What changed in this filing

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Item 1. Financial Statements

2022-11-08 compared with 2022-08-03 · 263 added, 157 removed, 851 unchanged (33% of the section changed)

3 unchanged sentences

(in thousands, except share and per share data)

September 30,

2022 December 31,

27 unchanged sentences

Preferred stock, par value $ 0.0001 ;

10,000,000 shares authorized as of June 30, 2022 and

10,000,000 shares authorized as of September 30, 2022 and

December 31, 2021;

no shares issued and outstanding as of June 30, 2022 and December 31, 2021

no shares issued and outstanding as of September 30, 2022 and December 31, 2021

Common stock, par value $ 0.0001 ;

15,000,000,000 shares authorized as of June 30, 2022 and December 31, 2021;

1,673,401,436 and 1,648,413,415 shares issued and 1,672,543,611 and 1,647,555,590 shares outstanding as of June 30, 2022 and December 31, 2021, respectively

15,000,000,000 shares authorized as of September 30, 2022 and December 31, 2021;

1,681,005,163 and 1,648,413,415 shares issued and 1,680,147,338 and 1,647,555,590 shares outstanding as of September 30, 2022 and December 31, 2021, respectively

Additional paid-in capital 10,162,745 9,995,778

Treasury stock, at cost, 857,825 shares at June 30, 2022 and December 31, 2021

Treasury stock, at cost, 857,825 shares at September 30, 2022 and December 31, 2021

( 20,716 ) ( 20,716 )

9 unchanged sentences

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

2022 2021 2022 2021

10 unchanged sentences

Change in fair value of common stock warrant liability 140,146 ( 24,787 ) 998,319 ( 24,787 )

Transaction costs expensed — ( 2,717 ) — ( 2,717 )

Interest income 24,373 — 27,284 —

Interest expense ( 7,613 ) ( 76 ) ( 22,521 ) ( 111 )

29 unchanged sentences

Stockholders’

Three Months Ended June 30, 2022

Balance as of March 31, 2022 1,666,739,708 $ 167 $ 9,997,176 $ ( 20,716 ) $ — $ ( 6,147,158 ) $ 3,829,469

Three Months Ended September 30, 2022

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 )

2 unchanged sentences

Issuance of common stock upon vesting of employee RSUs 5,100,389 — — — — — —

Issuance of common stock under employee stock purchase plan 751,036 — 12,882 — — — 12,882

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 June 30, 2022

Balance as of September 30, 2022

1,680,147,338 $ 168 $ 10,162,745 $ ( 20,716 ) $ ( 13,266 ) $ ( 6,897,684 ) $ 3,231,247

4 unchanged sentences

Equity (Deficit)

Three Months Ended June 30, 2021

Three Months Ended September 30, 2021

Amount Shares (1)

Balance as of March 31, 2021 1,088,999,959 $ 4,454,811 35,689,218 $ 3 $ 6,196 $ ( 4,234,062 ) $ ( 4,227,863 )

Balance as of June 30, 2021 1,155,909,367 $ 5,836,785 36,799,150 $ 4 $ 26,613 $ ( 4,495,789 ) $ ( 4,469,172 )

Net loss — — — — — ( 524,403 ) ( 524,403 )

Issuance of Series E convertible preferred stock 66,909,408 1,361,273 — — 15,719 — 15,719

Stock-based compensation related to Series E convertible preferred stock — 20,701 — — — — —

Conversion of convertible preferred stock into common stock in connection with the reverse recapitalization ( 1,155,909,367 ) ( 5,836,785 ) 1,155,909,367 116 5,836,669 — 5,836,785

Issuance of common stock and common stock warrants upon the reverse recapitalization, net of issuance costs — — 425,395,023 42 3,590,914 — 3,590,956

Issuance of common stock upon exercise of common stock warrants — — 22,651,424 2 173,271 — 173,273

Issuance of common stock upon exercise of stock options — — 887,852 — 763 — 763

Stock-based compensation — — — — 236,956 — 236,956

Balance as of June 30, 2021

Balance as of September 30, 2021

— $ — 1,641,642,816 $ 164 $ 9,865,186 $ ( 5,020,192 ) $ 4,845,158

14 unchanged sentences

Stockholders’

Six Months Ended June 30, 2022

Nine Months Ended September 30, 2022

Balance as of January 1, 2022 1,647,555,590 $ 165 $ 9,995,778 $ ( 20,716 ) $ — $ ( 6,065,872 ) $ 3,909,355

6 unchanged sentences

Stock-based compensation — — 352,245 — — — 352,245

Balance as of June 30, 2022

Balance as of September 30, 2022

1,680,147,338 $ 168 $ 10,162,745 $ ( 20,716 ) $ ( 13,266 ) $ ( 6,897,684 ) $ 3,231,247

