						694,035						600,218
Selling, general and administrative			189,691						176,736						556,209						563,707
Restructuring charges			518						—						24,546						—
Total cost and expenses			890,689						882,980						2,800,841						2,194,720
Loss from operations			(752,875)						(687,523)						(2,362,721)						(1,844,252)
Other income (expense), net
Change in fair value of common stock warrant liability			60,316						140,146						61,647						998,319
Interest income			66,064						24,373						145,594						27,284
Interest expense			(3,340)						(7,613)						(17,138)						(22,521)
Other income (expense), net			(763)						665						(1,024)						9,898
Total other income, net			122,277						157,571						189,079						1,012,980
Loss before provision for income taxes			(630,598)						(529,952)						(2,173,642)						(831,272)
Provision for income taxes			296						149						1,012						540
Net loss			(630,894)						(530,101)						(2,174,654)						(831,812)
Net loss attributable to common stockholders, basic			(630,894)						(530,101)						(2,174,654)						(831,812)
Change in fair value of dilutive warrants			—						(140,146)						—						(998,319)
Net loss attributable to common stockholders, diluted			$	(630,894)					$	(670,247)					$	(2,174,654)					$	(1,830,131)
Weighted average shares outstanding attributable to common stockholders
Basic			2,284,446,783						1,676,048,504						2,010,916,100						1,666,693,217
Diluted			2,284,446,783						1,690,963,548						2,010,916,100						1,686,576,589
Net loss per share attributable to common stockholders
Basic			$	(0.28)					$	(0.32)					$	(1.08)					$	(0.50)
Diluted			$	(0.28)					$	(0.40)					$	(1.08)					$	(1.09)
Other comprehensive income (loss)
Net unrealized gains (losses) on investments, net of tax			$	1,554					$	(12,575)					$	2,590					$	(13,266)
Foreign currency translation adjustments			(1,967)						—						(1,381)						—
Total other comprehensive income (loss)			(413)						(12,575)						1,209						(13,266)
Comprehensive loss attributable to common stockholders			$	(631,307)					$	(542,676)					$	(2,173,445)					$	(845,078)

The accompanying notes are an integral part of these condensed consolidated financial statements.

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LUCID GROUP, INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(Unaudited)

(in thousands, except share data)

						Common Stock												Additional Paid-In Capital						Treasury Stock						Accumulated Other Comprehensive Loss						Accumulated Deficit						Total Stockholders’ Equity
Three Months Ended September 30, 2023						Shares						Amount
Balance as of June 30, 2023						2,282,278,815						$	228					$	14,904,370					$	(20,716)					$	(9,950)					$	(8,914,092)					$	5,959,840
Net loss						—						—						—						—						—						(630,894)						(630,894)
Other comprehensive loss						—						—						—						—						(413)						—						(413)
Tax withholding payments for net settlement of employee awards						—						—						(4,327)						—						—						—						(4,327)
Issuance of common stock upon vesting of employee RSUs						5,172,059						1						(1)						—						—						—						—
Issuance of common stock upon exercise of stock options						1,825,636						—						2,214						—						—						—						2,214
Stock-based compensation						—						—						79,595						—						—						—						79,595
Balance as of September 30, 2023						2,289,276,510						$	229					$	14,981,851					$	(20,716)					$	(10,363)					$	(9,544,986)					$	5,406,015

						Common Stock												Additional Paid-In Capital						Treasury Stock						Accumulated Other Comprehensive Loss						Accumulated Deficit						Total Stockholders’ Equity
Three Months Ended September 30, 2022						Shares						Amount
Balance as of June 30, 2022						1,672,543,611						$	167					$	10,099,209					$	(20,716)					$	(691)					$	(6,367,583)					$	3,710,386
Net loss						—						—						—						—						—						(530,101)						(530,101)
Other comprehensive loss						—						—						—						—						(12,575)						—						(12,575)
Tax withholding payments for net settlement of employee awards						—						—						(21,654)						—						—						—						(21,654)
Issuance of common stock upon vesting of employee RSUs						5,100,389						—						—						—						—						—						—
Issuance of common stock upon exercise of stock options						2,503,338						1						1,888						—						—						—						1,889
Stock-based compensation						—						—						83,302						—						—						—						83,302
Balance as of September 30, 2022						1,680,147,338						$	168					$	10,162,745					$	(20,716)					$	(13,266)					$	(6,897,684)					$	3,231,247

The accompanying notes are an integral part of these condensed consolidated financial statements.

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LUCID GROUP, INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY - continued

(Unaudited)

(in thousands, except share data)

						Common Stock												Additional Paid-In Capital						Treasury Stock						Accumulated Other Comprehensive Loss						Accumulated Deficit						Total Stockholders’ Equity
Nine months ended September 30, 2023						Shares						Amount
Balance as of January 1, 2023						1,829,314,736						$	183					$	11,752,138					$	(20,716)					$	(11,572)					$	(7,370,332)					$	4,349,701
Net loss						—						—						—						—						—						(2,174,654)						(2,174,654)
Other comprehensive income						—						—						—						—						1,209						—						1,209
Tax withholding payments for net settlement of employee awards						—						—						(14,705)						—						—						—						(14,705)
Issuance of common stock upon vesting of employee RSUs						11,607,793						2						(2)						—						—						—						—
Issuance of common stock under employee stock purchase plan						2,287,592						—						15,089						—						—						—						15,089
Issuance of common stock upon exercise of stock options						6,827,738						—						7,321						—						—						—						7,321
Issuance of common stock under Underwriting Agreement, net of issuance costs						173,544,948						17						1,184,207						—						—						—						1,184,224
Issuance of common stock under 2023 Subscription Agreement, net of issuance costs						265,693,703						27						1,812,614						—						—						—						1,812,641
Stock-based compensation						—						—						225,189						—						—						—						225,189
Balance as of September 30, 2023						2,289,276,510						$	229					$	14,981,851					$	(20,716)					$	(10,363)					$	(9,544,986)					$	5,406,015

						Common Stock												Additional Paid-In Capital						Treasury Stock						Accumulated Other Comprehensive Loss						Accumulated Deficit						Total Stockholders’ Equity
Nine months ended September 30, 2022						Shares						Amount
Balance as of January 1, 2022						1,647,555,590						$	165					$	9,995,778					$	(20,716)					$	—					$	(6,065,872)					$	3,909,355
Net loss						—						—						—						—						—						(831,812)						(831,812)
Other comprehensive loss						—						—						—						—						(13,266)						—						(13,266)
Tax withholding payments for net settlement of employee awards						—						—						(212,895)						—						—						—						(212,895)
Issuance of common stock upon vesting of employee RSUs						13,142,048						1						(1)						—						—						—						—
Issuance of common stock under employee stock purchase plan						751,036						—						12,882						—						—						—						12,882
Issuance of common stock upon exercise of stock options						18,698,664						2						14,736						—						—						—						14,738
Stock-based compensation						—						—						352,245						—						—						—						352,245
Balance as of September 30, 2022						1,680,147,338						$	168					$	10,162,745					$	(20,716)					$	(13,266)					$	(6,897,684)					$	3,231,247

The accompanying notes are an integral part of these condensed consolidated financial statements.

