SEC Filing | Lucid Group, Inc.

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lcid-20230930

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


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

Accelerated Filer

Non-accelerated Filer

Smaller Reporting Company

Emerging Growth Company

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

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

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”).

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;

“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.

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.

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.

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.

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.

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.

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.

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.

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.”

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.

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.

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.

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.

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.

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


	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.

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.

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.

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		3.6
Risk-free rate	4.79	%	4.11	%
Dividend yield	—	%	—	%

NOTE 8 – STOCKHOLDERS’ EQUITY

Preferred Stock

The Company has authorized the issuance of 10,000,000 shares of undesignated preferred stock with a par value of $0.0001 per share with rights and preferences, including voting rights, designated from time to time by the Board of Directors. As of September 30, 2023 and December 31, 2022, there were no issued and outstanding shares of preferred stock.

Common Stock

On November 8, 2022, the Company entered into 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. During the year ended December 31, 2022, the Company issued 56,203,334 shares at a weighted average price per share of $10.68 and received net proceeds of $594.3 million after deducting commissions and other issuance costs of approximately $5.7 million. No shares remain available for sale under the Equity Distribution Agreement.

On November 8, 2022, the Company also entered into the Subscription Agreement, 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 issued 85,712,679 shares to Ayar pursuant to the Subscription Agreement at a weighted average price per share of $10.68, and received aggregate proceeds of $915.0 million.

On May 31, 2023, the Company entered into the Underwriting Agreement with the Underwriter, under which the Underwriter agreed to purchase 173,544,948 shares of the Company’s common stock at a price per share of $6.83, for aggregate net proceeds to the Company of approximately $1.2 billion. In June 2023, the Company issued the shares to the Underwriter pursuant to the Underwriting Agreement and received aggregate net proceeds of $1.2 billion after deducting issuance costs of approximately $1.1 million.

On May 31, 2023, the Company entered into the 2023 Subscription Agreement with Ayar, pursuant to which Ayar agreed to purchase from the Company 265,693,703 shares of the Company’s common stock at a price per share of $6.83 in a private placement for aggregate net proceeds to the Company of approximately $1.8 billion. In June 2023, the Company issued the shares to Ayar pursuant to the 2023 Subscription Agreement and received aggregate net proceeds of $1.8 billion after deducting issuance costs of approximately $2.0 million.

Issuance costs incurred were recorded as a reduction of the gross proceeds received from the equity offerings within additional paid-in capital in the condensed consolidated balance sheets.

Treasury Stock

During the year ended December 31, 2021, the Company repurchased an aggregate of 857,825 shares of its common stock, including 712,742 shares from certain employees and 145,083 shares from Board of Directors of the Company’s predecessor, Atieva, Inc. at $24.15 per share. No common stock was repurchased during the three and nine months ended September 30, 2023 and 2022.

Common Stock Reserved for Issuance

The Company’s common stock reserved for future issuances as of September 30, 2023 was as follows:


			September 30, 2023
Private Placement Warrants to purchase common stock			44,350,000
Stock options outstanding			34,320,337
Restricted stock units outstanding			61,270,330
Shares available for future grants under equity plans			29,343,917
If-converted common shares from convertible note			36,737,785
Total shares of common stock reserved			206,022,369

NOTE 9 – STOCK-BASED AWARDS

Stock Options

A summary of stock option activity for the nine months ended September 30, 2023 was as follows:


	Outstanding Options
	Number of Options	Weighted Average Exercise Price		Weighted-Average Remaining Contractual Term	Intrinsic Value (in thousands)
Balance as of December 31, 2022	39,011,116	$	1.19	6.52	$	224,721
Options granted	3,534,993	8.40
Options exercised	(6,827,738)	1.07
Options canceled	(1,398,034)	2.41
Balance as of September 30, 2023	34,320,337	$	1.91	5.75	$	140,380
Options vested and exercisable as of September 30, 2023	27,690,560	$	1.11	5.47	$	127,260

As of September 30, 2023, unrecognized stock-based compensation cost related to outstanding unvested stock options that are expected to vest was $14.7 million, which is expected to be recognized over a weighted-average period of 3.2 years.

Restricted Stock Units (“RSUs”)

A summary of RSUs activity for the nine months ended September 30, 2023 was as follows:


	Restricted Stock Units
	Time-Based Shares	Performance-Based Shares	Total Shares	Weighted-Average Grant-Date Fair Value
Balance as of December 31, 2022	38,570,298	2,090,140	40,660,438	$	19.38
Granted	33,708,323	7,362,343	41,070,666	7.29
Vested	(13,613,955)	—	(13,613,955)	16.51
Cancelled/Forfeited	(6,846,819)	—	(6,846,819)	15.19
Balance as of September 30, 2023	51,817,847	9,452,483	61,270,330	$	12.38

As of September 30, 2023, unrecognized stock-based compensation cost related to outstanding unvested time-based RSUs that are expected to vest was $485.2 million, which is expected to be recognized over a weighted-average period of 2.3 years.

In 2021, the Company granted performance-based RSUs to the CEO and they are subject to performance and market conditions. The performance condition was satisfied upon the closing of the Merger. The fair value of these performance-based RSUs was measured on the grant date, March 27, 2021, using a Monte Carlo simulation model, with the following assumptions:


Weighted average volatility	60.0	%
Expected term (in years)	5.0
Risk-free interest rate	0.9	%
Expected dividends	—

The Company recognizes compensation expense using a graded vesting attribution method over the derived service period for the CEO performance-based awards. Stock-based compensation expense is recognized when the relevant performance condition is considered probable of achievement for the performance-based award. During the year ended December 31, 2022, the market condition was met for the CEO performance-based awards for four of the five tranches and certified by the Board of Directors, representing an aggregate of 13,934,271 performance RSUs. The Company recorded stock-based compensation expense of $85.4 million for the four tranches during the year ended December 31, 2022. The unamortized expense of $8.2 million as of December 31, 2022 for the fifth tranche, representing 2,090,140 RSUs, was fully recognized during the nine months ended September 30, 2023. The Company withheld approximately 0.5 million and 1.4 million shares of common stock, respectively, for the three and nine months ended September 30, 2023, and 0.4 million and 8.9 million shares of common stock, respectively, for the same periods in the prior year, by net settlement to meet the related tax withholding requirements related to the CEO time-based and performance-based RSUs.

During the three and nine months ended September 30, 2023, the Company granted performance-based RSUs to certain employees. Performance-based RSUs granted to certain employees are subject to corporate performance conditions and/or individual performance. The number of awards granted represents 100% of the target goal. Under the terms of the awards, the recipient may earn between 0% to 150% of the original number of grants based on actual achievement of corporate performance goals and/or individual performance. Performance-based RSUs earned are subject to service condition which will be met generally over 3 years. Stock-based compensation expense is recognized when the relevant performance condition is considered probable of achievement for the performance-based award. During the three and nine months ended September 30, 2023, the Company recorded stock-based compensation expenses of $2.9 million and $3.6 million, respectively, related to these performance-based RSUs. As of September 30, 2023, the unamortized expense for the performance-based RSUs was $17.9 million which will be recognized over a weighted-average period of 1.4 years.

Employee Stock Purchase Plan (“ESPP”)

The ESPP authorizes the issuance of shares of common stock pursuant to purchase rights granted to employees. The plan provides for 24-month offering periods beginning in December and June of each year, and each offering period will consist of four six-month purchase periods. The purchase price for each share purchased during an offering period will be the lesser of 85% of the fair market value of the share on the purchase date or 85% of the fair market value of the share on the offering date. As of September 30, 2023, unrecognized stock-based compensation cost related to the ESPP was $31.1 million, which is expected to be recognized over a weighted-average period of 1.7 years.

Stock-based Compensation Expense

Total employee and nonemployee stock-based compensation expense for the three and nine months ended September 30, 2023 and 2022, was classified in the condensed consolidated statements of operations and comprehensive loss as follows (in thousands):


	Three Months Ended September 30,				Nine Months Ended September 30,
	2023		2022		2023		2022
Cost of revenue	$	1,221	$	10,836	$	2,560	$	29,816
Research and development	35,963		34,083		101,356		123,059
Selling, general and administrative	31,053		38,383		90,959		199,370
Restructuring charges	—		—		(1,443)		—
Total	$	68,237	$	83,302	$	193,432	$	352,245

NOTE 10 – LEASES

The Company has entered into various non-cancellable operating and finance lease agreements for certain of the Company’s offices, manufacturing and warehouse facilities, retail and service locations, equipment and vehicles, worldwide.

In August 2022, the Company entered into a four-year agreement (“Lease Agreement”) to lease land in Casa Grande, Arizona adjacent to our manufacturing facility. The Company classifies this lease as a finance lease because the Lease Agreement contains a purchase option which the Company is reasonably certain to exercise. As of September 30, 2023 and December 31, 2022, assets associated with the finance lease were $79.3 million. As of September 30, 2023 and December 31, 2022, liabilities associated with the finance lease were $79.5 million and $81.1 million, respectively.

Contemporaneously with the execution of the Lease Agreement, the Company entered into a sale agreement, pursuant to which the Company sold certain parcels of land for $31.7 million to the lessor and leased back these parcels of land under the Lease Agreement. The sale of the land and subsequent lease did not result in change in the transfer of control of the land; therefore, the sale-leaseback transaction is accounted for as a failed sale and leaseback financing obligation. The Company recorded $31.7 million of sales proceeds received as a financial liability within other long-term liabilities in the condensed consolidated balance sheets as of September 30, 2023 and December 31, 2022.

The balances for the operating and finance leases where the Company is the lessee are presented as follows within the Company’s condensed consolidated balance sheets (in thousands):


	September 30, 2023		December 31, 2022
Operating leases:
Operating lease right-of-use assets	$	221,657	$	215,160

Other current liabilities	$	24,925	$	11,269
Other long-term liabilities	246,818		243,843
Total operating lease liabilities	$	271,743	$	255,112

Finance leases:
Property, plant and equipment, net	$	86,254	$	90,386
Total finance lease assets	$	86,254	$	90,386

Finance lease liabilities, current portion	$	8,964	$	10,586
Finance lease liabilities, net of current portion	77,019		81,336
Total finance lease liabilities	$	85,983	$	91,922

The components of lease expense were as follows within the Company’s condensed consolidated statements of operations and comprehensive loss (in thousands):


	Three Months Ended September 30,				Nine Months Ended September 30,
	2023		2022		2023		2022
Operating lease expense:
Operating lease expense(1)	$	14,000	$	11,888	$	40,578	$	32,215
Variable lease expense	438		906		1,306		2,581

Finance lease expense:
Amortization of leased assets	$	1,326	$	1,217	$	4,133	$	3,446
Interest on lease liabilities	1,204		897		3,677		1,186
Total finance lease expense	$	2,530	$	2,114	$	7,810	$	4,632
Total lease expense	$	16,968	$	14,908	$	49,694	$	39,428

(1) Excluded short-term leases, which were not material.

Other information related to leases where the Company is the lessee was as follows:


	September 30, 2023		December 31, 2022
Weighted-average remaining lease term (in years):
Operating leases	7.1		7.6
Finance leases	2.8		3.5

Weighted-average discount rate:
Operating leases	10.87	%	10.52	%
Finance leases	5.58	%	5.57	%

As of September 30, 2023, the maturities of the Company’s operating and finance lease liabilities (excluding short-term leases) were as follows (in thousands):


	Operating Leases		Finance Leases
2023 (remainder of the year)	$	9,179	$	1,321
2024	59,125		8,340
2025	59,693		6,619
2026	56,748		82,488
2027	49,491		117
Thereafter	167,124		37
Total minimum lease payments	401,360		98,922
Less: Interest	(129,617)		(12,939)
Present value of lease obligations	271,743		85,983
Less: Current portion	(24,925)		(8,964)
Long-term portion of lease obligations	$	246,818	$	77,019

As of September 30, 2023, the Company entered into additional leases for facilities and equipment that have not yet commenced with undiscounted future lease payments of $7.6 million. The leases are expected to commence over the next twelve months.

NOTE 11 - COMMITMENTS AND CONTINGENCIES

Contractual Obligations

As of September 30, 2023 and December 31, 2022, the Company had $384.2 million and $593.9 million, respectively, in commitments related to AMP-1 and AMP-2 plant and equipment. These commitments represent future expected payments on open purchase orders entered into as of September 30, 2023 and December 31, 2022.

The Company’s non-cancellable long-term commitments primarily related to certain inventory component purchases. The estimated future payments having a remaining term in excess of one year as of September 30, 2023 were as follows (in thousands):


Years ended December 31,	Minimum Purchase Commitment(1)
2023 (remainder of the year)	$	98,775
2024	342,720
2025	459,826
2026	703,715
2027	703,205
Thereafter	2,709,173
Total	$	5,017,414

(1) Included minimum purchase commitment of approximately $4.9 billion of battery cells from Panasonic Energy Co., Ltd. and certain of its affiliates.

Legal Matters

From time to time, the Company may become subject to legal proceedings, claims and litigation arising in the ordinary course of business. Some of these claims, lawsuits and other proceedings may involve highly complex issues that are subject to substantial uncertainties, and could result in damages, fines, penalties, non-monetary sanctions or relief.

Beginning on April 18, 2021, two individual actions and two putative class actions were filed in federal courts in Alabama, California, New Jersey and Indiana, asserting claims under the federal securities laws against the Company (f/k/a Churchill Capital Corp IV), its wholly owned subsidiary, Atieva, Inc. (“Lucid Motors”), and certain current and former officers and directors of the Company, generally relating to the Merger. On September 16, 2021, the plaintiff in the New Jersey action voluntarily dismissed that lawsuit. The remaining actions were ultimately transferred to the Northern District of California and consolidated under the caption, In re CCIV / Lucid Motors Securities Litigation, Case No. 4:21-cv-09323-YGR (the “Consolidated Class Action”). On December 30, 2021, lead plaintiffs in the Consolidated Class Action filed a revised amended consolidated complaint (the “Complaint”), which asserts claims under Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 on behalf of a putative class of shareholders who purchased stock in CCIV between February 5, 2021 and February 22, 2021. The Complaint names as defendants Lucid Motors and the Company’s chief executive officer, and generally alleges that, prior to the public announcement of the Merger, defendants purportedly made false or misleading statements regarding the expected start of production for the Lucid Air and related matters. The Complaint seeks certification of the action as a class action as well as compensatory damages, interest thereon, and attorneys’ fees and expenses. The Company moved to dismiss the Complaint on February 14, 2022 and that motion was granted on January 11, 2023, with Plaintiffs being provided the ability to seek leave to amend. On January 30, 2023, Plaintiffs filed a Motion for Leave to Amend, which the Company opposed. On June 29, 2023, the District Court denied that motion, dismissed the lawsuit and terminated the case. On July 28, 2023, Plaintiffs appealed the District Court’s decision to the Ninth Circuit Court of Appeals.

On December 3, 2021, the Company received a subpoena from the SEC requesting the production of certain documents related to an investigation by the SEC related to the business combination between the Company (f/k/a Churchill Capital Corp IV) and Legacy Lucid and certain projections and statements. The Company responded and fully cooperated with the SEC in its review. On April 27, 2023, SEC staff informed the Company that the SEC has concluded this matter and it does not intend to recommend an enforcement action by the SEC against the Company.

In addition, two separate purported shareholders of the Company filed shareholder derivative actions, purportedly on behalf of the Company, against certain of the Company’s officers and directors in California federal court, captioned Sahr Lebbie v. Peter Rawlinson, et al., Case No. 4:22-cv-00531-YGR (N.D. Cal.) (filed on January 26, 2022) and Zsata Williams-Spinks v. Peter Rawlinson, et al., Case No. 4:22-cv-01115-YGR (N.D. Cal.) (filed on February 23, 2022). The complaint also names the Company as a nominal defendant. Based on allegations that are similar to those in the Consolidated Class Action, the Lebbie complaint asserts claims for unjust enrichment, breach of fiduciary duty, aiding and abetting breach of fiduciary duty, abuse of control, gross mismanagement and waste of corporate assets and a claim for contribution under Sections 10(b) and 21D of the Exchange Act in connection with the Consolidated Class Action and the Williams-Spinks complaint asserts claims for breach of fiduciary duty, gross mismanagement, abuse of control, unjust enrichment, contribution under Sections 10(b) and 21D of the Exchange Act, and aiding and abetting breach of fiduciary duty in connection with the Consolidated Class Action. The complaints seek compensatory damages, interest thereon, certain corporate governance reforms, and attorneys’ fees and expenses. The Company is advancing defendants’ fees and expenses incurred in their defense of the actions.

On April 1, 2022 and May 31, 2022, two alleged shareholders filed putative class actions under the federal securities laws against Lucid Group, Inc. and certain officers of the Company relating to alleged statements, updated projections and guidance provided in the late 2021 to early 2022 timeframe. The complaints, which were filed in the Northern District of California, are captioned Victor W. Mangino v. Lucid Group, Inc., et al., Case No. 3:22-cv-02094-JD, and Anant Goel v. Lucid Group, Inc., et al., Case No. 3:22-cv-03176-JD. The two matters were consolidated into one action, entitled In re Lucid Group, Inc. Securities Litigation, Case No. 22-cv-02094-JD. The consolidated complaint names as defendants Lucid Group, Inc. and the Company’s chief executive officer and chief financial officer, and generally allege that defendants purportedly made false or misleading statements regarding delivery and revenue projections and related matters between November 15, 2021 and August 3, 2022. The consolidated complaint seeks certification of the action as a class action, as well as compensatory damages, interest thereon, and attorneys’ fees and expenses. The Company filed a Motion to Dismiss on February 23, 2023, which is pending before the court. The Company believes that the plaintiffs’ claims are without merit and intends to defend itself vigorously, but the Company cannot ensure that defendants’ efforts to dismiss the consolidated complaint will be successful or that it will avoid liability in these matters.

In addition, on July 11, 2022, a purported shareholder of the Company filed a shareholder derivative action, purportedly on behalf of the Company, against certain of the Company’s officers and directors in California state court, captioned Floyd Taylor v. Glenn August, et al., Superior Court, Alameda County, Case No. 22CV014130. The complaint also names the Company as a nominal defendant. Based on allegations that are similar to those in the In re Lucid Group, Inc. Securities Litigation action, the Taylor complaint asserts claims for breach of fiduciary duty, unjust enrichment, waste of corporate assets and aiding and abetting breach of fiduciary duty. The complaint seeks compensatory damages, punitive damages, interest, and attorneys’ fees and expenses. The Company is advancing defendants’ fees and expenses incurred in their defense of the action.

At this time, the Company does not consider any such claims, lawsuits or proceedings that are currently pending, individually or in the aggregate, including the matters referenced above, to be material to the Company’s business or likely to result in a material adverse effect on its future operating results, financial condition or cash flows should such proceedings be resolved unfavorably.

Indemnification

In the ordinary course of business, the Company may provide indemnification of varying scope and terms to customers, vendors, investors, directors, officers, and certain key employees with respect to certain matters, including, but not limited to, losses arising out of our breach of such agreements, services to be provided by the Company, or from intellectual property infringement claims made by third parties. These indemnification provisions may survive termination of the underlying agreement and the maximum potential amount of future payments the Company could be required to make under these indemnification provisions may not be subject to maximum loss clauses. The maximum potential amount of future payments the Company could be required to make under these indemnification provisions is indeterminable. The Company has never paid a material claim, nor has it been sued in connection with these indemnification arrangements. The Company has indemnification obligations with respect to letters of credit and surety bond primarily used as security against facility leases, utilities infrastructure and other agreements that require securitization. The indemnification obligations were $60.6 million and $52.5 million as of September 30, 2023 and December 31, 2022, respectively, for which no liabilities are recorded in the condensed consolidated balance sheets.

NOTE 12 - INCOME TAXES

The Company’s provision from income taxes for interim periods is determined using its effective tax rate that arise during the period. The Company’s quarterly tax provision is subject to variation due to several factors, including variability in pre-tax income (or loss), the mix of jurisdictions to which such income relates, changes in how the Company does business, and tax law developments.

The Company’s effective tax rate was 0.0% for the three and nine months ended September 30, 2023, and 0.0% and (0.1)%, respectively, for the same periods in the prior year, due to minimal profits in foreign jurisdictions and U.S. losses for which no benefit will be realized.

NOTE 13 - NET LOSS PER SHARE

Basic and diluted net loss per share attributable to common stockholders are calculated as follows (in thousands, except share and per share amounts):


	Three Months Ended September 30,				Nine Months Ended September 30,
	2023		2022		2023		2022
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, basic	2,284,446,783		1,676,048,504		2,010,916,100		1,666,693,217
Private Placement Warrants using the treasury stock method	—		14,915,044		—		19,883,372
Weighted-average shares outstanding, diluted	2,284,446,783		1,690,963,548		2,010,916,100		1,686,576,589

Net loss per share:
Basic	$	(0.28)	$	(0.32)	$	(1.08)	$	(0.50)
Diluted	$	(0.28)	$	(0.40)	$	(1.08)	$	(1.09)

The following outstanding shares of potentially dilutive securities were excluded from the computation of diluted net loss per share attributable to common stockholders because including them would have had an anti-dilutive effect:


	September 30,
Excluded Securities	2023	2022
Private Placement Warrants to purchase common stock	44,350,000	—
Options outstanding to purchase common stock	34,320,337	43,132,157
RSUs outstanding	51,817,847	37,300,903
Employee stock purchase plan	9,353,757	5,068,423
If-converted common shares from convertible note	36,737,785	36,737,785
Total	176,579,726	122,239,268

The 9,452,483 and 2,090,140 shares of common stock equivalents subject to RSUs are excluded from the anti-dilutive table above as the underlying shares remain contingently issuable since the market or corporate performance conditions have not been satisfied as of September 30, 2023 and 2022, respectively.

NOTE 14 - EMPLOYEE BENEFIT PLAN

The Company has a 401(k) savings plan (the “401(k) Plan”) that qualifies as a deferred salary arrangement under Section 401(k) of the Internal Revenue Code. Under the 401(k) Plan, participating employees may elect to contribute up to 100% of their eligible compensation, subject to certain limitations. The 401(k) Plan provides for a discretionary employer-matching contribution. The Company made no matching contribution to the 401(k) Plan for the three and nine months ended September 30, 2023 and 2022.

NOTE 15 - RELATED PARTY TRANSACTIONS

Public Investment Fund Internship Agreement

In July 2021, the Company entered into an agreement with PIF, which is an affiliate of Ayar, to implement a recruitment and talent development program pursuant to which the Company agreed to evaluate, employ and train participants nominated by PIF during six-month internships, and PIF agreed to reimburse us for expenses related to participant wages, visa fees, medical insurance, airfare and housing incurred by us. The program ended during the year ended December 31, 2022. Expenses incurred under the agreement were nil during the three and nine months ended September 30, 2023, and $0.3 million and $1.0 million, respectively, during the same periods in the prior year. The amount due from PIF was nil and $1 million as of September 30, 2023 and December 31, 2022, respectively.

Leases

In February 2022, the Company entered into a lease agreement with KAEC, a related party of PIF, which is an affiliate of Ayar, for our first international manufacturing plant in Saudi Arabia. The lease has an initial term of 25 years expiring in Year 2047. The right-of-use assets related to this lease were $4.6 million and $4.8 million as of September 30, 2023 and December 31, 2022, respectively. The lease liabilities were $5.6 million and $5.4 million as of September 30, 2023 and December 31, 2022, respectively. The lease expense recorded for the three and nine months ended September 30, 2023 and 2022 was immaterial.

In July 2023, the Company entered into a lease agreement with King Abdullah Financial District Development and Management Company, a subsidiary of PIF, which is an affiliate of Ayar, for its corporate office in Saudi Arabia. The lease has an initial term of 6 years expiring in Year 2029. The right-of-use asset and lease liability related to this lease were $2.4 million and $2.3 million, respectively, as of September 30, 2023. The lease expense recorded for the three and nine months ended September 30, 2023 was immaterial.

SIDF Loan Agreement

In February 2022, Lucid LLC entered into the SIDF Loan Agreement with the SIDF, a related party of PIF, which is an affiliate of Ayar. Under the SIDF Loan Agreement, SIDF has committed to provide 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. See Note 6 “Debt” for more information.

MISA Agreements

In February 2022, Lucid LLC entered into agreements with MISA, a related party of PIF, which is an affiliate of Ayar, pursuant to which MISA has agreed to provide economic support for certain capital expenditures in connection with Lucid LLC’s on-going design and construction of AMP-2. The support by MISA is subject to Lucid LLC’s completion of certain milestones related to the construction and operation of AMP-2. Following the commencement of construction, if operations at the plant do not commence within 30 months, or if the agreed scope of operations is not attained within 55 months, MISA may suspend availability of subsequent support.

Pursuant to the agreements, MISA has the right to require Lucid LLC to transfer the ownership of AMP-2 to MISA, at the fair market value thereof, minus an amortized value of the support provided in the event of customary events of default including abandonment or material and chronically low utilization of AMP-2. Alternatively, Lucid LLC is entitled to avoid the transfer of the ownership of AMP-2 by electing to pay such amortized value. The agreements will terminate on the fifteenth anniversary of the commencement of CBU operations at AMP-2 at the latest.

In 2022, the Company received support of SAR 366 million (approximately $97.3 million) in cash. The Company recorded nil and $64.0 million as deferred liability within other long-term liabilities in the condensed consolidated balance sheets as of September 30, 2023 and December 31, 2022, respectively. The Company also recorded $97.3 million and $33.3 million as a deduction in calculating the carrying amount of the related assets in the condensed consolidated balance sheets as of September 30, 2023 and December 31, 2022, respectively. There were no unfulfilled conditions and contingencies attached to the payments received. In 2022, payment receipts were classified as investing cash inflows in the condensed consolidated statements of cash flows.

GIB Facility Agreement

In April 2022, Lucid LLC entered into the GIB Facility Agreement with GIB. 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).

On March 12, 2023, Lucid LLC entered into an amendment of the 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. See Note 6 “Debt” for more information.

Construction Service Contract

Lucid LLC entered into agreements with Al Bawani Company Limited (“Al Bawani”), an affiliate of PIF, which is an affiliate of Ayar, for certain design and construction services in connection with the development of AMP-2. The capital expenditures incurred under these agreements were SAR 120.2 million (approximately $32.1 million) and SAR 302.1 million (approximately $80.6 million), respectively, for the three and nine months ended September 30, 2023. Amounts due to Al Bawani under these agreements were SAR 97.2 million (approximately $25.9 million) and SAR 42.1 million (approximately $11.2 million) as of September 30, 2023 and December 31, 2022, respectively.

Subscription Agreements

On November 8, 2022, the Company entered into the Subscription Agreement with Ayar, pursuant to which Ayar agreed to purchase from the Company, up to $915.0 million shares of its common stock in one or more private placements through March 31, 2023. In December 2022, the Company issued 85,712,679 shares at a weighted average price per share of $10.68, and received aggregate proceeds of $915.0 million.

On May 31, 2023, the Company entered into the 2023 Subscription Agreement with Ayar, pursuant to which Ayar agreed to purchase from the Company 265,693,703 shares of the Company’s common stock at a price per share of $6.83 in a private placement for aggregate net proceeds of approximately $1.8 billion. In June 2023, the Company issued the shares to Ayar pursuant to the 2023 Subscription Agreement and received aggregate net proceeds of $1.8 billion after deducting issuance costs of approximately $2.0 million. See Note 8 “Stockholders’ Equity” for more information.

Common stock acquired by Ayar under the Subscription Agreements is subject to the investor rights agreement dated February 22, 2021 (the “Investor Rights Agreement”), which governs the registration for resale of such common stock. On May 31, 2023, concurrently with entering into the 2023 Subscription Agreement, the Company entered into an amendment to the Investor Rights Agreement (the “Second IRA Amendment”). Pursuant to the Second IRA Amendment, Ayar is entitled to certain registration rights with respect to the shares of common stock Ayar purchased in the private placement.

Human Resources Development Fund (“HRDF”) Joint Cooperation Agreement

In March 2023, Lucid LLC entered into a joint cooperation agreement with HRDF, a related party of PIF, which is an affiliate of Ayar. Pursuant to the agreement, Lucid LLC will train and develop local personnel in Saudi Arabia, and HRDF agreed to reimburse the Company training related costs in an aggregate of approximately SAR 29.3 million (approximately $7.8 million) during a one year program.

During the three and nine months ended September 30, 2023, the Company received a payment of nil and SAR 8.8 million (approximately $2.3 million), respectively, in cash. The Company recorded $2.0 million as deferred liability within other current liabilities in the condensed consolidated balance sheet as of September 30, 2023. The deduction recorded to operating expenses in the condensed consolidated statement of operations and comprehensive loss was immaterial, for the three and nine months ended September 30, 2023.

EV Purchase Agreement

In August 2023, Lucid LLC entered into an EV purchase agreement with the Government of Saudi Arabia, a related party of PIF, which is an affiliate of Ayar, as represented by the Ministry of Finance (the “EV Purchase Agreement”). The EV Purchase Agreement supersedes the Letter of Undertaking that Lucid LLC entered into in April 2022. Pursuant to the terms of the EV Purchase Agreement, the Government of Saudi Arabia and its entities and corporate subsidiaries and other beneficiaries (collectively, the “Purchaser”) may purchase up to 100,000 vehicles, with a minimum purchase quantity of 50,000 vehicles and an option to purchase up to an additional 50,000 vehicles during a ten-year period. Under the EV Purchase Agreement, the Purchaser may reduce the minimum vehicle purchase quantity by the number of vehicles set out in any purchase order not accepted by us or by the number of vehicles that Lucid LLC fails to deliver within six months from the date of the applicable purchase order. The Purchaser also has absolute discretion to decide whether to exercise the option to purchase the additional 50,000 vehicles. Vehicle sales during the three and nine months ended September 30, 2023 and amounts due from the Purchaser as of September 30, 2023 were not material.

NOTE 16 – SUBSEQUENT EVENTS

In connection with the preparation of the condensed consolidated financial statements for the three and nine months ended September 30, 2023, the Company evaluated subsequent events and concluded there were no subsequent events that required recognition in the condensed consolidated financial statements.

Implementation Agreement with Aston Martin

In June 2023, the Company entered into an agreement (the “Implementation Agreement”) with Aston Martin Lagonda Global Holdings plc (together with its subsidiaries, “Aston Martin”) under which the Company and Aston Martin have established a long-term strategic technology arrangement. On November 6, 2023, pursuant to the terms of the Implementation Agreement, integration and supply arrangements became effective, under which the Company will provide Aston Martin access to its powertrain, battery system, and software technologies, work with Aston Martin to integrate its powertrain and battery components with Aston Martin’s battery electric vehicle chassis, and supply powertrain and battery components to Aston Martin (collectively, the “Strategic Technology Arrangement”). In connection with the commencement of the Strategic Technology Arrangement, the Company received 28,352,273 ordinary shares of Aston Martin and the first cash installment of $33 million. The Company will receive the remaining cash payments of $99 million phased over a period of three years. Aston Martin has also committed to an effective minimum spend with the Company on powertrain components of $225 million.

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our condensed consolidated financial statements and related notes included elsewhere in this Quarterly Report on Form 10-Q (the “Quarterly Report”) and our Annual Report on Form 10-K for the year ended December 31, 2022, filed with the SEC on February 28, 2023. This discussion may contain forward-looking statements based upon Lucid’s current expectation, estimates and projections that involve risks and uncertainties. Our actual results could differ materially from those anticipated in these forward-looking statements as a result of various factors, including those set forth under “Risk Factors”, in Part II, Item 1A of this Quarterly Report.

Overview

We are a technology and automotive company with a mission to inspire the adoption of sustainable energy by creating advanced technologies and the most captivating luxury electric vehicles, centered around the human experience. Our focus on in-house technology innovation, vertical integration, and a “clean sheet” approach to engineering and design have led to the development of the award-winning Lucid Air.

We sell vehicles directly to consumers through our retail sales network and through direct online sales including through Lucid Financial Services. We believe that owning our sales network provides an opportunity to closely manage the customer experience, gather direct customer feedback, and ensure that customer interactions are on-brand and tailored to our customers’ needs. We own and operate a vehicle service network comprised of service centers in major metropolitan areas and a fleet of mobile service vehicles. In addition to our in-house service capabilities, we established and continue to grow an approved list of specially trained collision repair shops which also serve as repair hubs for our mobile service offerings in some cases.

We began delivering the Lucid Air to customers in October 2021. We expect to launch additional vehicles over the coming decade. We have already commenced design and engineering work for the Lucid Gravity, a luxury sports utility vehicle (“SUV”) that is expected to leverage and expand the technological advancements from the Lucid Air. We expect to begin production of the Lucid Gravity SUV in late 2024. After the Lucid Air and the Lucid Gravity SUV, we plan to leverage and expand our technological and manufacturing advancements to develop and manufacture progressively higher-volume vehicle segments.

Recent Developments

Implementation Agreement with Aston Martin

In June 2023, we entered into an agreement (the “Implementation Agreement”) with Aston Martin Lagonda Global Holdings plc (together with its subsidiaries, “Aston Martin”) under which we and Aston Martin have established a long-term strategic technology arrangement. On November 6, 2023, pursuant to the terms of the Implementation Agreement, integration and supply arrangements became effective, under which we will provide Aston Martin access to our powertrain, battery system, and software technologies, work with Aston Martin to integrate our powertrain and battery components with Aston Martin’s battery electric vehicle chassis, and supply powertrain and battery components to Aston Martin (collectively, the “Strategic Technology Arrangement”). In connection with the commencement of the Strategic Technology Arrangement, we received 28,352,273 ordinary shares of Aston Martin and the first cash installment of $33 million. We will receive the remaining cash payments of $99 million phased over a period of three years. Aston Martin has also committed to an effective minimum spend with us on powertrain components of $225 million.

EV Purchase Agreement

In August 2023, Lucid LLC entered into an EV purchase agreement with the Government of Saudi Arabia as represented by the Ministry of Finance (the “EV Purchase Agreement”), which supersedes the Letter of Undertaking that Lucid LLC entered into in April 2022. Pursuant to the terms of the EV Purchase Agreement, the Government of Saudi Arabia and its entities and corporate subsidiaries and other beneficiaries (collectively, the “Purchaser”) may purchase up to 100,000 vehicles, with a minimum purchase quantity of 50,000 vehicles and an option to purchase up to an additional 50,000 vehicles during a ten-year period. Under the EV Purchase Agreement, the Purchaser may reduce the minimum vehicle purchase quantity by the number of vehicles set out in any purchase order not accepted by us or by the number of vehicles that Lucid LLC fails to deliver within six months from the date of the applicable purchase order. The Purchaser also has absolute discretion to decide whether to exercise the option to purchase the additional 50,000 vehicles.

Potential Impact of an Economic Downturn on our Business

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 our 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 our 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 our products may result in significant decreases in our product sales, which in turn would have a material adverse impact on our business, prospects, financial condition and results of operations. Because of our premium brand positioning and pricing, an economic downturn is likely to have a heightened adverse effect on us compared to many of our 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, an economic recession or other downturn could also cause logistical challenges and other operational risks if any of our suppliers, sub-suppliers or partners become insolvent or are otherwise unable to continue their operations, fulfill their obligations to us, or meet our future demand. In addition, the deterioration of conditions in global credit markets may limit our ability to obtain external financing to fund our operations and capital expenditures on terms favorable to us, if at all. See “Risk Factors” in Part II, Item 1A of this 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.”

Impact of the COVID-19 Pandemic on our Business

The COVID-19 pandemic has impacted the global economy and caused significant macroeconomic uncertainty. Infection rates vary across the jurisdictions in which we operate. 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 we rely on third party suppliers for the development, manufacture, and/or provision and development of many of the key components and materials used in our vehicles, as well as provisioning and servicing equipment in our manufacturing facilities, we have been affected by inflation and such industry-wide challenges in logistics and supply chains. While we continue to focus on mitigating risks to our operations and supply chain in the current industry environment, we expect that these industry-wide trends will continue to impact our cost structure as well as our ability and the ability of our suppliers to obtain parts, components and manufacturing equipment on a timely basis for the foreseeable future.

In the current circumstances, any impact on our 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 more 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.”

Key Factors Affecting Our Performance

We believe that our future success and financial performance depend on a number of factors that present significant opportunities for our business, but also pose risks and challenges, including those discussed below and in the section entitled “Risk Factors” in Part II, Item 1A of this Quarterly Report.

Design and Technology Leadership

We believe that we are positioned to be a leader in the electric vehicle market by unlocking the potential for advanced, high-performance, and long-range electric vehicles to co-exist. The Lucid Air is designed with race-proven battery and powertrain technologies and robust performance together with a sleek exterior design and expansive interior space given our miniaturized key drivetrain components. We anticipated continued consumer demand for the Lucid Air based on its luxurious design, high-performance technology and sustainability leadership, and the growing acceptance of and demand for electric vehicles as a substitute for gasoline-fueled vehicles. We continue to receive significant interest in the Lucid Air from potential customers.

Direct-to-Consumer Model

We operate a direct-to-consumer sales and service model, which we believe allows us to offer a personalized experience for our customers based on their purchase and ownership preferences. We expect to continue to incur significant expenses in our sales, service and marketing operations for sale of the Lucid Air, including to open studios, hire a sales force, invest in marketing and brand awareness, and stand up a service center operation. As of September 30, 2023, we have opened forty-five studios and service centers (excluding temporary and satellite service centers): thirty-three in the United States (ten in California, four in each of Florida and New York, two in each of Arizona, Illinois, Massachusetts, Texas, Virginia and Washington, and one in each of Colorado, Michigan and New Jersey), five in Canada, two in Germany, one in Netherlands, one in Norway, one in Switzerland, and two in Saudi Arabia. We also expect to hire additional sales, customer service, and service center personnel. We believe that investing in our direct-to-consumer sales and service model will be critical to deliver and service the Lucid electric vehicles we manufacture and sell.

Establishing Manufacturing Capacity

Achieving commercialization and growth for each generation of electric vehicles requires us to make significant capital expenditures to scale our production capacity and improve our supply chain processes in the United States and internationally. We expect our capital expenditures to increase as we continue our expansion of AMP-1 and construction of the completely-built-up (“CBU”) portion of AMP-2. The amount and timing of our future manufacturing capacity requirements, and resulting capital expenditures, will depend on many factors, including the pace and results of our research and development efforts to meet technological development milestones, our ability to develop and launch new electric vehicles, our ability to achieve sales and experience customer demand for our vehicles at the levels we anticipate, our ability to utilize planned capacity in our existing facilities and our ability to enter new markets.

Technology Innovation

We develop in-house battery and powertrain technology, which requires us to invest a significant amount of capital in research and development. The electric vehicle market is highly competitive and includes both established automotive manufacturers and new entrants. To establish market share and attract customers from competitors, we plan to continue to make substantial investments in research and development for the commercialization and continued enhancements of the Lucid Air, the development of the Lucid Gravity SUV, and future generations of our electric vehicles and other products.

Inflationary Pressure

The U.S. and Saudi Arabia economies have experienced increased inflation, including as a result of the COVID-19 pandemic. Our cost to manufacture a vehicle is heavily influenced by the cost of the key components and materials used in the vehicle, cost of labor, as well as cost of equipment used in our manufacturing facilities. As we continue our phased construction of our AMP-1 and AMP-2 facilities, any further increases in material and infrastructure equipment prices and cost of construction labor could lead to higher capital expenditures.

Results of Operations

Revenue

The following table presents our revenue for the periods presented (in thousands):


	Three Months Ended September 30,								Nine Months Ended September 30,
	2023		2022		$ Change		% Change		2023		2022		$ Change		% Change
Revenue	$	137,814	$	195,457	$	(57,643)	(29)	%	$	438,120	$	350,468	$	87,652	25	%

We recognize vehicle sales when the customer obtains control of the vehicle, which is upon delivery. We also generate revenue from non-warranty after-sales vehicle services and parts, powertrain kits and retail merchandise.

Revenue decreased by $57.6 million, or 29% for the three months ended September 30, 2023, as compared to the same period in the prior year. The decrease was primarily driven by the change in product mix, pricing and incentives offered during the three months ended September 30, 2023.

Revenue increased by $87.7 million, or 25% for the nine months ended September 30, 2023, as compared to the same period in the prior year, primarily driven by increases in deliveries of the Lucid Air vehicles, partially offset by change in pricing and incentives offered during the nine months ended September 30, 2023.

Cost of Revenue

The following table presents our cost of revenue for the periods presented (in thousands):


	Three Months Ended September 30,								Nine Months Ended September 30,
	2023		2022		$ Change		% Change		2023		2022		$ Change		% Change
Cost of revenue	$	469,722	$	492,483	$	(22,761)	(5)	%	$	1,526,051	$	1,030,795	$	495,256	48	%

Cost of vehicle sales includes direct parts, materials, shipping and handling costs, allocable overhead costs such as depreciation of manufacturing related equipment and facilities, information technology costs, personnel costs, including wages and stock-based compensation, estimated warranty costs, charges to reduce inventories to their net realizable value, charges for any excess or obsolete inventories, and losses from firm purchase commitments.

Cost of other revenue includes direct parts, material and labor costs, manufacturing overhead, including depreciation of tooling costs, shipping and logistic costs. Cost of other revenue also includes costs associated with providing non-warranty after-sales services and costs for retail merchandise.

Cost of revenue decreased by $22.8 million, or 5% for the three months ended September 30, 2023, as compared to the same period in the prior year. The decrease was primarily due to the change in product mix, partially offset by an increase in inventory and firm purchase commitments write-downs.

Cost of revenue increased by $495.3 million, or 48% for the nine months ended September 30, 2023, as compared to the same period in the prior year, primarily due to the increases in the manufacture and sale of the Lucid Air vehicles in 2023 and inventory and firm purchase commitments write-downs. We incurred significant personnel and overhead costs to operate our large-scale manufacturing facilities while ramping up production. In the near term, we expect our production volume of vehicles to continue to be significantly less than our manufacturing capacity.

We 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. We expect inventory write-downs could negatively affect our costs of vehicle sales in upcoming periods in the near term as we ramp production volumes up toward our manufacturing capacity.

Operating Expenses

The following table presents our operating expenses for the periods presented (in thousands):


	Three Months Ended September 30,								Nine Months Ended September 30,
	2023		2022		$ Change		% Change		2023		2022		$ Change		% Change
Research and development	$	230,758	$	213,761	$	16,997	8	%	$	694,035	$	600,218	$	93,817	16	%
Selling, general and administrative	189,691		176,736		12,955		7	%	556,209		563,707		(7,498)		(1)	%
Restructuring charges	518		—		518		*nm		24,546		—		24,546		*nm
Total operating expenses	$	420,967	$	390,497	$	30,470	8	%	$	1,274,790	$	1,163,925	$	110,865	10	%

*nm - not meaningful

Research and Development

Our research and development efforts have primarily focused on the development of our battery and powertrain technology, the Lucid Air, the Lucid Gravity SUV, and future generations of our electric vehicles. Research and development expenses consist primarily of materials, supplies and personnel-related expenses for employees involved in the engineering, designing, and testing of electric vehicles. Personnel-related expenses primarily include salaries, benefits and stock-based compensation. Research and development expenses also include prototype material, engineering, design and testing services, and allocated facilities costs, such as office and rent expense and depreciation expense, and other engineering, designing, and testing expenses.

Research and development expense increased by $17.0 million, or 8% for the three months ended September 30, 2023, as compared to the same period in the prior year. The increase was primarily attributable to an increase of $26.9 million for prototype material, engineering, design and testing services and higher personnel-related expenses of $11.4 million largely due to our growth in headcount, partially offset by a decrease of $13.0 million from lower utilization of contractors and professional fees and a decrease of $10.0 million in allocated facilities costs.

Research and development expense increased by $93.8 million, or 16% for the nine months ended September 30, 2023, as compared to the same period in the prior year. The increase was primarily attributable to an increase of $81.6 million for prototype material, engineering, design and testing services and higher personnel-related expenses of $19.9 million ($41.6 million increase due to our growth in headcount, partially offset by $21.7 million lower stock-based compensation expenses), partially offset by a decrease of $15.4 million from lower utilization of contractors and professional fees.

Selling, General, and Administrative

Selling, general, and administrative expenses consist primarily of personnel-related expenses for employees involved in general corporate, selling and marketing functions, including executive management and administration, legal, human resources, facilities and real estate, accounting, finance, tax, and information technology. Personnel-related expenses primarily include salaries, benefits and stock-based compensation. Selling, general, and administrative expenses also include allocated facilities costs, such as office, rent and depreciation expenses, professional services fees and other general corporate expenses. As we continue to grow as a company, build out our sales force, and commercialize the Lucid Air and planned future generations of our electric vehicles, we expect that our selling, general and administrative costs will increase.

We are incurring additional expenses as a result of operating as a public company, including expenses necessary to comply with the rules and regulations applicable to companies listed on a national securities exchange and related to compliance and reporting obligations pursuant to the rules and regulations of the SEC, as well as higher expenses for general and director and officer insurance, investor relations, and professional services.

Selling, general, and administrative expense increased by $13.0 million, or 7% for the three months ended September 30, 2023, as compared to the same period in the prior year. The increase was primarily attributable to an increase in allocated facilities costs of $14.2 million, higher personnel-related expenses of $9.5 million ($16.8 million increase due to our growth in headcount, partially offset by $7.3 million lower stock-based compensation expenses), and an increase of $6.4 million in sales and marketing expenses, partially offset by a decrease of $16.6 million from lower utilization of contractors and professional fees.

Selling, general, and administrative expense decreased by $7.5 million, or 1% for the nine months ended September 30, 2023, as compared to the same period in the prior year. The decrease was primarily attributable to lower personnel related expenses of $65.0 million ($108.4 million lower stock-based compensation expense mainly driven by the vesting of the four tranches of CEO performance-based awards during the nine months ended September 30, 2022, partially offset by $43.4 million increase due to our growth in headcount) and a decrease of $7.9 million from lower utilization of contractors and professional fees, partially offset by increases in allocated facilities costs of $47.4 million, other general corporate expenses of $12.4 million, and sales and marketing expense of $5.4 million.

Restructuring Charges

On March 28, 2023, we 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. We substantially completed the Restructuring Plan in the second quarter of 2023.

Restructuring charges of $0.5 million and $24.5 million, respectively, for the three and nine months ended September 30, 2023 primarily related to severance payments, employee benefits, employee transition and stock-based compensation, net of a reversal of previously recognized stock-based compensation expense.

Other Income (Expense), net

The following table presents our other income (expense), net for the periods presented (in thousands):


	Three Months Ended September 30,								Nine Months Ended September 30,
	2023		2022		$ Change		% Change		2023		2022		$ Change		% Change
Other income (expense), net:
Change in fair value of common stock warrant liability	$	60,316	$	140,146	$	(79,830)	(57)	%	$	61,647	$	998,319	$	(936,672)	(94)	%
Interest income	66,064		24,373		41,691		171	%	145,594		27,284		118,310		434	%
Interest expense	(3,340)		(7,613)		4,273		(56)	%	(17,138)		(22,521)		5,383		(24)	%
Other income (expense), net	(763)		665		(1,428)		*nm		(1,024)		9,898		(10,922)		*nm
Total other income, net	$	122,277	$	157,571	$	(35,294)	(22)	%	$	189,079	$	1,012,980	$	(823,901)	(81)	%

*nm - not meaningful

Change in Fair Value of Common Stock Warrant Liability

Our common stock warrant liability relates to the privately placed common stock warrants (the “Private Placement Warrants”) to purchase shares of Lucid Group common stock that were effectively issued upon the Closing in connection with the reverse recapitalization treatment of the Merger. Our common stock warrant liability is subject to remeasurement to fair value at each balance sheet date. Changes in the fair value of our common stock warrant liability were recognized in the condensed consolidated statements of operations and comprehensive loss.