4 unchanged sentences

Equity (Deficit)

Six Months Ended June 30, 2021

Nine Months Ended September 30, 2021

Amount Shares (1)

5 unchanged sentences

Stock-based compensation related to Series E convertible preferred stock — 123,614 — — — — —

Conversion of convertible preferred stock into common stock in connection with the reverse recapitalization ( 1,155,909,367 ) ( 5,836,785 ) 1,155,909,367 116 5,836,669 — 5,836,785

Issuance of common stock and common stock warrants upon the reverse recapitalization, net of issuance costs — — 425,395,023 42 3,590,914 — 3,590,956

Issuance of common stock upon exercise of common stock warrants — — 22,651,424 2 173,271 — 173,273

Issuance of common stock upon exercise of stock options — — 8,895,300 1 6,028 — 6,029

Stock-based compensation — — — — 242,586 — 242,586

Balance as of June 30, 2021

Balance as of September 30, 2021

— $ — 1,641,642,816 $ 164 $ 9,865,186 $ ( 5,020,192 ) $ 4,845,158

6 unchanged sentences

(in thousands)

Six Months Ended

Nine Months Ended

September 30,

Cash flows from operating activities

5 unchanged sentences

Stock-based compensation 352,245 366,200

Amortization of debt discounts and issuance costs 2,409 —

Inventory write-downs 178,057 —

Inventory and firm purchase commitments write-downs 364,553 —

Change in fair value of contingent forward contract liability — 454,546

16 unchanged sentences

Purchases of property, plant and equipment ( 784,964 ) ( 299,313 )

Proceed from sale of property, plant and equipment — 19

Proceeds from government grant 97,267 —

Proceeds from sale of property, plant and equipment — 19

Purchases of investments ( 2,726,677 ) —

Proceeds from maturities of investments 125,353 —

Net cash used in investing activities ( 3,289,021 ) ( 299,294 )

4 unchanged sentences

Proceeds from borrowings 20,228 —

Repayments for borrowings ( 6,653 ) —

Proceeds from failed sale-leaseback transaction 31,700 —

Repurchase of Series B convertible preferred stock — ( 3,000 )

2 unchanged sentences

Proceeds from exercise of stock options 14,738 6,027

Proceeds from the exercise of public warrants — 173,273

Proceeds from the reverse capitalization — 4,439,153

Payment of transaction costs related to the reverse recapitalization — ( 4,811 )

Proceeds from employee stock purchase plan 12,882 —

2 unchanged sentences

Net cash (used in) provided by financing activities ( 165,566 ) 5,236,843

Net decrease in cash, cash equivalents, and restricted cash ( 3,105,609 ) ( 48,213 )

Net (decrease) increase in cash, cash equivalents, and restricted cash ( 5,032,330 ) 4,192,148

Beginning cash, cash equivalents, and restricted cash 6,298,020 640,418

4 unchanged sentences

(in thousands)

Six Months Ended

Nine Months Ended

September 30,

Supplemental disclosure of cash flow information:

2 unchanged sentences

Supplemental disclosure of non-cash investing and financing activity:

Increases (decreases) in purchases of property, plant and equipment included in accounts payable and accrued expenses 17,240 ( 24,661 )

Increases in purchases of property, plant and equipment included in accounts payable and accrued expenses

Property, plant and equipment and right-of-use assets obtained through leases 143,972 70,756

3 unchanged sentences

Issuance of Series E convertible preferred stock upon settlement of contingent forward contracts — 2,621,878

Capital leases retired upon adoption of new lease accounting standard $ — $ 3,257

Issuance of common stock upon conversion of preferred stock in connection with the reverse recapitalization — 5,836,785

Transaction costs related to the reverse recapitalization not yet paid $ — $ 34,054

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

1 unchanged sentence

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2022

September 30, 2022

NOTE 1 – DESCRIPTION OF BUSINESS

8 unchanged sentences

The Company devotes its efforts to business planning, research and development, recruiting of management and technical staff, acquiring operating assets, and raising capital.

From inception through June 30, 2022, the Company has incurred operating losses and negative cash flows from operating activities.

For the six months ended June 30, 2022 and 2021, the Company has incurred operating losses, including net losses of $ 301.7 million and $ 1,009.7 million, respectively.

The Company has an accumulated deficit of $ 6.4 billion as of June 30, 2022.

During the quarter ended June 30, 2021, the Company completed the first phase of the construction of its newly built manufacturing plant in Casa Grande, Arizona (the “Arizona plant”).

From inception through September 30, 2022, the Company has incurred operating losses and negative cash flows from operating activities.