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LUCID GROUP, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

(in thousands)

			Nine Months Ended September 30,
			2023						2022
Cash flows from operating activities:
Net loss			$	(2,174,654)					$	(831,812)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization			166,033						131,343
Amortization of insurance premium			30,242						25,188
Non-cash operating lease cost			18,871						14,254
Stock-based compensation			193,432						352,245
Inventory and firm purchase commitments write-downs			734,495						364,553
Change in fair value of common stock warrant liability			(61,647)						(998,319)
Other non-cash items			(46,990)						(5,020)
Changes in operating assets and liabilities:
Accounts receivable			(3,778)						489
Inventory			(575,933)						(906,054)
Prepaid expenses			(43,062)						(12,101)
Other current assets			13,680						(33,262)
Other noncurrent assets			(113,790)						(39,082)
Accounts payable			(114,810)						52,216
Accrued compensation			(1,781)						16,644
Operating lease liabilities			(17,500)						(10,761)
Other current liabilities			(44,005)						281,545
Other long-term liabilities			25,993						20,191
Net cash used in operating activities			(2,015,204)						(1,577,743)
Cash flows from investing activities:
Purchases of property, plant and equipment			(638,002)						(784,964)
Purchases of investments			(3,585,254)						(2,726,677)
Proceeds from maturities of investments			2,480,570						125,353
Proceeds from sale of investments			148,388						—
Proceeds from government grant			—						97,267
Other investing activities			(4,827)						—
Net cash used in investing activities			(1,599,125)						(3,289,021)
Cash flows from financing activities:
Proceeds from issuance of common stock under Underwriting Agreement, net of issuance costs			1,184,224						—
Proceeds from issuance of common stock under 2023 Subscription Agreement, net of issuance costs			1,812,641						—
Payment for short-term insurance financing note			—						(15,330)
Payment for finance lease liabilities			(4,534)						(3,605)
Proceeds from borrowings			42,920						20,228
Repayments for borrowings			—						(6,653)
Proceeds from failed sale-leaseback transaction			—						31,700
Proceeds from exercise of stock options			7,321						14,738
Proceeds from employee stock purchase plan			15,089						12,882
Tax withholding payments for net settlement of employee awards			(14,705)						(212,895)
Payment for credit facility issuance costs			—						(6,631)
Net cash provided by (used in) financing activities			3,042,956						(165,566)
Net decrease in cash, cash equivalents, and restricted cash			(571,373)						(5,032,330)
Beginning cash, cash equivalents, and restricted cash			1,737,320						6,298,020
Ending cash, cash equivalents, and restricted cash			$	1,165,947					$	1,265,690

The accompanying notes are an integral part of these condensed consolidated financial statements.

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LUCID GROUP, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - continued

(Unaudited)

(in thousands)

			Nine Months Ended September 30,
			2023						2022
Supplemental disclosure of cash flow information:
Cash paid for interest, net of amounts capitalized			$	7,933					$	11,307
Cash paid for taxes			$	37					$	480
Supplemental disclosure of non-cash investing and financing activities:
Purchases of property, plant and equipment included in accounts payable and other current liabilities			$	77,844					$	65,267
Property, plant and equipment and right-of-use assets obtained through leases			$	26,572					$	143,972

The accompanying notes are an integral part of these condensed consolidated financial statements.

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LUCID GROUP, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

September 30, 2023

NOTE 1 – DESCRIPTION OF BUSINESS

Overview

Lucid Group, Inc. (“Lucid”) is a technology and automotive company focused on designing, developing, manufacturing, and selling the next generation of electric vehicles (“EV”), EV powertrains and battery systems.

Lucid was originally incorporated in Delaware on April 30, 2020 under the name Churchill Capital Corp IV (formerly known as Annetta Acquisition Corp) (“Churchill”) as a special purpose acquisition company with the purpose of effecting a merger with one or more operating businesses. On February 22, 2021, Churchill entered into a definitive merger agreement (the “Merger Agreement”) with Atieva, Inc. (“Legacy Lucid”) in which Legacy Lucid would become a wholly owned subsidiary of Churchill (the “Merger”). Upon the closing of the Merger on July 23, 2021 (the “Closing”), Churchill was immediately renamed to “Lucid Group, Inc.” The Merger between Churchill and Legacy Lucid was accounted for as a reverse recapitalization.

Throughout the notes to the condensed consolidated financial statements, unless otherwise noted, the “Company,” “we,” “us” or “our” and similar terms refer to Legacy Lucid and its subsidiaries prior to the consummation of the Merger, and Lucid and its subsidiaries after the consummation of the Merger.

Liquidity

The Company devotes its efforts to business planning, selling and servicing of vehicles, providing technology access, research and development, construction and expansion of manufacturing facilities, expansion of retail studios and service center capacities, recruiting of management and technical staff, acquiring operating assets, and raising capital.

From inception through September 30, 2023, the Company had incurred operating losses and negative cash flows from operating activities. For the nine months ended September 30, 2023 and 2022, the Company has incurred net losses of $2,174.7 million and $831.8 million, respectively. The Company had an accumulated deficit of $9.5 billion as of September 30, 2023.

The Company completed the first phase of the construction of its Advanced Manufacturing Plant 1 in Casa Grande, Arizona (“AMP-1”) in 2021, transitioned general assembly to the AMP-1 phase 2 manufacturing facility and completed the semi knocked-down (“SKD”) portion of its Advanced Manufacturing Plant 2 in Saudi Arabia (“AMP-2”) in September 2023. The Company began commercial production of its first vehicle, the Lucid Air, in September 2021 and delivered its first vehicles in late October 2021. The Company continues to expand AMP-1, construct the completely-built-up (“CBU”) portion of AMP-2, and build a network of retail sales and service locations. The Company has plans for continued development of additional vehicle model types for future release. The aforementioned activities will require considerable capital, which is above and beyond the expected cash inflows from the initial sales of the Lucid Air. As such, the future operating plan involves considerable risk if secure funding sources are not identified and confirmed.