The Private Placement Warrants remained unexercised as of September 30, 2023. The liability was remeasured to fair value, resulting in 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. The change in fair value was classified within change in fair value of common stock warrant liability in the condensed consolidated statements of operations and comprehensive loss. See Note 7 “Common Stock Warrant Liability” to the condensed consolidated financial statements included elsewhere in this Quarterly Report for more information.

Interest Income

Interest income increased by $41.7 million and $118.3 million, respectively, for the three and nine months ended September 30, 2023, primarily due to higher average balances and book yield from cash on hand and our investments of available-for-sale securities.

Interest Expense

Interest expense primarily consists of contractual interest and amortization of debt discounts and debt issuance costs incurred related to the 2026 Notes issued in December 2021, commitment fees and amortization of deferred issuance costs from the five-year senior secured asset-based revolving credit facility (“ABL Credit Facility”), and interest on our finance leases.

Interest expense decreased by $4.3 million and $5.4 million, respectively, for the three and nine months ended September 30, 2023, as compared to the same periods in the prior year, primarily due to an increase in interest capitalized on construction in progress related to significant capital asset construction, partially offset by increases in commitment fees and amortization of deferred issuance costs from the ABL Credit Facility, and increase in interest expense from the GIB credit facility.

Other Income (Expense), net

Other income (expense), net primarily consists of foreign currency gains and losses and dividend income from our investments. Our foreign currency exchange gains and losses relate to transactions and monetary asset and liability balances denominated in currencies other than the U.S. dollar. We expect our foreign currency gains and losses to continue to fluctuate in the future due to changes in foreign currency exchange rates.

Other income (expense), net decreased by $1.4 million and $10.9 million, respectively, for the three and nine months ended September 30, 2023, primarily due to dividend income earned from our investments in 2022 and changes in foreign currency exchange rates.

Provision for Income Taxes

The following table presents our provision for income taxes for the periods presented (in thousands):


	Three Months Ended September 30,								Nine Months Ended September 30,
	2023		2022		$ Change		% Change		2023		2022		$ Change		% Change
Provision for income taxes	$	296	$	149	$	147	99	%	$	1,012	$	540	$	472	87	%

Our provision for income taxes consists primarily of U.S., state and foreign income taxes in jurisdictions in which we operate. We maintain a valuation allowance against the full value of our U.S. and state net deferred tax assets because we believe it is more likely than not that the recoverability of these deferred tax assets will not be realized.

Liquidity and Capital Resources

Sources of Liquidity

As of September 30, 2023, Lucid had approximately $4.9 billion of cash, cash equivalents and investments. Since inception, our sources of cash are predominantly from proceeds received upon the completion of the Merger, the issuance of convertible debt and proceeds from equity offerings.

We expect that our current sources of liquidity together with our projection of cash flows from operating activities will provide us with adequate liquidity for at least the next 12 months, including investment in funding (i) ongoing operations, (ii) research and development projects for new products/ technologies, (iii) further construction of AMP-1 phase 2 in Casa Grande, Arizona, (iv) construction of AMP-2 CBU portion in Saudi Arabia, (v) expansion of retail studios and service centers, and (vi) other initiatives related to the sale of vehicles and/ or technology.

We anticipate our cumulative spending on capital expenditures to be in the range of $1.0 billion to $1.1 billion for the fiscal year 2023 to support our continued commercialization and growth objectives as we strategically invest in manufacturing capacity and capabilities, our retail studios and service center capabilities throughout North America and across the globe, development of different products and technologies, and other areas supporting the growth of Lucid’s business. Our future capital expenditures may vary and will depend on many factors including the timing and extent of spending and other growth initiatives. In addition, we expect our operating expenses to increase in order to grow and support the operations of a global automotive company targeting volumes in line with Lucid’s aspirations.

As of September 30, 2023, our total minimum lease payments are $500.3 million, of which $10.5 million is due in fiscal year 2023. We also have non-cancellable long-term commitments of $5.0 billion, primarily relating to certain inventory component purchases. For details regarding these obligations, refer to Note 10 “Leases” and Note 11 “Commitments and Contingencies” to the condensed consolidated financial statements included elsewhere in this Quarterly Report for more information.

2026 Notes

In December 2021, we issued $2,012.5 million of the 2026 Notes. The 2026 Notes accrue interest at a rate of 1.25% per annum, payable semi-annually 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 earlier repurchased, redeemed or converted. Before the close of business on the business day immediately before September 15, 2026, noteholders will have the right to convert their Notes only upon the occurrence of certain events. From and after September 15, 2026, noteholders may convert their Notes at any time at their election until the close of business on the second scheduled trading day immediately before the maturity date. We will settle conversions by paying or delivering, as applicable, cash, shares of our common stock or a combination of cash and shares of our common stock, at our election. The initial conversion rate is 18.2548 shares of common stock per $1,000 principal amount of Notes, which represents an initial conversion price of approximately $54.78 per share of common stock. The conversion rate and conversion price will be subject to customary adjustments upon the occurrence of certain events. In addition, if certain corporate events that constitute a “Make-Whole Fundamental Change” (as defined in the indenture) occur, then the conversion rate will, in certain circumstances, be increased for a specified period of time. As of September 30, 2023 and December 31, 2022, we were in compliance with applicable covenants under the indenture governing the 2026 Notes.

International Manufacturing Expansion

On February 27, 2022, we announced that we had selected King Abdullah Economic City (“KAEC”) in Saudi Arabia as the location of our first international manufacturing plant and signed related agreements with the Ministry of Investment of Saudi Arabia, the Saudi Industrial Development Fund, and the Economic City at KAEC. The operations at the new plant would initially consist of re-assembly of the Lucid Air vehicle “kits” pre-manufactured in the U.S. and, over time, production of complete vehicles.

Saudi Industrial Development Fund (“SIDF”) Loan Agreement

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 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.

Ministry of Investment of Saudi Arabia (“MISA”) Agreements

In 2022, we received support of SAR 366 million (approximately $97.3 million) in cash. We recorded nil and $64.0 million as deferred liability within other long-term liabilities in the condensed consolidated balance sheets as of September 30, 2023 and December 31, 2022, respectively. We also recorded $97.3 million and $33.3 million as a deduction in calculating the carrying amount of the related assets in the condensed consolidated balance sheets as of September 30, 2023 and December 31, 2022, respectively. There were no unfulfilled conditions and contingencies attached to the payments received.

Gulf International Bank (“GIB”) Facility Agreement

On April 29, 2022, Lucid LLC entered into a revolving credit facility agreement (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 bridge financing (the “Bridge Facility”) of Lucid LLC’s capital expenditures in connection with AMP-2. The remaining SAR 350 million (approximately $93.1 million) might be used for general corporate purposes (the “Working Capital Facility”). 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 an amendment of 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 SAR 1 billion (approximately $266.6 million) revolving credit facility (the “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.

We are 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, we 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, we 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, we were in compliance with applicable covenants under the Amended GIB Facility Agreement.

ABL Credit Facility

In June 2022, we 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, we 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. We are 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 our 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, we were in compliance with applicable covenants under the ABL Credit Facility.

As of September 30, 2023 and December 31, 2022, we 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.

At-the-Market Offering, Subscription Agreements and Underwriting Agreement

In December 2022, we completed our at-the-market offering program (the “At-the-Market Offering”) 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 (the “Subscription Agreement”) pursuant to the Subscription Agreement for $915.0 million.

In June 2023, we completed the public offering pursuant to the Underwriting Agreement for aggregate net proceeds of $1.2 billion and also consummated a private placement of shares to Ayar pursuant to the 2023 Subscription Agreement for aggregate net proceeds of $1.8 billion after deducting issuance costs. See Note 8 “Stockholders’ Equity” to the condensed consolidated financial statements included elsewhere in this Quarterly Report, for more information.

We have generated significant losses from our operations as reflected in our accumulated deficit of $9.5 billion and $7.4 billion as of September 30, 2023 and December 31, 2022, respectively. Additionally, we have generated significant negative cash flows from operations and investing activities as we continue to support the growth of our business.

The expenditures associated with the development and commercial launch of our vehicles, the anticipated increase in manufacturing capacity, and the international expansion of our business operations are subject to significant risks and uncertainties, many of which are beyond our control, which may affect the timing and magnitude of these anticipated expenditures. These risk and uncertainties are described in more detail in the section entitled “Risk Factors” in Part II, Item 1A of this Quarterly Report.

Cash Flows

The following table summarizes our cash flows for the periods presented (in thousands):


	Nine Months Ended September 30,
	2023		2022
Cash used in operating activities	$	(2,015,204)	$	(1,577,743)
Cash used in investing activities	(1,599,125)		(3,289,021)
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)

Cash Used in Operating Activities

Our cash flows used in operating activities to date have been primarily comprised of cash outlays to support overall growth of the business, especially the costs related to inventory and sale of our vehicles, costs related to research and development, payroll and other general and administrative activities. As we continue to ramp up hiring after starting commercial operations, we expect our cash used in operating activities to increase significantly before it starts to generate any material cash flows from our business.

Net cash used in operating activities increased by $437.5 million to $2,015.2 million during the nine months ended September 30, 2023 compared to the same period in the prior year. The increase was primarily due to an overall increase in net operating assets and liabilities of $244.8 million and the increase in net loss excluding non-cash expenses and gains of $192.7 million. The change in net operating assets and liabilities was mainly attributable to advances to suppliers and timing of payments.

Cash Used in Investing Activities

Cash flows from investing activities primarily relate to purchases of investments and capital expenditures to support our growth. We continue to experience negative cash flows from investing activities as we expand our business and continue to build our infrastructure.

Net cash used in investing activities decreased by $1,689.9 million to $1,599.1 million during the nine months ended September 30, 2023 compared to the same period in the prior year. The decrease was primarily attributable to an increase in proceeds from maturities of investments of $2,355.2 million, partially offset by an increase in purchases of investments of $858.6 million during the nine months ended September 30, 2023 compared to the same period in the prior year.

Cash Provided by (Used in) Financing Activities

Since inception, we have financed our operations primarily from the issuances of equity securities, including the public offering, At-the-Market Offering, the private placements to Ayar, convertible preferred stock, the proceeds of the Merger, and the 2026 Notes.

Net cash provided by financing activities was $3,043.0 million during the nine months ended September 30, 2023, compared to $165.6 million of net cash used in financing activities for the same period in the prior year. The change was primarily attributable to net proceeds from the issuance of common stock under the 2023 Subscription Agreement of $1,812.6 million and net proceeds from the issuance of common stock under the Underwriting Agreement of $1,184.2 million during the nine months ended September 30, 2023.

Critical Accounting Policies and Estimates

The condensed consolidated financial statements and the related notes thereto included elsewhere in this Quarterly Report are prepared in accordance with generally accepted accounting principles in the United States (“U.S. GAAP”). The preparation of our condensed consolidated financial statements requires us to make estimates and assumptions that affect the reported amounts and related disclosures in our financial statements and accompanying notes. We base our estimates on historical experience and on various other factors that we believe to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions due to the inherent uncertainty involved in making those estimates and any such differences may be material.

For a description of our critical accounting policies and estimates, refer to Part II, Item 7, Critical Accounting Policies and Estimates in our Annual Report on Form 10-K for the year ended December 31, 2022 and Note 2 “Summary of Significant Accounting Policies” to the condensed consolidated financial statements in Item 1 of Part I of this Quarterly Report. There have been no material changes to our critical accounting policies and estimates since our Annual Report on Form 10-K for the year ended December 31, 2022.

Item 3. Qualitative and Quantitative Disclosures about Market Risk.

We are exposed to market risks in the ordinary course of our business. Market risk represents the risk of loss that may impact our financial position due to adverse changes in financial market prices and rates. Our market risk exposure is primarily the result of fluctuations in interest rates and inflationary pressure.

Interest Rate Risk

We are exposed to market risk for changes in interest rates applicable to our Cash and cash equivalents, restricted cash, and investments. We had cash, cash equivalents, restricted cash, and investments totaling approximately $4.9 billion as of September 30, 2023. Our investment policy is focused on the preservation of capital and supporting our liquidity needs. Under the policy, we invest in highly rated securities, primarily issued by the U.S. government or liquid money market funds. We do not invest in financial instruments for trading or speculative purposes. We utilize external investment managers who adhere to the guidelines of our investment policy. Based on investment positions as of September 30, 2023, a hypothetical 100 basis point increase in interest rates would result in approximately $17.4 million incremental decline in the fair market value of our portfolio.

Inflationary Pressure

Supply Risk

We are dependent on our 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 us, or its inability to efficiently manage these components, could have a material adverse effect on our results of operations and financial condition.

Item 4. Controls and Procedures.

Evaluation of Disclosure Controls and Procedures

Our management, with the participation of our principal executive officer and principal financial officer, evaluated the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) as of the end of the period covered by this Quarterly Report on Form 10-Q.

Based on their evaluation, our principal executive officer and principal financial officer concluded that as of September 30, 2023, our disclosure controls and procedures are designed to, and are effective to, provide reasonable assurance that the information we are required to disclose in reports we file or submit under the Exchange Act is (i) recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms, and (ii) accumulated and communicated to our management, including our principal executive officer and principal financial officer, as appropriate, to allow timely decisions regarding required disclosure.

Changes in Internal Control Over Financial Reporting

There were no changes in our internal control over financial reporting (as defined in Rule 13a-15(f) and 15d-15(f) under the Exchange Act) that occurred during the fiscal quarter ended September 30, 2023, that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

Limitations on Effectiveness of Controls and Procedures

In designing and evaluating the disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives. In addition, the design of disclosure controls and procedures must reflect the fact that there are resource constraints and that management is required to apply its judgment in evaluating the benefits of possible controls and procedures relative to their costs.

PART II – OTHER INFORMATION

Item 1. Legal Proceedings.

For a description of our legal proceedings, see the description set forth in the “Legal Matters” section in Note 11 “Commitments and Contingencies” to the condensed consolidated financial statements in Item 1 of Part I of this Quarterly Report, which is incorporated herein by reference.

Item 1A. Risk Factors.

A description of the risks and uncertainties associated with our business is set forth below. You should carefully consider the risks and uncertainties described below, as well as the other information in this Quarterly Report, including our condensed consolidated financial statements and the related notes and “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” The occurrence of any of the events or developments described below, or of additional risks and uncertainties not presently known to us or that we currently deem immaterial, could materially and adversely affect our business, results of operations, financial condition and growth prospects. In such an event, the market price of our common stock could decline, and you could lose all or part of your investment.

Risk Factor Summary

Our business is subject to numerous risks and uncertainties, including those highlighted in this section titled Item 1A. “Risk Factors,” that represent challenges that we face in connection with the successful implementation of our strategy and growth of our business. The occurrence of one or more of the events or circumstances described in this section titled Item 1A. “Risk Factors,” alone or in combination with other events or circumstances, may have an adverse effect on our business, cash flows, financial condition and results of operations. Such risks include, but are not limited to:

•Our limited operating history makes evaluating our business and future prospects difficult and may increase the risk of your investment.

•We have incurred net losses each year since our inception and expect to incur increasing expenses and substantial losses for the foreseeable future.

•We may be unable to adequately control the substantial costs associated with our operations.

•Reservations and orders for our vehicles are cancellable.

•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 operation and financial condition.

•We currently depend on revenue generated from a single model and in the foreseeable future will be significantly dependent on a limited number of models.

•Our business and prospects depend significantly on our brand.

•We will not have a third-party retail product distribution and full-service network.

•If we fail to manage our future growth effectively, we may not be able to develop, manufacture, distribute, market and sell our vehicles successfully.

•We face risks associated with international operations, including unfavorable regulatory, political, tax and labor conditions, which could harm our business.

•The automotive industry has significant barriers to entry that we must overcome in order to manufacture and sell electric vehicles at scale.

•The automotive market is highly competitive, and we may not be successful in competing in this industry.

•We have experienced and may in the future experience significant delays in the design, manufacture, launch and financing of our vehicles, including the Lucid Air and the Lucid Gravity SUV, which could harm our business and prospects.

•Our ability to continue production and our future growth depends upon our ability to maintain relationships with our existing suppliers and source suppliers for our critical components, and to complete building out our supply chain, while effectively managing the risks due to such relationships.

•We are dependent on our suppliers, the majority of which are single-source suppliers, and the inability of these suppliers to deliver necessary components of our products according to our schedule and at prices, quality levels and volumes acceptable to us, or our inability to efficiently manage these components or to implement or maintain effective inventory management and other systems, processes and personnel to support ongoing and increased production, could have a material adverse effect on our results of operations and financial condition.

•Changes in costs, changes of supply or shortage of materials, in particular for lithium-ion battery cells or semiconductors, could harm our business.

•If we fail to successfully construct or tool our manufacturing facilities or if our manufacturing facilities become inoperable, we will be unable to produce our vehicles and our business will be harmed.

•We have limited experience in high volume manufacture of our vehicles.

•If our vehicles fail to perform as expected, our ability to develop, market and sell or lease our products could be harmed.

•We face challenges providing charging solutions for our vehicles, both domestically and internationally.

•We have limited experience servicing our vehicles and their integrated software. If we or our partners are unable to adequately service our vehicles, our business, prospects, financial condition and results of operations may be materially and adversely affected.

•Insufficient reserves to cover future warranty or part replacement needs or other vehicle repair requirements, including any potential software upgrades, could materially adversely affect our business, prospects, financial condition and results of operations.

•We may not be able to accurately estimate the supply and demand for our vehicles, which could result in a variety of inefficiencies in our business and hinder our ability to generate revenue. If we fail to accurately predict our manufacturing requirements, we could incur additional costs or experience delays.

•Any unauthorized control, manipulation, interruption or compromise of or access to our products or information technology systems could result in loss of confidence in us and our products, harm our business and materially adversely affect our financial performance, results of operations or prospects.

•We are subject to evolving laws, regulations, standards, policies, and contractual obligations related to data privacy and security, and any actual or perceived failure to comply with such obligations could harm our reputation and brand, subject us to significant fines and liability, or otherwise adversely affect our business.

•The loss of key employees or an inability to attract, retain and motivate qualified personnel may impair our ability to expand our business.

•We are highly dependent on the services of Peter Rawlinson, our Chief Executive Officer and Chief Technology Officer.

•We are subject to substantial laws and regulations that could impose substantial costs, legal prohibitions or unfavorable changes upon our operations or products, and any failure to comply with these laws and regulations, including as they evolve, could substantially harm our business and results of operations.

•We may face regulatory limitations on our ability to sell vehicles directly, which could materially and adversely affect its ability to sell our vehicles.

•We may fail to adequately obtain, maintain, enforce and protect our intellectual property and may not be able to prevent third parties from unauthorized use of our intellectual property and proprietary technology. If we are unsuccessful in any of the foregoing, our competitive position could be harmed and we could be required to incur significant expenses to enforce our rights.

•We will require additional capital to support business growth, and this capital might not be available on commercially reasonable terms, or at all.

•We may not be able to realize the anticipated benefits of our agreement with Aston Martin.

•If we identify material weaknesses or otherwise fail to maintain an effective system of internal control over financial reporting, we may not be able to accurately or timely report our financial condition or results of operations, which may adversely affect investor confidence in us and the value of our common stock.

•We are a “controlled company” within the meaning of the applicable rules of Nasdaq and, as a result, qualify for exemptions from certain corporate governance requirements. Our stockholders do not have the same protections afforded to stockholders of companies that are not controlled companies.

•PIF and Ayar beneficially own a significant equity interest in us and may take actions that conflict with your interests.

Risks Related to Our Business and Operations

Our limited operating history makes evaluating our business and future prospects difficult and may increase the risk of your investment.

We are an early-stage company with a limited operating history, operating in a rapidly evolving and highly regulated market. Furthermore, we have only released one commercially available vehicle, and we have limited experience manufacturing or selling a commercial product at scale. Because we have yet to generate significant revenue from the sale of electric vehicles, and as a result of the capital-intensive nature of our business, we expect to continue to incur substantial operating losses for the foreseeable future.

We have encountered and expect to continue to encounter risks and uncertainties frequently experienced by early-stage companies in rapidly changing markets, including risks relating to our ability to, among other things:

•hire, integrate and retain professional and technical talent, including key members of management;

•continue to make significant investments in research, development, manufacturing, marketing and sales;

•successfully obtain, maintain, protect and enforce our intellectual property and defend against claims of intellectual property infringement, misappropriation or other violation;

•build a well-recognized and respected brand;

•establish, implement, refine and scale our commercial manufacturing capabilities and distribution infrastructure;

•establish and maintain satisfactory arrangements with third-party suppliers;

•establish and expand a customer base;

•navigate an evolving and complex regulatory environment;

•anticipate and adapt to changing market conditions, including consumer demand for certain vehicle types, models or trim levels, technological developments and changes in competitive landscape; and

•successfully design, build, manufacture and market new variants and models of electric vehicles, such as the Lucid Gravity SUV.

We have incurred net losses each year since our inception and expect to incur increasing expenses and substantial losses for the foreseeable future.

We have incurred net losses each year since our inception, including net loss of approximately $630.9 million and $2,174.7 million for the three and nine months ended September 30, 2023, respectively. As of September 30, 2023, our accumulated deficit was approximately $9.5 billion. We expect to continue to incur substantial losses and increasing expenses in the foreseeable future as we:

•continue to design, develop and manufacture our vehicles;

•equip and expand our research, service, battery, powertrain, and manufacturing facilities to produce our vehicles in Arizona and in international locations such as Saudi Arabia;

•build up inventories of parts and components for our vehicles;

•manufacture and store an available inventory of our vehicles;

•develop and deploy geographically dispersed vehicle charging partnerships;

•expand our design, research, development, maintenance and repair capabilities and facilities;

•increase our sales, service and marketing activities and develop our distribution infrastructure; and

•expand our general and administrative functions to support our growing operations and status as a public company.

If our product development or commercialization of future vehicles is delayed, our costs and expenses may be significantly higher than we currently expect. Because we will incur the costs and expenses from these efforts before we receive any incremental revenues with respect thereto, we expect our losses in future periods will be significant.

We may be unable to adequately control the substantial costs associated with our operations.

We will require significant capital to develop and grow our business. We have incurred and expect to continue to incur significant expenses, including leases, sales and distribution expenses as we build our brand and market our vehicles; expenses relating to developing and manufacturing our vehicles, constructing, tooling and expanding our manufacturing facilities; research and development expenses (including expenses related to the development of the Lucid Air, the Lucid Gravity SUV and other future products); raw material procurement costs; and general and administrative expenses as we scale our operations and incur the costs of being a public company. Increased competition and adverse economic conditions have in the past and may continue in the future to require us to spend additional resources to attract customers, which in turn may result in higher marketing and incentive expenses. Furthermore, lower production and sales volumes may result in an inability to fully utilize our purchase commitments with suppliers which could result in increased costs and excess inventory as well as potential inventory write-offs. In addition, we have incurred and expect to continue to incur significant costs servicing and maintaining customers’ vehicles, including establishing our service operations and facilities and undertaking product recalls. As a company, we have limited historical experience forecasting and budgeting for any of these expenses, and these expenses could be significantly higher than we currently anticipate. While we have announced and implemented the Restructuring Plan intended to reduce our operating expenses, there is no guarantee that the Restructuring Plan will generate its intended benefits. If we are unable to realize the expected operational efficiencies and cost savings, our operating results and financial condition may be materially and adversely affected. In addition, any disruption to our manufacturing operations, obtaining necessary equipment or supplies, expansion of our manufacturing facilities, or the procurement of permits and licenses relating to our expected manufacturing, sales and distribution model could significantly increase our expenses. In such event, we could be required to seek additional financing earlier than we expect, and such financing may not be available on commercially reasonable terms, or at all.

In the longer term, our ability to become profitable in the future will depend on our ability not only to effectively manage our capital expenditures and control costs on a timely basis, but also to sell in quantities and at prices sufficient to achieve our expected margins. If we are unable to appropriately price and cost-efficiently design, manufacture, market, sell, distribute and service our vehicles, our margins, profitability and prospects will be materially and adversely affected.

Reservations and orders for our vehicles are cancellable.

Delays in customer deliveries, delays in the availability of options, potential changes in customer preferences, competitive developments and other factors could result in significant customer cancellations or cause delays in conversions of reservations to orders. Increases in interest rates could make financing unaffordable for segments of our customer base, resulting in cancellations. In addition, customers who placed orders prior to the enactment of the Inflation Reduction Act of 2022 in an effort to maintain eligibility for a federal tax credit, may decide to cancel their orders based upon the initial guidance provided by the Internal Revenue Service that could negatively affect our customers’ ability to receive tax credits for those orders. Any event or incident which generates negative media coverage about us or the safety or quality of our vehicles could also result in significant customer cancellations. No assurance can be given that reservations or orders will not be cancelled and will ultimately result in the final purchase, delivery and sale or lease of vehicles. Accordingly, the number of reservations and orders have significant limitations as a measure of demand for our vehicles, including demand for particular body styles, models or trim levels, or for future vehicle sales. If we encounter delays in customer deliveries of the Lucid Air that further lengthen wait times or in the event of negative media coverage, a significant number of orders may be cancelled.

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.

A global economic recession or other downturn, whether due to inflation, global conflicts or other geopolitical events including the evolving conflict in Israel and Gaza, 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 our 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 our 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 our products may result in significant decreases in our product sales, which in turn would have a material adverse impact on our business, prospects, financial condition and results of operations. Because of our premium brand positioning and pricing, an economic downturn is likely to have a heightened adverse effect on us compared to many of our 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 our suppliers, sub-suppliers or partners become insolvent or are otherwise unable to continue their operations, fulfill their obligations to us, or meet our future demand. Further, the immediate or prolonged effects of the COVID-19 pandemic could significantly affect government finances and, accordingly, the continued availability of incentives related to electric vehicle purchases and other governmental support programs.

In addition, the deterioration of conditions in global credit markets may limit our ability to obtain external financing to fund our operations and capital expenditures on terms favorable to us, if at all. If we are unable to obtain adequate financing or financing on terms satisfactory to us, when we require it, we will have to significantly reduce our spending, delay or cancel our planned activities or substantially change our corporate structure, and we might not have sufficient resources to conduct or support our business as projected, which would have a material adverse effect on our business, prospects, results of operations, and financial condition. See “—Risks Related to Financing and Strategic Transactions — We will require additional capital to support business growth, and this capital might not be available on commercially reasonable terms, or at all.”

We currently depend on revenue generated from a single model and in the foreseeable future will be significantly dependent on a limited number of models.

We currently depend on revenue generated from a single vehicle model, the Lucid Air, and in the foreseeable future will be significantly dependent on a single or limited number of models. Although we have other vehicle models on our product roadmap, we currently do not expect to introduce another vehicle model for sale until late 2024. We expect to rely on sales from the Lucid Air, among other sources of financing, for the capital that will be required to develop and commercialize those subsequent models. To the extent that production of the Lucid Air or future models is delayed or reduced, or if the Lucid Air or future models are not well-received by the market for any reason, our revenue and cash flow would be adversely affected, we may need to seek additional financing earlier than we expect, and such financing may not be available to us on commercially reasonable terms, or at all.

If we are unable to fulfill the orders from the Government of Saudi Arabia or if the Government of Saudi Arabia purchases significantly fewer vehicles than we anticipate for any reason, our business, prospects, results of operations and financial condition could be materially and adversely affected.

In August 2023, we entered into an EV purchase agreement with the Government of Saudi Arabia as represented by the Ministry of Finance (the “EV Purchase Agreement”), which supersedes the Letter of Undertaking that we entered into in April 2022. Pursuant to the terms of the EV Purchase Agreement, the Government of Saudi Arabia and its entities and corporate subsidiaries and other beneficiaries (collectively, the “Purchaser”) may purchase up to 100,000 vehicles, with a minimum purchase quantity of 50,000 vehicles and an option to purchase up to an additional 50,000 vehicles during a ten-year period. Under the EV Purchase Agreement, the Purchaser may reduce the minimum vehicle purchase quantity by the number of vehicles set out in any purchase order not accepted by us or by the number of vehicles that we fail to deliver within six months from the date of the applicable purchase order. The Purchaser also has the absolute discretion to decide whether to exercise the option to purchase the additional 50,000 vehicles. See Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations for more information.

If we experience delays in manufacturing and delivering vehicles ordered by the Purchaser, fail to or experience delays in complying with Saudi Arabian regulations or the requirements of the EV Purchase Agreement, fail to provide adequate service or support for the vehicles, or fail to set the appropriate purchase price for such vehicles, our revenue, cash flow and results of operations and financial condition could be adversely affected. Furthermore, if the Purchaser reduces the minimum vehicle purchase quantity, delays the purchase of vehicles, does not exercise its option to purchase additional vehicles, or purchases significantly fewer vehicles than we currently anticipate for any reason, including for reasons beyond our control, our business, prospects, results of operations and financial condition could be materially and adversely affected.

Our business and prospects depend significantly on our brand.

Our business and prospects will heavily depend on our ability to develop, maintain, protect and strengthen the “Lucid” brand association with luxury and technological excellence. Promoting and positioning our brand will likely depend significantly on our ability to provide a consistently high-quality customer experience, an area in which we have limited experience. To promote our brand, we will be required to invest in, and over time change our customer development and branding practices, which could result in substantially increased expenses, including the need to use public relations and advertising firms. Our ability to successfully position our brand could also be adversely affected by perceptions about the quality of our competitors’ vehicles or our competitors’ success. For example, certain of our competitors have been subject to significant scrutiny for incidents involving their self-driving technology and battery fires, which could result in similar scrutiny of us.

In particular, any negative publicity, whether or not true, can quickly proliferate on social media and harm consumer perception and confidence in our brand. The growing use of social media increases the speed with which information and opinions can be shared and, thus, the speed with which a company’s reputation can be affected. If we fail to correct or mitigate misinformation or negative information, including information spread through social media or traditional media channels, about us, the products we offer, our customer experience, or any aspect of our brand, our business, sales and results of operations could be adversely impacted. From time to time, our vehicles or those of our competitors may be evaluated and reviewed by third parties. Perceptions of our offerings in the marketplace may be significantly influenced by these reviews, which are disseminated via various media, including the internet. Any negative reviews or reviews which compare us unfavorably to competitors could adversely affect consumer perception about our vehicles and reduce demand for our vehicles, which could have a material adverse effect on our business, results of operations, prospects and financial condition.

Our sales will depend in part on our ability to establish and maintain confidence in our long-term business prospects among consumers, analysts and others within our industry.

Consumers may be less likely to purchase our products if they do not believe that our business will succeed or that our operations, including service and customer support operations, will continue for many years. Similarly, suppliers and other third parties will be less likely to invest time and resources in developing business relationships with us if they are not convinced that our business will succeed. Accordingly, to build, maintain and grow our business, we must establish and maintain confidence among customers, suppliers, analysts and other parties with respect to our liquidity and long-term business prospects.

Maintaining such confidence may be particularly difficult as a result of many factors, including our limited operating history, others’ unfamiliarity with our products, uncertainty regarding the future of electric vehicles, any delays in scaling production, delivery and service operations to meet demand, competition and our production and sales performance compared with market expectations. Many of these factors are largely outside of our control, and any negative perceptions about our long-term business prospects, even if exaggerated or unfounded, would likely harm our business and make it more difficult to raise additional capital in the future. In addition, as discussed above, a significant number of new electric vehicle companies have recently entered the automotive industry, which is an industry that has historically been associated with significant barriers to entry and a high rate of failure. If these new entrants or other traditional automotive manufacturers now producing electric vehicles go out of business, discontinue production of electric vehicles, produce vehicles that do not perform as expected or otherwise fail to meet expectations, such failures may have the effect of increasing scrutiny of others in the industry, including us, and further challenging customer, supplier and analyst confidence in our long-term prospects.

We will not have a third-party retail product distribution and full-service network.

Third-party dealer networks are the traditional method of vehicle sales distribution and service. Because we sell directly to consumers, we do not have a traditional dealer product distribution and service network. We have limited experience distributing directly to consumers, and we expect that continuing to build a national and global in-house sales and marketing function, including an expanded physical sales, marketing and service footprint via our Lucid studios and service centers, will be expensive and time consuming. We have experienced delays in the construction and opening of our Lucid studios and service centers and any significant delays to establish Lucid studios and service centers in key markets in the future could have an adverse effect on our business, results of operations, prospects and financial condition. In addition, if our lack of a traditional dealer distribution and service network results in lost opportunities to generate sales, it could limit our ability to grow. Moreover, our business model of selling directly to consumers and directly servicing all vehicles may be limited by regulatory constraints. To the extent we are unable to successfully execute on such plans in all markets, we may be required to develop a third-party dealer distribution and service network, including developing and implementing the necessary information technology infrastructure to support them, which may prove costly, time-consuming or ineffective. If our use of an in-house sales, marketing and service team is not effective, our results of operations and financial conditions could be adversely affected.

Our ability to generate meaningful product revenue will depend on consumer adoption of electric vehicles.

We are developing and producing only electric vehicles and, accordingly, our ability to generate meaningful product revenue will highly depend on sustained consumer demand for alternative fuel vehicles in general and electric vehicles in particular. If the market for electric vehicles does not develop as we expect or develops more slowly than we expect, or if there is a decrease in consumer demand for electric vehicles, our business, prospects, financial condition and results of operations will be harmed. The market for electric and other alternative fuel vehicles is relatively new, rapidly evolving, characterized by rapidly changing technologies, price competition, additional competitors, evolving government regulation (including government incentives and subsidies) and industry standards, frequent new vehicle announcements and changing consumer demands and behaviors. Any number of changes in the industry could negatively affect consumer demand for electric vehicles in general and our electric vehicles in particular.

In addition, demand for electric vehicles may be affected by factors directly impacting automobile prices or the cost of purchasing and operating automobiles such as sales and financing incentives such as tax credits, prices of raw materials and parts and components, cost of fuel, availability of consumer credit, interest rates, and governmental regulations, including tariffs, import regulation and other taxes. Volatility in demand may lead to lower vehicle unit sales, which may result in downward price pressure and adversely affect our business, prospects, financial condition and results of operations. Further, sales of vehicles in the automotive industry tend to be cyclical in many markets, which may expose us to increased volatility, especially as we expand and adjust our operations and retail strategies. Specifically, it is uncertain how such macroeconomic factors will impact us as a new entrant in an industry that has globally been experiencing a recent decline in sales.

Other factors that may influence the adoption of electric vehicles include:

•perceptions about electric vehicle quality, safety, design, performance and cost;

•perceptions about the limited range over which electric vehicles may be driven on a single battery charge;

•perceptions about the total cost of ownership of electric vehicles, including the initial purchase price and operating and maintenance costs, both including and excluding the effect of government and other subsidies and incentives designed to promote the purchase of electric vehicles;

•concerns about electric grid capacity and reliability;

•perceptions about the sustainability and environmental impact of electric vehicles, including with respect to both the sourcing and disposal of materials for electric vehicle batteries and the generation of electricity provided in the electric grid;

•the availability of other alternative fuel vehicles, including plug-in hybrid electric vehicles;

•improvements in the fuel economy of the internal combustion engine;

•the quality and availability of service for electric vehicles, especially in international markets;

•volatility in the cost of oil and gasoline;

•government regulations and economic incentives promoting fuel efficiency and alternate forms of energy;

•access to charging stations and cost to charge an electric vehicle, especially in international markets, and related infrastructure costs and standardization;

•the availability of tax and other governmental incentives to purchase and operate electric vehicles or future regulation requiring increased use of nonpolluting vehicles; and

•macroeconomic factors.

The influence of any of the factors described above or any other factors may cause a general reduction in consumer demand for electric vehicles or our electric vehicles in particular, either of which would materially and adversely affect our business, results of operations, financial condition and prospects.

If we fail to manage our future growth effectively, we may not be able to develop, manufacture, distribute, market and sell our vehicles successfully.

Any failure to manage our growth effectively could materially and adversely affect our business, prospects, results of operations and financial condition. We are expanding our operations significantly and our current and future expansion plans include:

•expanding our management team;

•hiring and training new personnel;

•establishing or expanding design, manufacturing, distribution, sales and service facilities;

•implementing and enhancing administrative and business infrastructure, governance, systems and processes, including in connection with our maturation as a public company; and

•expanding into new markets and establishing sales, service, administrative, distribution, and/or manufacturing operations in many of those markets.

We require qualified personnel, including design and manufacturing personnel and service technicians for our vehicles. Because our vehicles are based on a different technology platform than traditional internal combustion engines, individuals with sufficient training in electric vehicles may not be available to hire, and as a result, we will need to expend significant time and expense training the employees we do hire. Competition for individuals with experience in supply chain management and logistics as well as designing, engineering, manufacturing, producing, selling, and servicing electric vehicles is intense, and we may not be able to identify, attract, integrate, train, motivate or retain sufficient highly qualified personnel in the future. Furthermore, any restructuring plan, which involves the reduction of our employee workforce, may adversely affect our internal programs and initiatives as well as our ability to recruit and retain skilled and motivated personnel. Any such restructuring plan may also be distracting to employees and management and may negatively impact our business operations, reputation, or ability to serve customers. We cannot provide any assurances that we will not have to undertake additional workforce reductions in the future. The failure to identify, attract, integrate, train, motivate and retain these employees could seriously harm our business and prospects. In addition, our employee equity program is a key factor in our ability to attract and retain talent and continue to support the growth of the company. If we are unable to grant equity awards, or if we are forced to reduce the value of equity awards to be received by the employees for any reason, we may not be able to attract, hire and retain the personnel necessary for our business, which would have a material adverse effect on our business, prospects financial condition and results of operations. In addition, our success is substantially dependent upon the continued service and performance of our senior management team and key technical and vehicle management personnel. If any key employees were to separate their employment with us, such separation would likely increase the difficulty of managing our current operations and future growth and heighten the foregoing risks.

We also have limited experience to date in high volume manufacturing of our vehicles. We cannot assure our investors that we will be able to develop and implement efficient, automated, low-cost manufacturing capabilities and processes, and reliable sources of component supply that will enable us to meet the quality, price, engineering, design and production standards, as well as the production volumes, required to successfully market our vehicles. We have also experienced, and may continue to experience, internal and external logistics challenges with respect to our manufacturing and warehousing facilities, including disruption to manufacturing operations due to the consolidation of our logistics operations with our manufacturing operations at AMP-1. Any failure to develop and implement such manufacturing processes and capabilities within our projected costs and timelines could stunt our future growth and impair our ability to produce, market, service and sell or lease our vehicles successfully. In addition, our rapid growth, competitive real estate markets, and increasing rental rates, may impact our ability to obtain suitable space to accommodate our growing operations or to renew existing leases on terms favorable to us, if at all. Any failure to obtain or renew leases for real property on terms favorable to us when we need them may limit our growth, impact our operations and have an adverse impact on our financial condition. If we fail to manage our growth effectively, such failure could result in negative publicity and damage to our brand and have a material adverse effect on our business, prospects, financial condition and results of operations.

We face risks associated with international operations, including unfavorable regulatory, political, tax and labor conditions, which could harm our business.

As we expand our international presence and operations, we will be increasingly subject to the legal, political, regulatory and social requirements and economic conditions in these jurisdictions. Additionally, as part of our growth strategy, we have been expanding and may continue to expand our sales, maintenance and repair services outside of the United States. We are also continuing the construction of AMP-2 in Saudi Arabia and may continue to further expand our manufacturing activities outside the United States. However, we have limited experience to date manufacturing our vehicles outside of the United States, and such expansion has and will continue to require us to make significant expenditures, including the hiring of local employees and establishing facilities and related systems and processes, in advance of generating any significant revenue. We are subject to a number of risks associated with international business activities that may increase our costs, impact our ability to sell, service and manufacture our vehicles, and require significant management attention. These risks include:

•conforming our vehicles to various international regulatory and homologation requirements where our vehicles are sold;

•establishing localized supply chains and managing international supply chain and logistics costs, including the shipping and delivery of kits for the SKD facility;

•establishing sufficient charging points for our customers in those jurisdictions, via partnerships or, if necessary, via development of our own charging networks;

•difficulty in staffing and managing foreign operations, especially in jurisdictions where no EV ecosystem exist and qualified personnel must be hired and relocated;

•difficulties attracting customers in new jurisdictions;

•difficulties establishing international manufacturing operations, including difficulties establishing relationships with or establishing localized supplier bases and developing cost-effective and reliable supply chains for such manufacturing operations and financing such manufacturing operations;

•difficulties controlling costs and potential loss of funding, including as a result of delays in the construction or commencement of operations at AMP-2;

•foreign government taxes, regulations and permit requirements, including foreign taxes that we may not be able to offset against taxes imposed upon us in the United States, and foreign tax and other laws limiting our ability to repatriate funds to the United States;

•inflation as well as fluctuations in foreign currency exchange rates and interest rates, including risks related to any forward currency contracts, interest rate swaps or other hedging activities we may undertake;

•United States and foreign government trade restrictions, tariffs and price or exchange controls;

•foreign laws, regulations and restrictions, including in the areas of supply chain, labor, sales, service, environment and health and safety, and related compliance costs;

•increasingly restrictive and complex foreign data privacy and security laws, regulations and obligations;

•changes in diplomatic and trade relationships, including political risk and customer perceptions based on such changes and risks;

•political instability, natural disasters, pandemics (including severity, magnitude and the duration of the COVID-19 pandemic), global conflicts or other geopolitical events, war or events of terrorism; and

•the strength of international economies.

If we fail to successfully address these risks, our business, prospects, results of operations and financial condition could be materially harmed.

The automotive industry has significant barriers to entry that we must overcome in order to manufacture and sell electric vehicles at scale.

The automobile industry is characterized by significant barriers to entry, including large capital requirements, investment costs of designing, manufacturing, and distributing vehicles, long lead times to bring vehicles to market from the concept and design stage, the need for specialized design and development expertise, regulatory requirements, establishing a brand name and image, and the need to establish sales and service locations. Since we are focused on the design of electric vehicles, we face a variety of added challenges to entry that a traditional automobile manufacturer would not encounter, including additional costs of developing and producing an electric powertrain that has comparable performance to a traditional gasoline engine in terms of range and power, inexperience with servicing electric vehicles, regulations associated with the transport of batteries, the need to establish or provide access to sufficient charging locations and unproven high-volume customer demand for fully electric vehicles. While we have developed and started producing our first electric sedan and have completed the first phase of construction of AMP-1, we have not finished tooling all production lines at AMP-1. If we are not able to overcome these barriers, our business, prospects, results of operations and financial condition will be negatively impacted, and our ability to grow our business will be harmed.

The automotive market is highly competitive, and we may not be successful in competing in this industry.

The global automotive market, particularly for electric and alternative fuel vehicles, is highly competitive, and we expect it will become even more so in the future. In recent years, the electric vehicle industry has grown, with the emergence of several companies that focus completely or partially on the electric vehicle market. In addition, traditional automotive manufacturers are also producing and selling electric and alternative fuel vehicles. We expect additional companies to enter this market within the next several years. Electric vehicle manufacturers with which we compete include Tesla, an increasing number of U.S.-based and international entrants and traditional automotive manufacturers, many of which have begun, or announced plans to begin, selling their own electric vehicles in the near-term. We also compete with established automobile manufacturers in the luxury vehicle segment, many of which have entered or have announced plans to enter the alternative fuel and electric vehicle market with either fully electric or plug-in hybrid versions of their vehicles. We compete for sales with luxury vehicles with internal combustion engines from established manufacturers. Many of our current and potential competitors have significantly greater financial, technical, manufacturing, marketing and other resources than we do and may be able to devote greater resources to the design, development, manufacturing, distribution, promotion, sale, servicing, and support of their products, including the ability to significantly reduce prices of their products. In addition, many of these companies have longer operating histories, greater name recognition, larger and more established sales forces, broader customer and industry relationships and other resources than we do. Our competitors may be in a stronger position to respond quickly to changing market conditions and new technologies and may be able to design, develop, market and sell their products more effectively than we do. For example, some of our competitors have recently announced vehicle price reductions, which may result in downward price pressure and reduced demand for our vehicles. However, we may not be able to adjust our pricing strategies effectively, and there can be no assurance that such adjustments will allow us to successfully compete against our competitors, which may have a material adverse effect on our brand, business, prospects, inventory levels, results of operations and financial conditions. In addition, increased competition has in the past and may continue to require us to increase marketing and incentive expenses, which may have a material adverse effect on our operating results and financial condition. We expect competition in our industry to significantly intensify in the future in light of increased demand for alternative fuel vehicles, continuing globalization, favorable governmental policies, macroeconomic uncertainty, and consolidation in the worldwide automotive industry. Our ability to successfully compete in our industry will be fundamental to our future success in existing and new markets. There can be no assurance that we will be able to compete successfully in our markets.

Developments in electric vehicle or alternative fuel technology or improvements in the internal combustion engine may adversely affect the demand for our vehicles.

We may be unable to keep up with changes in electric vehicle technology or alternatives to electricity as a fuel source and, as a result, our competitiveness may suffer. Significant developments in alternative technologies, such as alternative battery cell technologies, hydrogen fuel cell technology, advanced gasoline, ethanol or natural gas, or improvements in the fuel economy of the internal combustion engine, may materially and adversely affect our business and prospects in ways we do not currently anticipate. Existing and other battery cell technologies, fuels or sources of energy may emerge as customers’ preferred alternative to the technologies in our electric vehicles. Any failure by us to develop new or enhanced technologies or processes, or to react to changes in existing technologies, could materially delay our development and introduction of new and enhanced electric vehicles, which could result in the loss of competitiveness of our vehicles, decreased revenue and a loss of market share to competitors. In addition, we expect to compete in part on the basis of our vehicles’ range, efficiency, charging speeds and performance, and improvements in the technology offered by competitors could reduce demand for the Lucid Air or other future vehicles. As technologies change, we plan to upgrade or adapt our vehicles and introduce new models that reflect such technological developments, but our vehicles may become obsolete, and our research and development efforts may not be sufficient to adapt to changes in alternative fuel and electric vehicle technology. Additionally, as new companies and larger, existing vehicle manufacturers continue to enter the electric vehicle space, we may lose any technological advantage we may have and suffer a decline in our competitive position. Any failure by us to successfully react to changes in existing technologies or the development of new technologies could materially harm our competitive position and growth prospects.

The unavailability, reduction or elimination of certain government and economic programs could have a material adverse effect on our business, prospects, financial condition and results of operations.

We expect to benefit from government and economic programs that encourage the development, manufacture or purchase of electric vehicles, such as zero emission vehicle credits, greenhouse gas credits and similar regulatory credits, the loss of which could harm our ability to generate revenue from the sale of such credits to other manufacturers; tax credits and other incentives to consumers, without which the net cost to consumers of our vehicles could increase, potentially reducing demand for our products; and investment tax credits for equipment, tooling and other capital needs, without which we may be unable to procure the necessary infrastructure for production to support our business and timeline; and certain other benefits, including a California sales and use tax exclusion and certain other hiring and job training credits in California and Arizona. We may also benefit from government loan programs. Any reduction, elimination or selective application of tax and other governmental programs and incentives because of policy changes, the reduced need for such programs due to the perceived success of the electric vehicle, fiscal tightening or other reasons may result in the diminished competitiveness of the electric vehicle industry generally or our electric vehicles in particular, which would adversely affect our business, prospects, financial condition and results of operations. Further, we cannot assure you that the current governmental incentives and subsidies available for purchasers of electric vehicles will remain available. For example, beginning in 2023, the Inflation Reduction Act of 2022 eliminated the $7,500 federal sales tax credit for sedans that have a manufacturer’s suggested retail price over $55,000, although a tax credit remains available for vehicles that are leased rather than purchased. See “— Reservations and orders for our vehicles are cancellable.”

While certain U.S. federal and state tax credits and other incentives for alternative energy production and alternative fuel and electric vehicles have been available in the past, there is no guarantee these programs will be available in the future. If current tax incentives are not available in the future, our financial position could be harmed.

We may not be able to obtain or agree on acceptable terms and conditions for all or a significant portion of the government grants, loans and other incentives for which we may apply. As a result, our business and prospects may be adversely affected.

