Lucid CEO Peter Rawlinson hits factory floor to focus on slow EV ramp-up, quality issues

3 days ago 7

Lucid Motor's manufacturing woes go beyond the widespread parts shortages that have hit the auto industry as a whole. The electric vehicle startup — which delivered just 679 vehicles in the second quarter — is also struggling with problems of its own making.

CEO Peter Rawlinson is now spending most of his time troubleshooting at Lucid's Arizona plant rather than at headquarters in California, he said on an earnings call Wednesday.

The move is reminiscent of Tesla CEO Elon Musk's claim of sleeping on his company's EV factory floor during a new product launch that Musk called "production hell" in 2017.

Speaking from Lucid's plant near Phoenix, Rawlinson said: "I've been spending the vast majority of my time here, right here on the shop floor. And I believe it's my responsibility as a CEO to be here resolving issues and helping to onboard new executives."

The assembly problems are such that Lucid again slashed its production forecast for this year, to between 6,000 and 7,000 vehicles. Its previous estimate was 12,000 to 14,000 vehicles, which it set in February. Last year, Lucid initially put its 2022 production target at 20,000 vehicles.

Lucid is currently building the most expensive trims of its Air sedan, which range from $89,050 for the Pure trim, including shipping, to $180,650 for the Grand Touring Performance. Rawlinson said the automaker has over 37,000 reservations for the vehicles.

"This quarter has proven to be a very challenging period," Rawlinson said after reporting revenue of $97.3 million and an adjusted loss of $414.1 million, which were below the market consensus.

"And while we have experienced supply chain and logistics challenges along with the entire industry, the limitations of our logistics systems have compounded the challenge," said Rawlinson, who worked under Musk at Tesla a decade ago.

Lucid said it ended the quarter with $4.6 billion in cash, cash equivalents and investments, "which is expected to fund the company well into 2023."

While supplier issues were responsible for Lucid's slow manufacturing ramp initially, Rawlinson said, the startup was unable to accelerate production once those shortages eased.

"As we attempted to push forward the rate, we found that our logistics constraints prevented us from scaling meaningfully this past quarter," Rawlinson said. "For example, our ability to feed the parts through the line at the correct time and cadence."

Lucid, which reported first-half production of 1,405 vehicles and deliveries of 1,039, has had to hold back Air inventory to correct quality issues, Rawlinson said. It has also had unplanned production shutdowns to fix logistics issues, he said.

But the company said it has identified the primary bottlenecks and is implementing solutions.

Lucid is bringing its logistics operation in-house, adding executives with deep experience, and restructuring its manufacturing operations so that it can scale to meet customer demand and quality expectations for a luxury marque.

"Make no mistake," Rawlinson said. "Although frustrating, this is a phase of our growth as a company that we will power through. We have a product, we've augmented our work force, and we're improving our processes to enable this to happen."

As part of the changes, Lucid announced the appointment of Steven David as senior vice president of operations, which it described as a new role in the company.

David will oversee supply chain, logistics, manufacturing and quality, Lucid said Wednesday. He most recently worked as head of component operations at Stellantis in Auburn Hills, Mich.

Lucid has also recruited two industry veterans to its leadership team this year.

Evelyn Chiang, a former Tesla vice president, was named Lucid's vice president of process transformation, the automaker said. Walter Ludwig, previously head of logistics at Mercedes-Benz Argentina, was appointed as vice president of global logistics.

Read Entire Article