The Company’s existing sources of liquidity include cash, cash equivalents, investments, and credit facilities. Historically, the Company funded operations primarily with issuances of common stock, convertible preferred stock and convertible notes. Upon the completion of the Merger, the Company received $4,400.3 million in cash proceeds, net of transaction costs. In December 2021, the Company issued an aggregate principal amount of $2,012.5 million of 1.25% convertible senior notes due in December 2026.

In 2022, the Company entered into a loan agreement with the Saudi Industrial Development Fund (“SIDF”) with an aggregate principal amount of up to approximately $1.4 billion, a new five-year senior secured asset-based revolving credit facility (“ABL Credit Facility”) with an initial aggregate principal commitment amount of up to $1.0 billion and revolving credit facilities (the “GIB Facility Agreement”) with Gulf International Bank (“GIB”) in an aggregate principal amount of approximately $266.1 million. The GIB Facility Agreement provided for two committed revolving credit facilities, of which $173.0 million was available as a bridge financing (the “Bridge Facility”) and $93.1 million was for general corporate purposes (the “Working Capital Facility”).

In March 2023, the Company amended the GIB Facility Agreement (together with the GIB Facility Agreement, the “Amended GIB Facility Agreement”) to combine the Bridge Facility and the Working Capital Facility into a committed $266.6 million revolving credit facility (the “GIB Credit Facility”), which will bear interest at a rate of 1.40% per annum over SAIBOR (based on the term of borrowing) and associated fees. See Note 6 “Debt” for more information.

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On November 8, 2022, the Company entered into an equity distribution agreement (the “Equity Distribution Agreement”) with BofA Securities, Inc., Barclays Capital Inc. and Citigroup Global Markets Inc., under which the Company could offer and sell shares of its common stock having an aggregate offering price up to $600.0 million (the “At-the-Market Offering”). On November 8, 2022, the Company also entered into a subscription agreement (the “Subscription Agreement”) with Ayar Third Investment Company, the controlling stockholder of the Company (“Ayar”), pursuant to which Ayar agreed to purchase from the Company, up to $915.0 million of shares of its common stock in one or more private placements through March 31, 2023. In December 2022, the Company completed its At-the-Market Offering program pursuant to the Equity Distribution Agreement for net proceeds of $594.3 million after deducting commissions and other issuance costs and also consummated a private placement of shares to Ayar pursuant to the Subscription Agreement for $915.0 million. No shares remain available for sale under the Equity Distribution Agreement. See Note 8 “Stockholders’ Equity” for more information.

On May 31, 2023, the Company entered into an underwriting agreement (the “Underwriting Agreement”) with BofA Securities, Inc. (the “Underwriter”), under which the Underwriter agreed to purchase from the Company shares of the Company’s common stock in a public offering for aggregate net proceeds to the Company of approximately $1.2 billion. On May 31, 2023, the Company also entered into a subscription agreement (the “2023 Subscription Agreement”) with Ayar, pursuant to which Ayar agreed to purchase from the Company shares of the Company’s common stock in a private placement for aggregate net proceeds of approximately $1.8 billion. In June 2023, the Company completed the public offering pursuant to the Underwriting Agreement for aggregate net proceeds of $1.2 billion and also consummated the private placement to Ayar pursuant to the 2023 Subscription Agreement for aggregate net proceeds of $1.8 billion. See Note 8 “Stockholders’ Equity” for more information.

Certain Significant Risks and Uncertainties

The Company’s current business activities consist of (i) generating sales from the deliveries and service of vehicles, (ii) research and development efforts to design, engineer and develop high-performance fully electric vehicles and advanced electric vehicle powertrain components, including battery pack systems, (iii) further construction of AMP-1 phase 2 in Casa Grande, Arizona, (iv) construction of the CBU portion of AMP-2 in Saudi Arabia, and (v) expansion of its retail studios and service centers capabilities throughout North America and across the globe. The Company is subject to the risks associated with such activities, including the need to further develop its technology, its marketing, and distribution channels; further develop its supply chain and manufacturing; and hire additional management and other key employees. Successful completion of the Company’s development program and, ultimately, the attainment of profitable operations are dependent upon future events, including our ability to access potential markets, and secure long-term financing.

The Company participates in a dynamic high-technology industry. Changes in any of the following areas could have a material adverse impact on the Company’s future financial position, results of operations, and/or cash flows: changes in the overall demand for its products and services; advances and trends in new technologies; competitive pressures; acceptance of the Company’s products and services; litigation or claims against the Company based on intellectual property (including patents), regulatory, or other factors; and the Company’s ability to attract and retain employees necessary to support its business operations.

A global economic recession or other downturn, whether due to inflation, global conflicts or other geopolitical events, COVID-19 or other public health crises, interest rate increases or other policy actions by major central banks, government closures of banks and liquidity concerns at other financial institutions, or other factors, may have an adverse impact on the Company’s business, prospects, financial condition and results of operations. Adverse economic conditions as well as uncertainty about the current and future global economic conditions may cause the Company’s customers to defer purchases or cancel their reservations and orders in response to higher interest rates, availability of consumer credit, decreased cash availability, fluctuations in foreign currency exchange rates, and weakened consumer confidence. Reduced demand for the Company’s products may result in significant decreases in product sales, which in turn would have a material adverse impact on the Company’s business, prospects, financial condition and results of operations. Because of the Company’s premium brand positioning and pricing, an economic downturn is likely to have a heightened adverse effect on the Company compared to many of its electric vehicle and traditional automotive industry competitors, to the extent that consumer demand for luxury goods is reduced in favor of lower-priced alternatives. In addition, any economic recession or other downturn could also cause logistical challenges and other operational risks if any of the Company’s suppliers, sub-suppliers or partners become insolvent or are otherwise unable to continue their operations, fulfill their obligations to the Company, or meet the Company’s future demand. In addition, the deterioration of conditions in the broad financing markets may limit the Company’s ability to obtain external financing to fund its operations and capital expenditures on terms favorable to the Company, if at all. See “Risk Factors” in Part II, Item 1A of this Quarterly Report on Form 10-Q (the “Quarterly Report”) for more information regarding risks associated with a global economic recession, including under the caption “A global economic recession, government closures of banks and liquidity concerns at other financial institutions, or other downturn may have a material adverse impact on our business, prospects, results of operations and financial condition.”

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The COVID-19 pandemic has impacted the global economy and caused significant macroeconomic uncertainty. Infection rates vary across the jurisdictions in which the Company operates. Broader impacts of the pandemic have included inflationary pressure as well as ongoing, industry-wide challenges in logistics and supply chains, such as intermittent supplier delays and a shortfall of semiconductor supply. Because the Company relies on third party suppliers for the development, manufacture, and/or provision and development of many of the key components and materials used in its vehicles, as well as provisioning and servicing equipment in its manufacturing facilities, the Company has been affected by inflation and such industry-wide challenges in logistics and supply chains. While the Company continues to focus on mitigating risks to its operations and supply chain in the current industry environment, the Company expects that these industry-wide trends will continue to impact its cost structure as well as its ability and the ability of its suppliers to obtain parts, components and manufacturing equipment on a timely basis for the foreseeable future.