We may apply for federal and state grants, loans and tax incentives under government programs designed to stimulate the economy and support the production of alternative fuel and electric vehicles and related technologies. We anticipate that in the future there will be new opportunities for us to apply for grants, loans and other incentives from the United States federal and state governments, as well as foreign governments. Our ability to obtain funds or incentives from government sources is subject to the availability of funds under applicable government programs and approval of our applications to participate in such programs. The application process for these funds and other incentives will likely be highly competitive. We cannot assure you that we will be successful in obtaining any of these additional grants, loans and other incentives. If we are not successful in obtaining any of these additional incentives and we are unable to find alternative sources of funding to meet our planned capital needs, our business and prospects could be materially adversely affected.

We may be unable to offer attractive leasing and financing options for the Lucid Air and future vehicles, which would adversely affect consumer demand for the Lucid Air and our future vehicles. In addition, offering leasing and financing options to customers could expose us to credit risk.

We offer leasing and financing of our vehicles to potential customers through third-party financing partners and intend to do the same in new markets, but we cannot provide any assurance that such third-party financing partners will continue, or would be able or willing, to provide such services on terms acceptable to us or our customers. Furthermore, because we have only sold a limited number of vehicles and only a limited secondary market for our vehicles exists, the future resale value of our vehicles is difficult to predict, and the possibility that resale values could be lower than we expect increases the difficulty of providing leasing terms that appeal to potential customers through such third-party financing partners. We believe that the ability to offer attractive leasing and financing options is particularly relevant to customers in the luxury vehicle segments in which we compete, and if we are unable to offer our customers an attractive option to finance the purchase of or lease the Lucid Air or planned future vehicles, such failure could substantially reduce the population of potential customers and decrease demand for our vehicles.

Furthermore, offering leasing and financing alternatives to customers could expose us to regulatory risks commonly associated with the extension of consumer credit. Competitive pressure and challenging markets could increase credit risk through leases and loans to financially weak customers, extended payment terms, and leases and loans into new and immature markets, and any such credit risk could be further heightened in light of the economic uncertainty and any economic recession or other downturn, whether due to inflation, global conflicts or other geopolitical events, COVID-19, or other public crises. If we are unable to provide leasing and financing arrangements that appeal to potential customers in a timely manner, or if the provision of such arrangements exposes us to excessive consumer credit risk, our business, competitive position, results of operations and financial condition could be adversely affected.

We are subject to risks associated with autonomous driving and advanced driver assistance system technology, and we cannot guarantee that our vehicles will achieve our targeted assisted or autonomous driving functionality within our projected timeframe, if ever.

Our vehicles are designed with advanced driver assistance system (“ADAS”) hardware and software. We have released a Lucid Air software update, and expect to launch the Lucid Gravity SUV, with Level 2 (partial automation) ADAS functionality, which we plan to upgrade with additional capabilities over time. ADAS technologies are emerging and subject to known and unknown risks, and there have been accidents and fatalities associated with such technologies. The safety of such technologies depends in part on user interaction, and users, as well as other drivers on the roadways, may not be accustomed to using or adapting to such technologies. In addition, self-driving technologies are the subject of intense public scrutiny and interest, and previous accidents involving autonomous driving features in other non-Lucid vehicles, including alleged failures or misuse of such features, have generated significant negative media attention and government investigations. We and others in our industry are subject to a Standing General Order issued by NHTSA that requires us to report any crashes in which certain ADAS features were active, and these crash reports will become publicly available. To the extent accidents associated with our ADAS technologies occur, we could be subject to significant liability, negative publicity, government scrutiny and further regulation. Any of the foregoing could materially and adversely affect our results of operations, financial condition and growth prospects.

In addition, we face substantial competition in the development and deployment of ADAS technologies. Many of our competitors, including established automakers and technology companies, have devoted significant time and resources to developing self-driving technologies. If we are unable to develop competitive Level 2 or more advanced ADAS technologies in-house or acquire access to such technologies via partnerships or investments in other companies or assets, we may be unable to equip our vehicles with competitive ADAS features, which could damage our brand, reduce consumer demand for our vehicles or trigger cancellations of reservations and could have a material adverse effect on our business, results of operations, prospects and financial condition.

ADAS technology is also subject to regulatory uncertainty, which exposes us to additional risks. See “— Risks Related to Litigation and Regulation — ADAS technology is subject to uncertain and evolving regulations.”

Uninsured or underinsured losses could result in payment of substantial damages, which would decrease our cash reserves and could harm our cash flow and financial condition.

In the ordinary course of business, we may be subject to losses resulting from claims such as product liability, significant accidents, acts of God or other claims brought against us, for which we may have no or insufficient insurance coverage. While we currently carry insurance that is customary for our size and operations, we may not maintain as much insurance coverage as other original equipment manufacturers, and in some cases, we may not maintain any at all. Additionally, the policies that we have may include significant deductibles or exclusions, and we cannot be certain that our insurance coverage will be sufficient to cover all or any future claims. A loss that is uninsured or exceeds existing policy limits may require us to pay unexpected and substantial amounts, which could adversely affect our financial condition and results of operations. Further, insurance coverage may not continue to be available to us or, if available, may be at a significantly higher cost, based on insurance market conditions or a change in our risk profile. This may require a change in our insurance purchasing philosophy and strategy which can result in the assumption of greater risks to offset insurance market fluctuations.

The COVID-19 pandemic has adversely affected, and we cannot predict its ultimate impact on, our business, prospects, results of operations and financial condition.

The COVID-19 pandemic has been a risk to our business, including through its impact on general economic conditions, manufacturing and supply chain operations, labor markets, changes in customer behavior, and global financial markets. Its continued impact on the economy, even after the pandemic has subsided, may cause our customers to defer purchases, cancel their reservations and orders for our vehicles prior to delivery. See “—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, financial condition and results of operations.”

The spread of COVID-19, or the outbreak of another pandemic, can disrupt our manufacturing operations and those of our suppliers. For example, the COVID-19 outbreak in China and the resulting lockdowns caused parts supply delays with some impact on manufacturing operations in Arizona in 2022. Such disruptions to us and our suppliers have negatively impacted, and could negatively impact in the future the production volume of the Lucid Air, as well other vehicles that we may introduce from time to time. Our manufacturing operations at a limited number of facilities in Casa Grande, Arizona and Saudi Arabia concentrate this risk. In addition, broader impacts of the pandemic have included inflationary pressure, which impacts our cost structure.

The pandemic has resulted in the imposition of travel bans and restrictions, quarantines and business shutdowns due to localized spikes in COVID-19 cases, which have contributed to delays in the anticipated production schedule of the Lucid Air and potential development of future

models. These measures pose numerous operational risks and logistical challenges to our business. In addition, regional, national and international travel restrictions have resulted in adverse impacts to our supply chain. For example, in certain instances, international travel restrictions have prevented our supply quality engineers from conducting in-person visits and parts production quality engineering with international suppliers, which has lengthened the time required to finalize and secure certain components of the Lucid Air. The transition of some of our personnel to a remote or hybrid workforce has also increased demand on our information technology resources and systems and increased data privacy and cybersecurity risks and increased risk of absenteeism.

The severity, magnitude and duration of the COVID-19 pandemic, or another pandemic, and the economic and regulatory consequences arising from it are rapidly changing and uncertain. Accordingly, we cannot predict the ultimate impact of the COVID-19 pandemic on our business, financial condition and results of operations.

Extended periods of low gasoline or other petroleum-based fuel prices could adversely affect demand for our vehicles, which would adversely affect our business, prospects, results of operations and financial condition.

A portion of the current and expected demand for electric vehicles results from concerns about volatility in the cost of gasoline and other petroleum-based fuel, the dependency of the United States on oil from unstable or hostile countries, government regulations and economic incentives promoting fuel efficiency and alternative forms of energy, as well as concerns about climate change resulting in part from the burning of fossil fuels. If the cost of gasoline and other petroleum-based fuel decreases significantly, the outlook for the long-term supply of oil to the United States improves, the government eliminates or modifies its regulations or economic incentives related to fuel efficiency and alternative forms of energy or there is a change in the perception that the burning of fossil fuels negatively impacts the environment, the demand for electric vehicles, including our vehicles, could be reduced, and our business and revenue may be harmed.

Gasoline and other petroleum-based fuel prices have historically been extremely volatile and it is difficult to ascertain whether such volatility will continue to persist. Lower gasoline or other petroleum-based fuel prices over extended periods of time may lower the perception in government and the private sector that cheaper, more readily available energy alternatives should be developed and produced. If gasoline or other petroleum-based fuel prices remain at deflated levels for extended periods of time, the demand for electric vehicles, including our vehicles, may decrease, which would have an adverse effect on our business, prospects, financial condition and results of operations.

Increasing scrutiny and changing expectations from global regulations, our investors, customers and employees with respect to our ESG practices may impose additional costs on us or expose us to new or additional risks.

There is increased focus, including from governmental organizations and our investors, customers and employees, on ESG issues such as environmental stewardship, climate change, diversity and inclusion, racial justice, workplace conduct, recyclability, sourcing and ESG disclosure. There can be no certainty that we will manage such issues successfully, or that we will successfully meet society’s expectations as to our proper role. Negative public perception, adverse publicity or negative comments in social media could damage our reputation if we do not, or are not perceived to, adequately address these issues. Any harm to our reputation could impact our employees’ engagement and retention and the willingness of our customers and partners to do business with us.

It is possible that our stakeholders may not be satisfied with our ESG disclosures, practices, or the speed of their adoption, and our systems may not be adequate to comply with increasing global regulations on ESG topics, such as human rights and sustainability reporting. Actual or perceived shortcomings with respect to our ESG initiatives and reporting may subject us to litigation and could negatively impact our business. We could also incur additional costs and require additional resources to monitor, report, and comply with various ESG practices. In addition, a variety of organizations have developed ratings to measure the performance of companies on ESG topics, and the results of these assessments are widely publicized. Investment in funds that specialize in companies that perform well in such assessments are increasingly popular, and major institutional investors have publicly emphasized the importance of such ESG measures to their investment decisions. Unfavorable or downgraded ratings of our company or our industries, as well as non-inclusion or removal of our stock on ESG-oriented investment funds or indexes, may lead to negative investor sentiment and the diversion of investment to other companies or industries, which could have a negative impact on our stock price.

In addition, due to the impacts of climate change, there are increasing risks to our business, including physical risks such as wildfires, floods, tornadoes or other events, that could cause disruptions to our supply chain, manufacturing, and corporate functions. We may incur additional costs and resources preparing for and addressing such risks.

Risks Related to Manufacturing and Supply Chain

We have experienced and may in the future experience significant delays in the design, manufacture, launch and financing of our vehicles, including the Lucid Air and the Lucid Gravity SUV, which could harm our business and prospects.

Our plan to commercially manufacture and sell our vehicles is dependent upon the timely availability of funds, upon our finalizing of the related design, engineering, component procurement, testing, build-out and manufacturing plans in a timely manner and also upon our ability to execute these plans within the planned timeline. Automobile manufacturers often experience delays in the design, manufacture and commercial release of new vehicle models, and we have experienced in the past, and may experience in the future, such delays with regard to additional variants of the Lucid Air or our other vehicles. For example, we have experienced delays in the engineering of certain of our vehicle systems, including as a result of design changes to components. Any future delays in the financing, design, manufacture and launch of the Lucid Air, including planned future variants, and any future electric vehicles could materially damage our business, prospects, financial condition and results of operations.

Many of our vehicles are still in the development and/or testing phase and production of the Lucid Gravity SUV is not expected to begin until late 2024, and may occur later or not at all. Additionally, prior to mass production of our electric vehicles, we will also need the vehicles to be fully approved for sale according to differing requirements, including but not limited to regulatory requirements, in the different geographies where we intend to launch our vehicles. Likewise, we have encountered and may continue to encounter delays with the design, construction, and regulatory or other approvals necessary to bring online our future expansions of our Arizona and Saudi Arabia manufacturing facilities, or other future manufacturing facilities.

Furthermore, we rely on third party suppliers for the development, manufacture, and/or provision and development of many of the key components and materials used in our vehicles, as well as provisioning and servicing equipment in our manufacturing facilities. We have been affected by ongoing, industry-wide challenges in logistics and supply chains, such as increased supplier lead times and ongoing constraints of semiconductor supply. These challenges have affected our ability, and the ability of our suppliers, to obtain parts, components and manufacturing equipment on a timely basis, and in some instances have resulted in increased costs and delays to the construction and expansion of our facilities. We expect that the risk of unexpected disruptions will continue for the foreseeable future. To the extent our suppliers experience any delays in providing us with or developing necessary components, we could experience delays in delivering on our timelines.

Any significant delay or other complication in the production ramp of the Lucid Air or the development, manufacture, launch and production ramp of our future products, features and services, including complications associated with expanding our production capacity and supply chain or obtaining or maintaining related regulatory approvals, or inability to manage such ramps cost-effectively, could materially damage our brand, business, prospects, financial condition and results of operations.

The continued development of and the ability to manufacture our vehicles, including the Lucid Air and the Lucid Gravity SUV, are and will be subject to risks, including with respect to:

•our ability to ensure ongoing readiness of firmware features and functions to be integrated into the Lucid Air as planned and on the desired timeline;

•our ability to finalize release candidate specifications for the Lucid Gravity SUV as planned and on the desired timeline;

•any delays by us in delivering final component designs to our suppliers or any changes to such component designs;

•our or our suppliers’ ability to successfully tool their manufacturing facilities as planned and on the desired timeline;

•our ability to ensure a working supply chain and desired supplier part quality and quantity as planned and on the desired timeline;

•our ability to accurately manufacture vehicles within specified design tolerances;

•our ability to establish, implement, refine and scale, as well as make significant investments in manufacturing, supply chain management and logistics functions, including the related information technology systems and software applications;

•our ability to adequately reduce and control the costs of key parts and materials;

•our ability to significantly reduce freight costs, including in-bound freight costs;

•our ability to manage any transitions or changes in our production process, planned or unplanned;

•the occurrence of product defects that cannot be remedied without adversely affecting the production;

•our ability to secure necessary funding;

•our ability to negotiate and execute definitive agreements with various suppliers for hardware, software, or services necessary to engineer or manufacture our vehicles;

•our ability to obtain required regulatory approvals and certifications;

•our ability to comply with environmental, safety, and similar regulations and in a timely manner;

•our ability to secure necessary components, services, or licenses on acceptable terms and in a timely manner;

•our ability to attract, recruit, hire, retain and train skilled employees including supply chain management, supplier quality, manufacturing and logistics personnel;

•our ability to design and implement effective and efficient quality control and inventory management processes;

•delays or disruptions in our supply chain including raw material supplies;

•our ability to maintain arrangements on commercially reasonable terms with our suppliers, delivery and other partners, after sales service providers, and other operationally significant third parties;

•other delays, backlog in manufacturing and research and development of new models, and cost overruns;

•the severity, magnitude and duration of the COVID-19 pandemic, including related business interruptions and other effects; and

•any other risks identified herein.

We expect that we will require additional financing to fund our planned operations and expansion plans. If we are unable to arrange for required funds under the terms and on the timeline that we anticipate, our plans for tooling and building out our manufacturing facilities and for commercial production of our electric vehicles could be significantly delayed, which would materially adversely affect our business, prospects, financial condition and results of operations. See “—Risks Related to Financing and Strategic Transactions — We will require additional capital to support business growth, and this capital might not be available on commercially reasonable terms, or at all.”

Our ability to continue production and our future growth depends upon our ability to maintain relationships with our existing suppliers and source suppliers for our critical components, and to complete building out our supply chain, while effectively managing the risks due to such relationships.

Our success, including our ability to continue production of the Lucid Air, will depend on our ability to enter into supplier agreements and maintain our relationships with hundreds of suppliers that are critical to the output and production of our vehicles. To date, we have not secured long-term supply agreements for all of our components and for some components, our supply agreements do not guarantee sufficient quantities of components for our vehicle production ramp curve. We plan to seek opportunities to secure long-term committed supply agreements for certain of these components. The supplier agreements we have or may enter into with key suppliers in the future may not be renewed or may contain provisions under which suppliers may refuse to supply. To the extent that we do not have long-term supply agreements with guaranteed pricing for our parts or components, we will be exposed to fluctuations in prices of components, materials and equipment. In addition, our agreements for the purchase of battery cells and other components often contain pricing provisions that are subject to adjustment based on changes in market prices of key commodities and/or currency values. Substantial increases in the prices for such components, materials and equipment, whether due to supply chain or logistics issues or due to inflation, or increased energy or natural gas costs, would increase our operating costs and could reduce our margins if we cannot recoup the increased costs. Any attempts to increase the announced or expected prices of our vehicles in response to increased costs could be viewed negatively by our potential customers and could adversely affect our business, prospects, financial condition or results of operations.

We may also be at a disadvantage in negotiating supply agreements for the production of our vehicles as well as for the design and construction of our manufacturing facilities due to our limited operating history. In addition, given that in many cases we are an aggregator of automotive parts produced by third party manufacturers, there is the possibility that supply agreements for the parts and components for our vehicles could be at costs that make it difficult for us to operate profitably.

We are dependent on our suppliers, the majority of which are single-source suppliers, and the inability of these suppliers to deliver necessary components of our products according to our schedule and at prices, quality levels and volumes acceptable to us, or our inability to efficiently manage these components or to implement or maintain effective inventory management and other systems, processes and personnel to support ongoing and increased production, could have a material adverse effect on our results of operations and financial condition.

We rely on hundreds of third-party suppliers for the provision and development of many of the key components and materials used in our vehicles. While we plan to obtain components from multiple sources whenever possible, many of the components used in our vehicles will be custom and purchased by us from a single source. Our limited, and in many cases single-source, supply chain exposes us to multiple potential sources of delivery failure or component shortages for our production. Our third-party suppliers may not be able to meet our required product specifications and performance characteristics, which would impact our ability to achieve our product specifications and performance characteristics as well. Additionally, our third-party suppliers may be unable to obtain required certifications or provide necessary warranties for their products that are necessary for use in our vehicles.

We have been affected by ongoing, industry-wide challenges in logistics and supply chains, such as increased supplier lead times and ongoing constraints of semiconductor supply. We expect that these industry-wide trends may continue to affect the ability of us and our suppliers to obtain parts, components and manufacturing equipment, including electrical and mechanical equipment for AMP-2 and the Phase 2 expansion of AMP-1, on a timely basis for the foreseeable future, and may result in increased costs. Changes in our supply chain or production needs in order to meet our quality targets and development timelines as well as due to design changes have resulted in cost increases from our suppliers.

Any significant increases in our production may in the future require us to procure additional components in a short amount of time and our suppliers may not ultimately be able to sustainably and timely meet our cost, quality and volume needs, requiring us to replace them with other sources. In many cases, our suppliers provide us with custom-designed parts that would require significant lead time to obtain from alternative suppliers, or may not be available from alternative suppliers at all. If we are unable to obtain suitable components and materials used in our vehicles from our suppliers or if our suppliers decide to create or supply a competing product, our business could be adversely affected. Further, if we are unsuccessful in our efforts to control and reduce supplier costs, our results of operations will suffer. Alternatively, if our production decreases significantly below our projections for any reason, we may not meet all of our purchase commitments with suppliers with whom we have non-cancelable long-term purchase commitments. In cases where we are unable to fully utilize our purchase commitments, we have in the past and may continue to face fees, penalties, increased prices, excess inventory or inventory write-offs, and there could be a material adverse effect on our results of operations.

In addition, we have experienced, and in the future could continue to experience, delays if our suppliers do not meet agreed upon timelines, experience capacity constraints, or deliver components that do not meet our quality standards or other requirements. Any disruption in the supply of components, whether or not from a single source supplier, could temporarily disrupt production of our vehicles until an alternative supplier is able to supply the required material. Any such delay, even if caused by a delay or shortage in only one part, could significantly affect our ability to meet our planned vehicle production targets. Even in cases where we may be able to establish alternate supply relationships and obtain or engineer replacement components for our single source components, we may be unable to do so quickly, or at all, at prices or quality levels that are acceptable to us. This risk is heightened by the fact that we have less negotiating leverage with suppliers than larger and more established automobile manufacturers, which could adversely affect our ability to obtain necessary components and materials on a timely basis, on favorable pricing and other terms, or at all. The industry in which we operate has recently experienced severe supply chain disruptions, and we expect these conditions to continue for the foreseeable future. Any such supply disruption could materially and adversely affect our results of operations, financial condition and prospects.

Furthermore, as the scale of our vehicle production increases, we will need to accurately forecast, purchase, warehouse and transport components to our manufacturing facilities and servicing locations internationally and at much higher volumes. We are only beginning to scale production in our manufacturing facilities and in the process we have experienced challenges associated with such activities. If our production decreases significantly below our projections for any reason, we may incur loss due to inventory write-downs or assets impairment. In addition, we have not yet begun servicing vehicles at significant volumes. Accordingly, our ability to scale production and vehicle servicing and mitigate risks associated with these activities has not been thoroughly tested. In addition, our current systems and processes are not mature, which may affect our ability to timely initiate critical and time sensitive projects and increase project costs. If we continue to experience logistics challenges, are unable to accurately match the timing and quantities of component purchases to our actual needs, successfully recruit and retain personnel with relevant experience, timely comply with applicable regulations, or successfully implement automation, inventory management and other systems or processes to accommodate the increased complexity in our supply chain and manufacturing operations, we may incur unexpected production disruption, storage, transportation and write-off costs, which could have a material adverse effect on our results of operations and financial condition.

Furthermore, unexpected changes in business conditions, materials pricing, labor issues, wars, global conflicts or other geopolitical events, governmental changes, tariffs, natural disasters, health epidemics such as the COVID-19 pandemic, and other factors beyond our and our suppliers’ control could also affect these suppliers’ ability to deliver components to us on a timely basis. We have also identified certain of our suppliers, including certain suppliers we deem critical, as having poor financial health or being at risk of bankruptcy. Although we routinely review our suppliers’ financial health and attempt to identify alternate suppliers where possible, the loss of any supplier, particularly a single- or limited-source supplier, or the disruption in the supply of components from our suppliers, could lead to vehicle design changes, production delays, idle manufacturing facilities and potential loss of access to important technology and parts for producing, servicing and supporting our vehicles, any of which could result in negative publicity, damage to our brand and a material and adverse effect on our business, prospects, results of operations and financial condition. In addition, if our suppliers experience substantial financial difficulties, cease operations or otherwise face business disruptions, including as a result of the effects of the COVID-19 pandemic, we may be required to provide substantial financial support to ensure supply continuity, which could have an additional adverse effect on our liquidity and financial condition.

Changes in costs, changes of supply or shortage of materials, in particular for lithium-ion battery cells or semiconductors, could harm our business.

As we scale commercial production of our vehicles or any future energy storage systems, we have experienced and may continue to experience increases in the cost of or a sustained interruption in the supply or shortage of materials. Any such increase, supply interruption or shortage could materially and adversely impact our business, results of operations, prospects and financial condition. For example, as we continue our phased construction of our AMP-1 facility, we have experienced increases in material and infrastructure equipment prices and cost of construction labor. In addition, we use various materials in our business, including aluminum, steel, lithium, nickel, copper, cobalt, neodymium, terbium, praseodymium and manganese, as well as lithium-ion battery cells and semiconductors from suppliers. The prices for these materials fluctuate, and their available supply may be unstable, depending on market conditions, inflationary pressure and global demand for these materials, including as a result of increased production of electric vehicles, energy storage products by our competitors and the global supply chain crisis, and could adversely affect our business and results of operations. For instance, we are exposed to multiple risks relating to lithium-ion battery cells. These risks include:

•a change in the cost, or changes in the available supply, of materials, such as cobalt, used in lithium-ion battery cells;

•disruption in the supply of lithium-ion battery cells due to quality issues or recalls by manufacturers;

•our ability to manage our supply and inventory of lithium-ion battery cells; and

•fluctuations in the value of any foreign currencies, in which lithium-ion battery cells and related raw material purchases are or may be denominated against the U.S. dollar.

Our ability to manufacture our vehicles or any future energy storage systems will depend on the continued supply of battery cells for the battery packs used in our products. We have limited flexibility in changing battery cell suppliers, and any disruption in the supply of battery cells from such suppliers could disrupt production of our vehicles until a different supplier is fully qualified. In addition, we have entered into agreements with Panasonic Energy Co., Ltd. and certain of its affiliates for the supply of lithium-ion battery cells, pursuant to which we have made certain non-cancelable long-term purchase commitments. If our production decreases significantly below our projections for any reason, we may not meet all of our purchase commitments. In cases where we are unable to fully utilize our purchase commitments, we have in the past and may continue to face fees, penalties, increased prices, excess inventory or inventory write-offs, and there could be a material adverse effect on our results of operations.

Furthermore, our ability to manufacture our vehicles depends on continuing access to semiconductors and components that incorporate semiconductors. A global semiconductor supply shortage is having wide-ranging effects across multiple industries and the automotive industry in particular, and it has impacted many automotive suppliers and manufacturers, including us, that incorporate semiconductors into the parts they supply or manufacture. We have experienced and may continue to experience an impact on our operations as a result of the semiconductor supply shortage, and such shortage could in the future have a material impact on us or our suppliers, which could delay or reduce planned production levels of the Lucid Air or planned future vehicles, impair our ability to continue production once started or force us or our suppliers to pay exorbitant rates for continued access to semiconductors, any of which could have a material adverse effect on our business, prospects and results of operations. In addition, prices and transportation expenses for these materials fluctuate depending on many factors beyond our control, including fluctuations in supply and demand, foreign currency fluctuations, tariffs and taxes, fluctuations in energy prices and shortages in petroleum or natural gas supply, freight charges and other economic and political factors. These risks could be further magnified by geographical developments, global conflicts or other geopolitical events. Substantial increases in the prices for our materials or prices charged to us, such as those charged by battery cell or semiconductor suppliers, would increase our operating costs, and could reduce our margins if we cannot recoup the increased costs through increased prices. Any attempts to increase product prices in response to increased material costs could result in cancellations of orders and reservations and materially and adversely affect our brand, image, business, results of operations, prospects and financial condition.

Furthermore, foreign currency fluctuations, tariffs or shortages in petroleum or natural gas and other economic or political conditions have contributed to and may continue to result in significant increases in freight charges and raw material costs. Substantial increases in the prices for our raw materials or components would increase our operating costs and could reduce our margins. In addition, a growth in popularity of electric vehicles without a significant expansion in battery cell production capacity could result in shortages which would result in increased materials costs to us, and would impact our expected manufacturing and delivery timelines, and adversely affect our business, prospects, financial condition, results of operations, and cash flows.

We must develop complex software and technology systems, including in coordination with vendors and suppliers, in order to produce our electric vehicles, and there can be no assurance such systems will be successfully developed.

Our vehicles, including the Lucid Air, use a substantial amount of third-party and proprietary software and complex technological hardware to operate, some of which is still subject to further development and testing. The development and implementation of such advanced technologies is inherently complex and requires coordination with our vendors and suppliers in order to integrate such technology into our electric vehicles and ensure it interoperates with other complex technology as designed and as expected.

We may fail to detect defects and errors that are subsequently revealed, and our control over the performance of third-party services and systems may be limited. Any defects or errors in, or which are attributed to, our technology, could result in, among other things:

•delayed production and delivery of our vehicles, including the Lucid Air;

•delayed market acceptance of our vehicles;

•loss of customers or inability to attract new customers;

•diversion of engineering or other resources for remedying the defect or error;

•damage to our brand or reputation;

•increased service and warranty costs;

•legal action by customers or third parties, including product liability claims; and

•penalties imposed by regulatory authorities.

In addition, if we are unable to develop the software and technology systems necessary to operate our vehicles, our competitive position will be harmed. We rely on third-party suppliers to develop a number of technologies for use in our products. There can be no assurances that our suppliers will be able to meet the technological requirements, production timing and volume requirements to support our business plan. In addition, such technology may not satisfy the cost, performance useful life and warranty characteristics we anticipate in our business plan, which could materially adversely affect our business, prospects and results of operations.

If we fail to successfully construct or tool our manufacturing facilities or if our manufacturing facilities become inoperable, we will be unable to produce our vehicles and our business will be harmed.

While we have completed the initial phase and portions of the second phase of construction at AMP-1, and the SKD portion of AMP-2, tooling our facilities for production of our vehicles and our future expansion plans are complicated and present significant challenges and may require us to take vehicle production offline. In addition, certain of our suppliers may be unable to complete tooling with respect to finalized components of our vehicles in the planned timeframe after we deliver final component specifications, which could adversely affect our ability to continue commercial production of the Lucid Air on the expected timing and at the quality levels we require. As with any large-scale capital project, these efforts could be subject to delays, cost overruns or other complications. In addition, we may encounter problems or disputes with our vendors for a variety of reasons, including for reasons beyond our control, and such disputes, with or without merit, could also cause significant delays and cost overruns. These risks could be exacerbated because we are building our facilities from the ground up to support our electric vehicle production processes, which differ substantially from traditional automobile production processes for which expertise is more readily available. In connection with the commencement of commercial production at AMP-1 and SKD production at AMP-2, we have hired and trained and continue to hire, retain, and train a significant number of employees and integrate a yet-to-be-fully-developed supply chain. Any failure to continue commercial or SKD production on schedule would lead to additional costs and would delay our ability to generate meaningful revenues. In addition, it could prevent us from gaining the confidence of potential customers, spur cancellations of reservations for the Lucid Air and open the door to increased competition. All of the foregoing could hinder our ability to successfully launch and grow our business and achieve a competitive position in the market.

In addition, if any of our manufacturing facilities are not constructed in conformity with our requirements, repair or remediation may be required to support our planned phased manufacturing build-out and could require us to take vehicle production offline, delay implementation of our planned phased manufacturing build-out, or construct alternate facilities, which could materially limit our manufacturing capacity, delay planned increases in manufacturing volumes, delay the start of production of the Lucid Gravity SUV or other future vehicles, or adversely affect our ability to timely sell and deliver our electric vehicles to customers. Any repair or remediation efforts could also require us to bear substantial additional costs, including both the direct costs of such activities and potentially costly litigation or other legal proceedings related to any identified defect, and there can be no assurance that our insurance policies or other recoveries would be sufficient to cover all or any of such costs. Any of the foregoing consequences could have a material adverse effect on our business, prospects, results of operations and financial condition and could cause our results of operations to differ materially from our current expectations. For example, a portion of our manufacturing facility in Casa Grande, Arizona, was not constructed in accordance with the contractual requirements. The facility is capable of supporting current production volumes, but it will require repair or remediation to support future production volumes. We have begun to repair or remediate these issues where possible without impacting manufacturing, and we plan to address the bulk of such repairs or remediation as part of the phased build-out of our Casa Grande facility. Although we do not currently expect that we will be required to take vehicle production offline or reduce our planned manufacturing volumes, the repairs or remediation are expected to entail significant costs, and we may be unable to recover some or all of such costs from the applicable contractor(s).

The construction of our facilities and our operations are also subject to review and inspection by officials in the jurisdictions where our facilities are located, including without limitation, fire officials and building construction officials. We have, in the past received, and could in the future receive, results from inspections by local officials at our facilities, both existing and currently under construction, in Casa Grande, Arizona, citing failing marks. We have actively engaged with the local authorities to address all of the specific issues identified by those officials as well as to devise means and methods that ensure an ongoing safe and compliant work environment. Any future results will be addressed in a similar manner. Failure to address issues raised by local authorities may result in government-ordered temporary cessation of our construction and/or production operations, which could require us to take vehicle production offline or reduce our planned manufacturing volumes, all of which could have a material adverse effect on our business, results of operations, cash flows, financial condition or prospects.

We rely on complex machinery for our operations, and production involves a significant degree of risk and uncertainty in terms of operational performance, safety, security and costs.

We utilize a number of new manufacturing technologies, techniques and processes for our vehicles, such as motor winding equipment, and we may utilize additional new technologies, techniques and processes in the future. Certain design features in our vehicles present additional manufacturing challenges, such as large display screens and ADAS hardware. There is no guarantee that we will be able to successfully and timely introduce and scale any such new processes or features.

We also rely heavily on complex machinery for our operations, and our production involves a significant degree of uncertainty and risk in terms of operational performance and costs. Our manufacturing plant employs large-scale, complex machinery combining many components, which may suffer unexpected malfunctions from time to time and will depend on repairs and spare parts that may not be available when needed. Furthermore, AMP-1 and the equipment we use to manufacture our vehicles will be costly to repair or replace and could require substantial lead-time to repair or replace and qualify for use.

Unexpected malfunctions of the manufacturing plant components may significantly decrease our operational efficiency, including by forcing manufacturing shutdowns in order to conduct repairs or troubleshoot manufacturing problems. Our facilities may also be harmed or rendered inoperable by natural or man-made disasters, including but not limited to earthquakes, tornadoes, flooding, fire, power outages, sandstorms, environmental hazards and remediation, costs associated with decommissioning of equipment, labor disputes and strikes, lack of availability of qualified construction labor, difficulty or delays in obtaining governmental permits and licenses, damages or defects in electronic systems, industrial accidents or health epidemics, such as the COVID-19 pandemic, which may render it difficult or impossible for us to manufacture our vehicles for some period of time. The inability to produce our vehicles or the backlog that could develop if our manufacturing plant is inoperable for even a short period of time may result in the loss of customers or harm our reputation. Although we maintain insurance for damage to our property, this insurance may not be sufficient to cover all of our potential losses and may not continue to be available to us on acceptable terms, if at all, based on insurance market conditions or our evolving risk profile. Should operational risks materialize, they may result in the personal injury to or death of our workers, the loss of production equipment, damage to manufacturing facilities, monetary losses, delays and unanticipated fluctuations in production, environmental damage, administrative fines, increased insurance costs and potential legal liabilities, all of which could have a material adverse effect on our business, results of operations, cash flows, financial condition or prospects.

If we update or discontinue the use of our manufacturing equipment more quickly than expected, we may have to shorten the useful lives of any equipment to be retired as a result of any such update, and the resulting acceleration in our depreciation could negatively affect our financial results.

We have invested and expect to continue to invest significantly in what we believe is state of the art tooling, machinery and other manufacturing equipment, and we depreciate the cost of such equipment over their expected useful lives. However, manufacturing technology may evolve rapidly, and we may decide to update our manufacturing processes more quickly than expected. Moreover, as we ramp the commercial production of our vehicles, our experience may cause us to discontinue the use of already installed equipment in favor of different or additional equipment. The useful life of any equipment that would be retired early as a result would be shortened, causing the depreciation on such equipment to be accelerated, and our results of operations could be negatively impacted.

We have limited experience in high volume manufacture of our vehicles.

We cannot provide any assurance as to whether we will be able to develop and implement efficient, automated, low-cost logistics and production capabilities and processes and reliable sources of component supply that will enable us to meet the quality, price, engineering, design and production standards, as well as the production volumes, required to successfully mass market our vehicles. Even if we are successful in developing our high volume production capability and processes and reliably source our component supply, no assurance can be given as to whether we will be able to do so in a manner that avoids significant delays and cost overruns, including as a result of factors beyond our control such as problems with suppliers and vendors, or force majeure events, or in time to meet our commercialization schedules, or to store and deliver parts in sufficient quantities to the manufacturing lines in a manner that enables us to maintain our production ramp curve and rates, satisfy the requirements of customers and potential customers or fully utilize our purchase commitments with suppliers. Any failure to develop and implement such logistics, production, quality control, and inventory management processes and capabilities within our projected costs and timelines could have a material adverse effect on our business, results of operations, prospects and financial condition. Moreover, we have experienced logistics challenges as we continue to refine our manufacturing, logistics and inventory management processes, and efforts to implement or improve such processes may cause halts or delays in production and result in additional costs. Bottlenecks and other unexpected challenges have and may continue to arise as we ramp production of the Lucid Air, and it will be important that we address them promptly while continuing to control our logistics and manufacturing costs. If we are not successful in doing so, or if we experience issues with our logistics and manufacturing process improvements, we could face further delays in establishing and/or sustaining our production ramps or be unable to meet our related cost and profitability targets.

If our vehicles fail to perform as expected, our ability to develop, market and sell or lease our products could be harmed.

Our vehicles or the components installed therein have in the past and may in the future contain defects in design or manufacture that may cause them not to perform as expected or that may require repairs, recalls, or design changes, any of which would require significant financial and other resources to successfully navigate and resolve. Our vehicles use a substantial amount of software code to operate, and software products are inherently complex and may contain defects and errors when first introduced. If our vehicles contain defects in design or manufacture that cause them not to perform as expected or that require repair, or certain features of our vehicles such as bi-directional charging or ADAS features take longer than expected to become available, are legally restricted or become subject to additional regulation, our ability to develop, market and sell our products and services could be harmed. In addition, our over-the-air software updates may fail to achieve its intended repair and performance goals, expose our customers’ vehicles to vulnerabilities, or have unintended consequences, and may require our customers to bring their vehicles to our service centers. Although we will attempt to remedy any issues we observe in our products as effectively and rapidly as possible, such efforts could significantly distract management’s attention from other important business objectives, may not be timely, may hamper production or may not be to the satisfaction of our customers. Further, our limited operating history and limited field data reduce our ability to evaluate and predict the long-term quality, reliability, durability and performance characteristics of our battery packs, powertrains and vehicles. There can be no assurance that we will be able to detect and fix any defects in our products prior to their sale or lease to customers.

Any defects, delays or legal restrictions on vehicle features, failed over-the-air software updates, or other failure of our vehicles to perform as expected, could harm our brand and reputation and result in delivery delays, product recalls, product liability claims, breach of warranty claims or significant warranty and other expenses, and could have a material adverse impact on our business, results of operations, prospects and financial condition. Any such defects or noncompliance with legal requirements could also result in safety recalls. See “— Risks Related to Litigation and Regulation — We have in the past and may choose in the future, or we may be compelled, to undertake product recalls or take other actions, which could adversely affect our business, prospects, results of operations, reputation and financial condition.” As a new entrant to the industry attempting to build customer relationships and earn trust, these effects could be significantly detrimental to us. Additionally, problems and defects experienced by other electric consumer vehicles could by association have a negative impact on perception and customer demand for our vehicles.

In addition, even if our vehicles function as designed, we expect that the battery efficiency, and hence the range, of our electric vehicles, like other electric vehicles that use current battery technology, will decline over time. Other factors, such as usage, time and stress patterns, may also impact the battery’s ability to hold a charge, or could require us to limit vehicles’ battery charging capacity, including via over-the-air or other software updates, for safety reasons or to protect battery capacity, which could further decrease our vehicles’ range between charges. Such decreases in or limitations of battery capacity and therefore range, whether imposed by deterioration, software limitations or otherwise, could also lead to consumer complaints or warranty claims, including claims that prior knowledge of such decreases or limitations would have affected consumers’ purchasing decisions. Further, there can be no assurance that we will be able to improve the performance of our battery packs, or increase our vehicles’ range, in the future. Any such battery deterioration or capacity limitations and related decreases in range may negatively influence potential customers’ willingness to purchase our vehicles and negatively impact our brand and reputation, which could adversely affect our business, prospects, results of operations and financial condition.

We face challenges providing charging solutions for our vehicles, both domestically and internationally.

Demand for our vehicles will depend in part on the availability of charging infrastructure both domestically and internationally. While the prevalence of charging stations has been increasing, charging station locations are significantly less widespread than gas stations. Although we have partnered with Electrify America and may partner with other third-party electric vehicle charging providers to offer charging stations to our customers, the charging infrastructure available to our customers may be insufficient to meet their needs or expectations, especially in certain international markets. Some potential customers may choose not to purchase our vehicles because of the lack of more widespread charging infrastructure, and some potential customers may be conditioned to favor or expect proprietary charging solutions, such as Tesla’s Supercharger network. In addition, although the current U.S. presidential administration has proposed a plan to deploy 500,000 additional public charging stations across the United States by 2030, the deployment may not occur at planned levels, which could serve to limit the development of public charging infrastructure and increase the relative attractiveness to potential customers of a proprietary charging solution.

If we were to pursue development of a proprietary charging solution, we would face significant challenges and barriers, including successfully navigating the complex logistics of rolling out a network and teams in appropriate areas, resolving issues related to inadequate capacity or overcapacity in certain areas, addressing security risks and risks of damage to vehicles, securing agreements with third-party providers to roll out and support a network of charging solutions in appropriate areas, obtaining any required permits and land use rights and filings, and providing sufficient financial resources to successfully roll out the proprietary charging solution, which could require diverting such resources from our other important business initiatives. In addition, our limited experience in providing charging solutions could contribute to additional unanticipated challenges that would hinder our ability to provide such solutions or make the provision of such solutions costlier than anticipated. To the extent we are unable to meet user expectations or experience difficulties in providing charging solutions, demand for our vehicles may suffer, and our reputation and business may be materially and adversely affected.

We have limited experience servicing our vehicles and their integrated software. If we or our partners are unable to adequately service our vehicles, our business, prospects, financial condition and results of operations may be materially and adversely affected.

We have limited experience servicing or repairing our vehicles and their integrated software. Servicing electric vehicles is different than servicing vehicles with internal combustion engines and requires specialized skills, including high voltage training and servicing techniques. Furthermore, some vehicle repairs may be done via over-the-air software updates, which poses additional risks to the vehicles’ software if any issues arise during an update. In addition, we may partner with certain third parties to perform some of the service on our vehicles, and there can be no assurance that we will be able to enter into acceptable arrangements with any such third-party providers or develop and implement the necessary information technology infrastructure to support them. Further, although such servicing partners may have experience in servicing other electric vehicles, they will initially have no experience in servicing our vehicles. We also have a limited network of locations to perform service and will also rely upon mobile service vans with Lucid technicians to provide service to customers. There can be no assurance that our service arrangements will adequately address the service requirements of our customers to their satisfaction, or that we and our servicing partners will have sufficient resources, experience or inventory to meet these service requirements in a timely manner as the volume of vehicles we deliver increases. This risk is enhanced by our limited operating history and our limited data regarding our vehicles’ real-world reliability and service requirements. In addition, if we are unable to roll out and establish a widespread service network that provides satisfactory customer service, our customer loyalty, brand and reputation could be adversely affected, which in turn could materially and adversely affect our sales, results of operations, prospects and financial condition.

Further, the motor vehicle industry laws in some states require that service facilities be available to service vehicles physically sold from locations in the state. In addition, the motor vehicle franchise laws in some states may preclude us from providing direct warranty service to consumers in that state. While we anticipate developing a service program that would satisfy regulatory requirements in these circumstances, the specifics of our service program are still being refined, and at some point may need to be restructured to comply with state law, which may impact our business, financial condition, results of operations and prospects.

Our customers also depend on our customer support team to resolve technical and operational issues relating to the integrated software underlying our vehicles, a large portion of which we have developed in-house. As we grow, additional pressure may be placed on our customer support team or partners, and we may be unable to respond quickly enough to accommodate short-term increases in customer demand for technical support or service. We also may be unable to modify the future scope and delivery of our technical support to compete with changes in the technical support provided by our competitors. Increased customer demand for support, without corresponding revenue, could increase costs and negatively affect our results of operations. If we are unable to successfully address the service requirements of our customers, or if we establish a market perception that we do not maintain high-quality support, our brand and reputation could be adversely affected, and we may be subject to claims from our customers, which could result in loss of revenue or damages, and our business, results of operations, prospects and financial condition could be materially and adversely affected.

Insufficient reserves to cover future warranty or part replacement needs or other vehicle repair requirements, including any potential software upgrades, could materially adversely affect our business, prospects, financial condition and results of operations.

We provide a new vehicle limited warranty on all new vehicles and a genuine spare parts and accessories limited warranty on Lucid genuine spare parts and accessories we sell. We maintain warranty reserves to cover part replacement and other vehicle repair needs, including any potential software upgrades or warranty claims. In addition, we expect to provide a manufacturer’s warranty on any future products, including energy storage systems we sell and may provide additional warranties on installation workmanship or performance guarantees. Warranty reserves include our management team’s best estimate of the projected costs to repair or to replace items under warranty. Such estimates are inherently uncertain, particularly in light of our limited operating history and the limited field data available to us, and changes to such estimates based on real-world observations may cause material changes to our warranty reserves in the future. If our reserves are inadequate to cover future maintenance requirements on our vehicles, our business, prospects, financial condition and results of operations could be materially and adversely affected. We may become subject to significant and unexpected expenses as well as claims from our customers, including loss of revenue or damages. There can be no assurances that then-existing reserves will be sufficient to cover all claims. In addition, if future laws or regulations impose additional warranty obligations on us that go beyond our manufacturer’s warranty we may be exposed to materially higher warranty, parts replacement and repair expenses than we expect, and our reserves may be insufficient to cover such expenses.

We may not be able to accurately estimate the supply and demand for our vehicles, which could result in a variety of inefficiencies in our business and hinder our ability to generate revenue. If we fail to accurately predict our manufacturing requirements, we could incur additional costs or experience delays.

It is difficult to predict our future revenues and appropriately budget for our expenses, and we have limited insight into trends that may emerge and affect our business. We will be required to provide forecasts of our demand to our suppliers several months prior to the scheduled delivery of vehicles to our prospective customers. Currently, there is limited historical basis for making judgments about the demand for our vehicles or our ability to develop, manufacture, and deliver vehicles, or our profitability in the future. If we overestimate our requirements, our suppliers may have excess inventory, which indirectly would increase our costs. If we underestimate our requirements, our suppliers may have inadequate inventory, which could interrupt manufacturing of our products and result in delays in shipments and revenues. In addition, lead times for materials and components that our suppliers order may vary significantly and depend on factors such as the specific supplier, contract terms and demand for each component at a given time. If we fail to order sufficient quantities of product components in a timely manner or fail to establish the delivery processes and infrastructure to make deliveries, the delivery of vehicles to our customers could be delayed, which would harm our business, financial condition and results of operations.

Our facilities or operations could be adversely affected by events outside of our control, such as natural disasters, wars, global conflicts or other geopolitical events, health epidemics or pandemics, or security incidents.

We and our suppliers may be impacted by weather events, natural disasters, wars, global conflicts or other geopolitical events, health epidemics or pandemics, security incidents or other events outside of our control. For example, our corporate headquarters are located in seismically active regions in Northern California, and our manufacturing facilities in Arizona and Saudi Arabia are located in sandstorm-, flood- and/or tornado-prone areas. If major disasters such as earthquakes, wildfires, floods, tornadoes or other events occur, or our information technology systems or communication networks break down or operate improperly, our headquarters and manufacturing facilities may be seriously damaged, or we may have to stop or delay production and shipment of our products. In addition, the COVID-19 pandemic has impacted economic markets, manufacturing operations, supply chains, employment and consumer behavior in nearly every geographic region and industry across the world, and we have been, and may in the future be, adversely affected as a result. Furthermore, we could be impacted by physical security incidents at our facilities, which could result in significant damage to such facilities that could require us to delay or discontinue production of our vehicles. In addition, we have established a foreign trade zone with respect to certain of our facilities in Casa Grande, Arizona. To the extent any such physical security incidents are determined to result from insufficient security measures, we could face the risk of loss of our foreign trade zone approval, as well as financial penalties or fines, which could increase the cost of our duties and tariffs. See “— Risks Related to Litigation and Regulation — A failure to properly comply with foreign trade zone laws and regulations could increase the cost of our duties and tariffs.” In addition, global conflicts or other geopolitical events may increase the likelihood of supply chain interruptions and may impair our ability to compete in current or future markets, or otherwise subject us to potential liability. See “—Risks Related to Manufacturing and Supply Chain — if we fail to successfully tool our manufacturing facilities or if our manufacturing facilities become inoperable, we will be unable to produce our vehicles and our business will be harmed.” and “— Risks Related to Litigation and Regulation — Changes in U.S. trade policy, including the imposition of tariffs or revocation of normal trade relations and the resulting consequences, could adversely affect our business, prospects, results of operations and financial condition.” We may incur significant expenses or delays relating to such events outside of our control, which could have a material adverse impact on our business, results of operations and financial condition.

