The Power of Tesla's Price Reduction: Lucid Loses $40,000 in Revenue per Vehicle!

Lucid, the rising star of American electric vehicles, recently released its first-quarter financial report, which showed a loss of 43 cents per share and sales of $149 million. Wall Street had expected a loss of 39 cents per share and sales of $204 million.

In pre-market trading, Lucid fell nearly 11%.

Big Drop in Car Prices

Lucid's net loss in the first quarter was $780 million, which means a loss of $554,400 per car delivered.

In the first quarter, 1,406 cars were delivered, with an average revenue of about $106,000 per car.

In the fourth quarter, this number was about $133,000. Analysts generally predicted revenue per car to be about $145,000.

This indicates that the price drop is faster than Wall Street analysts expected.

Since the beginning of this year, the prices of many electric cars have been falling, as Tesla has lowered its prices several times, apparently to compete for market share.

In addition to sales, management's forecast for production may also make investors nervous. Lucid expects to produce more than 10,000 cars in 2023.

But in February of this year, Lucid management told investors that production in 2023 is expected to be between 10,000 and 14,000 cars.

In February of this year, Wall Street had predicted that Lucid would produce about 20,000 to 22,000 cars in 2023. At that time, Lucid had orders for 28,000 cars, lower than the 34,000 cars in the third quarter.

Facing Cash Problems

In addition to demand, cash is also a major problem for start-up electric car companies.

As of the end of 2022, Lucid had about $4.4 billion in cash and $4.9 billion in liquid assets (including debt financing). But as of the end of the first quarter, the company had about $3.4 billion in cash and $4.1 billion in liquid assets.

Lucid used about $1 billion in cash in the first quarter. Given Wall Street's expectation that the company will use about $3 billion and $2.1 billion in 2023 and 2024, respectively, this is a large number.

Lucid invested about $3.9 billion in 2022, and Wall Street expects Lucid to have negative free cash flow until 2026.

This cash balance and burn rate mean that funding will be needed at some point in the future. When Lucid sells stock to raise funds depends on management and the market.