In the current circumstances, any impact on the Company’s financial condition, results of operations or cash flows in the future continues to be difficult to estimate and predict, as it depends on future events that are highly uncertain and cannot be predicted with accuracy. See “Risk Factors” in Part II, Item 1A of this Quarterly Report for additional information regarding risks associated with the COVID-19 pandemic, including under the caption “The COVID-19 pandemic has adversely affected, and we cannot predict its ultimate impact on, our business, prospects, results of operations and financial condition.”

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation and Principles of Consolidation

The accompanying unaudited condensed consolidated financial statements included herein have been prepared in accordance with generally accepted accounting principles in the United States of America (“U.S. GAAP”) and applicable rules and regulations of the U.S. Securities and Exchange Commission (the “SEC”) regarding interim financial reporting. Certain information and disclosures normally included in the financial statements prepared in accordance with U.S. GAAP have been condensed or omitted pursuant to such rules and regulations. These unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes included in the Company’s Form 10-K filed with the SEC on February 28, 2023.

In management’s opinion, these unaudited condensed consolidated financial statements have been prepared on the same basis as the annual financial statements and reflect all adjustments, which include normal recurring adjustments, necessary for the fair statement of the Company’s financial position as of September 30, 2023 and the results of operations for the three and nine months ended September 30, 2023 and 2022. The results of operations for the three and nine months ended September 30, 2023 are not necessarily indicative of the results to be expected for the full year ending December 31, 2023 or any other future interim or annual period.

The condensed consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries. All significant intercompany balances and transactions have been eliminated in consolidation.

Use of Estimates

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates. Significant estimates, assumptions and judgments made by management include, among others, inventory valuation, warranty reserve, useful lives of property, plant and equipment, fair value of common stock warrants, estimates of residual value guarantee (“RVG”) liability and deferred revenue related to over-the-air (“OTA”) software updates, fair value of common stock prior to the Merger and other assumptions used to measure stock-based compensation expense, and estimated incremental borrowing rates for assessing operating and financing leases. These estimates and assumptions are based on management’s best estimates and judgment. Management evaluates its estimates and assumptions on an ongoing basis using historical experience and other factors, including the current economic environment, which management believes to be reasonable under the circumstances. The Company adjusts such estimates and assumptions when facts and circumstances dictate. Changes in those estimates resulting from continuing changes in the economic environment will be reflected in the financial statements in future periods.

Cash, Cash Equivalents and Restricted Cash

The Company considers all highly liquid investments with an original maturity at the date of purchase of three months or less to be cash equivalents.

Restricted cash in other current assets and other noncurrent assets is primarily related to letters of credit issued to the landlords for certain of the Company’s leased facilities.

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The following table provides a reconciliation of cash, cash equivalents, and restricted cash to amounts shown in the condensed consolidated statements of cash flows (in thousands):

			September 30, 2023						December 31, 2022						September 30, 2022						December 31, 2021
Cash and cash equivalents			$	1,164,391					$	1,735,765					$	1,264,136					$	6,262,905
Restricted cash included in other current assets			1,556						1,555						1,554						10,740
Restricted cash included in other noncurrent assets			—						—						—						24,375
Total cash, cash equivalents, and restricted cash			$	1,165,947					$	1,737,320					$	1,265,690					$	6,298,020

Concentration of Credit Risk

Financial instruments that potentially subject the Company to concentration of credit risk consist of cash, cash equivalents, and investments. The Company places its cash primarily with domestic financial institutions that are federally insured within statutory limits, but at times its deposits may exceed federally insured limits.

Concentration of Supply Risk

The Company is dependent on its suppliers, the majority of which are single-source suppliers, and the inability of these suppliers to deliver necessary components of its products according to the schedule and at prices, quality levels and volumes acceptable to the Company, or its inability to efficiently manage these components, could have a material adverse effect on the Company’s results of operations and financial condition.

Revenue from Contracts with Customers

Vehicle Sales

Vehicle Sales without Residual Value Guarantee

Vehicle sales revenue is generated from the sale of electric vehicles to customers. There are two performance obligations identified in vehicle sale arrangements. These are the vehicle including an onboard advanced driver assistance system (“ADAS”), and the right to unspecified OTA software updates to be provided as and when available over the term of the basic vehicle warranty, which is generally 4 years. The Company recognizes revenue related to the vehicle when the customer obtains control of the vehicle which occurs at a point in time either upon completion of delivery to the agreed upon delivery location or upon pick up of the vehicle by the customer. As the unspecified OTA software updates are provided when-and-if they become available, revenue related to OTA software updates is recognized ratably over the basic vehicle warranty term, commencing when control of the vehicle is transferred to the customer. At the time of revenue recognition, the Company reduces the transaction price and records a sales return reserve against revenue for estimated variable consideration related to future product returns. Return rate estimates are based on historical experience and sales return reserve balance was not material as of September 30, 2023 and December 31, 2022.

Vehicle Sales with Residual Value Guarantee

The Company provides an RVG to its commercial banking partner in connection with its vehicle leasing program. Vehicle sales with RVG totaled $56.5 million and $112.0 million, respectively, during the three and nine months ended September 30, 2023, and $10.1 million for the same periods in the prior year. The Company recognizes revenue when control transfers upon delivery when the consumer-lessee takes physical possession of the vehicle, and bifurcates the RVG at fair value and accounts for it as a guarantee liability. The remaining amount of the transaction price is allocated among the performance obligations, including the vehicle, the right to unspecified OTA software updates and remarketing activities, in proportion to the standalone selling price of the Company’s performance obligations. The guarantee liability represents the estimated amount the Company expects to pay at the end of the lease term. The Company is released from residual risk upon either expiration or settlement of the RVG. The Company evaluates variables such as third-party residual value publications, risk of future price deterioration due to changes in market conditions and reconditioning costs to determine the estimated residual value guarantee liability. As of September 30, 2023 and December 31, 2022, the RVG liability was not material.

Deferred revenue related to OTA and remarketing activities for vehicle sales of $6.7 million and $4.0 million, respectively, was recorded within other current liabilities, and $18.2 million and $11.4 million, respectively, was recorded within other long-term liabilities, in the condensed consolidated balance sheets as of September 30, 2023 and December 31, 2022.

Other

Other consists of revenue from non-warranty after-sales vehicle services and parts, powertrain kits and retail merchandise.