Our vehicles make use of lithium-ion battery cells, which have been observed to catch fire or vent smoke and flame.

The battery packs within our vehicles make use of, and any future energy storage systems will make use of lithium-ion cells. On rare occasions, lithium-ion cells can rapidly release the energy they contain by venting smoke and flames in a manner that can ignite nearby materials as well as other lithium-ion cells. While we have designed our battery packs to passively contain a single cell’s release of energy without spreading to neighboring cells, a field or testing failure of our vehicles or other battery packs that we produce could occur. In addition, although we equip our vehicles with systems designed to detect and warn vehicle occupants of such thermal events, there can be no assurance that such systems will function as designed or will provide vehicle occupants with sufficient, or any, warning in all crashes. Any such events or failures of our vehicles, battery packs or warning systems could subject us to lawsuits, product recalls, or redesign efforts, all of which would be time consuming and expensive. Also, negative public perceptions regarding the suitability of lithium-ion battery cells for automotive applications, disposal and recycling of lithium-ion battery cells, or any future incident involving lithium-ion battery cells, such as a vehicle or other fire, even if such incident does not involve our vehicles, could seriously harm our business and reputation.

In addition, as we expand our service network, increase our recycling practices and scale the manufacturing of our vehicles and any future energy storage products, we will need to store lithium-ion battery cells at our facilities and we have, and may in the future, experience thermal events. Any mishandling of battery cells or safety issue or fire related to the cells could disrupt our operations. Such damage or injury could also lead to adverse publicity and potentially a safety recall. In addition, the transportation and effective storage of lithium-ion batteries is also tightly regulated by the U.S. Department of Transportation and other regulatory bodies, and any failure to comply with such regulation could result in fines, loss of permits and licenses or other regulatory consequences, which could limit our ability to manufacture and deliver our vehicles and negatively affect our results of operations and financial condition. Moreover, any failure of a competitor’s electric vehicle or energy storage product may cause indirect adverse publicity for us and our products. Such adverse publicity could negatively affect our brand and harm our business, prospects, results of operations and financial condition.

Risks Related to Cybersecurity and Data Privacy

Any unauthorized control, manipulation, interruption or compromise of or access to our products or information technology systems could result in loss of confidence in us and our products, harm our business and materially adversely affect our financial performance, results of operations or prospects.

Our products contain complex information technology systems. For example, our vehicles are designed with built-in data connectivity to accept and install periodic remote updates to improve their functionality.

In addition, we collect, store, transmit and otherwise process data from vehicles, customers, employees and other third parties as part of our business operations, some of which includes personal data or confidential or proprietary information. We also work with third-party service providers and vendors that collect, store and process such data on our behalf. We have taken certain measures to prevent unauthorized access to our information technology systems and information (including personal data) and plan to continue to deploy additional measures as we grow. Our third-party service providers and vendors also take steps to protect the security and integrity of our and their information technology systems and our and their customers’ information. However, there can be no assurance that such systems and measures will not be compromised, including as a result of intentional misconduct by employees, contractors, or vendors, as well as a result of software bugs, human error, or technical malfunctions.

Furthermore, cyber threat actors may in the future attempt to gain unauthorized access to, modify, alter and/or use our vehicles, products and systems to (i) gain control of, (ii) change the functionality, user interface and performance characteristics of and/or (iii) gain access to data stored in or generated by, our vehicles, products and systems. Advances in technology, new vulnerability discoveries, an increased level of sophistication and diversity of our products and services, an increased level of expertise of cyber threat actors and new discoveries in the field of cryptography could lead to a compromise or breach of the measures that we or our third-party service providers use. Some of our products and information technology systems contain or use open-source software, which can create additional risks, including potential security vulnerabilities. We and our third-party service providers’ systems have in the past and may in the future be affected by security incidents. Our systems are also vulnerable to damage or interruption from, among other things, computer viruses, malware, ransomware, killware, wiperware, computer denial or degradation of service attacks, telecommunications failures, social engineering schemes (such as vishing, phishing or smishing), domain name spoofing, insider theft, physical theft, fire, terrorist attacks, natural disasters, power loss, war, or misuse, mistake or other attempts to harm our vehicles, products and systems. Our data center and our third-party service providers’ or vendors’ data centers could be subject to break-ins, sabotage and intentional acts of vandalism causing potential disruptions. We may also be subject to certain laws and regulations, such as “Right to Repair” laws, that could require us to provide third-party access to certain vehicle and vehicle-connected systems. Some of our systems will not be fully redundant, and our disaster recovery planning cannot account for all eventualities. Any problems at our or our third-party service providers’ or vendors’ data centers and/or cloud infrastructure could result in lengthy interruptions in our service and our business operations. There can be no assurance that any security or other operational measures that we or our third-party service providers or vendors have implemented will be effective against any of the foregoing threats or issues.

These risks have been heightened in connection with ongoing global conflicts and other geopolitical events and we cannot be certain how this new risk landscape will impact our operations. When geopolitical conflicts develop, government systems as well as critical infrastructures such as financial services and utilities may be targeted by state-sponsored cyberattacks even if they are not directly involved in the conflict. There can be no assurance that our business will not become a potential target as adversaries may attack networks and systems indiscriminately. Such cyberattacks may potentially cause unauthorized access to our sensitive data (including personal data or our proprietary software code), products, and systems, resulting in a data breach, or disruption, modification or destruction to our systems and applications. As a result, we may suffer monetary losses, business interruption, and long-lasting operational issues, damage to our reputation and brand or loss of our intellectual property (including trade secrets).

If we are unable to protect our products and systems (and the information stored in our systems) from unauthorized access, use, disclosure, disruption, modification, destruction or other breach, such problems or security breaches could have negative consequences for our business and future prospects, including compromise of vehicle integrity and physical safety, causing monetary losses, giving rise to liabilities under our contracts or to the owners of the applicable information, subjecting us to substantial fines, penalties, damages and other liabilities under applicable laws and regulations, incurring substantial costs to respond to, investigate and remedy such incidents, reducing customer demand for our products, harming our reputation and brand and compromising or leading to a loss of protection of our intellectual property (including trade secrets). In addition, regardless of their veracity, reports of unauthorized access to our vehicles, systems or data, as well as other factors that may result in the perception that our vehicles, systems or data are vulnerable to being “hacked,” could negatively affect our brand. Some entities within the U.S. federal government, including certain Members of Congress and the National Highway Traffic Safety Administration (“NHTSA”), have recently focused attention on automotive cybersecurity issues and may in the future propose or implement regulations specific to automotive cybersecurity. In addition, the United Nations Economic Commission for Europe (“UNECE”) has introduced new regulations governing connected vehicle cybersecurity, which became effective in January 2021 and apply in the European Union to all new vehicle types beginning in July 2022 and to all existing architectures/new vehicles from July 2024. Similar regulations are also in effect, or expected to come into effect, in certain other international jurisdictions. These and other regulations could adversely affect our business in European or other markets, and if such regulations or other future regulations are inconsistent with our approach to automotive cybersecurity, we would be required to modify our systems to comply with such regulations, which would impose additional costs and delays and could expose us to potential liability to the extent our automotive cybersecurity systems and practices are inconsistent with such regulation.

We may not have adequate insurance coverage to cover losses associated with any of the foregoing, if any. The costs of investing and remediating a large data breach, or the successful assertion of one or more large claims against us that exceeds our available insurance coverage, or results in changes to our insurance policies (including premium increases, imposition of large deductible, exclusions or co-insurance requirements), could have an adverse effect on our business. In addition, we cannot be sure that our existing insurance coverage will continue to be available on acceptable terms or that our insurers will not deny coverage as to any future claim.

Furthermore, we are continuously expanding and improving our information technology systems. In particular, our volume production of the Lucid Air and planned future vehicles will necessitate continued development, maintenance and improvement of our information technology and communication systems in the United States and abroad, such as systems for product data management, vehicle management tools, vehicle security systems, vehicle security management processes, procurement of bill of material items, supply chain management, inventory management, production planning and execution, lean manufacturing, sales, service and logistics, dealer management, financial, tax and regulatory compliance systems. Our ability to operate our business will depend on the availability and effectiveness of these systems. The implementation, maintenance, segregation and improvement of these systems require significant management time, support and cost. Moreover, there are inherent risks associated with developing, improving and expanding our core systems as well as implementing new systems, including the disruption of our data management, procurement, manufacturing execution, finance, supply chain, inventory management, and sales and service processes. We cannot be certain that these systems or their required functionality will be effectively and timely developed, implemented, maintained or expanded as planned. If we are unsuccessful in any of the foregoing, our operations may be disrupted, our ability to accurately or timely report our financial results could be impaired, and deficiencies may arise in our internal control over financial reporting, which may impact our ability to certify our financial results. If these systems or their functionality do not operate as we expect them to, we may be required to expend significant resources to make corrections or find alternative sources for performing these functions. Any of the foregoing could materially adversely affect our business, prospects, results of operations and financial condition.

In addition, our vehicles depend on the ability of software and hardware to store, retrieve, process and manage immense amounts of data. Our software and hardware, including any over-the-air or other updates, may contain, errors, bugs, design defects or vulnerabilities, and our systems may be subject to technical limitations that may compromise our ability to meet our objectives. Some errors, bugs or vulnerabilities may reside in third-party intellectual property or open-source software and/or be inherently difficult to detect and may only be discovered after code has been released for external or internal use. Although we will attempt to remedy any issues we observe in our vehicles as effectively and rapidly as possible, such efforts may not be timely, may hamper production or may not be to the satisfaction of our customers. Additionally, if we are able to deploy updates to the software addressing any issues but our over-the-air update procedures fail to properly update the software, our customers will then be responsible for working with our service personnel to install such updates to the software, and their vehicle will be subject to these vulnerabilities until they do so. Any compromise of our intellectual property, proprietary information, systems or vehicles or inability to prevent or effectively remedy errors, bugs, vulnerabilities or defects in our software and hardware may cause us to suffer lengthy interruptions to our ability to operate our business and our customers’ ability to operate their vehicles, compromise of vehicle integrity and physical safety, damage to our reputation, loss of customers, loss of revenue, governmental fines, investigations or litigation or liability for damages, any of which could materially adversely affect our business, results of operations, prospects and financial condition.

We are subject to evolving laws, regulations, standards, policies, and contractual obligations related to data privacy and security, and any actual or perceived failure to comply with such obligations could harm our reputation and brand, subject us to significant fines and liability, or otherwise adversely affect our business.

In the course of our operations, we collect, use, store, disclose, transfer and otherwise process personal information from our customers, employees and third parties with whom we conduct business, including names, accounts, driver license information, user IDs and passwords, and payment or transaction related information. Additionally, we use our vehicles’ electronic systems to log information about each vehicle’s use, such as charge time, battery usage, geolocation, mileage and driving behavior, in order to aid it in vehicle diagnostics, repair and maintenance, as well as to help us customize and improve the driving and riding experience.

Accordingly, we are subject to or affected by a number of federal, state, local and international laws and regulations, as well as contractual obligations and industry standards, that impose certain obligations and restrictions with respect to data privacy and security and govern our collection, storage, retention, protection, use, transmission, sharing, disclosure and other processing of personal information including that of our employees, customers and other third parties with whom we conduct business. These laws, regulations and standards may be interpreted and applied differently over time and from jurisdiction to jurisdiction, and it is possible that they will be interpreted and applied in ways that may have a material and adverse impact on our business, financial condition and results of operations. The global data protection landscape is rapidly evolving, and implementation standards and enforcement practices are likely to remain uncertain for the foreseeable future. We may not be able to monitor and react to all developments in a timely manner. For example, the European Union adopted the General Data Protection Regulation (“GDPR”), which became effective in May 2018, California adopted the California Consumer Privacy Act of 2018 (“CCPA”), which became effective in January 2020, Canada adopted the Personal Information Protection and Electronic Documents Act (“PIPEDA”) and continues to amend the statute, the United Arab Emirates adopted the Data Protection Law (“DPL”), which became effective in January 2022, and Saudi Arabia enacted the Personal Data Protection Law (“PDPL”) which recently received finalized implementing regulations and came into effect in September 2023, followed by a 12 month compliance grace period. Similarly, China’s Data Security Law (“DSL”) and Personal Information Protection Law (“PIPL”) have been effective since 2021. Each of the GDPR, the CCPA, the DSL, the PIPL, the PIPEDA, the DPL and the PDPL impose additional obligations on companies regarding the handling of personal data and provide certain individual privacy rights to persons whose data is collected. Compliance with existing, proposed and recently enacted laws and regulations (including implementation of the privacy and process enhancements called for under the GDPR, CCPA, PIPEDA, DPL and PDPL) can be costly, and any failure to comply with these regulatory standards could subject us to legal and reputational risks.

For example, failure to comply with the GDPR can result in significant fines and other liability, including, under the GDPR, fines of up to EUR 20 million or four percent (4%) of global revenue, whichever is greater. The cost of compliance, and the potential for fines and penalties for non-compliance, with GDPR may have a significant adverse effect on our business and operations. Legal developments in the European Economic Area (“EEA”), including rulings from the Court of Justice of the European Union and from various EU member state data protection authorities, have created complexity and uncertainty regarding transfers of personal data from the EEA to the United States and other so-called third countries outside the EEA. Similar complexities and uncertainties also apply to transfers from the United Kingdom to third countries. While we have taken steps to mitigate the impact on us, the efficacy and longevity of these mechanisms remains uncertain.

At the U.S. state level, we are subject to law and regulations such as the CCPA. The CCPA establishes a privacy framework for covered businesses, including an expansive definition of personal information and data privacy rights for California residents. The CCPA includes a framework with potentially severe statutory damages for violations and a private right of action for certain data breaches. The CCPA requires covered businesses to provide California residents with certain privacy-related disclosures and rights related to their personal information. As we expand our operations, the CCPA may increase our compliance costs and potential liability. Some observers have noted that the CCPA marked the beginning of a trend toward more stringent privacy legislation in the United States. Additionally, effective in most material respects starting in July 2023, the California Privacy Rights Act (“CPRA”), will significantly modify the CCPA, including by expanding California residents’ rights with respect to certain sensitive personal information. The CPRA also creates a new state agency, the California Privacy Protection Agency (“CPPA”), that will be vested with the authority to implement and enforce the CCPA (as modified by CPRA and any related regulations).

Other states, including Connecticut, Utah, Virginia, and Colorado, have enacted or are in the process of enacting, or considering similar laws. Compliance with these state statutes, other similar state or federal laws that may be enacted in the future, and other applicable privacy and data security laws and regulations is a rigorous and time-intensive process, and we may be required to put in place additional mechanisms to comply with such laws and regulations, which could cause us to incur substantial costs or require us to change our business practices, including our data practices, in a manner adverse to our business. Certain emerging privacy laws are still subject to a high degree of uncertainty as to their interpretation and application.

New company products, services and business lines may face scrutiny from regulators as well. Lucid Financial Services, for example, will be subject to the new FTC Safeguards Rule and other applicable laws and regulations. The financial data collected as part of that program requires additional security and administrative controls.

Related to the collection and use of data, we are impacted by regulations obligating the organization to share vehicle repair related information with third parties, including repair shops and repair tool hardware developers, in what is commonly called “right-to-repair.” Recent action by the Massachusetts Attorney General, for example, has expedited our timeline to respond to right-to-repair support requests in that state for telematics enabled vehicles. Other state, federal, and foreign jurisdictions are exploring expanding company obligations in this area as well.

Failure to comply with applicable laws or regulations, such as the ones discussed above, or to secure personal information could result in investigations, enforcement actions and other proceedings against us, which could result in substantial fines, damages and other liability as well as damage to our reputation and credibility, which could have a negative impact on revenues and profits.

We post public privacy policies and other documentation regarding our collection, use, disclosure and other processing of personal information. Although we endeavor to comply with our published policies and other documentation, we may at times fail to do so or may be perceived to have failed to do so. Moreover, despite our efforts, we may not be successful in achieving compliance if our employees, contractors, service providers, vendors or other third parties fail to comply with our published policies and documentation. Such failures could carry similar consequences or subject us to potential local, state and federal action if they are found to be deceptive, unfair or misrepresentative of our actual practices. Claims that we have violated individuals’ privacy rights or failed to comply with data protection laws or applicable privacy notices could, even if we are not found liable, be expensive and time-consuming to defend and could result in adverse publicity that could harm our business.

Most jurisdictions have enacted laws requiring companies to notify individuals, regulatory authorities and other third parties of security breaches involving certain types of data. For example, laws in all 50 U.S. states generally require businesses to provide notice under certain circumstances to consumers whose personal information has been disclosed as a result of a breach. Such laws may be inconsistent or may change or additional laws may be adopted. In addition, our agreements with certain customers may require us to notify them in the event of a security breach. Such mandatory disclosures are costly, could lead to negative publicity, penalties or fines, litigation and our customers losing confidence in the effectiveness of our security measures and could require us to expend significant capital and other resources to respond to or alleviate problems caused by the actual or perceived security breach. Any of the foregoing could materially adversely affect our business, prospects, results of operations and financial condition.

Risks Related to Our Employees and Human Resources

The loss of key employees or an inability to attract, retain and motivate qualified personnel may impair our ability to expand our business.

Our success is substantially dependent upon the continued service and performance of our senior management team. Our employees, including our senior management team, are often at-will employees, and therefore may terminate employment with us at any time with no advance notice. It is always possible that we could lose some key employees, especially if we are unable to grant sufficient or competitive compensation, including equity awards and bonuses, or if the volatility of our stock price increases. In addition, any restructuring plan, which involves the reduction of our employee workforce, may adversely affect our internal programs and initiatives as well as our ability to recruit and retain skilled and motivated personnel. Any such restructuring plan may also be distracting to employees and management and may negatively impact our business operations, reputation, or ability to serve customers. We cannot provide any assurances that we will not have to undertake additional workforce reductions in the future. The replacement of any members of our senior management team or other key employees likely would involve significant time and costs and may significantly delay or prevent the achievement of our business objectives. Our future success also depends, in part, on our ability to continue to attract, integrate and retain highly skilled personnel. Competition for personnel is frequently intense, especially in the San Francisco Bay Area, where we have a substantial presence and need for highly skilled personnel, including, but not limited to, in particular, engineers, and Arizona, where we have a substantial presence and a need for, among others, a large skilled repair, logistics, supply chain, and manufacturing workforce. As with any company with finite resources, there can be no guarantee that we will be able to attract such individuals or that the presence of such individuals will necessarily translate into our profitability. Because we operate in a newly emerging industry, there may also be limited personnel available with relevant expertise or business experience, and such individuals may be subject to non-competition and other agreements that restrict their ability to work for us. This challenge may be exacerbated for us as we attempt to transition from start-up to full-scale commercial vehicle manufacturing and sales in a very short period of time under the unforeseeable business conditions which continue to evolve as a result of the impact of COVID-19 and global conflicts or other geopolitical events. Our inability to attract and retain key employees may materially and adversely affect our business operations. Any failure by our management to effectively anticipate, implement and manage the changes required to sustain our growth would have a material adverse effect on our business, financial condition and results of operations.

We are highly dependent on the services of Peter Rawlinson, our Chief Executive Officer and Chief Technology Officer.

We are highly dependent on the services of Peter Rawlinson, our Chief Executive Officer and Chief Technology Officer. Mr. Rawlinson is a significant influence on and driver of our technology development and business plan. If Mr. Rawlinson were to discontinue his service with us due to death, disability or any other reason, we would be significantly disadvantaged.

We will need to hire, retain, and train a significant number of employees for our business operations, and our business could be adversely affected by labor and union activities.

We will need to hire, retain, and train a significant number of employees to engage in full capacity commercial manufacturing operations and for us to scale commercial production and sales and service operations. There are various risks and challenges associated with hiring, retaining, training and managing a large workforce, such as establishing and maintaining efficient communication channels, procedures and rules of conduct, hiring an adequate number of experienced manufacturing, supply chain management and logistics managerial personnel and creating and maintaining an effective company culture. Although the area surrounding our AMP-1 facility in Casa Grande, Arizona and the area surrounding our AMP-2 facility in King Abdullah Economic City (“KAEC”) are home to highly trained workforces with experience in engineering and manufacturing, these workforces do not have significant experience with electric vehicle manufacturing, and related processes such as inventory management, logistics and quality. Many jobs will require significant training and we may need to spend significant resources to ensure employees obtain and adhere to such training. Further, competition for employees in the Casa Grande, Arizona area has increased and may continue to increase in the future, which may impact the ability or cost to hire in the area; this same competition for talent may eventually intensify in KAEC as well. In addition, as we progress in constructing our AMP-2 facility in Saudi Arabia, we will need to hire, retain, and train a significantly larger number of employees in the local region to fully support the facility’s manufacturing operations. We can not assure you that we will be able to operate in compliance with local labor laws and regulations as well as with differing local customs, in order to operate the manufacturing facility. If we are unsuccessful in hiring, retaining and training a workforce in a timely and cost-effective manner, our business, financial condition and results of operations could be adversely affected.

Furthermore, although none of our United States based employees are currently represented by a labor union and none of our international employees are currently represented by a labor union that we are aware of at this time, it is common throughout the automobile industry generally for many employees at automobile companies to belong to a union, which can result in higher employee costs and increased risk of work stoppages. Moreover, regulations in some jurisdictions outside of the U.S. mandate employee participation in industrial collective bargaining agreements, work councils, or similar activities with certain consultation rights with respect to the relevant companies’ operations, or companies are required to apply collective bargaining agreements, implement works councils or similar bodies with certain consultation rights related to the activities of the companies involved. In the event our employees seek to join or form a labor union, we could be subject to risks as we engage in an attempt to address such organizing and/or to finalize negotiations with any such union, including potential work slowdowns or stoppages, delays and increased costs. Furthermore, we may be directly or indirectly dependent upon companies with unionized work forces, such as parts suppliers, construction contractors, and trucking and freight companies, and work stoppages or strikes organized by such unions could have a material adverse impact on our business, financial condition, ability to expand our facilities, or results of operations. If a work stoppage occurs, it could delay the manufacture and sale of our products and have a material adverse effect on our business, prospects, results of operations or financial condition.

Misconduct by our employees and independent contractors during and before their employment with us could expose us to potentially significant legal liabilities, reputational harm and/or other damages to our business.

Many of our employees play critical roles in ensuring the safety and reliability of our vehicles and/or our compliance with relevant laws and regulations. Certain of our employees have access to sensitive information and/or proprietary technologies and know-how. While we have adopted codes of conduct for all of our employees and implemented detailed policies and procedures relating to intellectual property, proprietary information and trade secrets, we cannot assure you that our employees will always abide by these codes, policies and procedures nor that the precautions we take to detect and prevent employee misconduct will always be effective. If any of our employees engage in any misconduct, illegal or suspicious activities, including but not limited to misappropriation or leakage of sensitive customer information or proprietary information, we and such employees could be subject to legal claims and liabilities and our reputation and business could be adversely affected as a result.

In addition, while we have screening procedures during the recruitment process, we cannot assure you that we will be able to uncover misconduct of job applicants that occurred before we offered them employment, or that we will not be affected by legal proceedings against our existing or former employees as a result of their actual or alleged misconduct. Any negative publicity surrounding such cases, especially in the event that any of our employees is found to have committed any wrongdoing, could negatively affect our reputation and may have an adverse impact on our business.

Furthermore, we face the risk that our employees and independent contractors may engage in other types of misconduct or other illegal activity, such as intentional, reckless or negligent conduct that violates production standards, workplace health and safety regulations, fraud, abuse or consumer protection laws, other similar non-U.S. laws or laws that require the true, complete and accurate reporting of financial information or data. It is not always possible to identify and deter misconduct by employees and other third parties, and the precautions we take to detect and prevent this activity may not be effective in controlling unknown or unmanaged risks or losses or in protecting us from governmental investigations or other actions or lawsuits stemming from a failure to be in compliance with such laws or regulations. In addition, we are subject to the risk that a person or government could allege such fraud or other misconduct, even if none occurred. If any such actions are instituted against us, and we are not successful in defending ourselves or asserting our rights, those actions could have a significant impact on our business, prospects, financial condition and results of operations, including, without limitation, the imposition of significant civil, criminal and administrative penalties, damages, monetary fines, disgorgement, integrity oversight and reporting obligations to resolve allegations of non-compliance, imprisonment, other sanctions, contractual damages, reputational harm, diminished profits and future earnings and curtailment of our operations, any of which could adversely affect our business, prospects, financial condition and results of operations.

Risks Related to Litigation and Regulation

We are subject to substantial laws and regulations that could impose substantial costs, legal prohibitions or unfavorable changes upon our operations or products, and any failure to comply with these laws and regulations, including as they evolve, could substantially harm our business and results of operations.

At various jurisdictional levels, we are or will be subject to complex and evolving environmental, manufacturing, health and safety laws and regulations, including laws relating to the use, handling, storage, recycling, disposal and human exposure to lithium-ion batteries and hazardous materials and with respect to constructing, expanding and maintaining our facilities. The costs of compliance, including remediating contamination, if any, for our properties and any changes to our operations mandated by new or amended laws, may be significant. We may also face unexpected delays in obtaining permits and approvals required by such laws in connection with our manufacturing facilities, which could hinder our ability to continue our commercial manufacturing operations. Such costs and delays may adversely impact our business prospects and operations. Furthermore, any violations of these laws may result in substantial fines and penalties, remediation costs, third party damages, or a suspension or cessation of our operations.

In addition, motor vehicles are subject to substantial regulation under international, federal, state and local laws. We have incurred, and expect to continue to incur, significant costs in complying with these regulations. Any failures to comply could result in significant expenses, delays or fines. In the United States, vehicles must meet or exceed all federally mandated motor vehicle safety standards to be certified under the federal regulations. Rigorous testing and the use of approved materials and equipment are among the requirements for achieving federal certification. The Lucid Air and any future vehicles will be subject to such regulation under federal, state and local laws and standards. These regulations include those promulgated by the U.S. Environmental Protection Agency, NHTSA, other federal agencies, various state agencies and various state boards; and compliance certification is required for each individual vehicle we manufacture for sale. These laws and standards are subject to change from time to time, and we could become subject to additional regulations in the future, which could increase the effort and expense of compliance. Federal, state and local laws and industrial standards for electric vehicles are still developing, and we face risks associated with changes to these regulations, which could have an impact on the adoption of electric vehicles. In addition, increased sensitivity by regulators to the needs of established automobile manufacturers with large employment bases, high fixed costs and business models based on the internal combustion engine could lead them to adopt regulations that could reduce the compliance costs of such established manufacturers or mitigate the effects of government efforts to promote electric vehicles. If compliance results in delays or substantial expenses, our business could be adversely affected.

We currently are, and expect to become, subject to laws and regulations applicable to the supply, manufacture, import, sale and service of automobiles in an increasing number of international jurisdictions. Applicable regulations in countries outside of the U.S., such as standards relating to vehicle safety, transportation of dangerous goods, fuel economy and emissions, battery recycling, among other things, are often materially different from requirements in the United States. Compliance with such regulations will therefore require additional time and resources to ensure regulatory compliance in those countries. This process may include official review and certification of our vehicles by foreign regulatory agencies prior to market entry, as well as compliance with foreign reporting and recall management systems requirements. There can be no assurance that we will be able to achieve foreign regulatory compliance in a timely manner and at our expected cost, or at all, and the costs of achieving international regulatory compliance or the failure to achieve international regulatory compliance could harm our business, prospects, results of operations and financial condition.

We may face regulatory limitations on our ability to sell vehicles directly, which could materially and adversely affect our ability to sell our vehicles.

Our business plan includes the direct sale of vehicles to retail consumers, both at retail locations and over the internet. The laws governing licensing of dealers and sales of motor vehicles vary from state to state. Most states require a dealer license to sell new motor vehicles within the state, and many states prohibit manufacturers or their affiliates from becoming licensed dealers and directly selling new motor vehicles to retail consumers from within that state. In addition, most states require that we have a physical dealership location in the state before we can be licensed as a dealer. We are currently licensed as a motor vehicle dealer in several states and anticipate that we can become a licensed dealer in additional states as we open retail locations in those states. In some states, we have also opened or expect to open Lucid studios to educate and inform customers about our vehicles, but those Lucid studios will not actually transact in the sale of vehicles. The application of these state laws to our operations continues to be difficult to predict. Laws in some states have limited our ability to obtain dealer licenses from state motor vehicle regulators and may continue to do so.

We may face legal challenges to this distribution model. For instance, in states where direct sales are not permitted, dealers and their lobbying organizations may complain to the government or regulatory agencies that we are acting in the capacity of a dealer without a license. Alternatively, we have and may continue to initiate legal action against such states that prohibit direct sales, which may be protracted and expensive, and the results are difficult to predict. In some states, regulators may restrict or prohibit us from directly providing warranty repair service, or from contracting with third parties who are not licensed dealers to provide warranty repair service. Even if regulators decide to permit us to sell vehicles, such decisions may be challenged by dealer associations and others as to whether such decisions comply with applicable state motor vehicle industry laws. Further, even in jurisdictions where we believe applicable laws and regulations do not currently prohibit our direct sales model or where we have reached agreements with regulators, legislatures may impose additional limitations. Because the laws vary from state to state, our distribution model must be carefully established, and our sales and service processes must be continually monitored for compliance with the various state requirements, which change from time to time. Regulatory compliance and likely challenges to the distribution model may add to the cost of our business.

We have in the past and may choose in the future, or we may be compelled, to undertake product recalls or take other actions, which could adversely affect our business, prospects, results of operations, reputation and financial condition.

Product recalls may result in adverse publicity, damage our reputation and adversely affect our business, prospects, results of operations and financial condition. For example, we have conducted several vehicle recalls due to a number of potential issues in the past and we may in the future voluntarily or involuntarily initiate additional recalls if any of our electric vehicles or components (including our batteries) prove to be defective or noncompliant with applicable federal motor vehicle safety standards. If a large number of vehicles are the subject of a recall or if needed replacement parts are not in adequate supply, we may be unable to service and repair recalled vehicles for a significant period of time. These types of disruptions could jeopardize our ability to fulfill existing contractual commitments or satisfy demand for our electric vehicles and could also result in the loss of business to our competitors. Such recalls, whether caused by systems or components engineered or manufactured by us or our suppliers, would involve significant expense and diversion of management’s attention and other resources, which could adversely affect our brand image in our target market and our business, prospects, results of operations and financial condition.

We are subject to legal proceedings, regulatory disputes and governmental inquiries that could cause us to incur significant expenses, divert our management’s attention, and adversely affect our business, results of operations, cash flows and financial condition.

From time to time, we may be subject to claims, lawsuits, government investigations and other proceedings involving product liability, consumer protection, competition and antitrust, intellectual property, privacy, securities, tax, labor and employment, health and safety, our direct distribution model, environmental claims, commercial disputes and other matters that could adversely affect our business, results of operations, cash flows and financial condition. In the ordinary course of business, we have been the subject of complaints or litigation, including claims related to shareholders, business disputes, and employment matters.

For example, beginning on April 18, 2021, two individual actions and two putative class actions were filed in federal courts in Alabama, California, New Jersey and Indiana, asserting claims under the federal securities laws against the Company (f/k/a Churchill Capital Corp IV), its wholly owned subsidiary, Atieva, Inc. (“Lucid Motors”), and certain current and former officers and directors of the Company, generally relating to the Merger. On September 16, 2021, the plaintiff in the New Jersey action voluntarily dismissed that lawsuit. The remaining actions were ultimately transferred to the Northern District of California and consolidated under the caption, In re CCIV / Lucid Motors Securities Litigation, Case No. 4:21-cv-09323-YGR (the “Consolidated Class Action”). On December 30, 2021, lead plaintiffs in the Consolidated Class Action filed a revised amended consolidated complaint (the “Complaint”), which asserts claims under Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 on behalf of a putative class of shareholders who purchased stock in CCIV between February 5, 2021 and February 22, 2021. The Complaint names as defendants Lucid Motors and the Company’s chief executive officer, and generally alleges that, prior to the public announcement of the Merger, defendants purportedly made false or misleading statements regarding the expected start of production for the Lucid Air and related matters. The Complaint seeks certification of the action as a class action as well as compensatory damages, interest thereon, and attorneys’ fees and expenses. The Company moved to dismiss the Complaint on February 14, 2022 and that motion was granted on January 11, 2023, with Plaintiffs being provided the ability to seek leave to amend. On January 30, 2023, Plaintiffs filed a Motion for Leave to Amend, which the Company opposed. On June 29, 2023, the District Court denied that motion, dismissed the lawsuit and terminated the case. On July 28, 2023, Plaintiffs appealed the District Court’s decision to the Ninth Circuit Court of Appeals.

Litigation and regulatory proceedings may be protracted and expensive, and the results are difficult to predict. Additionally, our litigation costs could be significant, even if we achieve favorable outcomes. Adverse outcomes with respect to litigation or any of these legal proceedings may result in significant settlement costs or judgments, penalties and fines, or require us to modify, make temporarily unavailable or stop manufacturing or selling our vehicles in some or all markets, all of which could negatively affect our sales and revenue growth and adversely affect our business, prospects, results of operations, cash flows and financial condition.

The results of litigation, investigations, claims and regulatory proceedings cannot be predicted with certainty, and determining reserves for pending litigation and other legal and regulatory matters requires significant judgment. There can be no assurance that our expectations will prove correct, and even if these matters are resolved in our favor or without significant cash settlements, these matters, and the time and resources necessary to litigate or resolve them, could harm our business, results of operations, cash flows and financial condition. In addition, the threat or announcement of litigation or investigations by governmental authorities or other parties, irrespective of the merits of the underlying claims, may itself have an adverse impact on the trading price of our common stock.

We may become subject to product liability claims, which could harm our financial condition and liquidity if we are not able to successfully defend or insure against such claims.

We may become subject to product liability claims, which could harm our business, prospects, results of operations and financial condition. The automotive industry experiences significant product liability claims, and we face inherent risks of exposure to claims in the event our production vehicles do not perform or are claimed not to perform as expected or malfunction, resulting in property damage, personal injury or death. We also expect that, as is true for other automakers, our vehicles will be involved in crashes resulting in death or personal injury, and even if not caused by the failure of our vehicles, we may face product liability claims and adverse publicity in connection with such incidents. In addition, we may face claims arising from or related to failures, claimed failures or misuse of new technologies that we expect to offer, including ADAS features in our vehicles. See “— Risks Related to Litigation and Regulation — ADAS technology is subject to uncertain and evolving regulations.” In addition, the battery packs that we produce make use of lithium-ion cells. On rare occasions, lithium-ion cells can rapidly release the energy they contain by venting smoke and flames in a manner that can ignite nearby materials as well as other lithium-ion cells. While we have designed our battery packs to passively contain a single cell’s release of energy without spreading to neighboring modules, there can be no assurance that a field or testing failure of our vehicles or other battery packs that we produce will not occur, in particular due to a high-speed crash. In addition, although we equip our vehicles with systems designed to detect and warn vehicle occupants of such thermal events, there can be no assurance that such systems will function as designed or will provide vehicle occupants with sufficient, or any, warning in all circumstances. Any such events or failures of our vehicles, battery packs or warning systems could subject us to lawsuits, product recalls or redesign efforts, all of which would be time consuming and expensive.

A successful product liability claim against us could require us to pay a substantial monetary award. Our risks in this area are particularly pronounced in light of the limited field experience of our vehicles. Moreover, a product liability claim against us or our competitors could generate substantial negative publicity about our vehicles and business and inhibit or prevent commercialization of our future vehicles, which would have material adverse effect on our brand, business, prospects and results of operations. Our insurance coverage might not be sufficient to cover all potential product liability claims, and insurance coverage may not continue to be available to us or, if available, may be at a significantly higher cost. Any lawsuit seeking significant monetary damages or other product liability claims may have a material adverse effect on our reputation, business and financial condition.

We may be exposed to delays, limitations and risks related to the environmental permits and other operating permits required to operate our manufacturing facilities.

Operation of an automobile manufacturing facility requires land use and environmental permits and other operating permits from federal, state and local government entities. While we believe that we have the permits necessary to carry out and perform our current plans and operations at our Casa Grande, Arizona manufacturing facilities based on our current target production capacity, we plan to expand our manufacturing facilities and construct additional manufacturing facilities over time to achieve a future target production capacity and will be required to apply for and secure various environmental, wastewater, hazardous materials, and land use permits and certificates of occupancy necessary for the commercial operation of such expanded and additional facilities. Delays, denials or restrictions on any of the applications for or assignment of the permits to operate our manufacturing facilities could adversely affect our ability to execute on our business plans and objectives based on our current target production capacity or our future target production capacity. See “— Risks Related to Manufacturing and Supply Chain — We have experienced and may in the future experience significant delays in the design, manufacture, launch and financing of our vehicles, including the Lucid Air and the Lucid Gravity SUV, which could harm our business and prospects.”

We are subject to various environmental, health and safety laws and regulations that could impose substantial costs on us and cause delays in expanding our production facilities.

Our operations are subject to international, federal, state and local environmental laws and regulations relating to the use, handling, storage, disposal of and exposure to hazardous materials and batteries. Environmental, health and safety laws and regulations are complex and evolving. For example, regulations regarding battery storage, recycling, disposal and processing are relatively new and the current lack of industry standards may increase our cost of compliance. Moreover, we may be affected by future amendments to such laws or other new environmental, health and safety laws and regulations which may require a change in our operations, potentially resulting in a material adverse effect on our business, prospects, results of operations and financial condition. These laws can give rise to liability for administrative oversight costs, cleanup costs, property damage, bodily injury, fines and penalties. Capital and operating expenses needed to comply with environmental laws and regulations can be significant, and violations could result in substantial fines and penalties, third-party damages, suspension of production or a cessation of our operations.

Contamination at properties we own or operate, properties we formerly owned or operated or properties to which we sent hazardous substances may result in liability under environmental laws and regulations, including, but not limited to, the Comprehensive Environmental Response, Compensation and Liability Act, which can impose liability for the full amount of remediation-related costs without regard to fault, for the investigation and cleanup of contaminated soil and ground water, for building contamination and impacts to human health and for damages to natural resources. The costs of complying with environmental laws and regulations and any claims concerning noncompliance, or liability with respect to contamination in the future, could have a material adverse effect on our financial condition or results of operations.

Our operations are also subject to federal, state, and local workplace safety laws and regulations, including, but not limited to, the Occupational Health and Safety Act, which require compliance with various workplace safety requirements. These laws and regulations can give rise to liability for oversight costs, compliance costs, bodily injury (including workers’ compensation), fines, and penalties. Additionally, non-compliance could result in delay or suspension of production or cessation of operations. The costs required to comply with workplace safety laws can be significant, and non-compliance could adversely affect our production or other operations, including with respect to the production of the Lucid Air, which could have a material adverse effect on our business, prospects and results of operations.

ADAS technology is subject to uncertain and evolving regulations.

We expect to introduce certain ADAS technologies into our vehicles over time. ADAS technology is subject to regulatory uncertainty as the law evolves to catch up with the rapidly evolving nature of the technology itself, all of which is beyond our control. There is a variety of international, federal and state regulations that may apply to self-driving and driver-assisted vehicles, which include many existing vehicle standards that assume a human driver will be controlling the vehicle at all times. There are currently no federal U.S. regulations pertaining to the safety of self-driving vehicles; however, NHTSA has established recommended guidelines. Certain states have legal restrictions on self-driving vehicles, and many other states are considering them. In Europe, certain vehicle safety regulations apply to self-driving braking and steering systems, and certain treaties also restrict the legality of certain higher levels of self-driving vehicles. Self-driving laws and regulations are expected to continue to evolve in numerous jurisdictions in the United States and foreign countries, which increases the likelihood of a patchwork of complex or conflicting regulations or may delay products or restrict self-driving features and availability, which could adversely affect our business. Our vehicles may not achieve compliance with the regulatory requirements in some countries or jurisdictions for certification and rollout to consumers or satisfy changing regulatory requirements which could require us to redesign, modify or update our ADAS hardware and related software systems. Any such requirements or limitations could impose significant expense or delays and could harm our competitive position, which could adversely affect our business, prospects, results of operations and financial condition.

We are subject to U.S. and foreign anti-corruption, anti-money laundering and anti-boycott laws and regulations. We can face criminal liability and other serious consequences for violations, which can harm our business.

We are subject to the U.S. Foreign Corrupt Practices Act of 1977, as amended, the U.S. domestic bribery statute contained in 18 U.S.C. § 201, the U.S. Travel Act, the USA PATRIOT Act and possibly other anti-bribery and anti-money laundering laws in countries in which we expect to conduct activities. Anti-corruption laws are interpreted broadly and prohibit companies and their employees, agents, contractors and other collaborators from authorizing, promising, offering or providing, directly or indirectly, improper payments or anything else of value to recipients in the public or private sector. We can be held liable for the corrupt or other illegal activities of our employees, agents, contractors and other collaborators, even if we do not explicitly authorize or have actual knowledge of such activities. Any violations of the laws and regulations described above may result in substantial civil and criminal fines and penalties, imprisonment, the loss of export or import privileges, debarment, tax reassessments, breach of contract and fraud litigation, reputational harm and other consequences.

We are subject to governmental export and import controls and laws that could subject us to liability if we are not in compliance with such laws.

Our vehicles and the equipment we use are subject to export control, import and economic sanctions laws and regulations, including the U.S. Export Administration Regulations, U.S. Customs regulations and various economic and trade sanctions regulations administered by the U.S. Treasury Department’s Office of Foreign Assets Control. Exports of our vehicles and technology must be made in compliance with these laws and regulations. If we fail to comply with these laws and regulations, we and certain of our employees could be subject to substantial civil or criminal penalties, including the possible loss of export or import privileges; fines, which may be imposed on us and responsible employees or managers; and, in extreme cases, the incarceration of responsible employees or managers. In addition, our existing and future international operations for the reassembly or manufacture of our vehicles may subject us to additional constraints under applicable export and import controls and laws.

In addition, changes to our vehicles, or changes in applicable export control, import or economic sanctions laws and regulations, may create delays in the introduction and sale of our vehicles and solutions or, in some cases, prevent the export or import of our vehicles to certain countries, governments, or persons altogether. Any change in export, import, or economic sanctions laws and regulations, shift in the enforcement or scope of existing laws and regulations or change in the countries, governments, persons or technologies targeted by such laws and regulations could also result in decreased use of our vehicles, as well decreasing our ability to export or market our vehicles to potential customers. Any decreased use of our vehicles or limitation on our ability to export or market our vehicles could adversely affect our business, prospects, results of operations and financial condition.

Changes in U.S. trade policy, including the imposition of tariffs or revocation of normal trade relations and the resulting consequences, could adversely affect our business, prospects, results of operations and financial condition.

The U.S. government has adopted an evolving approach to trade policy and in some cases has attempted to renegotiate or terminate certain existing bilateral or multi-lateral trade agreements. It has also imposed tariffs on certain foreign goods, including steel and certain vehicle parts, which have resulted in increased costs for goods imported into the United States. In response to these tariffs, a number of U.S. trading partners have imposed retaliatory tariffs on a wide range of U.S. products, which could make it costlier for us to export our vehicles to those countries. If we are unable to pass the costs of such tariffs on to our customer base or otherwise mitigate such costs, or if demand for our exported vehicles decreases due to the higher cost, our results of operations could be materially adversely affected. In addition, further tariffs have been proposed by the United States and its trading partners, and additional trade restrictions could be implemented on a broad range of products or raw materials. The resulting environment of retaliatory trade or other practices could harm our ability to obtain necessary inputs or sell our vehicles at prices customers are willing to pay, which could have a material adverse effect on our business, prospects, results of operations and financial condition.

In December 2021, the United States adopted the Uyghur Forced Labor Prevention Act (“UFLPA”) which creates a rebuttable presumption that any goods, wares, articles, and merchandise mined, produced, or manufactured in whole or in part in the Xinjiang Uyghur Administrative Region of China or that are produced by certain entities are prohibited from importation into the United States and are not entitled to entry. These import restrictions came into effect on June 21, 2022. While we are not presently aware of any direct impacts these restrictions will have on its supply chain, the UFLPA may materially and negatively impact our ability to import the goods and products we rely on to manufacture our products and operate our business. The UFLPA may further impact our supply chain and costs of goods as it may restrict the available supply of goods and products eligible for importation into the United States, including among other things, electronics assemblies, extractives (including coal, copper, hydrocarbons, oil, uranium, and zinc), textiles and fabrics (in particular, cotton) and renewable energy products (including polysilicon, ingots, wafers, crystalline silicon solar cells, and crystalline silicon solar photovoltaic modules). The full potential impact to us of the UFLPA remains uncertain and could have an adverse effect on our business and results of operations.

In 2022, in response to actions taken by the Russia against Ukraine, the United States and other countries around the world undertook rapidly evolving and escalating campaigns targeting Russia and Belarus, and Russian and Belarussian entities and persons, with significant new economic sanctions designations and embargoes, financial restrictions, trade controls and other government restrictions.

Although we are not aware of any company-related operations or activities in these jurisdictions, these economic sanctions and other laws and regulations could disrupt our supply chains, impair our ability to compete in current or future markets, or otherwise subject us to potential liability. While we have implemented certain procedures to facilitate compliance with applicable laws and regulations in connection with the growing sanctions and trade control programs around the globe related to Russia and Belarus, we cannot be assured that these procedures are always effective or that we, or third parties, many of whom we do not control, have complied with all laws or regulations in this regard. Failure by our employees, representatives, contractors, agents, intermediaries, or other third parties to comply with applicable laws and regulations could also have negative consequences for us, including reputational harm, government investigations, loss of export privileges, and penalties or fines. These economic sanctions and other restrictions continue to evolve, and the long-term potential impact on our operations and business is still unclear.

In addition, the United States enacted federal legislation that revokes normal trade relations between Russia and Belarus. As a result of this and executive action increasing import duty rates on certain Russia-origin products, imports of merchandise that is of Russian- or Belarussian-origin are subject to potentially higher import duty rates. To the extent such merchandise is found in our cross-border supply chains and subject to higher duties, the suspension of normal trade relations with Russian and Belarus could increase our input costs, which could have adverse impacts on our business and financial condition.

A failure to properly comply with foreign trade zone laws and regulations could increase the cost of our duties and tariffs.

We have established a foreign trade zone with respect to certain of our facilities in Casa Grande, Arizona, through qualification with U.S. Customs and Border Protection. Materials received in a foreign trade zone are not subject to certain U.S. duties or tariffs until the material enters U.S. commerce. We expect to benefit from the adoption of a foreign trade zone by reduced duties, deferral of certain duties and tariffs, and reduced processing fees, which we expect to help us realize a reduction in duty and tariff costs. However, the operation of our foreign trade zone requires compliance with applicable regulations, including with respect to the physical security of the foreign trade zone, and continued support of U.S. Customs and Border Protection with respect to the foreign trade zone program. If we are unable to maintain the qualification of our foreign trade zone, or if foreign trade zones are limited or unavailable to us in the future, our duty and tariff costs could increase, which could have an adverse effect on our business and results of operations.

Risks Related to Intellectual Property

We may fail to adequately obtain, maintain, enforce and protect our intellectual property and may not be able to prevent third parties from unauthorized use of our intellectual property and proprietary technology. If we are unsuccessful in any of the foregoing, our competitive position could be harmed and we could be required to incur significant expenses to enforce our rights.

Our ability to compete effectively is dependent in part upon our ability to obtain, maintain, enforce and protect our intellectual property and proprietary technology, but we may not be able to prevent third parties from unauthorized use of our intellectual property and proprietary technology, which could harm our business and competitive position. We establish and protect our intellectual property and proprietary technology through a combination of licensing agreements, third-party nondisclosure and confidentiality agreements and other contractual rights, as well as through patent, trademark, copyright and trade secret laws in the United States and other jurisdictions. Monitoring unauthorized use of our intellectual property is costly and challenging, and the steps we have taken or will take to prevent misappropriation may not be successful. Despite our efforts to obtain and protect intellectual property rights, there can be no assurance that these protections will be available in all cases or will be adequate to prevent our competitors or other third parties from copying, reverse engineering or otherwise obtaining and using our technology or products or seeking court declarations that they do not infringe, misappropriate or otherwise violate our intellectual property. Failure to adequately obtain, maintain, enforce and protect our intellectual property could result in our competitors offering identical or similar products, potentially resulting in the loss of our competitive advantage and a decrease in our revenue which would adversely affect our business, prospects, financial condition and results of operations.