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Restructuring

The Company’s restructuring charges primarily consist of severance payments, employee benefits, employee transition and stock-based compensation expenses associated with the management-approved restructuring plan. One-time employee termination benefits are recognized at the time of communication to employees, unless future service is required, in which case the costs are recognized over the future service period. Ongoing employee termination benefits are recognized when payments are probable and amounts are reasonably estimable. Other costs are recognized as incurred.

Except for the policy described above, there have been no significant changes to accounting policies during the three and nine months ended September 30, 2023.

NOTE 3 - RESTRUCTURING

On March 28, 2023, the Company announced a restructuring plan (the “Restructuring Plan”) intended to reduce operating expenses in response to evolving business needs and productivity improvement through a reduction in workforce. The Company substantially completed the Restructuring Plan in the second quarter of 2023.

During the three and nine months ended September 30, 2023, the Company recorded charges of $0.5 million and $24.5 million, respectively, related to severance payments, employee benefits, employee transition and stock-based compensation, net of a reversal of previously recognized stock-based compensation expense. These charges were recorded within restructuring charges in the condensed consolidated statements of operations and comprehensive loss.

A summary of restructuring liabilities associated with the Restructuring Plan was as follows (in thousands):

			Three Months Ended September 30, 2023						Nine Months Ended September 30, 2023
Restructuring liabilities - beginning of period			$	1,705					$	—
Restructuring charges excluding non-cash items(1)			518						25,989
Cash payments			(1,846)						(25,612)
Restructuring liabilities - end of period			$	377					$	377

(1) Excluded non-cash items of $1.4 million for the nine months ended September 30, 2023, which was net of accelerated stock-based compensation expense of $3.4 million and a reversal of $4.8 million related to previously recognized stock-based compensation expenses for unvested restricted stock awards.

As of September 30, 2023, the restructuring liabilities of $0.4 million associated with the Restructuring Plan were included in accrued compensation in the condensed consolidated balance sheet.

NOTE 4 – BALANCE SHEETS COMPONENTS

Inventory

Inventory as of September 30, 2023 and December 31, 2022 was as follows (in thousands):

			September 30, 2023						December 31, 2022
Raw materials			$	315,887					$	464,731
Work in progress			96,879						34,311
Finished goods			386,208						335,359
Total Inventory			$	798,974					$	834,401

Inventory was comprised of raw materials, work in progress related to the production of vehicles for sale and SKD units for final assembly in Saudi Arabia, and finished goods inventory including new vehicles available for sale, vehicles in transit to fulfill customer orders, and internally used vehicles which the Company intends to sell. The Company recorded write-downs of $230.8 million and $752.8 million, respectively, for the three and nine months ended September 30, 2023, and $186.5 million and $364.6 million, respectively, for the same periods in the prior year, to reduce our inventories to their net realizable values, for any excess or obsolete inventories, and losses from firm purchase commitments.

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Property, plant and equipment, net

Property, plant and equipment, net as of September 30, 2023 and December 31, 2022 was as follows (in thousands):

			September 30, 2023						December 31, 2022
Land and land improvements			$	69,718					$	64,677
Building and improvements(1)			564,576						197,406
Machinery, Tooling and Vehicles(2)			957,243						743,006
Computer equipment and software			70,311						48,899
Leasehold improvements			213,112						182,904
Furniture and fixtures			43,706						27,803
Finance leases			96,425						97,992
Construction in progress			1,094,280						1,077,179
Total Property, plant and equipment			3,109,371						2,439,866
Less: accumulated depreciation and amortization			(436,314)						(273,090)
Property, plant and equipment, net			$	2,673,057					$	2,166,776

(1) As of September 30, 2023, $97.3 million of capital expenditure support received from Ministry of Investment of Saudi Arabia (“MISA”) was primarily recorded as a deduction to the AMP-2 building balance. See Note 15 “Related Party Transactions” for more information.

(2) Included $31.7 million of service loaner vehicles as of September 30, 2023.

Construction in progress represents the costs incurred in connection with the construction of buildings or new additions to the Company’s plant facilities including tooling, which is with outside vendors. Costs classified as construction in progress include all costs of obtaining the asset, installation of the asset, and bringing it to the location and the condition necessary for its intended use. No depreciation is provided for construction in progress until such time as the asset is completed and is ready for its intended use. Construction in progress consisted of the following (in thousands):

			September 30, 2023						December 31, 2022
Machinery and tooling(1)			$	687,534					$	515,662
Construction of AMP-1 and AMP-2(1)			386,825						526,720
Leasehold improvements			19,921						34,797
Total construction in progress			$	1,094,280					$	1,077,179

(1) As of December 31, 2022, $33.3 million of capital expenditure support received from MISA was recorded as a deduction to the AMP-2 construction in progress balance. See Note 15 “Related Party Transactions” for more information.

Depreciation and amortization expense was $60.8 million and $166.0 million, respectively, for the three and nine months ended September 30, 2023, and $50.6 million and $131.3 million, respectively, for the same periods in the prior year. The amount of interest capitalized on construction in progress related to significant capital asset construction was $6.0 million and $10.0 million, respectively, for the three and nine months ended September 30, 2023, and $1.1 million and $1.8 million, respectively, for the same periods in the prior year.

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Other current liabilities

Other current liabilities as of September 30, 2023 and December 31, 2022 were as follows (in thousands):

			September 30, 2023						December 31, 2022
Engineering, design, and testing accrual			$	49,270					$	28,686
Construction in progress			220,741						167,462
Accrued purchases(1)			66,927						157,162
Retail leasehold improvements accrual			9,770						9,099
Third-party services accrual			29,433						34,951
Tooling liability			37,491						21,714
Short-term borrowings			52,526						9,595
Operating lease liabilities, current portion			24,925						11,269
Reserve for loss on firm inventory purchase commitments			155,029						22,640
Accrued warranty			33,497						10,464
Other current liabilities			183,143						161,525
Total Other current liabilities			$	862,752					$	634,567

(1) Primarily represent accruals for inventory related purchases and transportation charges that had not been invoiced.

Other long-term liabilities

Other long-term liabilities as of September 30, 2023 and December 31, 2022 were as follows (in thousands):

			September 30, 2023						December 31, 2022
Operating lease liabilities, net of current portion			$	246,818					$	243,843
Other long-term liabilities(1)			98,906						134,369
Total Other long-term liabilities			$	345,724					$	378,212

(1) As of December 31, 2022, $64.0 million of capital expenditure support received from MISA was recorded as deferred liability within other long-term liabilities. See Note 15 “Related Party Transactions” for more information.

Accrued warranty

Accrued warranty activities consisted of the following (in thousands):

			Three Months Ended September 30,												Nine Months Ended September 30,
			2023						2022						2023						2022
Accrued warranty - beginning of period(1)			$	62,186					$	8,311					$	22,949					$	1,282
Warranty costs incurred			(13,929)						(3,501)						(33,759)						(5,256)
Provision for warranty(2)			7,054						8,815						66,121						17,599
Accrued warranty - end of period(1)			$	55,311					$	13,625					$	55,311					$	13,625

(1) Accrued warranty balance of $33.5 million and $10.4 million, respectively, was recorded within other current liabilities, and $21.8 million and $12.5 million, respectively, was recorded within other long-term liabilities, in the condensed consolidated balance sheets as of September 30, 2023 and December 31, 2022.

(2) Provision for warranty for the three and nine months ended September 30, 2023 and 2022 included estimated costs related to the recalls identified and/or special campaigns to repair or replace items under warranties.

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NOTE 5 - FAIR VALUE MEASUREMENTS AND FINANCIAL INSTRUMENTS

The accounting standard for fair value measurements provides a framework for measuring fair value and requires expanded disclosures regarding fair value measurements. Fair value is defined as the price that would be received for an asset or the “exit price” that would be paid to transfer a liability in the principal or most advantageous market in an orderly transaction between independent market participants on the measurement date. The Company measures financial assets and liabilities at fair value at each reporting period using a fair value hierarchy, which requires the Company to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. A financial instrument classification within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement. This hierarchy prioritizes the inputs into three broad levels as follows:

•Level 1—Quoted prices (unadjusted) in active markets for identical assets or liabilities.

•Level 2—Observable inputs other than quoted prices in active markets for identical assets and liabilities, quoted prices for identical or similar assets or liabilities in inactive markets, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.

•Level 3—Inputs that are generally unobservable and typically reflect management’s estimates of assumptions that market participants would use in pricing the asset or liability. Factors used to develop the estimated fair value are unobservable inputs that are not supported by market activity. The sensitivity of the fair value measurement to changes in unobservable inputs may result in a significantly higher or lower measurement.

Cash, cash equivalents and investments are reported at their respective fair values on the Company’s condensed consolidated balance sheets. The Company’s short-term and long-term investments are classified as available-for-sale securities.

The following table sets forth the Company’s financial assets subject to fair value measurements on a recurring basis by level within the fair value hierarchy as of September 30, 2023 and December 31, 2022 (in thousands):

			September 30, 2023
																											Reported As:
			Amortized cost						Gross Unrealized Gains						Gross Unrealized Losses						Estimated Fair Value						Cash and cash equivalents						Short-Term Investments						Long-Term Investments
Cash			$	522,195					$	—					$	—					$	522,195					$	522,195					$	—					$	—
Level 1:
Money market funds			557,476						—						—						557,476						557,476						—						—
U.S. Treasury securities			2,522,890						59						(6,232)						2,516,717						59,767						2,205,811						251,139
Subtotal			3,080,366						59						(6,232)						3,074,193						617,243						2,205,811						251,139
Level 2:
U.S. government agency securities			45,005						—						(26)						44,979						—						44,979						—
Certificates of deposit			144,180						49						(107)						144,122						—						144,122						—
Commercial paper			447,969						14						(210)						447,773						24,953						422,820						—
Corporate debt securities			671,591						274						(2,803)						669,062						—						440,474						228,588
Subtotal			1,308,745						337						(3,146)						1,305,936						24,953						1,052,395						228,588
Total			$	4,911,306					$	396					$	(9,378)					$	4,902,324					$	1,164,391					$	3,258,206					$	479,727

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			December 31, 2022
																											Reported As:
			Amortized cost						Gross Unrealized Gains						Gross Unrealized Losses						Estimated Fair Value						Cash and cash equivalents						Short-Term Investments						Long-Term Investments
Cash			$	321,667					$	—					$	—					$	321,667					$	321,667					$	—					$	—
Level 1:
Money market funds			1,377,540						—						—						1,377,540						1,377,540						—						—
U.S. Treasury securities			1,861,449						151						(9,431)						1,852,169						—						1,570,591						281,578
Subtotal			3,238,989						151						(9,431)						3,229,709						1,377,540						1,570,591						281,578
Level 2:
U.S. government agency securities			43,477						46						(18)						43,505						—						43,505						—
Certificates of deposit			174,037						67						(132)						173,972						—						173,972						—
Commercial paper			238,224						63						(122)						238,165						19,761						218,404						—
Corporate debt securities			438,148						208						(2,404)						435,952						16,797						170,759						248,396
Subtotal			893,886						384						(2,676)						891,594						36,558						606,640						248,396
Total			$	4,454,542					$	535					$	(12,107)					$	4,442,970					$	1,735,765					$	2,177,231					$	529,974

During the three and nine months ended September 30, 2023 and 2022, there were immaterial realized gains or losses on the sale of available-for-sale securities. Accrued interest receivable excluded from both the fair value and amortized cost basis of the available-for-sale securities was $10.5 million and $7.5 million as of September 30, 2023 and December 31, 2022, respectively, and was recorded in other current assets in the condensed consolidated balance sheets. As of September 30, 2023 and December 31, 2022, no allowance for credit losses was recorded related to an impairment of available-for-sale securities.

The following table summarizes our available-for-sale securities by contractual maturity:

			September 30, 2023
			Amortized cost						Estimated Fair Value
Within one year			$	3,264,410					$	3,258,206
After one year through three years			482,509						479,727
Total			$	3,746,919					$	3,737,933

Level 3 liabilities consist of common stock warrant liability of which the fair value was measured upon issuance and is remeasured at each reporting date. Level 3 liabilities also consist of residual value guarantee liabilities, of which the fair value measurement is nonrecurring and measured upon delivery of vehicles. The valuation methodology and underlying assumptions are discussed further in Note 2 “Summary of Significant Accounting Policies” and Note 7 “Common Stock Warrant Liability”. Significant increases (decreases) in the unobservable inputs used in determining the fair value would result in a significantly higher (lower) fair value measurement. The following table presents a reconciliation of the common stock warrant liability measured and recorded at fair value on a recurring basis (in thousands):

						Three Months Ended September 30,												Nine Months Ended September 30,
						2023						2022						2023						2022
Fair value-beginning of period						$	139,259					$	536,635					$	140,590					$	1,394,808
Change in fair value						(60,316)						(140,146)						(61,647)						(998,319)
Fair value-end of period						$	78,943					$	396,489					$	78,943					$	396,489

NOTE 6 – DEBT

2026 Notes

In December 2021, the Company issued an aggregate of $2,012.5 million principal amount of 1.25% convertible senior notes due in December 2026 (the “2026 Notes”) in a private offering to qualified institutional buyers pursuant to Rule 144A under the Securities Act of 1933, as amended, at an issuance price equal to 99.5% of the principal amount of 2026 Notes. The 2026 Notes have been designated as green bonds, whose proceeds will be allocated in accordance with the Company’s green bond framework. The 2026 Notes were issued pursuant to and are governed by an indenture dated December 14, 2021, between the Company and U.S. Bank National Association as the trustee. The proceeds from the issuance of the 2026 Notes were $1,986.6 million, net of the issuance discount and debt issuance costs.