The measures we take to obtain, maintain, protect and enforce our intellectual property, including preventing unauthorized use by third parties, may not be effective for various reasons, including the following:

•any trademark or patent applications we file may not result in the issuance of trademarks or patents;

•we may not be the first inventor of the subject matter to which we have filed a particular patent application, and we may not be the first party to file such a patent application;

•the claims under any of our issued patents may not be broad enough to (i) protect our inventions and proprietary technology nor (ii) prevent third parties from creating, developing, or implementing technologies that are similar to ours or offer similar performance;

•our issued patents may be challenged or invalidated by our competitors or other third parties;

•patents have a finite term, and competitors and other third parties may offer identical or similar products after the expiration of our patents that cover such products;

•our employees, contractors or business partners may breach their confidentiality, non-disclosure and non-use obligations;

•competitors and other third parties may independently develop technologies that are the same or similar to ours;

•the intellectual property rights of others could also bar us from licensing and exploiting any patents that issue from our pending applications;

•the costs associated with enforcing patents or other intellectual property rights, or confidentiality and invention assignment agreements may make enforcement impracticable; and

•competitors and other third parties may circumvent or otherwise design around our patents or other intellectual property.

Patent, trademark, copyright and trade secret laws vary significantly throughout the world. The laws of some foreign countries, including countries in which our products are sold, may not be as protective of intellectual property rights as those in the United States, and mechanisms for obtaining and enforcing intellectual property rights may be inadequate. Therefore, our intellectual property may not be as strong or as easily obtained or enforced outside of the United States. Further, policing the unauthorized use of our intellectual property in foreign jurisdictions may be difficult. In addition, third parties may seek to challenge, invalidate or circumvent our patents, trademarks, copyrights, trade secrets or other intellectual property, or applications for any of the foregoing, which could permit our competitors or other third parties to develop and commercialize products and technologies that are the same or similar to ours.

While we have registered and applied for trademarks in an effort to protect our brand and goodwill with customers, competitors or other third parties have in the past and may in the future oppose our trademark applications or otherwise challenge our use of the trademarks and other brand names in which we have invested. Such oppositions and challenges can be expensive and may adversely affect our ability to maintain the goodwill gained in connection with a particular trademark. In addition, we may lose our trademark rights if we are unable to submit specimens of use by the applicable deadline to perfect such trademark rights.

It is our policy to enter into confidentiality and invention assignment agreements with our employees and contractors that have developed material intellectual property for us, but these agreements may not be self-executing and may not otherwise adequately protect our intellectual property, particularly with respect to conflicts of ownership relating to work product generated by the employees and contractors. Furthermore, we cannot be certain that these agreements will not be breached and that third parties will not gain access to our trade secrets, know-how and other proprietary technology. Third parties may also independently develop the same or substantially similar proprietary technology. Monitoring unauthorized use of our intellectual property is difficult and costly, as are the steps we have taken or will take to prevent misappropriation.

We have licensed and plan to further license patents and other intellectual property from third parties, including, but not limited to, suppliers and service providers, and we may face claims that our use of this in-licensed technology infringes, misappropriates or otherwise violates the intellectual property rights of third parties. In such cases, we will seek indemnification from our licensors. However, our rights to indemnification may be unavailable or insufficient to cover our costs and losses. Furthermore, disputes may arise with our licensors regarding the intellectual property subject to, and any of our rights and obligations under, any license or other commercial agreement.

To prevent unauthorized use of our intellectual property, it may be necessary to prosecute actions for infringement, misappropriation or other violation of our intellectual property against third parties. Any such action could result in significant costs and diversion of our resources and management’s attention, and there can be no assurance that we will be successful in any such action. Furthermore, many of our current and potential competitors have the ability to dedicate substantially greater resources to enforce their intellectual property rights than we do. Accordingly, despite our efforts, we may not be able to prevent third parties from infringing, misappropriating or otherwise violating our intellectual property. Any of the foregoing could adversely affect our business, prospects, financial condition and results of operations.

We may be sued by third parties for alleged infringement, misappropriation or other violation of their intellectual property, which could be time-consuming and costly and result in significant legal liability.

There are considerable issued patent, pending patent applications, and other intellectual property development, ownership, and activity in our industry. Companies, organizations and individuals, including our competitors, may hold or obtain patents, trademarks or other intellectual property that would prevent, limit or interfere with our ability to make, use, develop, sell, lease, market or otherwise exploit our vehicles, components or other technology, which could make it more difficult for us to operate our business. Our success depends in part on not infringing, misappropriating or otherwise violating the intellectual property of third parties. From time to time, we may receive communications from third parties, including our competitors, alleging that we are infringing, misappropriating or otherwise violating their intellectual property or otherwise asserting their rights and urging us to take licenses, and we may be found to be infringing, misappropriating or otherwise violating such rights. There can be no assurance that we can adequately mitigate the risk of potential suits or other legal demands by our competitors or other third parties. Accordingly, we may consider entering into licensing agreements with respect to such rights, although no assurance can be given that such licenses can be obtained on acceptable terms or at all or that litigation will not occur, and such licenses and associated litigation could significantly increase our operating expenses. We may be unaware of the intellectual property and other proprietary rights of third parties that may cover some or all of our products or technologies. Any claims or litigation could cause us to incur significant expenses and, if successfully asserted against it, could have adverse effects on our business, including requiring that it:

•pay substantial damages, including treble damages for willful infringement, or ongoing royalty payments;

•cease developing, selling, leasing, using or incorporating certain components into vehicles or offering goods or services that incorporate or use the asserted intellectual property;

•seek a license from the owner of the asserted intellectual property, which license may not be available on reasonable terms, or at all;

•comply with other unfavorable terms; or

•establish and maintain alternative branding for our products and services.

If any of our customers or indemnitees are alleged to have infringed, misappropriated or otherwise violated any third-party intellectual property, we would in general be required to defend or settle the litigation on their behalf. In addition, if we are unable to obtain licenses or modify our products or technologies to make them non-infringing, we might have to refund a portion of license fees paid to us and terminate those agreements, which could further exhaust our resources. In addition, we may pay substantial settlement amounts or royalties on future product sales to resolve claims or litigation, whether or not legitimately or successfully asserted against us. Even if we were to prevail in the actual or potential claims or litigation against us, any claim or litigation regarding our intellectual property could be costly and time-consuming and divert the attention and resources of our management and key employees from our business operations. Such disputes, with or without merit, could also cause potential customers to refrain from purchasing our products or otherwise cause us reputational harm and negative publicity.

Furthermore, many of our employees were previously employed by other automotive companies or by suppliers to automotive companies, or related industries. We may be subject to claims that we or our employees have inadvertently or otherwise used or disclosed trade secrets or other proprietary information of these employees’ former employers. Litigation may be necessary to defend against these claims. If we fail in defending such claims, in addition to paying monetary damages, we may be enjoined from using certain technology, product, services, or knowledge or, we may lose valuable intellectual property or personnel. A loss of key employees, our trade secrets, or our other work product could hamper or prevent our ability to commercialize our products, which could severely harm our business. Even if we are successful in defending against these claims, litigation could result in substantial costs and demand on management resources. Any of the foregoing could materially adversely affect our business, prospects, results of operations and financial condition.

Some of our products contain open-source software, which may pose particular risks to our proprietary software, products and services in a manner that could harm our business.

We use open-source software, available from third parties, in our products and anticipate using open-source software in the future. Some open-source software licenses require those who distribute open-source software as part of their own software product to publicly disclose all or part of the source code to such software product or to make available any derivative works of the open-source code on unfavorable terms or at no cost, and we may be subject to such terms. The terms of many open-source licenses to which we are subject have not been interpreted by U.S. or foreign courts, and there is a risk that open-source software licenses could be construed in a manner that imposes unanticipated conditions or restrictions on our ability to provide or distribute our products or services. Any actual or claimed requirement to disclose our proprietary source code or pay damages for breach of contract could harm our business and could help third parties, including our competitors, develop products and services that are similar to or better than ours. While we monitor our use of open-source software, compliance with open source licenses by us and third party suppliers of software to us, and try to ensure that none is used in a manner that would require us to disclose our proprietary source code or that would otherwise breach the terms of an open source agreement, such use could inadvertently occur, or could be claimed to have occurred. Additionally, we could face claims from third parties claiming non-compliance, ownership of, or demanding release of, the open-source software or derivative works that we developed using such software, which could include our proprietary source code, or otherwise seeking to enforce the terms of the applicable open source license. These claims could result in litigation and could require us to make our software source code freely available, purchase a costly license or cease offering the implicated products or services unless and until we can re-engineer them to avoid infringement, which may be a costly and time-consuming process, and we may not be able to complete the re-engineering process successfully.

Additionally, the use of certain open-source software can lead to greater risks than use of third-party commercial software, as open-source licensors generally do not provide warranties or controls on the origin of software or other contractual protections regarding infringement claims or the quality of the code, including with respect to security vulnerabilities. Moreover, some open-source projects have known security and other vulnerabilities and architectural instabilities, or are otherwise subject to security attacks due to their wide availability, and are provided on an “ as-is” basis. There is typically no support available for open-source software, and we cannot ensure that the authors of such open-source software will implement or push updates to address security risks or will not abandon further development and maintenance. Many of the risks associated with the use of open-source software, such as the lack of warranties or assurances of title or performance, cannot be eliminated, and could, if not properly addressed, negatively affect our business. Any of these risks could be difficult to eliminate or manage and, if not addressed, could have a material adverse effect on our business, financial condition and results of operations.

Risks Related to Financing and Strategic Transactions

We will require additional capital to support business growth, and this capital might not be available on commercially reasonable terms, or at all.

We have funded our operations since inception primarily through equity and debt financings. For example, we issued approximately $2.0 billion of 1.25% convertible senior notes due 2026 in December 2021 (the “2026 Notes”), entered into a credit agreement that provides for a $1.0 billion senior secured asset-based revolving credit facility in June 2022 (the “ABL Credit Facility”), completed an “at-the-market” equity offering program for net proceeds of $594.3 million after deducting commissions and other issuance costs and consummated a private placement of common stock to Ayar for aggregate proceeds of $915.0 million in December 2022. In addition, we have, through our subsidiary, entered into a loan agreement with the Saudi Industrial Development Fund for an aggregate principal amount of up to SAR 5.19 billion in February 2022 (the “SIDF Loan Agreement”) and also entered into a revolving credit facility agreement with Gulf International Bank for an aggregate principal amount of SAR 1 billion in April 2022, which was amended in March 2023 (as amended, the “Amended GIB Facility Agreement”). In June 2023, we completed an underwritten public offering of common stock for aggregate net proceeds of $1.2 billion and consummated the private placement to Ayar for aggregate net proceeds of $1.8 billion, after deducting issuance costs. We anticipate that we will continue to need to raise additional funds through equity, equity-linked or debt financings. Our business is capital-intensive, and we expect the costs and expenses associated with our planned operations will continue to increase in the near term. We do not expect to achieve positive cash flow from operations for several years, if at all. In addition, we have and we expect to settle tax withholding obligations in connection with vesting of the restricted stock units granted to Peter Rawlinson, our Chief Executive Officer and Chief Technology Officer, that were previously granted to him in March 2021 through “net settlement,” i.e., by remitting cash to satisfy the tax withholding obligation and withholding a number of the vested shares on each vesting date. The amount of the tax withholding due on each vesting date will be based on the fair value of our common stock on such vesting date. Depending on the fair value of our common stock and the number of restricted stock units vesting on any applicable vesting date, such net settlement could require us to expend substantial funds to satisfy tax withholding.

Our plan to continue the commercial production of our vehicles and grow our business is dependent upon the timely availability of funds and further investment in design, engineering, component procurement, testing, and the build-out of manufacturing capabilities. For example, we have entered into agreements with Panasonic Energy Co., Ltd. and certain of its affiliates to purchase an aggregate of approximately $5 billion of lithium-ion battery cells, subject to certain conditions and adjustments, beginning in 2023 through 2031. In addition, the fact that we have a limited operating history means that we have limited historical data on the demand for our vehicles. As a result, our future capital requirements are uncertain, and actual capital requirements may be greater than what we currently anticipate.

If we raise additional funds through further issuances of equity or convertible debt securities, our stockholders could suffer significant dilution, and any new equity securities we issue could have rights, preferences and privileges superior to those of holders of our common stock. Any debt financing in the future could involve additional restrictive covenants relating to our capital raising activities and other financial and operational matters, which may make it more difficult for us to obtain additional capital and to pursue business opportunities, including potential acquisitions.

We may not be able to obtain additional financing on terms favorable to us, if at all. Our ability to obtain such financing could be adversely affected by a number of factors, including general conditions in the global economy and in the global financial markets, including recent volatility and disruptions in the capital and credit markets, including as a result of inflation, government closures of banks and liquidity concerns at other financial institutions, interest rate changes, global conflicts or other geopolitical events and the COVID-19 pandemic, or investor acceptance of our business model. These factors may make the timing, amount, terms and conditions of such financing unattractive or unavailable to us. If we are unable to obtain adequate financing or financing on terms satisfactory to us, when we require it, we will have to significantly reduce our spending, delay or cancel our planned activities or substantially change our corporate structure, and we might not have sufficient resources to conduct or support our business as projected, which would have a material adverse effect on our business, prospects, results of operations and financial condition.

We may not be able to realize the anticipated benefits of our agreement with Aston Martin.

In June 2023, we entered into an agreement (the “Implementation Agreement”) with Aston Martin Lagonda Global Holdings plc (together with its subsidiaries, “Aston Martin”) under which we and Aston Martin have established a long-term strategic technology arrangement. On November 6, 2023, pursuant to the terms of the Implementation Agreement, integration and supply arrangements became effective, under which we will provide Aston Martin access to our powertrain, battery system, and software technologies, work with Aston Martin to integrate our powertrain and battery components with Aston Martin’s battery electric vehicle chassis, and supply powertrain and battery components to Aston Martin (collectively, the “Strategic Technology Arrangement”). See Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations for more information.

We may not be able to realize the anticipated benefits of the Strategic Technology Arrangement if we experience delays, fail to successfully integrate our powertrain and battery components with Aston Martin’s vehicles, or fail to enter into a long form supply agreement on terms acceptable to us, or if we experience delays or fail to deliver the components ordered by Aston Martin. Any such delay or failure for any reason, including for reasons beyond our control, may have an adverse effect on our brand and reputation, and our business, prospects, results of operations and financial condition.

The accounting method for reflecting the 2026 Notes on our consolidated balance sheet, accruing interest expense for the 2026 Notes and reflecting the underlying shares of our common stock in our reported diluted earnings per share may adversely affect our reported earnings and financial condition.

In August 2020, the Financial Accounting Standards Board published an Accounting Standards Update, which we refer to as ASU 2020-06, which simplifies certain of the accounting standards that apply to convertible notes. ASU 2020-06 will be effective for SEC-reporting entities for fiscal years beginning after December 15, 2021 (or, in the case of smaller reporting companies, December 15, 2023), including interim periods within those fiscal years. However, early adoption is permitted in certain circumstances for fiscal years beginning after December 15, 2020, including interim periods within those fiscal years. We adopted ASU 2020-06 for the year ended December 31, 2021, including interim periods within that fiscal year.

In accordance with ASU 2020-06, we accounted for the issuance of the 2026 Notes as a liability on our balance sheets, with the initial carrying amount equal to the principal amount of the 2026 Notes, net of issuance costs. The issuance costs will be treated as a debt discount for accounting purposes, which will be amortized into interest expense over the term of the 2026 Notes. As a result of this amortization, the interest expense that we expect to recognize for the 2026 Notes for accounting purposes will be greater than the cash interest payments we will pay on the 2026 Notes, which will result in higher reported loss.

In addition, the shares underlying the 2026 Notes will be reflected in our diluted earnings per share using the “if converted” method, in accordance with ASU 2020-06. Under that method, diluted earnings per share would generally be calculated assuming that all the 2026 Notes were converted solely into shares of common stock at the beginning of the reporting period, unless the result would be anti-dilutive. The application of the if-converted method may reduce our reported diluted earnings per share, and accounting standards may change in the future in a manner that may adversely affect our diluted earnings per share.

Furthermore, if any of the conditions to the convertibility of the 2026 Notes is satisfied, then we may be required under applicable accounting standards to reclassify the liability carrying value of the 2026 Notes as a current, rather than a long-term liability. This reclassification could be required even if no noteholders convert their 2026 Notes and could materially reduce our reported working capital.

Servicing our current and future debt may require a significant amount of cash, and we may not have sufficient cash flow from our business to pay our indebtedness. Our payment obligations under such indebtedness may limit the funds available to us, and the terms of our debt agreements may restrict our flexibility in operating our business or otherwise adversely affect our results of operations.

In December 2021, we issued approximately $2.0 billion principal amount of 2026 Notes and have entered into several credit facilities in 2022. See Note 6 “Debt” to the condensed consolidated financial statements included elsewhere in this Quarterly Report for further information on our outstanding debt obligations. Our ability to make scheduled payments of the principal of, to pay interest on or to refinance our indebtedness from time to time depends on our future performance, which is subject to economic, financial, competitive and other factors beyond our control. Our business may not generate cash flow from operations in the future sufficient to service our debt and make necessary capital expenditures. If we are unable to generate such cash flow, we may be required to adopt one or more alternatives, such as selling assets, restructuring debt or obtaining additional debt financing or equity capital on terms that may be onerous or highly dilutive. Our ability to refinance any future indebtedness will depend on the capital markets and our financial condition at such time. We may not be able to engage in any of these activities or engage in these activities on desirable terms, which could result in a default on our debt obligations. In addition, our existing debt agreements contain, and any of our future debt agreements may contain restrictive covenants that may prohibit us from adopting any of these alternatives. Our failure to comply with these covenants could result in an event of default which, if not cured or waived, could result in the acceleration of our debt.

In addition, our indebtedness, combined with our other existing and future financial obligations and contractual commitments, could have other important consequences. For example, it could:

• make us more vulnerable to adverse changes in general U.S. and worldwide economic, industry and competitive conditions and adverse changes in government regulation;

• limit our flexibility in planning for, or reacting to, changes in our business and our industry;

• place us at a disadvantage compared to our competitors who have less debt;

• limit our ability to borrow additional amounts to fund acquisitions, for working capital and for other general corporate purposes; and

• make an acquisition of our company less attractive or more difficult.

In addition, under the SIDF Loan Agreement, the Amended GIB Facility Agreement, and the ABL Credit Facility, we are subject to customary affirmative and negative covenants regarding our business and operations, including limitations on our ability to, among other things, pay dividends, incur debt, create liens and encumbrances, redeem or repurchase stock, dispose of assets (including dispositions of material intellectual property), consummate acquisitions or other investments, prepay certain debt, engage in transactions with affiliates, engage in sale and leaseback transactions, consummate mergers and other fundamental changes, enter in to restrictive agreements or modify their organizational documents. Any debt financing secured by us in the future could also involve such covenants as well as additional restrictive covenants relating to our capital-raising activities and other financial and operational matters, which may make it more difficult for us to obtain additional capital to pursue business opportunities, including potential acquisitions or divestitures. Any default under our debt arrangements could require that we repay our indebtedness immediately, and may limit our ability to obtain additional financing, which in turn may have an adverse effect on our cash flows and liquidity.

Further, shares of our common stock are subordinate in right of payment to all of our current and future debt. We cannot assure that there would be any remaining funds after the payment of all of our debt for any distribution to our stockholders.

Any of these factors could harm our business, results of operations and financial condition. In addition, if we incur additional indebtedness, the risks related to our business and our ability to service or repay our indebtedness would increase.

We have incurred and may still incur substantially more debt.

We and our subsidiaries have incurred and may be able to incur substantial additional debt in the future, subject to the restrictions contained in our debt instruments, some of which may be secured debt. The ABL Credit Facility imposes certain restrictions on our ability to incur additional debt, but we are not restricted under the terms of the indenture governing our 2026 Notes from incurring additional debt, securing existing or future debt, recapitalizing our debt or taking a number of other actions that are not limited by the terms of such indenture governing our 2026 Notes that could have the effect of diminishing our ability to make payments on our 2026 Notes when due.

The conditional conversion feature of the 2026 Notes, if triggered, may adversely affect our financial condition and operating results.

From and after September 15, 2026, noteholders may convert their 2026 Notes at any time at their election until the close of business on the second scheduled trading day immediately before the maturity date. In the event the conditional conversion feature of the 2026 Notes is triggered, holders of such 2026 Notes will be entitled under the indenture governing such 2026 Notes to convert their 2026 Notes at any time during specified periods at their option. If one or more holders of 2026 Notes elect to convert such 2026 Notes, unless we elect to satisfy our conversion obligation by delivering solely shares of our common stock, we would be required to settle a portion or all of our conversion obligation through the payment of cash, which could adversely affect our liquidity. In addition, in certain circumstances, such as conversion by holders or redemption, we could be required under applicable accounting rules to reclassify all or a portion of the outstanding principal of the 2026 Notes as a current rather than long-term liability, which would result in a material reduction of our net working capital.

We may be unable to raise the funds necessary to repurchase the notes for cash following a fundamental change, or to pay any cash amounts due upon conversion, and our other indebtedness may limit our ability to repurchase the notes or pay cash upon their conversion.

Noteholders may, subject to a limited exception, require us to repurchase their notes following a fundamental change at a cash repurchase price generally equal to the principal amount of the 2026 Notes to be repurchased, plus accrued and unpaid interest, if any. In addition, upon conversion, we will satisfy part or all of our conversion obligation in cash unless we elect to settle conversions solely in shares of our common stock. We may not have enough available cash or be able to obtain financing at the time we are required to repurchase the 2026 Notes or pay any cash amounts due upon conversion. In addition, applicable law, regulatory authorities and the agreements governing our other indebtedness, such as the covenants in the ABL Credit Facility, may restrict our ability to repurchase the 2026 Notes or pay any cash amounts due upon conversion. Our failure to repurchase 2026 Notes or pay any cash amounts due upon conversion when required will constitute a default under the indenture. A default under the indenture or the fundamental change itself could also lead to a default under agreements governing our other indebtedness, which may result in that other indebtedness becoming immediately payable in full. We may not have sufficient funds to satisfy all amounts due under the other indebtedness and the 2026 Notes.

We may be unable to draw down the full amounts available under the ABL Credit Facility, the SIDF Loan Agreement and the Amended GIB Facility Agreement.

The ABL Credit Facility has an initial aggregate principal commitment amount of up to $1.0 billion. However, availability of the committed amounts under the ABL Credit Facility is subject to the value of the eligible borrowing base and we are currently able to draw down only a portion of the full amount available under the ABL Credit Facility. In addition, there is no guarantee that we will have sufficient eligible borrowing base in the future to be able to draw down the full amount available under the ABL Credit Facility. In addition, amounts committed under the SIDF Loan Agreement and the Amended GIB Facility Agreement are only available for certain specific purposes and subject to conditions on drawdowns. Any inability to draw down the full amounts committed under these facilities, should the need arise, may have an adverse effect on our cash flows and liquidity.

We may not be able to identify adequate strategic relationship opportunities or form strategic relationships, in the future.

Strategic business relationships are and will continue to be an important factor in the growth and success of our business. From time to time, we explore opportunities to enter into strategic relationships, including partnerships with original equipment manufacturers. However, there are no assurances that we will be able to identify or secure suitable business relationship opportunities in the future or that we will be able to maintain such relationships. In addition, our competitors may capitalize on such opportunities before we do and we may not be able to offer similar benefits to other companies with which we would like to establish and maintain strategic relationships, which could impair our ability to establish such relationships. For example, we have partnered with Electrify America to provide our customers with access to Electrify America’s charging infrastructure, and we will rely on ongoing access to such infrastructure to provide our customers with charging solutions. If Electrify America terminates this partnership or otherwise fails to deliver the anticipated benefits of this partnership, our ability to provide a satisfactory customer experience will be harmed, and we will be required to identify alternate charging partners or invest in our own charging network. Our current and future alliances could subject us to a number of risks, including risks associated with sharing proprietary information, non-performance by the third party and increased expenses in establishing new strategic alliances, any of which may materially and adversely affect our business. We may have limited ability to monitor or control the actions of these third parties and, to the extent any of these strategic third parties suffer negative publicity or harm to their reputation from events relating to their business, we may also suffer negative publicity or harm to our reputation by virtue of our association with any such third party.

Moreover, identifying and executing on such opportunities could demand substantial management time and resources, and negotiating and financing relationships involves significant costs and uncertainties. If we are unable to successfully source and execute on strategic relationship opportunities in the future, our overall growth could be impaired, and our business, prospects and results of operations could be materially adversely affected.

We may acquire other businesses, which could require significant management attention, disrupt our business, dilute stockholder value and adversely affect our results of operations.

As part of our business strategy, we may make investments in complementary companies, solutions or technologies. We may not be able to find suitable acquisition candidates, and we may not be able to complete such acquisitions on favorable terms, if at all. In addition to possible stockholder approval, we may need approvals and licenses from relevant government authorities for the acquisitions and to comply with any applicable laws and regulations, which could result in increased delay and costs, and may disrupt our business strategy if we fail to do so. If we do complete acquisitions, we may not ultimately strengthen our competitive position or achieve our goals. In addition, if we are unsuccessful at integrating such acquisitions or developing the acquired technologies, the revenue and results of operations of the combined company could be adversely affected. Further, the integration of acquired businesses or assets typically requires significant time and resources, which could result in a diversion of resources from our existing business, which could have an adverse effect on our operations, and we may not be able to manage the process successfully. We may not successfully evaluate or utilize the acquired technology or personnel or accurately forecast the financial impact of an acquisition transaction, including accounting charges. We may have to pay cash, incur debt or issue equity securities to pay for any such acquisition, each of which could adversely affect our financial condition or the value of our common stock. The sale of equity or issuance of debt to finance any such acquisitions could result in dilution to our stockholders. The incurrence of indebtedness could result in increased fixed obligations and exposure to potential unknown liabilities of the acquired business and could also include covenants or other restrictions that could impede our ability to manage our operations.

Our financial results may vary significantly from period to period due to fluctuations in our production levels, operating costs, product demand and other factors.

We expect our period-to-period financial results to vary based on our production levels, operating costs and product demand, which we anticipate will fluctuate as we continue to design, develop and manufacture new vehicles, increase production capacity and establish or expand design, research and development, production, sales and service facilities. Our revenues from period to period may fluctuate as we identify and investigate areas of demand, adjust volumes and add new product derivatives based on market demand and margin opportunities, develop and introduce new vehicles or introduce existing vehicles to new markets for the first time. Our production levels also depend on our ability to obtain vehicle components from our suppliers, the effective operation of our manufacturing facilities, our ability to expand our production capacity, and our ability to timely deliver finished vehicles to customers. Lower production and sales volumes and an inability to fully utilize our purchase commitments with suppliers may result in increased costs and excess inventory as well as potential inventory write-offs. In addition, automotive manufacturers typically experience significant seasonality, with comparatively low sales in the first quarter and comparatively high sales in the fourth quarter, and we expect to experience similar seasonality as we scale commercial production and sale of the Lucid Air and future vehicles. Our period-to-period results of operations may also fluctuate because of other factors including labor availability and costs for hourly and management personnel; profitability of our vehicles, especially in new markets; changes in interest rates; impairment of long-lived assets; macroeconomic conditions, both nationally and locally; negative publicity relating to our vehicles; changes in consumer preferences and competitive conditions; or investment in expansion to new markets. As a result of these factors, we believe that quarter-to-quarter comparisons of our financial results, especially in the short term, may have limited utility as an indicator of future performance. Significant variation in our quarterly performance could significantly and adversely affect the trading price of our common stock.

Risks Related to Tax

Our ability to use net operating loss carryforwards and certain other tax attributes may be limited.

We have accumulated U.S. federal and state net operating loss (“NOL”) carryforwards and research and development credits which may be available to offset and reduce future taxable income. While our U.S. federal NOL carryforwards arising in taxable years beginning after December 31, 2017, will not be subject to expiration, some of our U.S. federal and state NOL carryforwards from taxable years prior to 2018 will begin to expire in 2031. As of September 30, 2023, we also had U.S. federal research and development credit carryforwards which will begin to expire in 2036 and state research and development credit carryforwards with no expiration. As of September 30, 2023, we maintain a full valuation allowance for our net deferred tax assets.

Our U.S. federal and state NOL carryforwards and certain tax credits may be subject to significant limitations under Section 382 and Section 383 of the U.S. tax code, respectively, and similar provisions of state law. Under those sections of the U.S. tax code, if a corporation undergoes an “ownership change,” the corporation’s ability to use its pre-change NOL carryforwards and other pre-change attributes, such as research tax credits, to offset its post-change income or tax may be limited.

In general, an “ownership change” will occur if there is a cumulative change in our ownership by “5-percent shareholders” that exceeds 50 percentage points over a rolling three-year period. Similar rules may apply under state tax laws. We have completed a formal Section 382 study of our equity transactions through December 31, 2020. The study determined that we experienced an “ownership change” in 2016, and we will not be able to utilize approximately $12 million of our gross U.S. federal NOL and $15 million of gross U.S. federal research and development tax credit (or $3 million in net credit) carryforwards. Similar provisions of state law may also apply to limit our use of accumulated state tax attributes from the same period.

We have not yet completed an analysis of whether the business combination also caused an “ownership change.” In addition, future changes in our stock ownership may be outside of our control. If we undergo an ownership change, we may be prevented from fully utilizing the NOL carryforwards and tax credits existing at the time of the ownership change prior to their expiration. Future regulatory changes could also limit our ability to utilize NOL carryforwards and tax credits. To the extent we are not able to offset future taxable income with our NOL carryforwards and tax credits, our net income and cash flows may be adversely affected.

It is possible that we will not generate taxable income in time to use any of our NOL carryforwards and research and development credits before their expiration.

Unanticipated tax laws or any change in the application of existing tax laws to us or our customers or any change to our corporate structure may adversely impact our profitability and business.

We are subject to income and other taxes in the United States and a growing number of foreign jurisdictions. Existing domestic and foreign tax laws, statutes, rules, regulations, or ordinances could be interpreted, changed, modified, or applied adversely to us (possibly with retroactive effect), which could require us to change our transfer pricing policies and pay additional tax amounts, fines or penalties, surcharges, and interest charges for past amounts due, the amounts and timing of which are difficult to discern. Existing tax laws, statutes, rules, regulations, or ordinances could also be interpreted, changed, modified, or applied adversely to our customers (possibly with retroactive effect) and, if our customers are required to pay additional surcharges, it could adversely affect demand for our vehicles.

Furthermore, changes to federal, state, local, or international tax laws on income, sales, use, import/export, indirect, or other tax laws, statutes, rules, regulations, or ordinances on multinational corporations continue to be considered by the United States and other countries where we currently operate or plan to operate.

These contemplated tax initiatives, if finalized and adopted by the United States or other countries where we do business, and the other tax issues described above may materially and adversely impact our operating activities, transfer pricing policies, effective tax rate, deferred tax assets, operating income, and cash flows.

We may change our corporate structure, our business operations or certain agreements that we have entered into relating to taxes in a particular jurisdiction. These changes may materially and adversely impact our consolidated financial statements.

Our warrants are accounted for as liabilities and the changes in value of our warrants could have a material effect on our financial results.

On April 12, 2021, the Acting Director of the Division of Corporation Finance and Acting Chief Accountant of the SEC together issued a public statement (the “SEC Warrant Accounting Statement”) on accounting and reporting considerations for warrants issued by special purpose acquisition companies (“SPACs”). The SEC Warrant Accounting Statement discussed “certain features of warrants issued in SPAC transactions” that “may be common across many entities.” The SEC Warrant Accounting Statement indicated that when one or more of such features is included in a warrant, the warrant “should be classified as a liability measured at fair value, with changes in fair value each period reported in earnings.” In light of the SEC Warrant Accounting Statement and guidance in Accounting Standards Codification (“ASC”) 815-40, “Derivatives and Hedging — Contracts in Entity’s Own Equity,” Churchill’s management evaluated the terms of the Warrant Agreement entered into in connection with the Churchill IPO and concluded that the warrants include provisions that, based on the SEC Warrant Accounting Statement, preclude the warrants from being classified as components of equity. As a result, Churchill classified the warrants as liabilities. Under this accounting treatment, we are required to measure the fair value of the Private Placement Warrants at the end of each reporting period and recognize changes in the fair value from the prior period in our operating results for the current period. As a result of the recurring fair value measurement, our financial statements and results of operations may fluctuate quarterly based on factors which are outside our control. We expect that we will recognize non-cash gains or losses due to the quarterly fair valuation of the warrants and that such gains or losses could be material.

In addition, following the issuance of the SEC Warrant Accounting Statement, and after consultation with Churchill’s independent registered public accounting firm and Churchill’s management team, Churchill concluded that, in light of the SEC Warrant Accounting Statement, it was appropriate to restate its financial statements for the period ended December 31, 2020, and the financial statements as of August 3, 2020 and as of and for the period ended September 30, 2020, in the financial statements accompanying Churchill’s Annual Report on Form 10-K/A.

Risks Related to Public Company Requirements

The requirements of being a public company may strain our resources and distract our management, which could make it difficult to manage our business.

We are required to comply with various regulatory and reporting requirements, including those required by the SEC and Nasdaq. Complying with these reporting and other regulatory requirements is time-consuming and will result in increased costs to us and could have a negative effect on our results of operations, financial condition or business. Those requirements and their interpretation and application may also change from time to time and those changes could have a material adverse effect on our results of operations, financial condition or business. A failure to comply with such requirements, as interpreted and applied, could also have a material adverse effect on our results of operations, financial condition or business. These obligations and constituents will require significant attention from our senior management and could divert their attention away from the day-to-day management of our business, which could adversely affect our business, results of operations, cash flows, and financial condition.

As a public company, we are subject to the reporting requirements of the Exchange Act and the requirements of the Sarbanes-Oxley Act. These requirements may place a strain on our systems and resources. The Exchange Act requires that we file annual, quarterly and current reports with respect to our business and financial condition. The Sarbanes-Oxley Act requires that we implement and maintain effective disclosure controls and procedures and internal controls over financial reporting. In addition, changing laws, regulations, and standards related to corporate governance and public disclosure are creating uncertainty for public companies, increasing legal and financial compliance costs, and making some activities more time-consuming. These laws, regulations, and standards are subject to varying interpretations, in many cases due to their lack of specificity, and, as a result, their application in practice may evolve over time as new guidance is provided by regulatory and governing bodies. This could result in continuing uncertainty regarding compliance matters and higher costs necessitated by ongoing revisions to disclosure and governance practices.

To implement, maintain and improve the effectiveness of our disclosure controls and procedures, we will need to commit significant resources, hire additional staff and provide additional management oversight. To comply with the requirements of being a public company, we have undertaken, and expect to continue to further undertake in the future, various actions, such as hiring additional accounting staff and implementing new internal controls and procedures for the purpose of addressing the standards and requirements applicable to public companies. Sustaining our growth also will require us to commit additional management, operational and financial resources to identify new professionals to join us and to maintain appropriate operational and financial systems to adequately support expansion. These activities may divert management’s attention from other business concerns, which could have a material adverse effect on our results of operations, financial condition or business.

If we identify material weaknesses or otherwise fail to maintain an effective system of internal control over financial reporting, we may not be able to accurately or timely report our financial condition or results of operations, which may adversely affect investor confidence in us and the value of our common stock.

We are subject to the SEC’s internal control over financial reporting requirements. Internal control over financial reporting is complex and may be revised over time to adapt to changes in our business, or changes in applicable accounting rules.

As part of such requirements, we are required to provide management’s attestation on the report on internal control over financial reporting by our independent registered public accounting firm. The design of internal controls over financial reporting for our business has required and will continue to require significant time and resources from management and other personnel.

In addition, we are required to report any control deficiencies that constitute a “material weakness” in our internal control over financial reporting. We cannot assure you that our internal control over financial reporting will be effective in the future or that a material weakness will not be discovered with respect to a prior period for which we had previously believed that our internal control over financial reporting was effective. If we are not able to maintain or document effective internal control over financial reporting, our independent registered public accounting firm will not be able to certify as to the effectiveness of our internal control over financial reporting. Matters impacting our internal control over financial reporting may result in material misstatements of our consolidated financial statements, cause us to be unable to report our financial information on a timely basis, or may cause us to restate previously issued financial information, and thereby subject us to adverse regulatory consequences, including sanctions or investigations by the SEC, or violations of applicable stock exchange listing rules. There could also be a negative reaction in the financial markets due to a loss of investor confidence in us and the reliability of our financial statements. This could materially adversely affect us by, for example, leading to a decline in our stock price and impairing our ability to raise capital.

We may be required to take write-downs or write-offs, restructuring and impairment or other charges that could have a significant negative effect on our financial condition, results of operations and stock price, which could cause you to lose some or all of your investment.

We may be required to later write-down or write-off assets, restructure operations, or incur impairment or other charges that could result in losses. Even though these charges may be non-cash items and not have an immediate impact on our liquidity, charges of this nature could contribute to negative market perceptions about us or our securities. Accordingly, any of our stockholders could suffer a reduction in the value of their shares.

Risks Related to Our Common Stock

The price of our common stock is volatile, and this volatility may negatively impact the market price of our common stock and the trading price of the 2026 Notes.

The trading price of our common stock has fluctuated substantially. The trading price of our securities depends on many factors, including those described elsewhere in this “Risk Factors” section, many of which are beyond our control and may not be related to our operating performance. These fluctuations could cause investors to lose all or part of the investment in our securities since investors might be unable to sell them at or above the price the investor paid for them. Any of the factors listed below could have a material adverse effect on your investment in our securities and our securities may trade at prices significantly below the price you paid for them. In such circumstances, the trading price of our securities may not recover and may experience a further decline.

Factors affecting the trading price of our securities may include:

•market conditions in the broader stock market in general, or in our industry in particular;

•actual or anticipated fluctuations in our quarterly financial or operating results or the quarterly financial or operating results of companies perceived to be similar to ours;

•changes in the market’s expectations about our operating results;

•the public’s reaction to our press releases, other public announcements and filings with the SEC;

•the public’s reaction to the number of unit reservations, financial projections and any other guidance or metrics that we may publicly disclose from time to time;

•speculation in the press or investment community;

•actual or anticipated developments in our business, competitors’ businesses or the competitive landscape generally;

•the operating results failing to meet the expectation of securities analysts or investors in a particular period;

•the timing of the achievement of objectives under our business plan and the timing and amount of costs we incur in connection therewith;

•changes in financial estimates and recommendations by securities analysts concerning us or the market in general;

•operating and stock price performance of other companies that investors deem comparable to ours;

•changes in laws and regulations affecting our business;

•commencement of, or involvement in, litigation or investigations involving us;

•changes in our capital structure, such as future issuances of securities or the incurrence of additional debt;

•the volume of our common stock available for public sale;

•any major change in our Board or management;

•sales of substantial amounts of our common stock by our directors, officers or significant stockholders or the perception that such sales could occur, including the expiration of the lock-up periods applicable to certain holders of our common stock pursuant to the Sponsor Agreement;

•general economic and political conditions, such as recessions, interest rates, pandemics (such as COVID-19), inflation, government closures of banks and liquidity concerns at other financial institutions, changes in diplomatic and trade relationships, fluctuations in foreign currency exchange rates, acts of war or terrorism, and natural disasters; and

•other risk factors listed in this section “Risk Factors.”

Broad market and industry factors may materially harm the market price of our securities irrespective of our operating performance. The stock market in general and Nasdaq have experienced extreme price and volume fluctuations that have often been unrelated or disproportionate to the operating performance of the particular companies affected. The trading prices and valuations of these stocks, and of our securities, may not be predictable. A loss of investor confidence in the market for the stocks of other companies which investors perceive to be similar to ours could depress our stock price and the trading price of the 2026 Notes regardless of our business, prospects, financial conditions or results of operations. Broad market and industry factors, including global conflicts and other geopolitical events, natural disasters, the COVID-19 pandemic, and any other global pandemics, as well as general economic, political and market conditions such as recessions, inflation, government closures of banks and liquidity concerns at other financial institutions, or interest rate changes, may seriously affect the market price of our common stock and other securities, regardless of our actual operating performance. A decline in the market price of our securities also could adversely affect our ability to issue additional securities and our ability to obtain additional financing in the future.

Furthermore, the stock markets in general, and the markets for technology and electric vehicle stocks in particular, have experienced extreme volatility, including as a result of the COVID-19 pandemic, that has sometimes been unrelated to the operating performance of the issuer. The trading price of our common stock may be adversely affected by third parties trying to drive down or drive up the market price. Short sellers and others, some of whom post anonymously on social media, may be positioned to profit if our stock declines or otherwise exhibits volatility, and their activities can negatively affect our stock price and increase the volatility of our stock price. These broad market and industry factors may seriously harm the market price of our common stock, regardless of our operating performance. In addition, hedging activity by holders of the 2026 Notes may impact the market price of our common stock, in particular during any redemption conversion period in connection with a redemption of the 2026 Notes or any observation period for a conversion of the 2026 Notes.

In addition, in the past, following periods of volatility in the overall market and the market prices of particular companies’ securities, securities class action litigations have often been instituted against these companies. Litigation of this type, if instituted against us, could result in substantial costs and a diversion of our management’s attention and resources. Any adverse determination in any such litigation or any amounts paid to settle any such actual or threatened litigation could require that we make significant payments.

The issuance of additional shares of our common stock or other equity or equity-linked securities, or sales of a significant portion of our common stock, could depress the market price of our common stock.

Future issuances of shares of our common stock, or of securities convertible into or exercisable for our common stock, could depress the market price of our common stock and result in significant dilution for holders of our common stock. The exercise of our outstanding warrants and options, the vesting and settlement of our restricted stock units, or the conversion of our 2026 Notes would result in additional dilution to holders of our common stock. In the future, we may issue additional shares of our common stock, or securities convertible into or exercisable for common stock, in connection with generating additional capital, future acquisitions, repayment of outstanding indebtedness, under our stock incentive plan, or for other reasons.

The market price of shares of our common stock could decline as a result of substantial sales of common stock, particularly by our significant stockholders, a large number of shares of common stock becoming available for sale or the perception in the market that holders of a large number of shares intend to sell their shares.

In addition, pursuant to the Investor Rights Agreement, Ayar, and certain other parties thereto are entitled to, among other things, certain registration rights, including demand, piggy-back and shelf registration rights. If one or more of these stockholders were to sell a substantial portion of the shares they hold, it could cause the trading price of our common stock to decline.

We are a “controlled company” within the meaning of the applicable Nasdaq rules and, as a result, qualify for exemptions from certain corporate governance requirements. Our stockholders will not have the same protections afforded to stockholders of companies that are not controlled companies.

As of September 30, 2023, PIF, both directly and indirectly through Ayar, held approximately 60.0% of our common stock. As a result, we are a “controlled company” within the meaning of the Nasdaq rules, and as a result, we qualify for exemptions from certain corporate governance requirements. Under these rules, a company of which more than 50% of the voting power for the election of directors is held by an individual, group or another company is a “controlled company” and may elect not to comply with certain corporate governance requirements, including the requirements to have: (a) a majority of independent directors on the board; (b) a nominating committee comprised solely of independent directors; (c) compensation of executive officers determined by a majority of the independent directors or a compensation committee comprised solely of independent directors; and (d) director nominees selected, or recommended for the selection by the board, either by a majority of the independent directors or a nominating committee comprised solely of independent directors. Although currently we do not utilize any of these exemptions, we may elect to utilize one or more of these exemptions for so long as we remain a “controlled company.” As a result, our stockholders may not have the same protections afforded to stockholders of companies that are subject to all of the Nasdaq corporate governance requirements. Ayar also has the ability to nominate five of the nine directors to our Board.

Further, this concentration of ownership and voting power allows Ayar to control our decisions, including matters requiring approval by our stockholders (such as, subject to the Investor Rights Agreement, the election of directors and the approval of mergers or other extraordinary transactions), regardless of whether or not other stockholders believe that the transaction is in their own best interests. Such concentration of voting power could also have the effect of delaying, deterring or preventing a change of control or other business combination that might otherwise be beneficial to our stockholders, could deprive our stockholders of an opportunity to receive a premium for their common stock as part of a sale of our company and might ultimately affect the market price of our common stock and the trading price of the 2026 Notes.

PIF and Ayar beneficially own a significant equity interest in us and may take actions that conflict with your interests.

The interests of PIF and Ayar may not align with our interests and the interests of our other stockholders or securityholders. PIF and Ayar are each in the business of making investments in companies and may acquire and hold interests in businesses that compete directly or indirectly with us. PIF and Ayar and their respective affiliates, may also pursue acquisition opportunities that may be complementary to our business and, as a result, those acquisition opportunities may not be available to us.

Securities or industry analysts may not publish or cease publishing research or reports about us, our business, our market, or change their recommendations regarding our common stock adversely, which could cause the price and trading volume of our common stock to decline.

The trading market for our common stock can be influenced by the research and reports that industry or securities analysts may publish about us, our business and operations, our market, or our competitors. Similarly, if any of the analysts who do cover us change their recommendation regarding our stock adversely, or provide more favorable relative recommendations about our competitors, the price of our common stock may decline. If any analyst who covers us were to cease coverage of us or fail to regularly publish reports on us, we could lose visibility in the financial markets, which could cause our stock price or trading volume to decline.

We do not anticipate paying any cash dividends for the foreseeable future.

We have never declared or paid cash dividends on our capital stock, and we do not anticipate paying any cash dividends in the foreseeable future. In addition, the ABL Credit Facility limits our and certain of our subsidiaries’ ability to pay dividends. We currently intend to retain our future earnings, if any, for the foreseeable future, to fund the development and growth of our business.

Any future determination to pay dividends will be at the discretion of our Board and will be dependent upon our financial condition, results of operations, capital requirements, applicable contractual restrictions and such other factors as the Board may deem relevant. As a result, capital appreciation in the price of our common stock, if any, will be your only source of gain on an investment in our common stock.

See the section titled “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Liquidity and Capital Resources” in this Quarterly Report.

There is no guarantee that an active and liquid public market for our securities will be sustained.

If a liquid trading market for our common stock is not sustained:

•holders of our common stock may not be able to liquidate their investment in shares of our common stock;

•holders of our common stock may not be able to resell their shares of our common stock at favorable prices, or at all;

•the market price of shares of our common stock may experience significant price volatility; and

•there may be less efficiency in carrying out purchase and sale orders with respect to our common stock.

Additionally, if our securities become delisted from Nasdaq for any reason, and are quoted on the OTC Bulletin Board, an inter-dealer automated quotation system for equity securities that is not a national securities exchange, the liquidity and price of our securities may be more limited than if we were quoted or listed on Nasdaq or another national securities exchange. You may be unable to sell your securities unless a market can be established or sustained.

Our current bylaws designate a state court within the State of Delaware, to the fullest extent permitted by law, as the sole and exclusive forum for certain types of actions and proceedings that may be initiated by our stockholders, which could limit the ability of our stockholders to obtain a favorable judicial forum for disputes with us or with our directors, officers or employees and may discourage stockholders from bringing such claims.

Under our current bylaws, unless we consent in writing to the selection of an alternative forum, the sole and exclusive forum will be a state court within the State of Delaware (or, if no state court located within the State of Delaware has jurisdiction, the federal district court for the District of Delaware) for:

•any derivative action or proceeding brought on our behalf;

•any action asserting a claim of breach of a fiduciary duty owed by any of our directors, officers or employees to us or our stockholders;

•any action asserting a claim against us or any of our directors or officers or other employees arising pursuant to any provision of the DGCL or our certificate of incorporation or bylaws (as either may be amended, restated, modified, supplemented or waived from time to time); or

•any action asserting a claim against us or any of our directors or officers or other employees governed by the internal affairs doctrine.

For the avoidance of doubt, the foregoing provisions of our current bylaws will not apply to any action or proceeding asserting a claim under the Securities Act or the Exchange Act. Section 22 of the Securities Act creates concurrent jurisdiction for federal and state courts over all suits brought to enforce any duty or liability created by the Securities Act or the rules and regulations thereunder. Accordingly, both state and federal courts have jurisdiction to entertain such claims. To prevent having to litigate claims in multiple jurisdictions and the threat of inconsistent or contrary rulings by different courts, among other considerations, our current bylaws provide that, unless we consent in writing to the selection of an alternative forum, the federal district courts of the United States will be the exclusive forum for resolving any complaint asserting a cause of action arising under the Securities Act. Although investors cannot waive compliance with the federal securities laws and the rules and regulations thereunder, any person or entity purchasing or otherwise acquiring any interest in shares of our capital stock will be deemed to have notice of, and consented to, the provisions of our current bylaws described in the preceding sentences. These provisions of our current bylaws could limit the ability of our stockholders to obtain a favorable judicial forum for certain disputes with us or with our directors, officers or other employees, which may discourage such lawsuits against us and our directors, officers and employees. Alternatively, if a court were to find these provisions of our current bylaws inapplicable to, or unenforceable in respect of, one or more of the types of actions or proceedings listed above, we may incur additional costs associated with resolving such matters in other jurisdictions, which could adversely affect our business, financial condition and results of operations. While the Delaware courts have determined that such choice of forum provisions are facially valid, a stockholder may nevertheless seek to bring a claim in a venue other than those designated in the exclusive forum provisions, and there can be no assurance that such provisions will be enforced by a court in those other jurisdictions.

Some provisions of Delaware law and our current certificate of incorporation and our current bylaws may deter third parties from acquiring us and diminish the value of our common stock and the 2026 Notes.

Our current certificate of incorporation and our current bylaws provide for, among other things:

•the ability of our Board to issue one or more series of preferred stock with voting or other rights or preferences that could have the effect of impeding the success of an attempt to acquire us or otherwise effect a change in control;

•subject to the Investor Rights Agreement, advance notice for nominations of directors by stockholders and for stockholders to include matters to be considered at stockholder meetings; and

•certain limitations on convening special stockholder meetings.

In addition, in our current certificate of incorporation, we have not opted out of Section 203 of the DGCL, which prohibits a Delaware corporation from engaging in certain “business combinations” with any “interested stockholder” for a three-year period following the time that the stockholder became an interested stockholder, unless:

•prior to such time, the Board approved either the business combination or the transaction that resulted in the stockholder becoming an interested stockholder;

•upon consummation of the transaction that resulted in the stockholder becoming an interested stockholder, the interested stockholder owned at least 85% of voting stock outstanding at the time the transaction commenced, excluding certain shares; or

•at or subsequent to that time, the business combination is approved by our Board and by the affirmative vote of holders of at least two-thirds of the votes of our outstanding voting stock that is not owned by the interested stockholder.

Generally, a “business combination” includes a merger, asset or stock sale or other transaction resulting in a financial benefit to the interested stockholder. Subject to certain exceptions, an “interested stockholder” is a person who, together with that person’s affiliates and associates, owns, or within the previous three years owned, 15% or more of the votes of our outstanding voting stock. For purposes of this provision, “voting stock” means any class or series of stock entitled to vote generally in the election of directors.

Under certain circumstances, this provision will make it more difficult for a person who would be an “interested stockholder” to effect various business combinations with us for a three-year period. This provision may encourage companies interested in acquiring us to negotiate in advance with our Board because the stockholder approval requirement would be avoided if our Board approves either the business combination or the transaction that results in the stockholder becoming an interested stockholder. These provisions also may have the effect of preventing changes in our Board and may make it more difficult to accomplish transactions that stockholders may otherwise deem to be in their best interests.

These provisions in our current certificate of incorporation and our current bylaws, as well as Delaware law, may discourage, delay or prevent a transaction involving a change in our control that is in the best interest of our minority stockholders. Even in the absence of a takeover attempt, the existence of these provisions may adversely affect the prevailing market price of our common stock or the trading price of the 2026 Notes if they are viewed as discouraging future takeover attempts. These provisions could also make it more difficult for stockholders to nominate directors for election to our Board and take other corporate actions, which could also affect the price investors are willing to pay for our common stock or the 2026 Notes.

Item 5. Other Information.

None of the Company’s directors or officers adopted, modified or terminated a Rule 10b5-1 trading arrangement or a non-Rule 10b5-1 trading arrangement during the quarter ended September 30, 2023, as such terms are defined under Item 408(a) of Regulation S-K.

Item 6. Exhibits.

The exhibits listed on the Exhibit Index to this Form 10-Q are filed herewith or incorporated by reference herein:

EXHIBIT INDEX

Incorporation by Reference

Exhibit
Number

Exhibit Description

Form

File
Number

Filing

Date

Exhibit
Number

Filed
Herewith

3.1

Third Amended and Restated Certificate of Incorporation of Lucid Group, Inc.

8-K

001-39408

April 25, 2023

3.1

3.2

Second Amended and Restated Bylaws of the Company

8-K

001-39408

March 3, 2023

3.2

10.1#

Electric Vehicle Purchase Agreement, dated August 7, 2023, between the Government of the Kingdom of Saudi Arabia (as Represented by the Ministry of Finance) and Lucid LLC.

10.2^

Form of Stock Option Agreement under the Second Amended and Restated 2021 Stock Incentive Plan

10.3^

Form of PSU Agreement under the Second Amended and Restated 2021 Stock Incentive Plan

10.4^

Form of RSU Agreement under the Second Amended and Restated 2021 Stock Incentive Plan

31.1

Certification of Principal Executive Officer Required Under Rule 13a-14(a) and 15d-14(a) of the Securities Exchange Act of 1934, as amended

31.2

Certification of Chief Financial Officer Required Under Rule 13a-14(a) and 15d-14(a) of the Securities Exchange Act of 1934, as amended

32.1

Certification of Principal Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

32.2

Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

101.INS

Inline XBRL Instance Document (the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document)

101.SCH

Inline XBRL Taxonomy Schema Linkbase Document

101.CAL

Inline XBRL Taxonomy Calculation Linkbase Document

101.DEF

Inline XBRL Taxonomy Definition Linkbase Document

101.LAB

Inline XBRL Taxonomy Labels Linkbase Document

101.PRE

Inline XBRL Taxonomy Presentation Linkbase Document

104

Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101)

^ Indicates management contract or compensatory plan

# Portions of this exhibit have been redacted in compliance with Regulation S-K Item 601(b)(10)(iv)

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.


	LUCID GROUP, INC.

Date: November 7, 2023	By:	/s/ Sherry House
		Sherry House
		Chief Financial Officer

Document

EXHIBIT 10.1

Certain identified information has been omitted from this document because it is not material and is the type that the Company customarily and actually treats as private or confidential and has been marked with “[***]”to indicate where omissions have been made.

This Agreement has been executed in English and Arabic; Arabic version has been omitted for purposes of this filing.

Dated _07_ August 2023

Electric Vehicles Purchase
Agreement

between

The Government of the Kingdom of
Saudi Arabia
(Represented by the Ministry of
Finance)

as the Purchaser

and

Lucid L.L.C.

as the Seller

ELECTRIC VEHICLES PURCHASE
AGREEMENT

This Electric Vehicles Purchase Agreement (the “Agreement”) is entered into on _7th_ August 2023, in the city of Riyadh, Kingdom of Saudi Arabia by and between:

1. The Government of the Kingdom of Saudi Arabia, represented by the Ministry of Finance, having its address in Riyadh, the Kingdom of Saudi Arabia (the “Purchaser”); and

2. Lucid L.L.C., a single shareholder company duly established under the laws and regulations of the Kingdom of Saudi Arabia, registered in Riyadh with commercial registration No. 1010716475, having its address at 3074 Prince Mohammed Bin Abdulaziz Road, Al Olaya Dist., Floor 19 Tower B, Riyadh, the Kingdom of Saudi Arabia (the “Seller”)

(The Purchaser and the Seller are hereinafter referred to individually as a “Party” and collectively as the “Parties”).

PREAMBLE

(a) The Purchaser has identified a need for the supply of Vehicles (as defined herein) to the Beneficiaries (as defined herein) and therefore wishes to enter into an agreement pursuant to which the Beneficiaries will Purchase (as defined herein) and the Seller will sell or lease (as the case may be) and supply and deliver to the Beneficiaries, pursuant to purchase orders issued by the Beneficiaries to the Seller, from time to time, in accordance with the terms and conditions set forth in the Agreement.

(b) The Seller is willing to sell, lease, supply and deliver Vehicles to the Beneficiaries and to provide all Services in accordance with the terms and conditions set forth in the Agreement.

Therefore, in consideration of the mutual covenants and obligations hereinafter set forth, the Purchaser and the Seller agree as follows:

1 DEFINITIONS AND INTERPRETATION

1.1. Definitions

Unless the context otherwise requires, whenever used in this Agreement, the following words and phrases shall have the meanings specified in this Clause 1 (DEFINITIONS AND INTERPRETATION):

“Accounting Principles” means the International Financial Reporting Standards that are applicable in the Kingdom from time to time.

“Agreement” means this Agreement and any documents referred to in Clause 2 (AGREEMENT DOCUMENTS) and any amendments thereto.

“Affiliate” means with respect to the Seller, any other entity controlling, controlled by, or under common control with, the Seller, and control for this purpose means the power to direct the management and the policies (via ordinary corporate actions and not otherwise) of the entity whether through the ownership of voting shares, by contract or otherwise.

“Annual Quantity” has the meaning given to it in paragraph (b) of Clause 7.2 (Quantity of Vehicles).

“Beneficiaries” means any natural or legal persons included in the List of Beneficiaries, as may be updated from time to time by the Purchaser, in its absolute discretion, by serving a notice to the Seller. For the purpose of this Agreement, the term “Beneficiaries” shall include the Purchaser if it elects to issue a Purchase Order in accordance with the terms and conditions set forth in the Agreement.

“Beneficiary’s Representative” means the person appointed by each Beneficiary to act as the Beneficiary’s representative for the purpose of Clause 10 (PURCHASER’S, BENEFICIARIES’ AND SELLER’S REPRESENTATIVES).

“Best Industry Practices” means practices and behaviors that comply with internationally recognized practices in the industry of electric vehicles.

“Best Effort” means taking all such steps and performing in such a manner as a well-managed company would undertake where it was acting in a determined, prudent and reasonable manner to achieve a particular desired result for its own benefit.

“Business Day” means a business day according to the official business days of the Purchaser.

“CBU” means a completely built-up Vehicle.

“CBU Costs” means, [***].

“Committee” means a committee comprising six (6) members, three (3) of whom will be appointed by the Purchaser, and three (3) will be appointed by the Seller after the Effective Date, to consider, advise upon, and to make recommendations in relation to unresolved matters under this Agreement. Members appointed by each Party shall include senior members from the accounting, technical, and legal teams at such Party or its related entities, and shall possess an adequate level of experience and qualification to perform their duties and responsibilities.

“Day” means the 24-hour period beginning and ending at 00:00 midnight Saudi Arabian time.

“Designated Senior Officer” means senior officer(s) designated by each of the Purchaser, Seller and the Beneficiaries after the Effective Date, to consider, advise upon, and to make recommendations in relation to certain matters set forth under this Agreement.

“Delivery Date” has the meaning given to it in paragraph (a) in Clause 6.3 (Taking Delivery of the Vehicles).

“Delivery Point” means the location specified in each Purchase Order issued by any Beneficiaries to which the Seller shall deliver the Vehicle(s).

“Effective Date” means the date on which this Agreement is signed by both Parties.

“Electronic Market” means any electronic platform designated by the Purchaser from time to time.

“Force Majeure” means a public event beyond the control of the Parties that is unforeseeable and unavoidable, during which the Seller is unable to fulfill its obligations under this Agreement, and is not attributable to the fault or negligence of any of the Parties including, fires, floods, accidents, wars, military operations, economic embargoes, and changes in laws and regulations, and excluding any event that can be controlled by the Seller, its suppliers, or subcontractors.

“Government Licenses” means all the licenses (including export licenses, if applicable), approvals, permits, exceptions, privileges and applications issued by or submitted to any government authority which are required under any applicable laws or necessary for the performance of any obligations set out in this Agreement.

“In-Kingdom Manufacturing Costs” means, [***].

“In-Kingdom Manufacturing Date” means the date on which the manufacturing activities will commence in the Kingdom, which date shall fall on or prior to the end of the first quarter of 2024.

“Inspection” has the meaning set out in paragraph (a) Clause 6.3 (Taking Delivery of the Vehicles).

“Intellectual Property Rights” means all inventions, trademarks, service marks, trade names or works subject to copyrights or similar rights, and all industrial designs, patents, knowhow, trade secrets, and all the other rights described as intellectual property (regardless of their nature, origin and whether they are currently known or to be created in the future) and in all cases, whether registered or not, as well as other intellectual property rights.

“Introduction Date” means the date on which any particular model of any Vehicle is officially introduced by the Seller or any of its Affiliates.

“Kingdom” means the Kingdom of Saudi Arabia.

“Kingdom Market” means the relevant market for electric vehicles in the Kingdom.

“Kingdom Modified Standard Vehicles” means any electric vehicles configured in accordance with Annex (3) (Kingdom Modified Standard Vehicle Configurations) as amended or updated from time to time.

“Letter of Undertaking” means the letter of undertaking issued by the Purchaser on 15 April 2022, which has been acknowledged and signed by the Seller on 20 April 2022, setting out the key terms governing the Purchase by the Beneficiaries and the sale and supply of Vehicles by the Seller to the Beneficiaries.

“List of Beneficiaries” means the list of beneficiaries set forth in Annex (2) (List of Beneficiaries), as amended, modified or supplemented from time to time by the Purchaser, in its absolute discretion, by serving a notice to the Seller.

“List of Vehicles and Services” means the list of models of vehicles and services set forth in Annex (1) (List of Vehicles), as amended, modified or supplemented from time to time.

“Maximum Quantity” means 100,000 Vehicles.

“Minimum Quantity” means 50,000 Vehicles the Purchaser undertakes to Purchase (or procure the Purchase by the Beneficiaries) and the Seller undertakes to sell or lease (as the case may be) and supply to the Beneficiaries in accordance with the terms and conditions set out in this Agreement.

“Marketing Materials” means the marketing materials of the Seller and its Affiliates in any format, medium and/or language including Lucid Motors web portal, configurator, Lucid Motors apps, product booklets and brochures, vehicle user guides, and brand and product presentations.

“Non-Standard Vehicles” means any electric vehicles which the Seller has agreed to manufacture at the Purchaser’s request, and which are not Standard Vehicles or Kingdom Modified Standard Vehicles.

“Purchase” means the outright purchase or utilization by any other means, whether through leasing or any other utilization means.

“Purchaser” has the meaning set out in the Parties section of the Agreement.

“Purchase Price” means, [***].

“Purchaser’s Representative” means the person appointed by the Purchaser to act as the Purchaser’s representative for the purpose of Clause 10 (PURCHASER’S, BENEFICIARIES’ AND SELLER’S REPRESENTATIVES).

“Purchase Order” means any Purchase Order issued by any Beneficiary to the Seller in accordance with Clause 6.1 (Purchase Orders).

“Purchase Order Price” has the meaning given to it in Clause 7.1 (Price).

“Saudi Costs” means [***].

“Saudi Riyal” means the official and lawful currency of the Kingdom.

“Seller” has the meaning set out in the Parties section of the Agreement.

“Seller’s Representative” means the person appointed by the Seller to act as the Seller’s representative for the purpose of Clause 10.6 (Seller’ Representative).

“SKD” means semi knocked down.

“SKD Costs” means, [***].

“Standards and Specifications” means all industrial standards and specifications relevant and applicable to the Vehicles and any parts thereof (including their hardware and software), which shall include each of the standard and specifications of (i) the Saudi Organization for Standardization, Metrology and Quality (SASO); (ii) the Standards Authority for the Gulf Cooperation Council states, (iii) the International Standards Organization (ISO); and (iv) the occupational health and safety standards (OHSAS).

“Standard Vehicles” means any standard configuration electric vehicles offered by the Seller or any of its Affiliates in any key markets, including the Kingdom Market and the U.S. Market.

“Services” means the services to be performed by the Seller as set out in this Agreement, as such services may be modified or supplemented from time to time in accordance with the terms and conditions of the Agreement.

“Taxes” means any taxes, fees, deductions, tariffs, or otherwise imposed, directly or indirectly, by a competent government authority, including the value-added tax, sales tax, notarial fees, import duties, withholding tax (whether on income, profit, fees, equipment rental or otherwise), foreign currency exchange, property tax, registration or licensing fees, including any fines imposed or amounts added in relation thereto.

“Term” means the term of this Agreement as specified in Clause 3 (AGREEMENT TERM) of the Agreement.

“U.S.” means the United States of America.

“U.S. Market” means the relevant market for electric vehicles in the U.S.

“Vehicles” means, as applicable, any Standard Vehicles, Kingdom Modified Standard Vehicles or Non-Standard Vehicles.

“Warranty Period” means, with respect to any Vehicle and any parts thereof, the standard warranty period offered by the Seller and its Affiliates in the Kingdom Market or the U.S. Market for such Vehicle, whichever is more favorable to the Beneficiary.

“WMCS” means wall mounted charging stations.

1.2. Rules of Interpretation

(a) Unless the context otherwise requires, words using the singular number also include the plural and vice versa.

(b) References to “paragraph” or “Clause” or “Annex” are to the paragraphs, clauses and annexes, respectively, of this Agreement.

(c) The words “include”, “for example” or “including” shall be deemed to be followed by “without limitation” or “but not limited to” whether or not they are followed by such phrases or words of like import.

(d) References to “this Agreement” or any other contract or document shall be construed as a reference to such contract or document as amended, modified or supplemented and in effect from time to time and shall include a reference to any document which amends, modifies or supplements it.

(e) A time of the day shall be construed as a reference to the time of day in Riyadh, the Kingdom.

(f) All periods of time shall be based on, and computed according to, the Gregorian calendar.

(g) Where any notice, consent, approval, waiver, or other authorization by the Purchaser, the Purchaser’s Representative, or any Beneficiaries is required under this Agreement, such notice, consent, approval, waiver, or authorization shall be effective only if in writing and delivered to the Seller pursuant to the terms and conditions of the Agreement.

(h) References to the “law”, “applicable laws” and similar expressions include all legally binding decrees, decisions, laws, regulations, orders or instructions or any treaty (and any interpretation thereof) promulgated or issued by a competent authority, including any amendments, extensions, and replacement thereof.

2 AGREEMENT DOCUMENTS

(a) The Agreement consists of the following documents, each of which is intended to be complementary and mutually explanatory of the others and shall be considered an integral part of this Agreement taken as a whole:

(i) This Agreement;

(ii) Annex (1) List of Vehicles;

(iii) Annex (2) List of Beneficiaries;

(iv) Annex (3) Kingdom Modified Standard Vehicle Configurations; and

(v) Any other documents agreed between the Parties in writing to form part of the Agreement.

(b) In the event of any conflict or inconsistency among the provisions of the above-mentioned documents, the preceding document shall prevail.

3 AGREEMENT TERM

The Term of the Agreement shall be become effective on the Effective Date and shall remain in full force and effect until the tenth (10th) anniversary of the first Purchase Order, unless terminated earlier in accordance with the provisions of the Agreement (the “Term”)

4 PURPOSE AND SCOPE OF THE AGREEMENT

(a) The purpose of this Agreement is to set forth the terms and conditions under which the Purchaser shall Purchase (or procure the Purchase by the Beneficiaries) from the Seller the agreed quantity of the Vehicles pursuant to Purchase Orders, issued from time to time, by the Beneficiaries to the Seller, and the Seller shall, throughout the Term, sell or lease (as the case may be) and supply and deliver to the Beneficiaries the agreed quantity of the Vehicles and provide all required Services during the Warranty Period (as may be extended in accordance with the terms and conditions set forth in the Agreement).

(b) Without limiting the generality of the forgoing and subject to the terms and conditions set forth herein, the Seller shall:

(i) provide a list of all details pertaining to all Standard Vehicles or Kingdom Modified Standard Vehicles, to the Purchaser for the purpose of posting on the Electronic Market or any other platforms or means determined by the Purchaser, in accordance with the terms and conditions set out in the Agreement;

(ii) sell or lease (as the case may be), supply and deliver the Vehicles to the Beneficiaries in accordance with the terms and conditions set out in the Agreement and in conformity with the applicable Standards and Specifications; and

(iii) provide, during the Warranty Period (which may be extended subject to the terms and conditions set forth in the Agreement), all Services to the Beneficiaries in a timely manner in accordance with the terms and conditions set out in the Agreement and in conformity with the applicable Standards and Specifications. The Services shall include inspection, maintenance and repair of Vehicles, making available spare parts and all software and hardware upgrades and updates, and assisting the Purchaser in marketing the Vehicles to the Beneficiaries.

5 SELLER’S OBLIGATIONS

(a) In addition to its other obligations hereunder, the Seller shall cause and be responsible for the following:

(i) be informed and comply with all applicable laws and regulations;

(ii) ensure that all Vehicles conform to the Standards and the Specifications applicable in the Kingdom, or if not available, to the best applicable U.S. standards and specifications;

(iii) offer to the Beneficiaries all specifications and options, with respect to any Standard Vehicles or Kingdom Modified Standard Vehicles, offered by the Seller or any of its Affiliates in any key markets, including the Kingdom Market and the U.S. Market and update Annex (3) (Kingdom Modified Standard Vehicle Configurations) as soon as practicable after the Introduction Date of any new models of Vehicles officially introduced by the Seller or any of its Affiliates;

(iv) homologate all Vehicles in accordance with applicable laws and regulations;

(v) offer to the Beneficiaries all Standard Vehicles and Kingdom Modified Standard Vehicles;

(vi) provide all relevant details to the Beneficiaries relating to all warranties available with respect to Vehicles, including warranty type, coverage duration, terms and conditions and costs (if applicable) and update the same on a quarterly basis;

(vii) offer to the Beneficiaries, at no additional costs, all software updates, with respect to any Vehicles, as soon as they are available in any key markets including the Kingdom Market and the U.S. Market;

(viii) make available, in accordance with Annex (3) (Kingdom Modified Standard Vehicle Configurations), all additional foot space options, at costs to be mutually agreed, subject to a minimum order quantity of [***] Vehicles for each order, provided that:

A. in the case this is achieved by downgrading a higher specification model, discounts shall be offered by the Seller if selecting such option(s) would result in a reduction of the applicable costs; and

B. in the case this is achieved by upgrading a lower specification vehicle, additional costs will be mutually agreed based on the feasibility study;

(ix) make available, in accordance with Annex (3) (Kingdom Modified Standard Vehicle Configurations), an option to have a hard metal roof instead of a glass roof at costs to be mutually agreed, subject to a minimum order quantity of [***] Vehicles for each order, provided that:

B. in the case this is achieved by upgrading a lower specification vehicle, additional costs will be mutually agreed;

(x) make available, at no additional costs, with respect to all models of Vehicles whether delivered or not, an option to have Apple Car Play and Android Auto, as soon as practicable after such option is generally available in the Kingdom Market;

(xi) ensure that systems of all Vehicles meet the then published applicable data security and cybersecurity requirements in the Kingdom, at no additional costs (except where compliance would require changes to hardware on Vehicles already delivered), including any additional data security and/or cybersecurity requirements as may be prescribed by any competent authority in the Kingdom from time to time;

(xii) [***];

(xiii) treat all details in relation to any Vehicles and activities of such Vehicles with utmost confidentiality and refrain from disclosing such information to any Affiliate or third parties, unless such disclosure is strictly necessary for the performance of the obligations set forth in this Agreement;

(xiv) obtain and keep in full force and effect all Government Licenses required for the performance of its respective obligations under this Agreement;

(xv) comply with Best Industry Practices;

(xvi) diligently preform all obligations set out in the Agreement and each Purchase Order;

(xvii) [***];

(xviii) [***];

(xix) provide at the same Business Day, during the Warranty Period, a fully insured substitute vehicle and use Best Efforts to ensure that such vehicle is a Standard Vehicle or Kingdom Modified Standard Vehicle (or a vehicle of the same category as a Standard Vehicle or Kingdom Modified Standard Vehicle (whether electric or internal-combustion engine based)) to any Vehicle being repaired or serviced;

(xx) make available, during the Warranty Period, any spare parts that need replacement within twelve (12) Business Days and ensure that spare parts are made available in the Kingdom Market after the expiration of the Warranty Period;

(xxi) support deployment of the relevant WMCS infrastructure and ensure that such infrastructure meets the requirements applicable to all Vehicles sold or leased (as the case may be) by the Seller;

(xxii) assist the Purchaser in marketing the Standard Vehicles and Kingdom Modified Standard Vehicles to the Beneficiaries by making available to the Purchaser all relevant Marketing Materials in both Arabic and English languages, arranging visits and road shows for key Beneficiaries in which Vehicles will be displayed and specialized marketing personnel will be available to provide the necessary services and supports, conducting workshops and trainings for individuals nominated by the Purchaser who would be responsible for marketing efforts in respect of such Vehicles, and making available its specialized marketing personnel to assist the Purchaser in this regard. In addition, the Seller shall arrange for test drives upon a request of any Beneficiary in accordance with its applicable policies;

(xxiii) cooperate and use its Best Effort to take, or cause to be taken, all appropriate actions necessary, proper, or advisable, to comply with the technical requirements of the Electronic Market; and

(xxiv) provide all relevant non-confidential information and data reasonably requested by the Purchaser in connection with such Purchaser’s Vehicle(s). The Seller shall promptly notify the Purchaser in writing of any deficiencies, inaccuracies, omissions, contradictions or ambiguities which, in the Seller’s opinion, exist within any information provided by the Seller to the Purchaser or the Beneficiaries (as the case may be).

(b) If the Purchaser has any objection or claim relating to the any matters set out herein in Clause 5 (SELLER’S OBLIGATIONS), the Purchaser shall submit such objection or claim to the Committee for resolution in accordance with paragraph (b) of Clause 17 (GOVERNING LAW AND DISPUTE RESOLUTION).

6 PURCHASE AND SUPPLY OF VEHICLES

6.1. Purchase Orders

(a) Beneficiaries wishing to Purchase the Vehicles, shall issue a Purchase Order, manually or through the Electronic Market, to the Seller, during the Term, in accordance with the terms and conditions set out in this Agreement, which shall set out at a minimum:

(i) number and model of Vehicle(s);

(ii) internal and external colors of Vehicle(s);

(iii) any special configurations and specifications;

(iv) any specific options and/or specifications from available options and specifications;

(v) name and ID number of natural or legal person to which Vehicle(s) should be registered and the name and ID number of user(s) of such Vehicle(s) (if different), unless Vehicles are ordered in bulk in accordance with Paragraph (b) of this Clause, in which case the Purchase Order shall set out necessary information for the registration of the Vehicles with relevant government authorities and the issuance of the license plates;

(vi) the requested Delivery Date;

(vii) all details pertaining to the Delivery Point and authorized person(s) who shall take delivery of the Vehicle(s);

(viii) method of utilization and details of any third parties involved (in case where Vehicle(s) will be leased);

(ix) any customization requests (such as wall mounted charging station); and

(x) name and ID number of natural or legal person or entity responsible for payment (if other than the Purchaser).

(b) The Purchaser may issue a Purchase Order for a bulk of Vehicles to be delivered to different Beneficiaries on the Delivery Date.

(c) All Purchase Orders placed with the Seller by the Beneficiaries will be subject to the terms and conditions set out in this Agreement.

(d) Upon receipt of a Purchase Order, whether manually or through the Electronic Market, the Seller shall promptly undertake measures to have it approved and, within seven (7) Business Days from the date of the receipt of such Purchase Order, notify the Beneficiary of (i) the acceptance of the approved Purchase Order to sell or lease (as the case may be), supply and deliver the Vehicle(s) on the terms specified in such Purchase Order and in accordance with the terms and conditions set forth in the Agreement; or (ii) with respect to Non-Standard Vehicles, the arrangements for further review and discussion, including feasibility studies and agreement on price and delivery dates

(e) The Beneficiary may cancel or change a Purchase Order without charge prior to the acceptance of the Seller.

(f) Notwithstanding anything to the contrary, the Beneficiary may amend, at any time prior to Delivery Date, any of the information set out in paragraph 6.1 (a)(v) and (vii).

6.2. Supply and Delivery of the Vehicles

(a) The Seller is fully responsible for the supply and delivery of the Vehicles to the Beneficiary at the Delivery Point specified in the relevant Purchase Orders within a period not exceeding [***] for Standard Vehicles or, [***] for Kingdom Modified Standard Vehicles or Non-Standard Vehicles, from the date on which the relevant Purchase Order is accepted by the Seller unless the relevant Beneficiary elects a longer period.

(b) The Seller shall immediately notify the Purchaser’s Representative and the relevant Beneficiary’s Representative of any events, potential events or future circumstances that may adversely affect or delay the supply and delivery of Vehicles, including any material event that would result in supply chain disruption.

6.3. Taking Delivery of the Vehicles

(a) On the date of delivery of the Vehicle(s) the subject of the Purchase Order (the “Delivery Date”), the authorized representative(s) of the relevant Beneficiary shall determine whether the Vehicles meet the requirements of Clause 7.3 (Quality of Vehicles) (the “Inspection”) and decide whether to accept or reject the Vehicles. The Purchaser, the relevant Beneficiary or their authorized representative(s) may only reject Vehicles that fail to pass the Inspection and shall not be entitled to terminate this Agreement. The authorized representative(s) of the relevant Beneficiary shall on the Delivery Date take delivery of the accepted Vehicles and prepare a delivery note, which shall be executed by the Seller and the relevant Beneficiary in three counterparts, one of which shall be furnished to the Purchaser. The delivery note shall set, at a minimum, the following:

(i) list of accepted sold Vehicle(s) and list of accepted leased Vehicle(s) together with details of any third parties involved (in case where Vehicle(s) will be leased);

(ii) number, model, configurations and specifications of accepted Vehicle(s); and

(iii) accepted customized items (i.e. wall mounted charging station).

(b) If the authorized representative(s) of the relevant Beneficiary fails to attend on the Delivery Date or to take the required actions within five (5) Business Days, the matter shall be escalated to the Designated Senior Officer(s) to take all necessary measures and actions to ensure that the authorized representative(s) of the relevant Beneficiary complies with the terms and conditions set forth in this Agreement. If the Designated Senior Officer(s) fails to resolve the matter within five (5) Business Days, such Officer(s) shall submit such matter to the Committee for resolution in accordance with paragraph (b) of Clause 17 (GOVERNING LAW AND DISPUTE RESOLUTION).

(c) If the authorized representative(s) of the relevant Beneficiary rejects one or more of the supplied Vehicles, the Seller shall be notified of the rejected Vehicles and the reasons for such rejection. The Seller shall take back rejected Vehicles and supply conforming Vehicles thereof within seven (7) Business Days. The relevant Beneficiary shall not be liable for any loss of, or damages to, the rejected Vehicles after the expiry of such period.

(d) The risk of loss in any Vehicles will pass to the Beneficiaries at the Delivery Date. The Seller shall take full responsibility for the care and custody of the Vehicles at which the risk transfers to the Beneficiaries in accordance with paragraph (a) of this Clause.

7 PRICE, QUANTITY AND QUALITY OF THE VEHICLES

7.1. Price

(a) [***].

(b) [***].

(d) [***].

7.2. Quantity of Vehicles

(a) The Purchaser shall Purchase (or procure the Purchase by the Beneficiaries), and the Seller shall sell or lease (as the case may be) and supply, the Minimum Quantity of the Vehicles during the Term. The Seller acknowledges and agrees that the Purchaser has an option - at its absolute discretion - to Purchase (or procure the Purchase by the Beneficiaries) of up to the Maximum Quantity of the Vehicles during the Term.

(b) The Seller acknowledges and agrees that the Purchaser has the right to Purchase (or procure the Purchase by the Beneficiaries) an annual quantity of the Vehicles as follows (the “Annual Quantity”):

(i) in each of 2023 and 2024, a minimum of [***] and a maximum of [***] Vehicles;

(ii) in 2025 a minimum of [***] and a maximum of [***] Vehicles; and

(iii) in each year from 2026 to 2032, a minimum of [***] and a maximum of [***] Vehicles.

(c) Notwithstanding the foregoing, the Purchaser acknowledges and agrees that it may not order, in each year from 2026 to 2032, more than [***] of the maximum Annual Quantity in any three-month period.

7.3. Quality of Vehicles

(a) The Seller shall ensure that the Vehicles delivered to the Beneficiaries under this Agreement comply with the applicable Standards and Specifications.

(b) The Seller shall ensure that all Vehicles supplied to the Beneficiaries are free of any interests, rights or claims by any third parties.

(c) The Seller shall ensure that the supplied Vehicles are new and unused, and that they are free from any defects in design, size, dimensions, material, equipment, workmanship and manufacture in each case that are demonstrably outside of norms for variations in quality and would render the Vehicle unfit for sale as a new vehicle or would not typically be noted for correction in a “due bill”. The Seller shall ensure that the Vehicles are suitable and fit for their intended purpose, or the purpose mutually agreed between the Seller and the Purchaser with respect to Non-Standard Vehicles at the time of submission of the Purchase Order, and that they comply with all applicable laws and regulations.

(d) If during Inspection, it becomes evident that the Vehicles do not comply with the requirements stipulated in this Clause (7.3) (Quality of Vehicles), the Beneficiaries are entitled to refuse to take delivery of the Vehicles and return them in the form they have been received. In which case, the Seller will be obliged to supply conforming Vehicles within a period not exceeding seven (7) Business Days.

7.4. Non-Conforming Vehicles

(a) As soon as the Seller becomes aware that any Vehicle supplied or to be supplied is or is reasonably likely to be non-conforming with the requirements of Clause (7.3) (Quality of Vehicles), the Seller shall promptly take the following measures:

(i) submit a detailed report to the Purchaser and the relevant Beneficiary which includes the following:

A. the noted defects of such non-conforming Vehicles compared to conforming Vehicles; and

B. the reason the Vehicles do not meet the requirements of Clause (7.3) (Quality of Vehicles).

(ii) discuss with the Purchaser and the relevant Beneficiary any remedial measures taken by the Seller to cure the situation; and

(iii) use its Best Effort to resume the supply of Vehicles meeting the applicable requirements of Clause (7.3) (Quality of Vehicles) as soon as possible.

7.5. Shipment and Documentation

(a) The Seller shall ensure that all Vehicles are loaded, transported, unloaded, and stored in accordance with applicable laws and in a manner that protects them from damage. Any dangerous or chemical materials or goods must be dealt with in accordance with relevant laws and regulations and the Purchaser’s instructions.

(b) The Seller shall provide all the papers and documentation (including technical documentation) relating to the Vehicles and any related parts thereof such as the user’s manual, storage, instructions on disposal of batteries, and safety instructions, in addition to all the necessary certificates such as the certificate of origin and certificates of conformity.

8 BILLING AND PAYMENT

8.1. Billing and Payment

With respect to each Purchase Order, the Purchase Order Price shall be paid to the Seller in accordance with the following:

(a) Upon acceptance of a Purchase Order in accordance with paragraph (d) in Clause (6.1) (Purchase Orders), the Seller shall issue an invoice for [***] of the total Purchase Order Price (the “Advance Payment”).

(b) The Beneficiary will pay or arrange for the Purchaser to pay to the Seller the Advance Payment within [***] Days from the issuance of the Advance Payment invoice.

(c) The Seller shall provide the Beneficiary, within a period not exceeding seven (7) Business Days from the Delivery Date, with an invoice for the outstanding balance of the Purchase Order Price.

(d) The Beneficiary shall pay or arrange for the Purchaser to pay the remaining amount of the Purchase Order Price to the Seller within [***] Days of receipt of the invoice for the outstanding balance of the Purchase Order Price. For the avoidance of doubt, the Seller will be entitled to receive the Purchase Order Price for the Vehicles accepted by the Beneficiaries in accordance with the terms and conditions set out in the Agreement.

8.2. Currency

All Purchase Order Prices due and payable to the Seller will be paid in Saudi Riyal.

8.3. Release

The Seller must submit to the Purchaser a written release acknowledging that the invoice constitutes the complete and final settlement of all the amounts owed to the Seller under the relevant Purchase Order. The acknowledgment shall take effect from the date on which the Beneficiary or Purchaser (as the case may be) has paid the remaining balance of the Purchase Order Price due to the Seller. If the Seller has any objection or claim relating to the any invoices, the Seller shall submit such objection or claim to the Committee for resolution in accordance with paragraph (b) of Clause 17 (GOVERNING LAW AND DISPUTE RESOLUTION).

9 INTELLECTUAL PROPERTY RIGHTS

Each Party shall retain its Intellectual Property Rights and neither Party shall by virtue of this Agreement acquire any title to or rights in the other Party’s Intellectual Property Rights.

10 PURCHASER’S, BENEFICIARIES’ AND SELLER’S REPRESENTATIVES

10.1. Purchaser’s Representative

The Purchaser shall appoint the Purchaser’s Representative pursuant to a letter issued by H.E the Minister of Finance delivered to the Seller in accordance with the terms of this Agreement.

10.2. Limitations on the Purchaser’s Representative Powers

Unless explicitly provided otherwise, the Purchaser’s Representative powers are limited as follows:

(a) The Purchaser’s Representative has no authority to amend the Agreement.

(b) The Purchaser’s Representative has no power to relieve the Seller from any duties, obligations or responsibilities specified in the Agreement nor to waive any of the Purchaser’s rights hereunder.

(c) Any request from the Seller to the Purchaser must be formally submitted to the Purchaser’s Representative in writing, and, unless stated otherwise in the relevant Clauses, the Purchaser’s Representative shall respond to the Seller’s requests within a period of five (5) Business Days from the date of receipt. If the Purchaser’s Representative fails to respond within five (5) Business Days, the matter shall be escalated to the Designated Senior Officer(s) to take all necessary measures and actions to ensure that the Purchaser’s Representative responds as soon as possible.

10.3. Purchaser’s Representative Instructions

The Purchaser’s Representative is responsible for providing the Seller with observations and instructions in relation to the performance of the Agreement within the limitations provided in Clause 10.2 (Limitations on the Purchaser’s Representative Powers’) and monitoring the Seller’s adherence to such instructions.

10.4. Replacement of the Purchaser’s Representative

The Purchaser has the right to replace the Purchaser’s Representative at any time pursuant to a letter issued by H.E the Minister of Finance, provided that it notifies the Seller of any such change in advance by way of written notice delivered to the Seller in accordance with the terms of this Agreement.

10.5. Beneficiaries’ Representative

(a) Each Beneficiary shall appoint a Beneficiary’s Representative pursuant to a letter delivered to the Purchaser and the Seller in accordance with the terms of this Agreement.

(b) Unless explicitly provided otherwise, the Beneficiary’s Representative powers are limited as follows:

(i) The Beneficiary’s Representative has no authority to amend the Agreement.

(ii) The Beneficiary’s Representative has no power to relieve the Seller from any duties, obligations or responsibilities specified in the Agreement nor to waive any of the Beneficiary’s rights hereunder.

(iii) Any request from the Seller to the Beneficiary must be formally submitted to the Beneficiary’s Representative in writing, and, unless stated otherwise in the relevant Clauses, the Beneficiary’s Representative shall respond to the Seller’s requests within a period of five (5) Business Days from the date of receipt. If the Beneficiary’s Representative fails to respond within five (5) Business Days, the matter shall be escalated to the Designated Senior Officer(s) to take all necessary measures and actions to ensure that the Beneficiary’s Representative responds as soon as possible.

(c) Each Beneficiary has the right to replace the Beneficiary’s Representative at any time by way of written notice delivered to the Purchaser and the Seller in accordance with the terms of this Agreement.

10.6. Seller’ Representative

(a) The Seller must appoint a Seller’s Representative, who shall be approved by the Purchaser, to act on behalf of the Seller for the purpose of this Agreement.

(b) The Purchaser may request the Seller to change the Seller’s Representative by a written notice to the Seller. In which case, the Seller shall replace the Seller’s Representative within a period of seven (7) Business Days from the date of receipt of the notice and appoint another Seller’s Representative who must be approved by the Purchaser.

(c) The Seller’s Representative shall receive instructions and directions from the Purchaser’s Representative or the Beneficiary’s Representative (as the case may be) on behalf of the Seller.

(d) Any request from the Purchaser or any of the Beneficiaries to the Seller must be formally submitted to the Seller’s Representative in writing, and, unless stated otherwise in the relevant Clauses, the Seller’s Representative shall respond to such requests within a period of seven (7) Business Days from the date of receipt. If the Seller’s Representative fails to respond within seven (7) Business Days, the matter shall be escalated to the Designated Senior Officer(s) to take all necessary measures and actions to ensure that the Seller’s Representative responds as soon as possible.

11 RECORDS, REPORTS AND AUDIT

11.1. Records

The Seller shall keep and properly maintain all documents, communications and financial accounts relating to the Agreement during the Term and for a period of ten (10) years after the termination or expiration of the Agreement or any other periods required by the Accounting Principles and applicable laws and regulations in the Kingdom. The Purchaser has the right to audit such records by itself or through an independent external auditor.

11.2. Progress Reports

The Seller shall submit to the Purchaser quarterly reports, which shall include (i) details relating to all Vehicles that have been sold or leased (as the case may be), supplied and delivered by the Seller to the Beneficiaries; and (ii) details pertaining to the in-Kingdom manufacturing activities.

12 INDEMNIFICATION

(a) The Seller shall defend, indemnify, and hold harmless the Purchaser and the Beneficiaries against any claim, damages, proceedings, costs, or direct expenses (including legal fees) arising from any allegation against the Purchaser or the Beneficiaries or incurred by them in relation to any of the following:

(i) poor performance of any obligations set forth in this Agreement;

(ii) the supply of Vehicles which do not conform to the applicable Standards and Specifications and the terms and conditions provided in the Agreement;

(iii) any negligence, omission, or misconduct by the Seller or its representatives; and

(iv) any violation of laws and regulations in force in the Kingdom by the Seller or any of its Affiliates.

13 FORCE MAJEURE

(a) Neither Party shall be liable for the failure or delay in the performance of its obligations under the Agreement if such failure or delay is a result of a Force Majeure event, provided that the Parties shall have taken all reasonable precautions, due diligence and necessary measures to perform the Agreement and that the Party affected by the Force Majeure event has notified the other Party as soon as possible it becomes aware of such event within a period not exceeding seven (7) Business Days.

(b) Both Parties shall use their Best Effort to minimize the effects of the Force Majeure event on the performance of its obligations under the Agreement. In such case, the Seller shall resort to alternative sources to access services and/or materials if necessary.

(i) non-payment of the Purchaser or the Beneficiaries of any Purchase Order Price owed to the Seller under this Agreement;

(ii) failure of either Party to fulfill any of their obligations in accordance with the provisions of this Agreement prior to the occurrence of Force Majeure;

(iii) delay in the supply and delivery of the Vehicles or provision of Services if this results from default or omission by the Seller;

(iv) delay in execution due to inefficiency at work, the Seller did not contract with subcontractors or qualified suppliers, or the Seller did not employ the necessary number of employees or workers to remedy the effects of Force Majeure;

(v) delay in execution due to a lack of resources or materials by the Seller unless the shortage in these materials or resources arises from Force Majeure;

(vi) delay due to bad weather conditions that can be reasonably anticipated, and other conditions that can be anticipated or expected; or

(vii) inability of the Seller to obtain the necessary financing required to supply the Vehicles otherwise perform its obligations under this Agreement, or ongoing financing.

14 RIGHT TO REDUCE ORDER QUANTITES; REMEDIES

(a) The Purchaser has the right to reduce the Minimum Quantity of Vehicles it undertakes to Purchase by the number of Vehicles set out in any Purchase Order if such Purchase Order has not been accepted by the Seller in accordance with paragraph (d) in Clause (6.1) (Purchase Orders) within seven (7) Business Days from the date on which a relevant Purchase Order is issued in line with requirements, terms and conditions set forth in this Agreement.

(b) The Purchaser has the right to reduce the Minimum Quantity of Vehicles it undertakes to Purchase by the number of Vehicles that have not been delivered under any Purchase Order by the Seller within six (6) months from the date on which a relevant Purchase Order is issued in line with requirements, terms and conditions set forth in this Agreement.

(d) The Purchaser is entitled to receive compensation for all direct and actual damages incurred as a result of the Seller’s failure to provide a fully insured substitute vehicle in accordance with the terms and conditions set forth in paragraph (a) (xix) of Clause 5 (SELLER’S OBLIGATIONS) of this Agreement. The Seller acknowledges that quantifiable damages equal to the market value of renting a vehicle in accordance with paragraph (a) (xix) of Clause 5 (SELLER’S OBLIGATIONS) of this Agreement on a daily basis for the same period during which a substitute vehicle should have been provided.

15 TERM AND TERMINATION

(a) Extension of Purchase Orders

The Seller shall, during the Term, deliver the Vehicles to the Beneficiaries in accordance with the timeframe set forth in the Purchase Orders. The term set forth in the relevant Purchase Order may be extended only if the Purchaser elects to grant the Seller additional time to perform its obligations and amend the Purchase Order(s) accordingly. For the avoidance of doubt, such extension shall not be considered an extension of the Term.

(b) Termination by the Purchaser

The Purchaser shall be entitled to terminate the Agreement immediately upon written notice to the Seller if any of the following events occur:

(i) if the Seller or Lucid Group Inc. ceases doing business as a going concern or files for bankruptcy or suffers appointment of a receiver or trustee over its property, or is dissolved or liquidated, or becomes a debtor in a bankruptcy, insolvency or receivership and such action is not dismissed within sixty (60) days of commencement; or

(ii) if the Seller fails to supply at least one Vehicle within a full calendar year; or

(iii) if the Seller fails to comply with obligations set forth in paragraph (e) Clause 18 (Assignment and Change of Control).

(i) Each Party shall be entitled to terminate the Agreement with immediate effect by written notice to the other Party if the other Party has committed a breach of a material obligation under the Agreement or any relevant law or regulation in performance of any obligation relating to this Agreement, provided such breach has not been remedied (if capable of being remedied) within thirty (30) Business Days of receipt of a written notice from the non-breaching Party, or if the breach is not capable of cure within such thirty (30) Business Day period, the breaching party has not submitted a reasonable path to cure, not to exceed a total of ninety (90) days from the original notice.

(ii) If the Agreement is terminated for breach by the Seller, the Purchaser reserves its right to compensation from the Seller for any incurred damages.

(d) Termination by Force Majeure

(i) The Purchaser may terminate the Agreement due to Force Majeure upon written notice given to the Seller, if Force Majeure prevents the Seller from accepting any Purchaser Orders or selling or supplying the Vehicles for a period of more than one hundred and twenty (120) Business Days according to the terms and conditions set forth in the Agreement and any relevant Purchase Orders.

(ii) If the Agreement is terminated due to Force Majeure in accordance with the provisions of this Clause, this Agreement shall be deemed to have ended within the period indicated in the termination notice.

(e) Seller’s Obligations Upon Termination

If this Agreement is terminated in accordance with this Clause 15 (TERM AND TERMINATION), the Seller shall cease to supply any Vehicles unless a Purchaser Order has been accepted by the Seller before the termination date.

(f) Settlement Upon Termination

If this Agreement is terminated by the Purchaser in accordance with the provisions in paragraph (b) (Termination by the Purchaser) in Clause 15, paragraph (c) (Termination for Breach) in Clause 15 or paragraph (d) (Termination by Force Majeure) in Clause 15 and once the termination notice becomes effective:

(i) the Purchaser shall pay to the Seller the Purchase Order Price of accepted Vehicles which have been supplied and delivered at the Delivery Point and recover from the Seller the remaining balance of the Advance Payment (if any); and

(ii) the termination of the Agreement shall not affect any rights or obligations arising from the Parties prior to the termination date.