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The 2026 Notes are unsecured obligations which bear regular interest at 1.25% per annum and will be payable semiannually in arrears on June 15 and December 15 of each year, beginning on June 15, 2022. The 2026 Notes will mature on December 15, 2026, unless repurchased, redeemed, or converted in accordance with their terms prior to such date. The 2026 Notes are convertible into cash, shares of our Class A common stock, or a combination of cash and shares of our Class A common stock, at the Company’s election, at an initial conversion rate of 18.2548 shares of Class A common stock per $1,000 principal amount of 2026 Notes, which is equivalent to an initial conversion price of approximately $54.78 per share of our Class A common stock. The conversion rate is subject to customary adjustments for certain dilutive events. The Company may redeem for cash all or any portion of the 2026 Notes, at the Company’s option, on or after December 20, 2024 if the last reported sale price of our Class A common stock has been at least 130% of the conversion price then in effect for at least 20 trading days at a redemption price equal to 100% of the principal amount of the 2026 Notes to be redeemed, plus accrued and unpaid interest up to the day before the redemption date. The holders may require the Company to repurchase the 2026 Notes upon the occurrence of certain fundamental change transactions at a redemption price equal to 100% of the principal amount of the 2026 Notes redeemed, plus accrued and unpaid interest up to the day before the redemption date.

Holders of the 2026 Notes may convert all or a portion of their 2026 Notes at their option prior to September 15, 2026, in multiples of $1,000 principal amounts, only under the following circumstances:

•during any calendar quarter commencing after the quarter ending on March 31, 2022 (and only during such calendar quarter), if the Company’s common stock price exceeds 130% of the conversion price for at least 20 trading days during the 30 consecutive trading days at the end of the prior calendar quarter;

•during the five consecutive business days immediately after any 10 consecutive trading day period in which the trading price per $1,000 principal amount of notes for each trading day of the measurement period was less than 98% of the product of the last reported sale price per share of our common stock on such trading day and the conversion rate on such trading day;

•upon the occurrence of specified corporate events; or

•if the Company calls any or all 2026 Notes for redemption, at any time prior to the close of business on the scheduled trading day immediately preceding the redemption date, but only with respect to the notes called for redemption.

On or after September 15, 2026, the 2026 Notes are convertible at any time until the close of business on the second scheduled trading day immediately preceding the maturity date. Holders of the 2026 Notes who convert the 2026 Notes in connection with a make-whole fundamental change, as defined in the indenture governing the 2026 Notes, or in connection with a redemption may be entitled to an increase in the conversion rate.

The Company accounted for the issuance of the 2026 Notes as a single liability measured at its amortized cost, as no other embedded features require bifurcation and recognition as derivatives. The following table is a summary of the 2026 Notes as of September 30, 2023 and December 31, 2022 (in millions):

						September 30, 2023						December 31, 2022
Principal Amount						$	2,012.5					$	2,012.5
Unamortized Debt Discounts and Issuance Costs						(16.8)						(20.7)
Net Carrying Amount						$	1,995.7					$	1,991.8
Fair Value (Level 2)						$	1,217.6					$	1,041.5

The effective interest rate for the convertible note is 1.5%. The components of interest expense related to the 2026 Notes were as follows (in millions):

			Three Months Ended September 30,												Nine Months Ended September 30
			2023						2022						2023						2022
Contractual interest			$	6.3					$	6.2					$	18.9					$	18.9
Amortization of debt discounts and debt issuance costs			1.3						1.4						3.9						3.8
Interest expense			$	7.6					$	7.6					$	22.8					$	22.7

The 2026 Notes were not eligible for conversion as of September 30, 2023 and December 31, 2022. No sinking fund is provided for the 2026 Notes, which means that the Company is not required to redeem or retire them periodically. As of September 30, 2023 and December 31, 2022, the Company was in compliance with applicable covenants under the indenture governing the 2026 Notes.

21

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SIDF Loan Agreement

On February 27, 2022, Lucid, LLC, a limited liability company established in Saudi Arabia and a subsidiary of the Company (“Lucid LLC”) entered into a loan agreement (as subsequently amended, the “SIDF Loan Agreement”) with SIDF, a related party of Public Investment Fund (“PIF”), which is an affiliate of Ayar. Under the SIDF Loan Agreement, SIDF has committed to provide loans (the “SIDF Loans”) to Lucid LLC in an aggregate principal amount of up to SAR 5.19 billion (approximately $1.4 billion); provided that SIDF may reduce the availability of SIDF Loans under the facility in certain circumstances. SIDF Loans will be subject to repayment in semi-annual installments in amounts ranging from SAR 25 million (approximately $6.7 million) to SAR 350 million (approximately $93.3 million), commencing on April 3, 2026 and ending on November 12, 2038. SIDF Loans are financing and will be used to finance certain costs in connection with the development and construction of AMP-2. Lucid LLC may repay SIDF Loans earlier than the maturity date without penalty. Obligations under the SIDF Loan Agreement do not extend to the Company or any of its other subsidiaries.

SIDF Loans will not bear interest. Instead, Lucid LLC will be required to pay SIDF service fees, consisting of follow-up and technical evaluation fees, ranging, in aggregate, from SAR 415 million (approximately $110.7 million) to SAR 1.77 billion (approximately $471.9 million), over the term of the SIDF Loans. SIDF Loans will be secured by security interests in the equipment, machines and assets funded thereby.

The SIDF Loan Agreement contains certain restrictive financial covenants and imposes annual caps on Lucid LLC’s payment of dividends, distributions of paid-in capital or certain capital expenditures. The SIDF Loan Agreement also defines customary events of default, including abandonment of or failure to commence operations at the plant in the King Abdullah Economic City (“KAEC”), and drawdowns under the SIDF Loan Agreement are subject to certain conditions precedent. As of September 30, 2023 and December 31, 2022, no amount was outstanding under the SIDF Loan Agreement.