16 REPRESENTATION AND WARRANTIES

The Seller hereby represents and warrants to the Purchaser as follows:

(a) Power, Authority

(i) The Seller and each of its shareholder is duly organized and validly existing under the laws of the jurisdiction of its organization.

(ii) The execution and performance by it of this Agreement have been duly authorized by all necessary action, and this Agreement constitutes and, upon execution and delivery thereof, a valid, binding and enforceable obligation of it, except as the enforceability thereof may be limited by bankruptcy, insolvency, other similar laws now or hereafter in effect relating to creditor’s rights or the relief of debtors or by decision from competent court.

(iii) Every consent, approval, authorization or order of any competent authority or third party required with respect to it in connection with its execution and performance of its obligations under this Agreement has been obtained and is in full force and effect.

(b) Litigation

(i) There is no pending or, to the best of its knowledge, threatened, action, suit, investigation, arbitration, or other proceeding that could adversely affect its ability to perform its obligations under this Agreement.

(ii) There are no judgments, decrees, or similar orders of any competent authority outstanding against it which could adversely affect its ability to perform its obligations under this Agreement.

(i) Neither it nor any of its Affiliates has received any notice from any competent authority of any violation or potential violation of any applicable law pertaining to or affecting it that would reasonably be likely to affect its ability to perform its obligations under this Agreement.

(ii) The execution by it of this Agreement and the performance by it of its obligations hereunder do not and will not violate, conflict with or result in a breach of any decrees and/or articles of associations, charters, bylaws, applicable laws, contracts or obligations to which it is a party or by which any of its properties are bound.

17 GOVERNING LAW AND DISPUTE RESOLUTION

(a) Governing Law

This Agreement is governed by, and shall be interpreted in accordance with, the laws of the Kingdom.

(b) Disputes Settlements

(i) If there is any dispute, controversy or claim arising out of or in relation to this Agreement, or arising out of breach, termination, invalidity thereof, either Party may give notice to the other Party, a copy of which shall be furnished simultaneously to the Committee, specifying in detail the matter being disputed. The relevant Party shall refer the dispute to the Committee for resolution. Where a dispute is resolved by the Committee and accepted by the Parties as an amicable settlement in accordance with this Clause, it shall be recorded in an agreed written statement signed by an authorized representative of each Party, and which shall be binding upon the Parties.

(ii) If the Parties fail to resolve the dispute amicably within thirty (30) Business Days of the notice referred to in paragraph (a) of this Clause, or such longer period as they may agree in writing at that time, the dispute shall be finally settled by the competent court in the Kingdom.

(iii) The existence of a dispute shall not relieve either Party from the performance of its obligations under this Agreement which are not affected by the dispute.

18 MISCELLANEOUS

(a) Notices and Communications

(i) All notices and other communications between the Parties required or permitted hereunder shall be in writing in the English language and shall be sufficiently given if in writing and delivered both via email to the email addresses below and hard copy sent by postal service, prepaid courier, or hand against written receipt to the following persons at the addresses set out below or to such other person or addresses as such Party may designate:

A. If to the Purchaser:

Attention: Chairman of the Lucid Permanent Committee

Address: The Ministry of Finance, Omar Ibin Alkhatab Road, Almalaz, Riyadh, the Kingdom of Saudi Arabia
Email:

With a copy to:

Attention: Head, International Legal Unit

Address: The Ministry of Finance, Omar Ibin Alkhatab Road, Almalaz, Riyadh, the Kingdom of Saudi Arabia
Email:

B. If to the Seller:

Attention: Faisal Sultan
Address: 3074 Prince Mohammed Bin Abdulaziz Road, Al Olaya Dist., Floor 19 Tower B, Riyadh, the Kingdom of Saudi Arabia
Email: Attn: General Counsel

(ii) Each Party shall notify the other Party of any changes to its official address. Otherwise, notices and communications delivered to the address stated in this Agreement shall be sufficient and effective.

(iii) Any such notice sent as aforesaid shall, if receipt is not acknowledged, be deemed to have been delivered at the expiration of five (5) Business Days from the time at which the same is sent; provided that a notice shall not be deemed to have been received, if sent by post, until the time of actual receipt by the addressee, if by courier upon proof of delivery by the courier, and in the case of an email, when a ‘delivery-receipt’ is issued from the email address from which the email was sent.

(b) Entire Agreement

This Agreement represents the entire understanding, and constitutes the whole agreement, in relation to its subject matter and supersedes any previous agreements or understandings whether written or made verbally between the Parties with respect thereto, including the Letter of Undertaking, which shall be used for guidance purposes only.

The failure or delay of either Party or any of the Beneficiaries to exercise its rights under this Agreement shall not be construed as a waive by such Party of such rights. No waiver by either Party or any of the Beneficiaries of any condition of this Agreement, in any one or more instances, shall be deemed to be or construed as a waiver of the same or any other condition of this Agreement on any future occasion, unless the waiver explicitly states otherwise.

(d) Amendments

No modification or amendment of any provisions of this Agreement shall be valid unless it is in writing and signed by the Parties.

(e) Assignment and Change of Control

(i) Neither Party may assign the Agreement or any part thereof to any party without obtaining written approval from the other Party. For the purpose of this paragraph (e) (Assignment and Change of Control), “assignment” includes merger, acquisition, reorganization, liquidation, or the like.

(ii) The Seller shall promptly notify the Purchaser once it becomes aware of any potential change of its ownership or the ownership of Lucid Group Inc. subject to Seller’s compliance with third party contractual terms or applicable laws or regulations.

(f) Confidentiality and Data Protection

(i) The Seller and all of its Affiliates undertake, and will use Best Efforts to guarantee the commitment of all its subcontractors, to never disclose or exploit information that is not public, such as data, drawings or documents, whether written or verbal, related to the Agreement. This includes any affairs of the Purchaser or the Beneficiaries that they may have known about due to their work. This commitment shall be effective throughout the Term and after its expiration or termination.

(ii) The Seller shall immediately notify the Purchaser of any violation related to the confidential information and data and provide a detailed explanation of the violation, the type of data that has been breached, the affected persons and all the other important details.

(iii) The Seller and all of its Affiliates are forbidden to disclose, to third parties, information related to the Purchaser or the Beneficiaries without the prior approval, except where required for the performance of their obligations under this Agreement or required to be disclosed by (i) any court of competent jurisdiction; (ii) the rules of any relevant stock exchange; or (iii) pursuant to any applicable legal, accounting, or regulatory requirement. For the avoidance of doubt, the Purchaser acknowledges that, under U.S. securities laws and related law and regulations and/or accounting rules, the Seller may be required to disclose the existence and material terms or file the full text of this Agreement with the U.S. Securities and Exchange Commission. However, the Seller agrees to make, absent the Purchasers written consent, the minimum disclosure mandated by law, regulations and/or accounting rules. The Purchaser may conduct the necessary investigations in case of violation, determine the consequences of such violations and make every effort to prevent another violation in the future.

(iv) The Seller shall, once the execution of the Agreement is completed and the Agreement has expired or been terminated, stop using the data and information related to the Purchaser or the Beneficiaries, delete them permanently except as required by law, destruct them or return them to the Purchaser or the Beneficiaries, as the case may be, upon their written request.

(g) Languages

This Agreement is prepared in Arabic and English and shall be interpreted accordingly. In the event of a conflict between the Arabic and the English language versions, the Arabic version shall prevail.

(h) Publicity

The Seller shall not issue any press release or make any other public disclosure or announcement relating to this Agreement without the prior written approval of the Purchaser. Notwithstanding the foregoing, the Seller, after consultation in good faith with the Purchaser, may make public disclosures or announcements relating to this Agreement without prior written approval in the case where such disclosure or announcement is required by (i) any court of competent jurisdiction; (ii) the rules of any relevant stock exchange; or (iii) pursuant to any applicable legal, accounting, or regulatory requirement. For the avoidance of doubt, the Purchaser acknowledges that, under U.S. securities laws and related law and regulations and/or accounting rules, the Seller may be required to disclose the existence and material terms or file the full text of this Agreement with the U.S. Securities and Exchange Commission. However, the Seller agrees to make, absent the Purchasers written consent, the minimum disclosure mandated by law, regulations and/or accounting rules.

(i) No Partnership

This Agreement does not create, nor shall be deemed or construed to create, a partnership, joint venture, or commercial agency, nor does it authorize a Party to represent the other Party or assume any obligations or liabilities on behalf of the other Party.

(j) Consequential Damages

Neither Party shall be liable to the other Party for consequential or indirect damages or indirect costs or expenses, loss of profits, loss of opportunities, or the like.

(k) Survival

Without prejudice to any rights or obligations accrued at the date of termination or expiration of this Agreement, the provisions contained in the following Clauses shall survive the expiration or the earlier termination of this Agreement Clause 17 (GOVERNING LAW AND DISPUTE RESOLUTION), Clause 9 (INTELLECTUAL PROPERTY RIGHTS), Clause 12 (INDEMNIFICATION) and paragraph (f) (Confidentiality and Data Protection) of Clause 18 (MISCELLANEOUS).

(l) Counterparts

The Agreement has been executed in four (4) counterparts. Each of the Purchaser, the Seller has retained two copies.

(m) Signature

In witness whereof, the Parties have caused their representatives to execute this Agreement on the date set forth above.

The First Party


The Government of Saudi Arabia (represented by the Ministry of Finance)
By:
			Name:
			Title: Assistant Minister for Financial Affairs

The Second Party


Lucid, L.L.C.
By:			/s/ Faisal Sultan
			Name: Faisal Sultan
			Title: VP & Managing Director, Middle East

Annex (1)

Annex (2)

Annex (3)

Document

Exhibit 10.2

LUCID GROUP, INC.
SECOND AMENDED AND RESTATED 2021 STOCK INCENTIVE PLAN
NOTICE OF STOCK OPTION GRANT

You have been granted the following Option (this “Option” or this “Award”) to purchase shares of common stock of Lucid Group, Inc. (the “Company”) under the Lucid Group, Inc. Second Amended and Restated 2021 Stock Incentive Plan (as may be amended from time to time, the “Plan”) which Option shall be governed by the terms and conditions of the Plan, as well as this Notice of Stock Option Grant (the “Notice”), the Stock Option Terms and Conditions attached hereto as Exhibit A, and the additional terms and conditions set forth in any appendix for your jurisdiction (the “Appendix” and all together, this “Agreement”), all of which are attached to or incorporated herein in their entirety:


Name of Optionee:			[Name of Optionee]

Grant Date:			[Date of Grant]

Total Number of Shares Subject to Option:			[Total Shares]

Type of Option:			[Award Type]

Exercise Price Per Share:			$[Exercise Price]

Vesting Commencement Date:			[Vesting Commencement Date]

Vesting Schedule:			[Actual vesting schedule to be inserted.]

Expiration Date:			[Expiration Date] This Option (and the ability to exercise the Option) expires earlier if your Service terminates earlier, as described in the Stock Option Terms and Conditions.

By your written signature below (or your electronic acceptance), you agree that the Company may deliver by e-mail all documents relating to the Plan or this Award (including without limitation, prospectuses required by the U.S. Securities and Exchange Commission) and all other documents that the Company is required to deliver to its security holders (including without limitation, annual reports and proxy statements). You also agree that the Company may deliver these documents by posting them on a website maintained by the Company or by a third party under contract with the Company. Should you electronically accept this Agreement, you agree to the following: “This electronic contract contains my electronic signature, which I have executed with the intent to sign this Agreement.” In addition, you acknowledge and agree that (i) you have carefully read, fully understand and agree to all of the terms and conditions described in the Plan, this Notice, and the other components of this Agreement (including the attached Stock Option Terms and Conditions in Exhibit A and the Appendix) and (ii) you have been given an opportunity to consult your own legal and tax counsel with respect to all matters relating to this Option prior to signing (or electronically accepting) this Notice and that you have either consulted such counsel or voluntarily declined to consult such counsel.

If you do not sign (or electronically accept) this Agreement (in accordance with the method specified by the Company) by the first vesting date for the Option set forth in this Notice, this Agreement will be deemed accepted by you, and you will be subject to the terms and conditions of the Plan and this Agreement.


OPTIONEE		LUCID GROUP, INC.
	By:
Optionee’s Signature	Name:

Optionee’s Printed Name

	Title:

Exhibit A

LUCID GROUP, INC.
SECOND AMENDED AND RESTATED 2021 STOCK INCENTIVE PLAN
STOCK OPTION TERMS AND CONDITIONS


The Plan and Other Agreements			The Option that you are receiving is granted pursuant and subject in all respects to the applicable provisions of the Plan, which is incorporated herein by reference. Capitalized terms not defined in these Stock Option Terms and Conditions or other portion of this Agreement will have the meanings ascribed to them in the Plan. The Plan and this Agreement (consisting of the attached Notice, these Stock Option Terms and Conditions and the Appendix hereto) constitute the entire understanding between you and the Company regarding this Award, and any prior agreements, commitments or negotiations concerning this Option are superseded, with the exception of (i) any compensation recovery policy that is adopted by the Company or is otherwise required by applicable law and (ii) any written employment or severance arrangement that would provide for vesting acceleration of this Option upon the terms and conditions set forth therein. This Agreement may be amended by the Committee without your consent; however, if any such amendment would materially impair your rights or obligations under this Agreement, this Agreement may be amended only by another written agreement, signed by you and the Company.
Tax Treatment			This Option is intended to be an ISO or a Nonstatutory (Non-qualified) Option, as provided in the Notice. Even if this Option is designated as an ISO, it will be deemed to be a Nonstatutory (Non-qualified) Option to the extent required by the $100,000 annual limitation under Section 422(d) of the Code.

Company’s Obligation			You are receiving the Option in consideration for Services rendered by you. The Option represents the right to purchase, on the terms and conditions set forth in the Plan or this Agreement, all or any part of the aggregate number of Shares subject to the Option as set forth in the Notice. You may only exercise the Option to the extent it has vested. The Option represents an unsecured obligation of the Company.

Vesting			The Option becomes exercisable in accordance with the vesting schedule set forth in the Notice. No additional portion of the Option may vest after your Service as an Employee, an Outside Director or a Consultant has terminated for any reason.

A-1


Term			This Option shall expire at the close of business at Company headquarters on the day before the [seventh (7th)] anniversary of the Grant Date, as shown on the Notice (fifth (5th) anniversary for a more than ten percent (10%) shareholder as provided under the Plan if this is an ISO) (the “Expiration Date”). This Option may expire earlier if your Service terminates, as described herein.
Forfeiture			Upon your termination of Service for any reason, this Option shall expire immediately as to the number of Shares subject to the portion of the Option that has not vested before the date of such termination of Service (and that does not become vested as a result of such termination). This means that the unvested portion of this Option will immediately be cancelled and forfeited upon such termination of Service. You will receive no payment for Shares subject to the portion of the Option that is so cancelled and forfeited. Upon your termination of Service by the Company for Cause, this Option shall expire immediately as to the total number of Shares subject to the Option. This means that the unvested portion and the vested portion of this Option will immediately be cancelled and forfeited upon such termination of Service. You will receive no payment in respect of such cancellation and forfeiture. If your Service terminates for any reason except (a) due to your death or Disability or (b) termination by the Company for Cause, then this Option will expire as to the number of Shares that have become vested at the close of business at Company headquarters on the date three (3) months after the date your Service terminates (or, if earlier, the Expiration Date). For purposes of this Agreement, termination of Service will be deemed to have occurred as of the date you cease to be an Employee, Consultant, or Outside Director (regardless of the reason for such termination and whether or not later found to be invalid or in breach of employment or other laws in the jurisdiction where you are employed or otherwise rendering services or the terms of your employment or other service agreement, if any) and will not be extended by any notice period (e.g., your period of service would not include any contractual notice period or any period of “garden leave” or similar period mandated under employment or other laws in the jurisdiction where you are employed or otherwise rendering services or the terms of your employment or other service agreement, if any). The Company shall have the exclusive discretion to determine when your Service terminates for purposes of this Agreement (including whether you may still be considered to be providing services while on a leave of absence).

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Death			If your Service terminates because of your death, then this Option will expire as to any Shares subject to the vested portion of the Option at the close of business at Company headquarters on the date twelve (12) months after the date your Service terminates (or, if earlier, the Expiration Date). During that period of up to twelve (12) months, your estate or heirs may exercise this Option with respect to vested Shares.

Disability			If your Service terminates because of your Disability, then this Option will expire as to any vested Shares at the close of business at Company headquarters on the date twelve (12) months after the date your Service terminates (or, if earlier, the Expiration Date).

Leaves of Absence			For purposes of this Option, your Service does not terminate when you go on a military leave, a sick leave or another bona fide leave of absence, if the leave of absence was approved by the Company in writing and if continued crediting of Service is required by the terms of the leave or by applicable law. But your Service terminates when the approved leave ends, unless you immediately return to active work. If you go on a leave of absence, then the vesting schedule specified in the Notice may be adjusted in accordance with the Company’s leave of absence policy or the terms of your leave. If you commence working on a part-time basis, then the vesting schedule specified in the Notice may be adjusted in accordance with the Company’s part-time work policy or the terms of an agreement between you and the Company pertaining to your part-time schedule.

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Exercise and Settlement of Option			Only the vested portion of the Option may be exercised. You may exercise such vested portion, in whole or in part, at any time until the Expiration Date or earlier termination pursuant to this Agreement. If partially exercised, you may exercise the remaining unexercised vested portion of the Option at any time until the Expiration Date or earlier termination pursuant to this Agreement. No portion of the Option shall be exercisable after the Expiration Date. When you wish to exercise the Option, you must provide a written or electronic notice of exercise form approved by the Company in accordance with such procedures as are established by the Company and communicated to you from time to time. Any notice of exercise must specify how many vested Shares are being exercised. If someone else wants to exercise vested Shares after your death, that person must prove to the Company’s satisfaction that they are entitled to do so. Any portion of the Option shall be deemed to be exercised on the business day that the Company receives an exercise notice in the form approved by the Company and payment or arrangement is made for payment of the aggregate exercise price for the portion of the Option being exercised and satisfaction of any withholding obligations, in each case, in a manner permitted by the Company. If the notice is received after business hours on such date, then the Option shall be deemed to be exercised on the business date immediately following the business date such notice is received by the Company. Upon the exercise of all or portion of the Option and payment of the aggregate Option exercise price and payment or other satisfaction of any withholding obligations in a manner approved by the Company, as set forth in these Stock Option Terms and Conditions, you shall be entitled to receive the underlying vested Shares being exercised. The Company will not permit you to exercise this Option if, at the time of intended exercise, the issuance of Shares would violate any law or regulation. The inability of the Company to obtain approval from any regulatory body having authority deemed by the Company to be necessary to the lawful issuance and sale of the Shares pursuant to this Option will relieve the Company of any liability with respect to the non-issuance or sale of the Shares as to which such approval will not have been obtained.

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Form of Payment			When you submit your notice of exercise, you must include payment of the aggregate Option exercise price for the Shares you are purchasing. Payment must be made in cash, by check payable to the order of the Company, wire transfer of immediately available funds, or, subject to any applicable Company insider trading policy (including blackout periods) and applicable law, by the following form(s): •If permitted by the Committee, certificates for Shares that you own, along with any forms needed to effect a transfer of those Shares to the Company. The value of the Shares, determined as of the effective date of the Option exercise, will be applied to the Option exercise price. Instead of surrendering Shares, you may attest to the ownership of those Shares on a form provided by the Company and have the same number of Shares subtracted from the Shares issued to you upon exercise of this Option. However, you may not surrender or attest to the ownership of Shares in payment of the exercise price if your action would cause the Company to recognize a compensation expense (or additional compensation expense) with respect to this Option for financial reporting purposes. •By delivery on a form approved by the Company of an irrevocable direction to a securities broker approved by the Company to sell all or part of the Shares that are issued to you when you exercise this Option and to deliver to the Company from the sale proceeds an amount sufficient to pay the Option exercise price and any withholding taxes. The balance of the sale proceeds, if any, will be delivered to you. The directions must be given by providing a notice of exercise form approved by the Company. •If permitted by the Committee, by a “net exercise” arrangement pursuant to which the number of Shares issuable upon exercise of the Option will be reduced by the largest whole number of Shares having an aggregate Fair Market Value that does not exceed the aggregate Option exercise price (plus tax withholdings, if applicable) and any remaining balance of the aggregate Option exercise price (and/or applicable tax withholdings) not satisfied by such reduction in the number of whole Shares to be issued will be paid by you in cash or in another form of payment permitted under this Option (with Committee permission, if applicable). The directions must be given by providing a notice of exercise form approved by the Company. •Any other form permitted by the Committee in its sole discretion. Notwithstanding the foregoing, payment may not be made in any form that is unlawful, as determined by the Committee in its sole discretion.

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Withholding Taxes			Regardless of any action the Company and/or the Subsidiary or Affiliate employing you (“Employer”) takes with respect to any or all income tax, social insurance, payroll tax, fringe benefit tax, payment on account or other tax-related withholding (including taxes that are imposed on the Company or your Employer as a result of your participation in the Plan but are deemed by the Company or your Employer to be an appropriate charge to you) (“Tax-Related Items”), you acknowledge that the ultimate liability for all Tax-Related Items legally due by you is and remains your responsibility and that the Company and/or your Employer (i) make no representations or undertakings regarding the treatment of any Tax-Related Items in connection with any aspect of this Option, including the grant, vesting or exercise of this Option, the subsequent sale of Shares or the receipt of any dividends; and (ii) do not commit to structure the terms of the grant or any aspect of this Option to reduce or eliminate your liability for Tax-Related Items. Further, if you are subject to Tax-Related Items in more than one jurisdiction, you acknowledge that the Company and/or your Employer (or former Employer, as applicable) may be required to withhold or account for Tax-Related Items in more than one jurisdiction. Prior to exercise of this Option, you will pay or make adequate arrangements satisfactory to the Company and/or your Employer to satisfy all withholding and payment on account obligations of the Company and/or your Employer. In this regard, you authorize the Company and/or your Employer to withhold all applicable Tax-Related Items legally payable by you from amounts otherwise payable to you in connection with the exercise of the Option or from your wages or other cash compensation paid to you by the Company and/or your Employer. With the Company’s consent, these arrangements may also include, if permissible under local law, (a) withholding Shares that otherwise would be issued to you when you exercise this Option, provided that the Company only withholds Shares having a Fair Market Value equal to the amount necessary to satisfy up to the maximum legally required tax withholding, (b) having the Company withhold taxes from the proceeds of the sale of the Shares, either through a voluntary sale or through a mandatory sale arranged by the Company (on your behalf pursuant to this authorization), or (c) any other arrangement approved by the Committee. Finally, you will pay to the Company or your Employer any amount of Tax-Related Items that the Company or your Employer may be required to withhold as a result of your participation in the Plan or your purchase of Shares that cannot be satisfied by the means previously described. The Company may refuse to honor the exercise and refuse to deliver the Shares if you fail to comply with your obligations in connection with the Tax-Related Items as described in this section.

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Restrictions on Resale			You agree not to sell any Shares at a time when applicable laws, Company policies or an agreement between the Company and its underwriters prohibit a sale. This restriction will apply as long as your Service continues and for such period of time after the termination of your Service as the Company may specify.

Option Nontransferable			In general, only you can exercise this Option prior to your death. You may not sell, transfer, assign, pledge or otherwise dispose of this Option, other than as designated by you, by will or by the laws of descent and distribution, except as provided below. For instance, you may not use this Option as security for a loan. If you attempt to do any of these things, this Option will immediately become invalid. You may in any event dispose of this Option in your will. Regardless of any marital property settlement agreement, the Company is not obligated to honor a notice of exercise from your former spouse, nor is the Company obligated to recognize your former spouse’s interest in this Option in any other way.

No Retention Rights			Neither this Option nor this Agreement gives you the right to be employed or retained by the Company or any Subsidiary or Affiliate in any capacity. The Company and its Subsidiaries and Affiliates reserve the right to terminate your Service at any time, with or without cause.

No Voting Rights or Dividends			This Option carries neither voting rights nor rights to dividends. You, or your estate or heirs, have no rights as a stockholder of the Company unless and until you have exercised this Option by giving the required notice to the Company and paying the Option exercise price, and the purchased Shares are issued to you. No adjustments will be made for dividends or other rights if the applicable record date occurs before you exercise this Option.

Adjustments			The number of Shares covered by this Option and the Option exercise price per Share will be subject to adjustment in the event of a stock split, a stock dividend or a similar change in Shares, and in other circumstances, as set forth in the Plan. The forfeiture provisions and restrictions described above will apply to all new, substitute or additional stock options or securities to which you are entitled by reason of this Award.

Successors and Assigns			Except as otherwise provided in the Plan or this Agreement, every term of this Agreement will be binding upon and inure to the benefit of the parties hereto and their respective heirs, legatees, legal representatives, successors, transferees and assigns.

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Notice			Any notice required or permitted under this Agreement will be given in writing and will be deemed effectively given upon the earliest of personal delivery, receipt or the third (3rd) full day following mailing with postage and fees prepaid, addressed to the other party hereto at the address last known in the Company’s records or at such other address as such party may designate by ten (10) days’ advance written notice to the other party hereto. The Company may also, in its sole discretion, decide to deliver any documents related to your current or future participation in the Plan, this Award, any Shares, or any other Company-related documents by electronic means. By accepting this Award, whether electronically or otherwise, you hereby consent to receive such documents by electronic delivery and agree to participate in the Plan through an online or electronic system established and maintained by the Company or a third party designated by the Company, including but not limited to the use of electronic signatures or click-through electronic acceptance of terms and conditions.
Section 409A of the Code			This Agreement and the Option is intended to be exempt from the application of Section 409A of the Code, including but not limited to by reason of complying with the exemption for stock options in Treasury Regulation Section 1.409A-1(b)(5) and any ambiguities herein shall be interpreted accordingly. Notwithstanding the foregoing, to the extent this Agreement and the Option are subject to, and not exempt from, Section 409A of the Code, this Agreement and the Option are intended to comply with Section 409A, and its provisions will be interpreted in a manner consistent with such intent. You acknowledge and agree that changes may be made to this Agreement to avoid adverse tax consequences to you under Section 409A. If it is determined that the Option is deferred compensation subject to Section 409A of the Code and you are a “specified employee” (within the meaning set forth in Section 409A(a)(2)(B)(i) of the Code) as of the date of your “separation from service” (as defined in Section 409A of the Code), then the payment that would otherwise be made upon the date of your separation from service or within the first six (6) months thereafter will not be made on the originally scheduled date(s) and will instead be issued in a lump sum on the date that is six (6) months and one day after the date of the separation from service, with the balance of the payment thereafter in accordance with the original vesting schedule set forth above, but if and only if such delay in payment is necessary to avoid the imposition of adverse taxation on you in respect of the Option under Section 409A of the Code. Each installment that vests is intended to constitute a “separate payment” for purposes of Treasury Regulation Section 1.409A-2(b)(2).

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Applicable Law and Arbitration			This Agreement will be interpreted and enforced under the laws of the State of Delaware without application of the conflicts of law principles thereof. Any dispute that arises directly or indirectly from the relationship of the parties evidenced by this Award or this Agreement shall be subject exclusively to any arbitration agreement or policy that you may be subject to with respect to the Company from time to time.

No Public Offer			This Award is made to you in your capacity as an Employee, Outside Director or Consultant. The grant of this Award is not intended to constitute a public offer of securities in any jurisdiction.

Independent Advice Recommended			The information provided by the Company, your Employer or any service provider engaged by the Company or your Employer in respect of this Award does not take into account your individual circumstances, objectives, needs or financial situation and does not constitute legal, tax or financial advice. You should exercise caution in relation to this Award and obtain independent professional advice if you have any doubt about any of the terms and before taking actions in relation to this Award.

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No Additional Entitlements			The grant of this Award is strictly discretionary. Neither the Plan nor this Agreement provides or implies any expectation or right in relation to (i) your future participation in the Plan, the grant of awards (or benefits in lieu of awards) or the receipt of similar benefits in the future; or (ii) the provisions and amount of any Plan participation or similar benefits that the Company or your Employer may decide to offer in the future. The Company and your Employer have reserved the right to amend, suspend or terminate the Plan at any time to the extent permitted by the Plan. You are not automatically entitled to the exercise of any discretion in your favor and you do not have any claim or right of action in respect of any decision or omission which may operate to your disadvantage, even if such decision or omission is unreasonable, irrational or might otherwise be regarded as perverse or in breach of any duties. All decisions made by or on behalf of the Company in respect of this Award are final and binding in all respects. These provisions apply regardless of whether offers or participation in the Plan are regular and repeated or on a one-off or otherwise exceptional basis, and regardless of whether your Employer is involved in the administration of the Plan or your Award. The Award and the Shares subject to the Award, and the income from and value of the same are not part of your normal or expected compensation for purposes of, including but not limited to, calculating severance, resignation, termination, redundancy, dismissal, or end-of-service payments, bonuses, holiday pay, long-service awards, pension or retirement or welfare benefits or similar payments. Unless otherwise provided in the Plan or by the Company, in its discretion, the Award and the benefits evidenced by this Agreement do not create any entitlement to have the Awards or any such benefits transferred to, or assumed by, another company nor to be exchanged, cashed out or substituted for, in connection with any corporate transaction affecting the Shares.
Recoupment			Without limiting the generality of Section 21 of the Plan, your Award and any other awards granted to you under the Plan (or any predecessor thereto), as well as all other Covered Compensation (as defined in the Company’s Compensation Recoupment Policy (as may be amended from time to time, the “Recoupment Policy”)) that you have received or receive in the future from the Company shall be subject to the Recoupment Policy. Notwithstanding anything herein to the contrary, your Award (to the extent vested) shall not be deemed fully earned until the Recoupment Period (as defined in the Recoupment Policy) applicable to the Award has lapsed.

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Miscellaneous			Unless otherwise agreed with the Company, the Award and the Shares subject to the Award, and the income from and value of the same, are not granted as consideration for, or in connection with, your services that may be provided as a director of an Affiliate. You understand and acknowledge that participation in the Plan ceases upon termination of your Service for any reason, except as may explicitly be provided otherwise in the Plan, this Agreement or under applicable law.
Share Price Risk; Currency Fluctuation Risk and Charges			There is a risk that the Shares underlying the Option may fall as well as rise in value. Market forces will impact the market value of Shares and, in the worst case, the market value of the Shares may become zero. Neither the Company nor any Subsidiary or Affiliate is liable for any loss due to movements in Share value. Neither the Company, nor any Subsidiary or Affiliate will be liable for any foreign exchange rate fluctuation between your local currency and the United States Dollar, or for any charges imposed in relation to the conversion or transfer of currency, that may affect the value of the Award or of any amounts due to you pursuant to the settlement of the Award or the subsequent sale of any Shares acquired upon settlement.

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Data Privacy			You hereby declare that you agree with the data processing practices described herein and consent to the collection, processing and use of Personal Data (as defined below) by the Company and the transfer of Personal Data to the recipients mentioned herein, including recipients located in countries which do not adduce an adequate level of protection from non-U.S. data protection law perspective, for the purposes described herein. Declaration of Consent. You understand that you must review the following information about the processing of Personal Data by or on behalf of the Company or, if different, a Subsidiary or Affiliate as described in this Agreement and any materials related to your eligibility to participate in the Plan and declare your consent. As regards the processing of your Personal Data in connection with the Plan, you understand that the Company is the controller of your Personal Data. Data Processing and Legal Basis. The Company collects, uses and otherwise processes certain information about you for purposes of implementing, administering and managing the Plan. You understand that this information may include, without limitation, your name, home address and telephone number, email address, date of birth, social insurance, passport or other identification number (e.g., resident registration number), salary, nationality, job title, any shares of stock or directorships held in the Company or any Subsidiary or Affiliate, details of all equity awards or any other entitlement to Shares or equivalent benefits awarded, canceled, exercised, vested, unvested or outstanding in your favor (the “Personal Data”). The legal basis for the processing of your Personal Data, where required, is your consent. Stock Plan Administration Service Providers. You understand that the Company transfers your Personal Data, or parts thereof, to Morgan Stanley Smith Barney LLC, an independent service provider based in the U.S., which assists the Company with the implementation, administration and management of the Plan. In the future, the Company may select different service providers and share your Personal Data with such different service providers that serve the Company in a similar manner. International Data Transfers. The Company and, as of the date hereof, any third parties assisting in the implementation, administration, and management of the Plan, such as Morgan Stanley Smith Barney LLC, are based in the U.S. If you are located outside the U.S., your country may have enacted data privacy laws that are different from the laws of the U.S. The Company’s legal basis for the transfer of Personal Data is your consent. Data Retention. The Company will process your Personal Data only as long as is necessary to implement, administer and manage your participation in the Plan, or to comply with legal or regulatory obligations, including under tax, exchange control, labor and securities laws. This period may extend beyond your termination of Service. When the Company no longer needs Personal Data for any of the above purposes, you understand that the Company will remove it from its systems. Voluntariness and Consequences of Denial/Withdrawal of Consent. You understand that any participation in the Plan and your consent are purely voluntary. You may deny or later withdraw your consent at any time, with future effect and for any or no reason. If you deny or later withdraw your consent, the Company cannot offer participation in the Plan or grant Options or other equity awards to you or administer or maintain such awards, and you will not be eligible to participate in the Plan. You further understand that denial or withdrawal of your consent would not affect your employment or service relationship with the Company or a Subsidiary or Affiliate and that you would merely forfeit the opportunities associated with the Plan. Data Subject Rights. You understand that data subject rights regarding the processing of personal data vary depending on the applicable law and that, depending on where you are based and subject to the conditions set out in the applicable law, you may have, without limitation, the rights to (i) inquire whether and what kind of Personal Data the Company holds about you and how it is processed, and to access or request copies of such Personal Data, (ii) request the correction or supplementation of Personal Data about you that is inaccurate, incomplete or out-of-date in light of the purposes underlying the processing, (iii) obtain the erasure of Personal Data no longer necessary for the purposes underlying the processing, (iv) request the Company to restrict the processing of your Personal Data in certain situations where you feel its processing is inappropriate, (v) object, in certain circumstances, to the processing of Personal Data for legitimate interests, and (vi) request portability of your Personal Data that you have actively or passively provided to the Company (which does not include data derived or inferred from the collected data), where the processing of such Personal Data is based on consent or your relationship with the Company or your Employer and is carried out by automated means. In case of concerns, you also may have the right to lodge a complaint with the competent local data protection authority. Further, to receive clarification of, or to exercise any of, your rights, you understand you should contact your local human resources representative, if any.

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Insider Trading/Market Abuse			You understand that you may be subject to insider trading restrictions and/or market abuse laws in applicable jurisdictions, including but not limited to the United States, your country, and the country or countries in which the Shares may be listed, which may affect your ability, directly or indirectly, to purchase or sell or attempt to sell or otherwise dispose of Shares, rights to Shares (this Award), or rights linked to the value of Shares during such times as you are considered to have “inside information” regarding the Company (as defined by the laws in the applicable jurisdiction(s)). Local insider trading laws and regulations may prohibit the cancellation or amendment of orders you placed before possessing the inside information. Furthermore, you understand that you may be prohibited from (i) disclosing the inside information to any third party, including fellow employees, and (ii) “tipping” third parties by sharing with them Company inside information, or otherwise causing third parties to buy or sell Company securities. Any restrictions under these laws or regulations are separate from and in addition to any restrictions that may be imposed under any applicable Company insider trading policy. It is your responsibility to comply with any applicable restrictions and you should consult with your personal legal advisor on this matter.

Foreign Asset/Account Reporting Requirements			You acknowledge that there may be certain foreign asset and/or account reporting requirements which may affect your ability to acquire or hold Shares or cash received from participating in the Plan (including from any dividends paid on Shares) in a brokerage or bank account outside your country. You may be required to report such accounts, assets, or related transactions to the tax or other authorities in your country. You may also be required to repatriate sale proceeds or other funds received as a result of your participation in the Plan to your country within a certain time after receipt. You acknowledge that it is your responsibility to comply with such regulations and that you should speak with a personal legal advisor on this matter.

Language			You acknowledge that you are sufficiently proficient in English or have consulted with an advisor who is sufficiently proficient in English so as to allow you to understand the terms and conditions of this Agreement. If you have received this Agreement or any other document(s) related to the Plan translated into a language other than English and if the meaning of the translated version is different than the English version, the English version will control.

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Appendix			Notwithstanding any provisions in this Agreement, the Option shall be subject to any additional terms and conditions for your jurisdiction set forth in the Appendix attached hereto. Moreover, if you relocate to one of the jurisdictions included in the Appendix, the additional terms and conditions for such jurisdiction will apply to you, to the extent the Company determines that the application of such terms and conditions is necessary or advisable for legal or administrative reasons. The Appendix constitutes part of this Agreement.

Imposition of other Requirements			The Company reserves the right to impose other requirements on your participation in the Plan and on the Option, to the extent the Company determines it is necessary or advisable for legal or administrative reasons, and to require you to sign any additional agreements or undertakings that may be necessary to accomplish the foregoing.
Waiver			You acknowledge that a waiver by the Company of breach of any provisions of this Agreement shall not operate or be construed as a waiver of any other provision of this Agreement, or of any subsequent breach by you or any other award recipient.

BY SIGNING (OR ELECTRONICALLY ACCEPTING) THE NOTICE ATTACHED TO THESE STOCK OPTION TERMS AND CONDITIONS, YOU AGREE TO ALL OF THE TERMS AND ALL OF THE CONDITIONS IN THE AGREEMENT (INCLUDING THE NOTICE, THESE STOCK OPTION TERMS AND CONDITIONS, AND THE APPENDIX), AND IN THE PLAN.

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Document

EXHIBIT 10.3

LUCID GROUP, INC.
SECOND AMENDED AND RESTATED 2021 STOCK INCENTIVE PLAN
NOTICE OF PERFORMANCE STOCK UNIT AWARD

You have been granted the following performance-based Restricted Stock Units (the “Performance Stock Units”, “PSUs” or this “Award”) with respect to shares of common stock of Lucid Group, Inc. (the “Company”) under the Lucid Group, Inc. Second Amended and Restated 2021 Stock Incentive Plan (as may be amended from time to time, the “Plan”), which PSUs shall be governed by the terms and conditions of the Plan, as well as this Notice of Performance Stock Unit Award (the “Notice”), the Performance Stock Unit Terms and Conditions attached hereto as Exhibit A, the Performance Conditions attached hereto as Exhibit B, and the additional terms and conditions set forth in any appendix for your country (the “Appendix” and all together, this “Agreement”), all of which are attached to or incorporated herein in their entirety:



Name of Participant:			[Name of Participant]

Grant Date:			[Date of Grant]

Target Number of PSUs:			[Target Number of PSUs]

Subject to any acceleration provisions contained in the Plan or set forth below, the PSUs may become earned and vested as follows:

a. Performance Conditions. You may earn between 0% and 150% of the Target Number of PSUs reflected above (“Target PSUs”) based on the Company’s achievement of the Company Performance Goals and the applicable Individual Performance Modifier (if any), in each case, for the Performance Period, each as defined in Exhibit B attached hereto (the Company Performance Goals and Individual Performance Modifier are collectively referred to as the “Performance Conditions”). No PSUs shall be considered earned until the date of the Committee’s certification of the achievement of the Performance Conditions, which shall occur no later than the filing of the Company’s Form 10-K with respect to the fiscal year of the Performance Period (the date of such certification, the “Certification Date”). The number of PSUs earned based on the Performance Conditions (the “Earned PSUs”) shall be eligible to vest and convert to Shares based on the vesting schedule set forth below. Any PSUs that are not earned based on the Performance Conditions shall be immediately cancelled and forfeited.

b. Vesting Schedule. Subject to your continued Service through the Certification Date and applicable vesting date set forth below (except as provided in the Performance Stock Unit Terms and Conditions), the Earned PSUs shall vest in accordance with the schedule below:

•1/3 of the Earned PSUs will vest on the later of March 5, [●] and the Certification Date (the “First Vesting Date”); and

•1/12 of the Earned PSUs will vest on each of the Company Vesting Dates occurring after the First Vesting Date, such that the Earned PSUs will be fully vested as of March 5, [●]. “Company Vesting Date” means March 5, June 5, September 5, December 5.

Upon your termination of Service for any or no reason before you vest in the Earned PSUs (or a portion thereof), the unvested Earned PSUs (or the unvested portion thereof) and your right to acquire any Shares in respect of PSUs hereunder will immediately terminate (except as provided in the Performance Stock Unit Terms and Conditions).

By your written signature below (or your electronic acceptance), you agree that the Company may deliver by e-mail all documents relating to the Plan or this Award (including without limitation, prospectuses required by the U.S. Securities and Exchange Commission) and all other documents that the Company is required to deliver to its security holders (including without limitation, annual reports and proxy statements). You also agree that the Company may deliver these documents by posting them on a website maintained by the Company or by a third party under contract with the Company. Should you electronically accept this Agreement, you agree to the following: “This electronic contract contains my electronic signature, which I have executed with the intent to sign this Agreement.” In addition, you acknowledge and agree that (i) you have carefully read, fully understand and agree to all of the terms and conditions described in the Plan, this Notice and the other components of this Agreement (including the Performance Stock Unit Terms and Conditions in Exhibit A, the Performance Conditions in Exhibit B and the Appendix) and (ii) you have been given an opportunity to consult your own legal and tax counsel with respect to all matters relating to these PSUs prior to signing (or electronically accepting) this Notice and that you have either consulted such counsel or voluntarily declined to consult such counsel.

If you do not sign (or electronically accept) this Agreement (in accordance with the method specified by the Company) by the first vesting date for the PSUs set forth in this Notice, this Agreement will be deemed accepted by you, and you will be subject to the terms and conditions of the Plan and this Agreement.

Signature page follows


RECIPIENT		LUCID GROUP, INC.
	By:
Recipient's Signature
	Name:
Recipient's Printed Name
	Title:

Exhibit A

LUCID GROUP, INC.
SECOND AMENDED AND RESTATED 2021 STOCK INCENTIVE PLAN
PERFORMANCE STOCK UNIT TERMS AND CONDITIONS


The Plan and Other Agreements			The PSUs that you are receiving are granted pursuant and subject in all respects to the applicable provisions of the Plan, which is incorporated herein by reference. Capitalized terms not defined in this Performance Stock Unit Terms and Conditions or other portion of this Agreement will have the meanings ascribed to them in the Plan. The Plan and this Agreement (consisting of the attached Notice, these Performance Stock Unit Terms and Conditions, Performance Conditions and the Appendix hereto) constitute the entire understanding between you and the Company regarding this Award, and any prior agreements, commitments or negotiations concerning this Award are superseded, with the exception of (i) any compensation recovery policy that is adopted by the Company or is otherwise required by applicable law and (ii) any written employment or severance arrangement that would provide for earning and/or vesting acceleration of the PSUs upon the terms and conditions set forth therein. This Agreement may be amended by the Committee without your consent; however, if any such amendment would materially impair your rights or obligations under this Agreement, this Agreement may be amended only by another written agreement, signed by you and the Company.
Payment for PSUs; Company’s Obligation			No cash payment is required for the PSUs you receive. You are receiving the PSUs in consideration for Services rendered by you. Each Earned PSU represents the right to receive up to 100% of the Fair Market Value of one Share on the date the Earned PSU vests. Unless and until the PSUs have been earned and have vested, you will have no right to settlement of any such PSUs. Prior to actual settlement of any vested PSUs, such PSUs will represent an unsecured obligation of the Company, payable (if at all) only from the general assets of the Company.

Earning and Vesting of PSUs, Generally			The PSUs that you are receiving will be earned based on the Performance Conditions and be subject to the vesting schedule set forth in the Notice. No PSUs will be considered earned until the Committee certifies achievement of the Performance Conditions, which shall occur no later than the Certification Date. Any PSUs that do not become Earned PSUs based on the Performance Conditions shall be immediately cancelled and forfeited. No additional PSUs may vest after your Service as an Employee, an Outside Director or a Consultant has terminated for any reason.


Forfeiture			Upon your termination of Service for any reason, this Award shall expire immediately as to the number of PSUs that have not been earned and vested before the date of such termination of Service (and that do not become earned and vested as a result of such termination). This means that the unvested PSUs (including unvested Earned PSUs) will immediately be cancelled and forfeited upon such termination of Service. You will receive no payment for PSUs that are so cancelled and forfeited. For purposes of this Agreement, termination of Service will be deemed to have occurred as of the date you cease to be an Employee, Consultant, or Outside Director (regardless of the reason for such termination and whether or not later found to be invalid or in breach of employment or other laws in the jurisdiction where you are employed or otherwise rendering services or the terms of your employment or other service agreement, if any) and will not be extended by any notice period (e.g., your period of service would not include any contractual notice period or any period of “garden leave” or similar period mandated under employment or other laws in the jurisdiction where you are employed or otherwise rendering services or the terms of your employment or other service agreement, if any). The Company shall have the exclusive discretion to determine when your Service terminates for purposes of this Agreement (including whether you may still be considered to be providing services while on a leave of absence).
Death/Disability			In the event of your death or Disability while in Service, whether occurring during or after the applicable Performance Period, any then unvested and outstanding Earned PSUs (as set forth in this paragraph) shall vest as of the day of such death or Disability and be paid out in accordance with the “Settlement of PSUs” paragraph below. In the event of your death or Disability while in Service during the Performance Period, the Company Performance Goals applicable to outstanding PSUs shall be deemed satisfied at the target level. If such termination occurs after the Performance Period but before the Certification Date, any payment will be made subject to such certification and be earned based on the actual level of achievement of the Performance Conditions. For purposes hereof, “Disability” has the meaning set forth in the Company’s Vesting Acceleration Policy for Death and Disability, as adopted on September 15, 2021 (the “Death and Disability Policy”). For the avoidance of doubt, the treatment of PSUs upon your death or Disability herein shall be in lieu of (and not in duplication of), any vesting acceleration under the Death and Disability Policy.


Change in Control			In the event of a Change in Control, the Committee will have full discretion to take whatever actions it deems necessary or appropriate with respect to then-outstanding PSUs, in accordance with Section 13 of the Plan; provided, however, that, in the event of a Change in Control during the Performance Period, the Company Performance Goals shall be deemed satisfied at the greater of target and actual level of performance (with the resulting Earned PSUs continuing to be subject to applicable vesting conditions, subject to any actions taken by the Committee pursuant to Section 13 of the Plan).

			If you are a participant in the Company’s Executive Severance Benefit Plan as of the date of a Change in Control, then the provisions thereof regarding acceleration of vesting in connection with a “Change of Control Termination” shall apply to any Earned PSUs that have not otherwise vested. If you are not a participant in the Company’s Executive Severance Benefit Plan on the date of a Change in Control, then, in the event of your involuntary termination without cause within the period starting three (3) months prior to a Change in Control and ending on the first anniversary of the Change in Control, any then-outstanding Earned PSUs shall vest as of the day immediately prior to such termination, provided that you sign a general waiver and release of claims against the Company and its affiliates (in a form provided by the Company) within 45 days following such termination and you do not revoke such general release and waiver of claims within the time period permitted by law. For purposes hereof, “involuntary termination without cause” means your involuntary termination of employment by the Company, resulting in a “separation from service” (within the meaning of Section 409A), for a reason other than death, Disability or Cause.
Going Private Transaction			In the event of a Going Private Transaction, the Committee will have full discretion to take whatever actions it deems necessary or appropriate with respect to then-outstanding PSUs, in accordance with Section 13 of the Plan (as applicable); provided, however, that, in the event of a Going Private Transaction during the Performance Period (and not, for the avoidance of doubt, during the period following the Performance Period but prior to the date of the Committee’s certification of the achievement of the Performance Conditions), the Company Performance Goals shall be deemed satisfied at the greater of target and actual level of performance (with the resulting Earned PSUs continuing to be subject to applicable vesting conditions, subject to any actions taken by the Committee pursuant to Section 13 of the Plan). For purposes hereof, “Going Private Transaction” means any transaction (or series of transactions) with the result that the Shares (or any equity securities for which the Shares are exchanged or to which they are converted in such transaction(s)) are no longer listed on a Nasdaq Stock Market or any other national securities exchange. For the avoidance of doubt, if the Going Private Transaction also constitutes a Change in Control, this paragraph shall apply and not the “Change in Control” paragraph above.