GIB Facility Agreement

On April 29, 2022, Lucid LLC entered into the GIB Facility Agreement with GIB, maturing on February 28, 2025. GIB is a related party of PIF, which is an affiliate of Ayar. The GIB Facility Agreement provided for two committed revolving credit facilities in an aggregate principal amount of SAR 1 billion (approximately $266.1 million). SAR 650 million (approximately $173.0 million) under the GIB Facility Agreement was available as the Bridge Facility for the financing of Lucid LLC’s capital expenditures in connection with AMP-2. The remaining SAR 350 million (approximately $93.1 million) was available as the Working Capital Facility and might be used for general corporate purposes. Loans under the Bridge Facility and the Working Capital Facility had a maturity of no more than 12 months. The Bridge Facility beared interest at a rate of 1.25% per annum over 3-month SAIBOR and the Working Capital Facility beared interest at a rate of 1.70% per annum over 1~3-month SAIBOR and associated fees.

On March 12, 2023, Lucid LLC entered into the Amended GIB Facility Agreement to combine the Bridge Facility and the Working Capital Facility into a committed SAR 1 billion (approximately $266.6 million) GIB Credit Facility which may be used for general corporate purposes. Loans under the Amended GIB Credit Facility Agreement have a maturity of no more than 12 months and bear interest at a rate of 1.40% per annum over SAIBOR (based on the term of borrowing) and associated fees.

The Company is required to pay a quarterly commitment fee of 0.15% per annum based on the unutilized portion of the GIB Credit Facility. Commitments under the Amended GIB Facility Agreement will terminate, and all amounts then outstanding thereunder would become payable, on the maturity date of the Amended GIB Facility Agreement. The Amended GIB Facility Agreement contains certain conditions precedent to drawdowns, representations and warranties and covenants of Lucid LLC and events of default.

As of September 30, 2023, the Company had outstanding borrowings of SAR 197 million (approximately $52.5 million) with weighted average interest rate of 7.46%. As of September 30, 2023, availability under the GIB Credit Facility was SAR 802 million (approximately $213.9 million), after giving effect to the outstanding letters of credit. As of December 31, 2022, the Company had outstanding borrowings of SAR 36 million (approximately $9.6 million) with interest rate of 6.40% from the Working Capital Facility. As of December 31, 2022, available borrowings were SAR 650 million (approximately $173.0 million) and SAR 314 million (approximately $83.5 million) under the Bridge Facility and Working Capital Facility, respectively. The outstanding borrowings were recorded within other current liabilities in the condensed consolidated balance sheets. As of September 30, 2023 and December 31, 2022, the Company was in compliance with applicable covenants under the Amended GIB Facility Agreement.

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ABL Credit Facility

In June 2022, the Company entered into the ABL Credit Facility with a syndicate of banks that may be used for working capital and general corporate purposes. The ABL Credit Facility provides for an initial aggregate principal commitment amount of up to $1.0 billion (including a $350.0 million letter of credit subfacility and a $100.0 million swingline loan subfacility) and has a stated maturity date of June 9, 2027. Borrowings under the ABL Credit Facility bear interest at the applicable interest rates specified in the credit agreement governing the ABL Credit Facility. Availability under the ABL Credit Facility is subject to the value of eligible assets in the borrowing base and is reduced by outstanding loan borrowings and issuances of letters of credit which bear customary letter of credit fees. Subject to certain terms and conditions, the Company may request one or more increases in the amount of credit commitments under the ABL Credit Facility in an aggregate amount up to the sum of $500.0 million plus certain other amounts. The Company is required to pay a quarterly commitment fee of 0.25% per annum based on the unutilized portion of the ABL Credit Facility.

The ABL Credit Facility contains customary covenants that limit the ability of the Company and its restricted subsidiaries to, among other activities, pay dividends, incur debt, create liens and encumbrances, redeem or repurchase stock, dispose of certain assets, consummate acquisitions or other investments, prepay certain debt, engage in transactions with affiliates, engage in sale and leaseback transactions or consummate mergers and other fundamental changes. The ABL Credit Facility also includes a minimum liquidity covenant which, at the Company’s option following satisfaction of certain pre-conditions, may be replaced with a springing, minimum fixed charge coverage ratio financial covenant, in each case on terms set forth in the credit agreement governing the ABL Credit Facility. As of September 30, 2023 and December 31, 2022, the Company was in compliance with applicable covenants under the ABL Credit Facility.

As of September 30, 2023 and December 31, 2022, the Company had no outstanding borrowings under the ABL Credit Facility. Outstanding letters of credit under the ABL Credit Facility were $44.9 million and $37.4 million as of September 30, 2023 and December 31, 2022, respectively. Availability under the ABL Credit Facility was $476.5 million (including $142.1 million cash and cash equivalents) and $441.4 million (including $37.3 million cash and cash equivalents) as of September 30, 2023 and December 31, 2022, respectively, after giving effect to the borrowing base and the outstanding letters of credit. The Company incurred issuance costs of $6.3 million to obtain the ABL Credit Facility, which was capitalized within other noncurrent assets in the condensed consolidated balance sheets and amortized over the facility term using the straight-line method. Amortization of the deferred issuance costs and commitment fee were $1.0 million and $2.8 million, respectively, for the three and nine months ended September 30, 2023, and were not material for the same periods in the prior year.

NOTE 7 - COMMON STOCK WARRANT LIABILITY

On July 23, 2021, in connection with the reverse recapitalization treatment of the Merger, the Company effectively issued 44,350,000 Private Placement Warrants to purchase shares of Lucid’s common stock at an exercise price of $11.50. The Private Placement Warrants were initially recognized as a liability with a fair value of $812.0 million and was remeasured to fair value of $140.6 million as of December 31, 2022. The Private Placement Warrants remained unexercised and were remeasured to fair value of $78.9 million as of September 30, 2023. The Company recognized gains of $60.3 million and $61.6 million, respectively, for the three and nine months ended September 30, 2023, and gains of $140.1 million and $998.3 million, respectively, for the same periods in the prior year, in the condensed consolidated statements of operations and comprehensive loss.

The fair value of the Private Placement Warrants that are not subject to the contingent forfeiture provisions was estimated using a Black-Scholes option pricing model, and were as follows:

						September 30, 2023						December 31, 2022
Fair value of Private Placement Warrants per share						$	1.78					$	3.17

Assumptions used in the Black-Scholes option pricing model take into account the contract terms as well as the quoted price of the Company’s common stock in an active market. The volatility is based on the actual market activity of the Company’s peer group as well as the Company’s historical volatility. The expected life is based on the remaining contractual term of the warrants, and the risk free interest rate is based on the implied yield available on U.S. Treasury securities with a maturity equivalent to the warrants’ expected life. The level 3 fair value inputs used in the Black-Scholes option pricing models were as follows:

						September 30, 2023						December 31, 2022
Volatility						75.00		%				80.00		%
Expected term (in years)						2.8