Leaves of Absence			For purposes of this Award, your Service does not terminate when you go on a military leave, a sick leave or another bona fide leave of absence, if the leave of absence was approved by the Company in writing and if continued crediting of Service is required by the terms of the leave or by applicable law. But your Service terminates when the approved leave ends, unless you immediately return to active work.
			If you go on a leave of absence, then the vesting schedule specified in the Notice may be adjusted in accordance with the Company’s leave of absence policy or the terms of your leave. If you commence working on a part-time basis, then the vesting schedule specified in the Notice may be adjusted in accordance with the Company’s part-time work policy or the terms of an agreement between you and the Company pertaining to your part-time schedule.

Nature of PSUs			Your PSUs are mere bookkeeping entries. They represent only the Company’s unfunded and unsecured promise to issue Shares on a future date (subject to satisfaction of the terms of the Plan and this Agreement). As a holder of PSUs, you have no rights other than the rights of a general creditor of the Company.

No Voting Rights or Dividends			Your PSUs carry neither voting rights nor rights to dividends. You, or your estate or heirs, have no rights as a stockholder of the Company unless and until your PSUs are settled by issuing Shares. No adjustments will be made for dividends or other rights if the applicable record date occurs before your Shares are issued.

PSUs Nontransferable			You may not sell, transfer, assign, pledge or otherwise dispose of any PSUs. For instance, you may not use your PSUs as security for a loan. If you attempt to do any of these things, your PSUs will immediately become invalid.


Settlement of PSUs			Each of your Earned PSUs will be settled within 74 days following the day it vests (including by reason of any vesting acceleration); provided, however, that if the Company requires you to pay withholding taxes through a sale of Shares, settlement of each Earned PSU may be deferred to the first permissible trading day for the Shares, if later than the applicable vesting date, but no later than two and one-half (2-1/2) months following the calendar year in which the applicable vesting date occurs. For purposes of this Agreement, “permissible trading day” means a day that satisfies all of the following requirements: (1) the exchange on which the Shares are traded is open for trading on that day; (2) you are permitted to sell Shares on that day without incurring liability under Section 16(b) of the Exchange Act; (3) either (a) you are not in possession of material non-public information that would make it illegal for you to sell Shares on that day under Rule 10b-5 under the Exchange Act or (b) Rule 10b5-1 under the Exchange Act would apply to the sale; (4) you are permitted to sell Shares on that day under such written insider trading policy as may have been adopted by the Company; and (5) you are not prohibited from selling Shares on that day by a written agreement between you and the Company or a third party. At the time of settlement, you will receive one Share for each vested Earned PSU; provided, however, that any fractional Shares that would otherwise be issued will be accumulated and will be issued only when a whole Share has accumulated, and further provided that any portion of the vested Earned PSUs that exceeds the Target PSUs may be settled in cash rather than Shares in the Committee’s sole discretion. In addition, the Shares are issued to you subject to the condition that the issuance of the Shares does not violate any law or regulation and the requirements of any stock exchange on which the Shares are listed for trading are met.


Withholding Taxes and Stock Withholding			Regardless of any action the Company and/or the Subsidiary or Affiliate employing you (“Employer”) takes with respect to any or all income tax, social insurance, payroll tax, fringe benefit tax, payment on account or other tax-related withholding (including taxes that are imposed on the Company or your Employer as a result of your participation in the Plan but are deemed by the Company or the Employer to be an appropriate charge to you) (“Tax-Related Items”), you acknowledge that the ultimate liability for all Tax-Related Items legally due by you is and remains your responsibility and that the Company and/or your Employer (1) make no representations or undertakings regarding the treatment of any Tax-Related Items in connection with any aspect of this Award, including the grant, earning, vesting or settlement of the PSUs, the subsequent sale of Shares acquired pursuant to settlement and the receipt of any dividends; and (2) do not commit to structure the terms of the award or any aspect of the PSUs to reduce or eliminate your liability for Tax-Related Items. Further, if you are subject to Tax-Related Items in more than one jurisdiction, you acknowledge that the Company and/or your Employer (or former Employer, as applicable) may be required to withhold or account for Tax-Related Items in more than one jurisdiction. Prior to the settlement of the PSUs, you shall pay or make adequate arrangements satisfactory to the Company and/or the Employer to satisfy all withholding and payment on account obligations of the Company and/or your Employer. In this regard, you authorize the Company and/or your Employer to withhold all applicable Tax-Related Items legally payable by you from your wages or other cash compensation paid to you by the Company and/or your Employer. Unless an alternative arrangement satisfactory to the Company has been provided prior to the vesting date, the default method for paying Tax-Related Items is withholding Shares that otherwise would be issued to you when the PSUs are settled, provided that the Company only withholds Shares having a Fair Market Value equal to the amount necessary to satisfy up to the maximum legally required tax withholding. The Company may also require the withholding of Tax-Related Items from the proceeds of the sale of the Shares, either through a voluntary sale or through a mandatory sale arranged by the Company (on your behalf pursuant to this authorization), or any other arrangement approved by the Committee, permitted under the Plan and in compliance with applicable law. The Fair Market Value of the Shares, determined as of the effective date when taxes otherwise would have been withheld in cash, will be applied as a credit against the withholding taxes. In the event of over-withholding, you may receive a refund of any over-withheld amount in cash (with no entitlement to the equivalent in Shares) or if not refunded, you may seek a refund from the local tax authorities. In the event of under-withholding, you will pay to the Company or your Employer any amount of Tax-Related Items that the Company or your Employer may be required to withhold as a result of your participation in the Plan or your acquisition of Shares that cannot be satisfied by the means previously described. The Company may refuse to deliver the Shares if you fail to comply with your obligations in connection with the Tax-Related Items as described in this section, and your rights to the Shares will be forfeited if you do not comply with such obligations on or before the date that is two and one-half (2-1/2) months following the calendar year in which the applicable vesting date for the PSUs occurs. If the obligations for Tax-Related Items is satisfied by withholding Shares, for tax purposes, you will be deemed to have been issued the full number of Shares subject to the vested PSUs, notwithstanding that a number of the Shares is held back solely for the purpose of satisfying withholding obligations for Tax-Related Items.


Restrictions on Resale			You agree not to sell any Shares at a time when applicable laws, Company policies or an agreement between the Company and its underwriters prohibit a sale. This restriction will apply as long as your Service continues and for such period of time after the termination of your Service as the Company may specify.

No Retention Rights			Neither this Award nor this Agreement gives you the right to be employed or retained by the Company or any Subsidiary or Affiliate in any capacity. The Company and its Subsidiaries and Affiliates reserve the right to terminate your Service at any time, with or without cause.

Adjustments			The number of PSUs covered by this Award will be subject to adjustment in the event of a stock split, a stock dividend or a similar change in Shares, and in other circumstances, as set forth in the Plan. The forfeiture provisions and restrictions described above will apply to all new, substitute or additional restricted stock units (including any performance-based restricted stock units) or securities to which you are entitled by reason of this Award.

Successors and Assigns			Except as otherwise provided in the Plan or this Agreement, every term of this Agreement will be binding upon and inure to the benefit of the parties hereto and their respective heirs, legatees, legal representatives, successors, transferees and assigns.

Notice			Any notice required or permitted under this Agreement will be given in writing and will be deemed effectively given upon the earliest of personal delivery, receipt or the third (3rd) full day following mailing with postage and fees prepaid, addressed to the other party hereto at the address last known in the Company’s records or at such other address as such party may designate by ten (10) days’ advance written notice to the other party hereto. The Company may also, in its sole discretion, decide to deliver any documents related to your current or future participation in the Plan, this Award, any Shares, or any other Company-related documents by electronic means. By accepting this Award, whether electronically or otherwise, you hereby consent to receive such documents by electronic delivery and agree to participate in the Plan through an online or electronic system established and maintained by the Company or a third party designated by the Company, including but not limited to the use of electronic signatures or click-through electronic acceptance of terms and conditions.


Section 409A of the Code			This Agreement and the PSUs are intended to be exempt from the application of Section 409A of the Code, including but not limited to by reason of complying with the “short-term deferral” rule set forth in Treasury Regulation Section 1.409A-1(b)(4) and any ambiguities herein shall be interpreted accordingly. Notwithstanding the foregoing, to the extent this Agreement and the PSUs are subject to, and not exempt from, Section 409A of the Code, this Agreement and the PSUs are intended to comply with Section 409A, and its provisions will be interpreted in a manner consistent with such intent. You acknowledge and agree that changes may be made to this Agreement to avoid adverse tax consequences to you under Section 409A. If it is determined that the PSUs are deferred compensation subject to Section 409A of the Code and you are a “specified employee” (within the meaning set forth in Section 409A(a)(2)(B)(i) of the Code) as of the date of your “separation from service” (as defined in Section 409A of the Code), then the issuance of any Shares that would otherwise be made upon the date of your separation from service or within the first six (6) months thereafter will not be made on the originally scheduled date(s) and will instead be issued in a lump sum on the date that is six (6) months and one day after the date of the separation from service, with the balance of the Shares issued thereafter in accordance with the original vesting and issuance schedule set forth above, but if and only if such delay in the issuance of the Shares is necessary to avoid the imposition of adverse taxation on you in respect of the Shares under Section 409A of the Code. Each installment of Shares that vests is intended to constitute a “separate payment” for purposes of Treasury Regulation Section 1.409A-2(b)(2).
Applicable Law and Arbitration			This Agreement will be interpreted and enforced under the laws of the State of Delaware without application of the conflicts of law principles thereof. Any dispute that arises directly or indirectly from the relationship of the parties evidenced by this Award or this Agreement shall be subject exclusively to any arbitration agreement or policy that you may be subject to with respect to the Company from time to time.
No Public Offer			This Award is made to you in your capacity as an Employee, Consultant or Outside Director. The grant of this Award is not intended to constitute a public offer of securities in any jurisdiction.

Independent Advice Recommended			The information provided by the Company, your Employer or any service provider engaged by the Company or your Employer in respect of this Award does not take into account your individual circumstances, objectives, needs or financial situation and does not constitute legal, tax or financial advice. You should exercise caution in relation to this Award and obtain independent professional advice if you have any doubt about any of the terms and before taking actions in relation to this Award.


No Additional Entitlements			The grant of this Award is strictly discretionary. Neither the Plan nor this Agreement provides or implies any expectation or right in relation to (i) your future participation in the Plan, the grant of awards (or benefits in lieu of awards) or the receipt of similar benefits in the future; or (ii) the provisions and amount of any Plan participation or similar benefits that the Company or your Employer may decide to offer in the future. The Company and your Employer have reserved the right to amend, suspend or terminate the Plan at any time to the extent permitted by the Plan. You are not automatically entitled to the exercise of any discretion in your favor and you do not have any claim or right of action in respect of any decision or omission which may operate to your disadvantage, even if such decision or omission is unreasonable, irrational or might otherwise be regarded as perverse or in breach of any duties. All decisions made by or on behalf of the Company in respect of this Award are final and binding in all respects. These provisions apply regardless of whether offers or participation in the Plan are regular and repeated or on a one-off or otherwise exceptional basis, and regardless of whether your Employer is involved in the administration of the Plan or your Award. The Award and the Shares subject to the Award, and the income from and value of the same, are not part of normal or expected compensation for purposes of, including but not limited to, calculating any severance, resignation, termination, redundancy, dismissal, or end-of-service payments, bonuses, holiday pay, long-service awards, pension or retirement or welfare benefits or similar payments.
Recoupment			Without limiting the generality of Section 21 of the Plan, your Award and any other awards granted to you under the Plan (or any predecessor thereto), as well as all other Covered Compensation (as defined in the Company’s Compensation Recoupment Policy (as may be amended from time to time, the “Recoupment Policy”)) that you have received or receive in the future from the Company shall be subject to the Recoupment Policy. Notwithstanding anything herein to the contrary, your Award (to the extent vested) shall not be deemed fully earned until the Recoupment Period (as defined in the Recoupment Policy) applicable to the Award has lapsed.


Miscellaneous			Unless otherwise agreed with the Company, the Award and the Shares subject to the Award, and the income from and value of the same, are not granted as consideration for, or in connection with, your services that may be provided as a director of an Affiliate. You understand and acknowledge that participation in the Plan ceases upon termination of your Service for any reason, except as may explicitly be provided otherwise in the Plan, this Agreement, or under applicable law. Unless otherwise provided in the Plan or by the Company, in its discretion, the Award and the benefits evidenced by this Agreement do not create any entitlement to have the Award or any such benefits transferred to, or assumed by, another company nor to be exchanged, cashed out or substituted for, in connection with any corporate transaction affecting the Shares.
Share Price Risk; Currency Fluctuation Risk and Charges			There is a risk that the Shares underlying the PSUs may fall as well as rise in value. Market forces will impact the market value of Shares and, in the worst case, the market value of the Shares may become zero. Neither the Company nor any Subsidiary or Affiliate is liable for any loss due to movements in Share value. Neither the Company, nor any Subsidiary or Affiliate will be liable for any foreign exchange rate fluctuation between your local currency and the United States Dollar, or for any charges imposed in relation to the conversion or transfer of currency, that may affect the value of the Award or of any amounts due to you pursuant to the settlement of the Award or the subsequent sale of any Shares acquired upon settlement.


Data Privacy			You hereby declare that you agree with the data processing practices described herein and consent to the collection, processing and use of Personal Data (as defined below) by the Company and the transfer of Personal Data to the recipients mentioned herein, including recipients located in countries which do not adduce an adequate level of protection from non-U.S. data protection law perspective, for the purposes described herein. Declaration of Consent. You understand that you must review the following information about the processing of Personal Data by or on behalf of the Company or, if different, a Subsidiary or Affiliate as described in this Agreement and any materials related to your eligibility to participate in the Plan and declare your consent. As regards the processing of your Personal Data in connection with the Plan, you understand that the Company is the controller of your Personal Data. Data Processing and Legal Basis. The Company collects, uses and otherwise processes certain information about you for purposes of implementing, administering and managing the Plan. You understand that this information may include, without limitation, your name, home address and telephone number, email address, date of birth, social insurance, passport or other identification number (e.g., resident registration number), salary, nationality, job title, any shares of stock or directorships held in the Company or any Subsidiary or Affiliate, details of all equity awards or any other entitlement to Shares or equivalent benefits awarded, canceled, exercised, vested, unvested or outstanding in your favor (the “Personal Data”). The legal basis for the processing of your Personal Data, where required, is your consent. Stock Plan Administration Service Providers. You understand that the Company transfers your Personal Data, or parts thereof, to Morgan Stanley Smith Barney LLC, an independent service provider based in the U.S., which assists the Company with the implementation, administration and management of the Plan. In the future, the Company may select different service providers and share your Personal Data with such different service providers that serve the Company in a similar manner. International Data Transfers. The Company and, as of the date hereof, any third parties assisting in the implementation, administration, and management of the Plan, such as Morgan Stanley Smith Barney LLC, are based in the U.S. If you are located outside the U.S., your country may have enacted data privacy laws that are different from the laws of the U.S. The Company’s legal basis for the transfer of Personal Data is your consent. Data Retention. The Company will process your Personal Data only as long as is necessary to implement, administer and manage your participation in the Plan, or to comply with legal or regulatory obligations, including under tax, exchange control, labor and securities laws. This period may extend beyond your termination of Service. When the Company no longer needs Personal Data for any of the above purposes, you understand that the Company will remove it from its systems. Voluntariness and Consequences of Denial/Withdrawal of Consent. You understand that any participation in the Plan and your consent are purely voluntary. You may deny or later withdraw your consent at any time, with future effect and for any or no reason. If you deny or later withdraw your consent, the Company cannot offer participation in the Plan or grant PSUs or other equity awards to you or administer or maintain such awards, and you will not be eligible to participate in the Plan. You further understand that denial or withdrawal of your consent would not affect your employment or service relationship with the Company or a Subsidiary or Affiliate and that you would merely forfeit the opportunities associated with the Plan. Data Subject Rights. You understand that data subject rights regarding the processing of personal data vary depending on the applicable law and that, depending on where you are based and subject to the conditions set out in the applicable law, you may have, without limitation, the rights to (i) inquire whether and what kind of Personal Data the Company holds about you and how it is processed, and to access or request copies of such Personal Data, (ii) request the correction or supplementation of Personal Data about you that is inaccurate, incomplete or out-of-date in light of the purposes underlying the processing, (iii) obtain the erasure of Personal Data no longer necessary for the purposes underlying the processing, (iv) request the Company to restrict the processing of your Personal Data in certain situations where you feel its processing is inappropriate, (v) object, in certain circumstances, to the processing of Personal Data for legitimate interests, and to (vi) request portability of your Personal Data that you have actively or passively provided to the Company (which does not include data derived or inferred from the collected data), where the processing of such Personal Data is based on consent or your relationship with the Company or your Employer and is carried out by automated means. In case of concerns, you also may have the right to lodge a complaint with the competent local data protection authority. Further, to receive clarification of, or to exercise any of, your rights, you understand you should contact your local human resources representative, if any.


Insider Trading /Market Abuse			You understand that you may be subject to insider trading restrictions and/or market abuse laws in applicable jurisdictions, including but not limited to the United States, your country, and the country or countries in which the Shares may be listed, which may affect your ability, directly or indirectly, to purchase or sell or attempt to sell or otherwise dispose of Shares, rights to Shares (this Award), or rights linked to the value of Shares during such times as you are considered to have “inside information” regarding the Company (as defined by the laws in the applicable jurisdiction(s)). Local insider trading laws and regulations may prohibit the cancellation or amendment of orders you placed before possessing the inside information. Furthermore, you understand that you may be prohibited from (i) disclosing the inside information to any third party, including fellow employees and (ii) “tipping” third parties by sharing with them Company inside information, or otherwise causing third parties to buy or sell Company securities. Any restrictions under these laws or regulations are separate from and in addition to any restrictions that may be imposed under any applicable Company insider trading policy. It is your responsibility to comply with any applicable restrictions and you should consult with your personal legal advisor on this matter.

Foreign Asset/Account Reporting Requirements			You acknowledge that there may be certain foreign asset and/or account reporting requirements which may affect your ability to acquire or hold Shares or cash received from participating in the Plan (including from any dividends paid on Shares) in a brokerage or bank account outside your country. You may be required to report such accounts, assets, or related transactions to the tax or other authorities in your country. You may also be required to repatriate sale proceeds or other funds received as a result of your participation in the Plan to your country within a certain time after receipt. You acknowledge that it is your responsibility to comply with such regulations and that you should speak with a personal legal advisor on this matter.

Language			You acknowledge that you are sufficiently proficient in English or have consulted with an advisor who is sufficiently proficient in English so as to allow you to understand the terms and conditions of this Agreement. If you have received this Agreement or any other document(s) related to the Plan translated into a language other than English and if the meaning of the translated version is different than the English version, the English version will control.

Appendix			Notwithstanding any provisions in this Agreement, the PSUs shall be subject to any additional terms and conditions for your jurisdiction set forth in the Appendix attached hereto. Moreover, if you relocate to one of the jurisdictions included in the Appendix, the additional terms and conditions for such jurisdiction will apply to you, to the extent the Company determines that the application of such terms and conditions is necessary or advisable for legal or administrative reasons. The Appendix constitutes part of this Agreement.


Imposition of other Requirements			The Company reserves the right to impose other requirements on your participation in the Plan, on the PSUs and on any Shares acquired upon vesting of the PSUs, to the extent the Company determines it is necessary or advisable for legal or administrative reasons, and to require you to sign any additional agreements or undertakings that may be necessary to accomplish the foregoing.
Waiver			You acknowledge that a waiver by the Company of breach of any provisions of this Agreement shall not operate or be construed as a waiver of any other provision of this Agreement, or of any subsequent breach by you or any other award recipient.

BY SIGNING (OR ELECTRONICALLY ACCEPTING) THE NOTICE ATTACHED TO THESE PERFORMANCE STOCK UNIT TERMS AND CONDITIONS, YOU AGREE TO ALL OF THE TERMS AND ALL OF THE CONDITIONS IN THE AGREEMENT (INCLUDING THE NOTICE, THESE PERFORMANCE STOCK UNIT TERMS AND CONDITIONS, THE PERFORMANCE CONDITIONS AND THE APPENDIX), AND IN THE PLAN.

Exhibit B

PERFORMANCE CONDITIONS

Document

Exhibit 10.4

LUCID GROUP, INC.
SECOND AMENDED AND RESTATED 2021 STOCK INCENTIVE PLAN
NOTICE OF RESTRICTED STOCK UNIT AWARD

You have been granted the following Restricted Stock Units (the “Restricted Stock Units”, “RSUs” or this “Award”) with respect to shares of common stock of Lucid Group, Inc. (the “Company”) under the Lucid Group, Inc. Second Amended and Restated 2021 Stock Incentive Plan (as may be amended from time to time, the “Plan”), which RSUs shall be governed by the terms and conditions of the Plan, as well as this Notice of Restricted Stock Unit Award (the “Notice”), the Restricted Stock Unit Terms and Conditions, and the additional terms and conditions set forth in any appendix for your jurisdiction (the “Appendix” and all together, this “Agreement”), all of which are attached to or incorporated herein in their entirety:


Name of Recipient:			[Name of Recipient]

Grant Date:			[Grant Date]

Total Number of Shares Subject to Restricted Stock Units:			[Total Shares]

Vesting Commencement Date:			[Vesting Commencement Date]

Vesting Schedule:			[Actual vesting schedule to be inserted]

By your written signature below (or your electronic acceptance), you agree that the Company may deliver by e-mail all documents relating to the Plan or this Award (including without limitation, prospectuses required by the U.S. Securities and Exchange Commission) and all other documents that the Company is required to deliver to its security holders (including without limitation, annual reports and proxy statements). You also agree that the Company may deliver these documents by posting them on a website maintained by the Company or by a third party under contract with the Company. Should you electronically accept this Agreement, you agree to the following: “This electronic contract contains my electronic signature, which I have executed with the intent to sign this Agreement.” In addition, you acknowledge and agree that (i) you have carefully read, fully understand and agree to all of the terms and conditions described in the Plan, this Notice, and the other components of this Agreement (including the Restricted Stock Unit Terms and Conditions and the Appendix) and (ii) you have been given an opportunity to consult your own legal and tax counsel with respect to all matters relating to these RSUs prior to signing (or electronically accepting) this Notice and that you have either consulted such counsel or voluntarily declined to consult such counsel.

If you do not sign (or electronically accept) this Agreement (in accordance with the method specified by the Company) by the first vesting date for the RSUs set forth in this Notice, this Agreement will be deemed accepted by you, and you will be subject to the terms and conditions of the Plan and this Agreement.


RECIPIENT		LUCID GROUP, INC.
	By:
Recipient's Signature
	Name:
Recipient's Printed Name
	Title:

LUCID GROUP, INC.
SECOND AMENDED AND RESTATED 2021 STOCK INCENTIVE PLAN
RESTRICTED STOCK UNIT TERMS AND CONDITIONS


The Plan and Other Agreements			The RSUs that you are receiving are granted pursuant and subject in all respects to the applicable provisions of the Plan, which is incorporated herein by reference. Capitalized terms not defined in this Restricted Stock Unit Terms and Conditions (“Terms and Conditions”) or other portion of this Agreement will have the meanings ascribed to them in the Plan. The Plan and this Agreement (consisting of the attached Notice, the Terms and Conditions, and the Appendix hereto) constitute the entire understanding between you and the Company regarding this Award, and any prior agreements, commitments or negotiations concerning this Award are superseded, with the exception of (i) any compensation recovery policy that is adopted by the Company or is otherwise required by applicable law and (ii) any written employment or severance arrangement that would provide for vesting acceleration of the RSUs upon the terms and conditions set forth therein. This Agreement may be amended by the Committee without your consent; however, if any such amendment would materially impair your rights or obligations under this Agreement, this Agreement may be amended only by another written agreement, signed by you and the Company.
Payment for RSUs; Company’s Obligation			No cash payment is required for the RSUs you receive. You are receiving the RSUs in consideration for Services rendered by you. Each RSU represents the right to receive the Fair Market Value of one Share on the date the RSU vests. Unless and until the RSUs have vested, you will have no right to settlement of any such RSUs. Prior to actual settlement of any vested RSUs, such RSUs will represent an unsecured obligation of the Company, payable (if at all) only from the general assets of the Company.
Vesting			The RSUs that you are receiving will vest subject to the vesting schedule set forth in the Notice. No additional RSUs may vest after your Service as an Employee, an Outside Director or a Consultant has terminated for any reason.


Forfeiture			Upon your termination of Service for any reason, this Award shall expire immediately as to the number of RSUs that have not vested before the date of such termination of Service (and that do not become vested as a result of such termination). This means that the unvested RSUs will immediately be cancelled and forfeited upon such termination of Service. You will receive no payment for RSUs that are so cancelled and forfeited. For purposes of this Agreement, termination of Service will be deemed to have occurred as of the date you cease to be an Employee, Consultant, or Outside Director (regardless of the reason for such termination and whether or not later found to be invalid or in breach of employment or other laws in the jurisdiction where you are employed or otherwise rendering services or the terms of your employment or other service agreement, if any) and will not be extended by any notice period (e.g., your period of service would not include any contractual notice period or any period of “garden leave” or similar period mandated under employment or other laws in the jurisdiction where you are employed or otherwise rendering services or the terms of your employment or other service agreement, if any). The Company shall have the exclusive discretion to determine when your Service terminates for purposes of this Agreement (including whether you may still be considered to be providing services while on a leave of absence).
Leaves of Absence			For purposes of this Award, your Service does not terminate when you go on a military leave, a sick leave or another bona fide leave of absence, if the leave of absence was approved by the Company in writing and if continued crediting of Service is required by the terms of the leave or by applicable law. But your Service terminates when the approved leave ends, unless you immediately return to active work.

			If you go on a leave of absence, then the vesting schedule specified in the Notice may be adjusted in accordance with the Company’s leave of absence policy or the terms of your leave. If you commence working on a part-time basis, then the vesting schedule specified in the Notice may be adjusted in accordance with the Company’s part-time work policy or the terms of an agreement between you and the Company pertaining to your part-time schedule.

Nature of RSUs			Your RSUs are mere bookkeeping entries. They represent only the Company’s unfunded and unsecured promise to issue Shares on a future date (subject to satisfaction of the terms of the Plan and this Agreement). As a holder of RSUs, you have no rights other than the rights of a general creditor of the Company.

No Voting Rights or Dividends			Your RSUs carry neither voting rights nor rights to dividends. You, or your estate or heirs, have no rights as a stockholder of the Company unless and until your RSUs are settled by issuing Shares. No adjustments will be made for dividends or other rights if the applicable record date occurs before your Shares are issued.


RSUs Nontransferable			You may not sell, transfer, assign, pledge or otherwise dispose of any RSUs. For instance, you may not use your RSUs as security for a loan. If you attempt to do any of these things, your RSUs will immediately become invalid.

Settlement of RSUs			Each of your vested RSUs will be settled within 74 days following the day it vests (including by reason of any vesting acceleration); provided, however, that if the Company requires you to pay withholding taxes through a sale of Shares, settlement of each RSU may be deferred to the first permissible trading day for the Shares, if later than the applicable vesting date, but no later than two and one-half (2-1/2) months following the calendar year in which the applicable vesting date occurs. For purposes of this Agreement, “permissible trading day” means a day that satisfies all of the following requirements: (1) the exchange on which the Shares are traded is open for trading on that day; (2) you are permitted to sell Shares on that day without incurring liability under Section 16(b) of the Exchange Act; (3) either (a) you are not in possession of material non-public information that would make it illegal for you to sell Shares on that day under Rule 10b-5 under the Exchange Act or (b) Rule 10b5-1 under the Exchange Act would apply to the sale; (4) you are permitted to sell Shares on that day under such written insider trading policy as may have been adopted by the Company; and (5) you are not prohibited from selling Shares on that day by a written agreement between you and the Company or a third party. At the time of settlement, you will receive one Share for each vested RSU; provided, however, that any fractional Shares that would otherwise be issued will be accumulated and will be issued only when a whole Share has accumulated. In addition, the Shares are issued to you subject to the condition that the issuance of the Shares does not violate any law or regulation and the requirements of any stock exchange on which the Shares are listed for trading are met.


Withholding Taxes and Stock Withholding			Regardless of any action the Company and/or the Subsidiary or Affiliate employing you (“Employer”) takes with respect to any or all income tax, social insurance, payroll tax, fringe benefit tax, payment on account or other tax-related withholding (including taxes that are imposed on the Company or your Employer as a result of your participation in the Plan but are deemed by the Company or your Employer to be an appropriate charge to you) (“Tax-Related Items”), you acknowledge that the ultimate liability for all Tax-Related Items legally due by you is and remains your responsibility and that the Company and/or your Employer (i) make no representations or undertakings regarding the treatment of any Tax-Related Items in connection with any aspect of this Award, including the grant, vesting or settlement of the RSUs, the subsequent sale of Shares acquired pursuant to settlement and the receipt of any dividends; and (ii) do not commit to structure the terms of the award or any aspect of the RSUs to reduce or eliminate your liability for Tax-Related Items. Further, if you are subject to Tax-Related Items in more than one jurisdiction, you acknowledge that the Company and/or your Employer (or former Employer, as applicable) may be required to withhold or account for Tax-Related Items in more than one jurisdiction. Prior to the settlement of the RSUs, you shall pay or make adequate arrangements satisfactory to the Company and/or your Employer to satisfy all withholding and payment on account obligations of the Company and/or your Employer. In this regard, you authorize the Company and/or your Employer to withhold all applicable Tax-Related Items legally payable by you from your wages or other cash compensation paid to you by the Company and/or your Employer. Unless an alternative arrangement satisfactory to the Company has been provided prior to the vesting date, the default method for paying Tax-Related Items is withholding Shares that otherwise would be issued to you when the RSUs are settled, provided that the Company only withholds Shares having a Fair Market Value equal to the amount necessary to satisfy up to the maximum legally required tax withholding. The Company may also require the withholding of Tax-Related Items from the proceeds of the sale of the Shares, either through a voluntary sale or through a mandatory sale arranged by the Company (on your behalf pursuant to this authorization), or any other arrangement approved by the Committee, permitted under the Plan and in compliance with applicable law. The Fair Market Value of the Shares, determined as of the effective date when taxes otherwise would have been withheld in cash, will be applied as a credit against the withholding taxes. In the event of over-withholding, you may receive a refund of any over-withheld amount in cash (with no entitlement to the equivalent in Shares) or if not refunded, you may seek a refund from the local tax authorities. In the event of under-withholding, you will pay to the Company or your Employer any amount of Tax-Related Items that the Company or your Employer may be required to withhold as a result of your participation in the Plan or your acquisition of Shares that cannot be satisfied by the means previously described. The Company may refuse to deliver the Shares if you fail to comply with your obligations in connection with the Tax-Related Items as described in this section, and your rights to the Shares will be forfeited if you do not comply with such obligations on or before the date that is two and one-half (2-1/2) months following the calendar year in which the applicable vesting date for the RSUs occurs. If the obligations for Tax-Related Items is satisfied by withholding Shares, for tax purposes, you will be deemed to have been issued the full number of Shares subject to the vested RSUs, notwithstanding that a number of the Shares is held back solely for the purpose of satisfying withholding obligations for Tax-Related Items.


Restrictions on Resale			You agree not to sell any Shares at a time when applicable laws, Company policies or an agreement between the Company and its underwriters prohibit a sale. This restriction will apply as long as your Service continues and for such period of time after the termination of your Service as the Company may specify.

No Retention Rights			Neither this Award nor this Agreement gives you the right to be employed or retained by the Company or any Subsidiary or Affiliate in any capacity. The Company and its Subsidiaries and Affiliates reserve the right to terminate your Service at any time, with or without cause.

Adjustments			The number of RSUs covered by this Award will be subject to adjustment in the event of a stock split, a stock dividend or a similar change in Shares, and in other circumstances, as set forth in the Plan. The forfeiture provisions and restrictions described above will apply to all new, substitute or additional restricted stock units or securities to which you are entitled by reason of this Award.

Successors and Assigns			Except as otherwise provided in the Plan or this Agreement, every term of this Agreement will be binding upon and inure to the benefit of the parties hereto and their respective heirs, legatees, legal representatives, successors, transferees and assigns.

Notice			Any notice required or permitted under this Agreement will be given in writing and will be deemed effectively given upon the earliest of personal delivery, receipt or the third (3rd) full day following mailing with postage and fees prepaid, addressed to the other party hereto at the address last known in the Company’s records or at such other address as such party may designate by ten (10) days’ advance written notice to the other party hereto. The Company may also, in its sole discretion, decide to deliver any documents related to your current or future participation in the Plan, this Award, any Shares, or any other Company-related documents by electronic means. By accepting this Award, whether electronically or otherwise, you hereby consent to receive such documents by electronic delivery and agree to participate in the Plan through an online or electronic system established and maintained by the Company or a third party designated by the Company, including but not limited to the use of electronic signatures or click-through electronic acceptance of terms and conditions.


Section 409A of the Code			This Agreement and the RSUs are intended to be exempt from the application of Section 409A of the Code, including but not limited to by reason of complying with the “short-term deferral” rule set forth in Treasury Regulation Section 1.409A-1(b)(4) and any ambiguities herein shall be interpreted accordingly. Notwithstanding the foregoing, to the extent this Agreement and the RSUs are subject to, and not exempt from, Section 409A of the Code, this Agreement and the RSUs are intended to comply with Section 409A, and its provisions will be interpreted in a manner consistent with such intent. You acknowledge and agree that changes may be made to this Agreement to avoid adverse tax consequences to you under Section 409A. If it is determined that the RSUs are deferred compensation subject to Section 409A of the Code and you are a “specified employee” (within the meaning set forth in Section 409A(a)(2)(B)(i) of the Code) as of the date of your “separation from service” (as defined in Section 409A of the Code), then the issuance of any Shares that would otherwise be made upon the date of your separation from service or within the first six (6) months thereafter will not be made on the originally scheduled date(s) and will instead be issued in a lump sum on the date that is six (6) months and one day after the date of the separation from service, with the balance of the Shares issued thereafter in accordance with the original vesting and issuance schedule set forth above, but if and only if such delay in the issuance of the Shares is necessary to avoid the imposition of adverse taxation on you in respect of the Shares under Section 409A of the Code. Each installment of Shares that vests is intended to constitute a “separate payment” for purposes of Treasury Regulation Section 1.409A-2(b)(2).
Applicable Law and Arbitration			This Agreement will be interpreted and enforced under the laws of the State of Delaware without application of the conflicts of law principles thereof. Any dispute that arises directly or indirectly from the relationship of the parties evidenced by this Award or this Agreement shall be subject exclusively to any arbitration agreement or policy that you may be subject to with respect to the Company from time to time.

No Public Offer			This Award is made to you in your capacity as an Employee, Outside Director or Consultant. The grant of this Award is not intended to constitute a public offer of securities in any jurisdiction.

Independent Advice Recommended			The information provided by the Company, your Employer or any service provider engaged by the Company or your Employer in respect of this Award does not take into account your individual circumstances, objectives, needs or financial situation and does not constitute legal, tax or financial advice. You should exercise caution in relation to this Award and obtain independent professional advice if you have any doubt about any of the terms and before taking actions in relation to this Award.


No Additional Entitlements			The grant of this Award is strictly discretionary. Neither the Plan nor this Agreement provides or implies any expectation or right in relation to (i) your future participation in the Plan, the grant of awards (or benefits in lieu of awards) or the receipt of similar benefits in the future; or (ii) the provisions and amount of any Plan participation or similar benefits that the Company or your Employer may decide to offer in the future. The Company and your Employer have reserved the right to amend, suspend or terminate the Plan at any time to the extent permitted by the Plan. You are not automatically entitled to the exercise of any discretion in your favor and you do not have any claim or right of action in respect of any decision or omission which may operate to your disadvantage, even if such decision or omission is unreasonable, irrational or might otherwise be regarded as perverse or in breach of any duties. All decisions made by or on behalf of the Company in respect of this Award are final and binding in all respects. These provisions apply regardless of whether offers or participation in the Plan are regular and repeated or on a one-off or otherwise exceptional basis, and regardless of whether your Employer is involved in the administration of the Plan or your Award. The Award and the Shares subject to the Award, and the income from and value of the same, are not part of normal or expected compensation for purposes of, including but not limited to, calculating any severance, resignation, termination, redundancy, dismissal, or end-of-service payments, bonuses, holiday pay, long-service awards, pension or retirement or welfare benefits or similar payments.
Recoupment			Without limiting the generality of Section 21 of the Plan, your Award and any other awards granted to you under the Plan (or any predecessor thereto), as well as all other Covered Compensation (as defined in the Company’s Compensation Recoupment Policy (as may be amended from time to time, the “Recoupment Policy”)) that you have received or receive in the future from the Company shall be subject to the Recoupment Policy. Notwithstanding anything herein to the contrary, your Award (to the extent vested) shall not be deemed fully earned until the Recoupment Period (as defined in the Recoupment Policy) applicable to the Award has lapsed.


Miscellaneous			Unless otherwise agreed with the Company, the Award and the Shares subject to the Award, and the income from and value of the same, are not granted as consideration for, or in connection with, your services that may be provided as a director of an Affiliate. You understand and acknowledge that participation in the Plan ceases upon termination of your Service for any reason, except as may explicitly be provided otherwise in the Plan, this Agreement, or under applicable law. Unless otherwise provided in the Plan or by the Company, in its discretion, the Award and the benefits evidenced by this Agreement do not create any entitlement to have the Award or any such benefits transferred to, or assumed by, another company nor to be exchanged, cashed out or substituted for, in connection with any corporate transaction affecting the Shares.
Share Price Risk; Currency Fluctuation Risk and Charges			There is a risk that the Shares underlying the RSUs may fall as well as rise in value. Market forces will impact the market value of Shares and, in the worst case, the market value of the Shares may become zero. Neither the Company nor any Subsidiary or Affiliate is liable for any loss due to movements in Share value. Neither the Company, nor any Subsidiary or Affiliate will be liable for any foreign exchange rate fluctuation between your local currency and the United States Dollar, or for any charges imposed in relation to the conversion or transfer of currency, that may affect the value of the Award or of any amounts due to you pursuant to the settlement of the Award or the subsequent sale of any Shares acquired upon settlement.


Data Privacy			You hereby declare that you agree with the data processing practices described herein and consent to the collection, processing and use of Personal Data (as defined below) by the Company and the transfer of Personal Data to the recipients mentioned herein, including recipients located in countries which do not adduce an adequate level of protection from non-U.S. data protection law perspective, for the purposes described herein. Declaration of Consent. You understand that you must review the following information about the processing of Personal Data by or on behalf of the Company or, if different, a Subsidiary or Affiliate as described in this Agreement and any materials related to your eligibility to participate in the Plan and declare your consent. As regards the processing of your Personal Data in connection with the Plan, you understand that the Company is the controller of your Personal Data. Data Processing and Legal Basis. The Company collects, uses and otherwise processes certain information about you for purposes of implementing, administering and managing the Plan. You understand that this information may include, without limitation, your name, home address and telephone number, email address, date of birth, social insurance, passport or other identification number (e.g., resident registration number), salary, nationality, job title, any shares of stock or directorships held in the Company or any Subsidiary or Affiliate, details of all equity awards or any other entitlement to Shares or equivalent benefits awarded, canceled, exercised, vested, unvested or outstanding in your favor (the “Personal Data”). The legal basis for the processing of your Personal Data, where required, is your consent. Stock Plan Administration Service Providers. You understand that the Company transfers your Personal Data, or parts thereof, to Morgan Stanley Smith Barney LLC, an independent service provider based in the U.S., which assists the Company with the implementation, administration and management of the Plan. In the future, the Company may select different service providers and share your Personal Data with such different service providers that serve the Company in a similar manner. The Company’s service providers may open an account for you to receive and trade Shares acquired under the Plan and you may be asked to agree to separate terms and data processing practices with the service provider, which is a condition of any ability to participate in the Plan. International Data Transfers. The Company and, as of the date hereof, any third parties assisting in the implementation, administration, and management of the Plan, such as Morgan Stanley Smith Barney LLC, are based in the U.S. If you are located outside the U.S., your country may have enacted data privacy laws that are different from the laws of the U.S. The Company’s legal basis for the transfer of Personal Data is your consent. Data Retention. The Company will process your Personal Data only as long as is necessary to implement, administer and manage your participation in the Plan, or to comply with legal or regulatory obligations, including under tax, exchange control, labor and securities laws. This period may extend beyond your termination of Service. When the Company no longer needs Personal Data for any of the above purposes, you understand that the Company will remove it from its systems. Voluntariness and Consequences of Denial/Withdrawal of Consent. You understand that any participation in the Plan and your consent are purely voluntary. You may deny or later withdraw your consent at any time, with future effect and for any or no reason. If you deny or later withdraw your consent, the Company cannot offer participation in the Plan or grant RSUs or other equity awards to you or administer or maintain such awards, and you will not be eligible to participate in the Plan. You further understand that denial or withdrawal of your consent would not affect your employment or service relationship with the Company or a Subsidiary or Affiliate and that you would merely forfeit the opportunities associated with the Plan. Data Subject Rights. You understand that data subject rights regarding the processing of personal data vary depending on the applicable law and that, depending on where you are based and subject to the conditions set out in the applicable law, you may have, without limitation, the rights to (i) inquire whether and what kind of Personal Data the Company holds about you and how it is processed, and to access or request copies of such Personal Data, (ii) request the correction or supplementation of Personal Data about you that is inaccurate, incomplete or out-of-date in light of the purposes underlying the processing, (iii) obtain the erasure of Personal Data no longer necessary for the purposes underlying the processing, (iv) request the Company to restrict the processing of your Personal Data in certain situations where you feel its processing is inappropriate, (v) object, in certain circumstances, to the processing of Personal Data for legitimate interests, and (vi) request portability of your Personal Data that you have actively or passively provided to the Company (which does not include data derived or inferred from the collected data), where the processing of such Personal Data is based on consent or your relationship with the Company or your Employer and is carried out by automated means. In case of concerns, you also may have the right to lodge a complaint with the competent local data protection authority. Further, to receive clarification of, or to exercise any of, your rights, you understand you should contact your local human resources representative, if any.


Insider Trading /Market Abuse			You understand that you may be subject to insider trading restrictions and/or market abuse laws in applicable jurisdictions, including but not limited to the United States, your country, and the country or countries in which the Shares may be listed, which may affect your ability, directly or indirectly, to purchase or sell or attempt to sell or otherwise dispose of Shares, rights to Shares (this Award), or rights linked to the value of Shares during such times as you are considered to have “inside information” regarding the Company (as defined by the laws in the applicable jurisdiction(s)). Local insider trading laws and regulations may prohibit the cancellation or amendment of orders you placed before possessing the inside information. Furthermore, you understand that you may be prohibited from (i) disclosing the inside information to any third party, including fellow employees, and (ii) “tipping” third parties by sharing with them Company inside information, or otherwise causing third parties to buy or sell Company securities. Any restrictions under these laws or regulations are separate from and in addition to any restrictions that may be imposed under any applicable Company insider trading policy. It is your responsibility to comply with any applicable restrictions and you should consult with your personal legal advisor on this matter.

Foreign Asset/Account Reporting Requirements			You acknowledge that there may be certain foreign asset and/or account reporting requirements which may affect your ability to acquire or hold Shares or cash received from participating in the Plan (including from any dividends paid on Shares) in a brokerage or bank account outside your country. You may be required to report such accounts, assets, or related transactions to the tax or other authorities in your country. You may also be required to repatriate sale proceeds or other funds received as a result of your participation in the Plan to your country within a certain time after receipt. You acknowledge that it is your responsibility to comply with such regulations and that you should speak with a personal legal advisor on this matter.

Language			You acknowledge that you are sufficiently proficient in English or have consulted with an advisor who is sufficiently proficient in English so as to allow you to understand the terms and conditions of this Agreement. If you have received this Agreement or any other document(s) related to the Plan translated into a language other than English and if the meaning of the translated version is different than the English version, the English version will control.

Appendix			Notwithstanding any provisions in this Agreement, the RSUs shall be subject to any additional terms and conditions for your jurisdiction set forth in the Appendix attached hereto. Moreover, if you relocate to one of the jurisdictions included in the Appendix, the additional terms and conditions for such jurisdiction will apply to you, to the extent the Company determines that the application of such terms and conditions is necessary or advisable for legal or administrative reasons. The Appendix constitutes part of this Agreement.


Imposition of other Requirements			The Company reserves the right to impose other requirements on your participation in the Plan, on the RSUs and on any Shares acquired upon vesting of the RSUs, to the extent the Company determines it is necessary or advisable for legal or administrative reasons, and to require you to sign any additional agreements or undertakings that may be necessary to accomplish the foregoing.
Waiver			You acknowledge that a waiver by the Company of breach of any provisions of this Agreement shall not operate or be construed as a waiver of any other provision of this Agreement, or of any subsequent breach by you or any other award recipient.

BY SIGNING (OR ELECTRONICALLY ACCEPTING) THE NOTICE ATTACHED TO THESE TERMS AND CONDITIONS, YOU AGREE TO ALL OF THE TERMS AND CONDITIONS IN THE AGREEMENT (INCLUDING THE NOTICE, THESE TERMS AND CONDITIONS, AND THE APPENDIX) AND IN THE PLAN.

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EXHIBIT 31.1

CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER

PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Peter Rawlinson, certify that:

1.I have reviewed this Quarterly Report on Form 10-Q of Lucid Group, Inc.;

2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a.Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b.Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c.Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d.Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a.All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b.Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.


Date: November 7, 2023						/s/ Peter Rawlinson
						Peter Rawlinson
						Chief Executive Officer
						(Principal Executive Officer)

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EXHIBIT 31.2

CERTIFICATION OF PRINCIPAL FINANCIAL OFFICER

PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Sherry House, certify that:

1.I have reviewed this Quarterly Report on Form 10-Q of Lucid Group, Inc.;

b.Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.


Date: November 7, 2023						/s/ Sherry House
						Sherry House
						Chief Financial Officer
						(Principal Financial Officer)

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EXHIBIT 32.1

CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350

AS ADOPTED PURSUANT TO SECTION 906

OF THE SARBANES-OXLEY ACT OF 2002 (FURNISHED HEREWITH)

I, Peter Rawlinson, Chief Executive Officer of Lucid Group, Inc. (the “Company”), certify, as of the date hereof and solely for purposes of and pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to my knowledge:

a.The Quarterly Report on Form 10-Q of the Company for the fiscal quarter ended September 30, 2023 (the “Report”) fully complies with the requirements of Section 13(a) or 15(d), as applicable, of the Securities Exchange Act of 1934; and

b.The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company at the dates and for the periods indicated.


Date: November 7, 2023						/s/ Peter Rawlinson
						Peter Rawlinson
						Chief Executive Officer
						(Principal Executive Officer)

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EXHIBIT 32.2

CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350

AS ADOPTED PURSUANT TO SECTION 906

OF THE SARBANES-OXLEY ACT OF 2002 (FURNISHED HEREWITH)

I, Sherry House, Chief Financial Officer of Lucid Group, Inc. (the “Company”), certify, as of the date hereof and solely for purposes of and pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to my knowledge:

b.The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company at the dates and for the periods indicated.


Date: November 7, 2023						/s/ Sherry House
						Sherry House
						Chief Financial Officer
						(Principal Financial Officer)