For the nine months ended September 30, 2022 and 2021, the Company has incurred operating losses, including net losses of $ 831.8 million and $ 1.5 billion, respectively.

The Company has an accumulated deficit of $ 6.9 billion as of September 30, 2022.

During the quarter ended June 30, 2021, the Company completed the first phase of the construction of its Advanced Manufacturing Plant 1 in Casa Grande, Arizona (“AMP-1”).

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 the Arizona plant, start the construction of a manufacturing facility in the Kingdom of Saudi Arabia (the “KSA Facility”), and build a network of retail sales and service locations.

The Company continues to expand AMP-1, construct its planned Advanced Manufacturing Plant 2 in the Kingdom of Saudi Arabia (“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.

5 unchanged sentences

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.

In addition, during the six months ended June 30, 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, revolving credit facilities with Gulf International Bank (“GIB”) in an aggregate principal amount of approximately $ 266.5 million and 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, See Note 6 “Long-term Debt” for additional information.

In addition, during the nine months ended September 30, 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, revolving credit facilities with Gulf International Bank (“GIB”) in an aggregate principal amount of approximately $ 266.2 million and 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.

See Note 6 “Debt” for additional 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) production and manufacturing ramps at existing manufacturing facilities in Casa Grande, Arizona, (iv) Phase 2 of construction at Advanced Manufacturing Plant 1 (“AMP-1”) in Casa Grande, Arizona, (v) the start of construction of a manufacturing facility in the Kingdom of Saudi Arabia, and (vi) expansion of our retail studios and service centers capabilities throughout North America and across the globe.

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) production and manufacturing ramps at existing manufacturing facilities in Casa Grande, Arizona, (iv) phase 2 of construction at AMP-1 in Casa Grande, Arizona, (v) the construction of AMP-2, and (vi) 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;

8 unchanged sentences

acceptance of the Company’s products and services;

litigation or claims against the Company based on intellectual property, patent, regulatory, or other factors;

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 growth.

A global economic recession or other downturn, whether due to inflation, ongoing conflict in Ukraine or other geopolitical events, COVID-19 or other public health crises, interest rate increases or other policy actions by major central banks, 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 tighter 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 global credit 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 additional information regarding risks associated with a global economic recession, including under the caption “ A global economic recession or other downturn may have a material adverse impact on our business, prospects, results of operations and financial condition .

The COVID-19 pandemic continues to impact the global economy and cause significant macroeconomic uncertainty.

4 unchanged sentences

The Company continues to monitor the rapidly evolving situation and guidance from international and domestic authorities, including federal, state and local public health authorities, and may take additional actions based on their recommendations and requirements or as the Company otherwise sees fit to protect the health and safety of its employees, customers, partners and suppliers.

While certain of the Company and its suppliers’ operations have from time-to-time been temporarily affected by government-mandated restrictions, the Company was able to commence deliveries of the Lucid Air to customers and to proceed with the construction of the Arizona plant.

While certain of the Company and its suppliers’ operations have from time-to-time been temporarily affected by government-mandated restrictions, the Company was able to commence and continue deliveries of the Lucid Air to customers and to proceed with the construction of AMP-1 and AMP-2.

Broader impacts of the pandemic have included inflationary pressure as well as ongoing, industry-wide challenges in logistics and supply chains, such as increased port congestion, intermittent supplier delays and a shortfall of semiconductor supply.

2 unchanged sentences

In the current circumstances, given the dynamic nature of the situation, 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, including, but not limited to, the duration and continued spread of the outbreak, its severity, potential additional waves of infection, the emergence of more virulent or more dangerous strains of the virus, the actions taken to mitigate the virus or its impact, the development, distribution, efficacy and acceptance of vaccines worldwide, how quickly and to what extent normal economic and operating conditions can resume, the broader impact that the pandemic is having on the economy and our industry and specific implications the pandemic may have on the Company’s suppliers and on global logistics.

See “Risk Factors” in Part II, Item 1A of this Quarterly Report on Form 10-Q (the “Quarterly Report”) for additional information regarding risks associated with the COVID-19 pandemic, including under the caption “The ongoing COVID-19 pandemic has adversely affected, and we cannot predict its ultimate impact on, our business, results of operations and financial condition.”

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 ongoing 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

6 unchanged sentences

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, 2022.

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 June 30, 2022 and the results of operations for the three and six months ended June 30, 2022 and 2021.

The results of operations for the three and six months ended June 30, 2022 are not necessarily indicative of the results to be expected for the full year ending December 31, 2022 or any other future interim or annual period.

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, 2022 and the results of operations for the three and nine months ended September 30, 2022 and 2021.

The results of operations for the three and nine months ended September 30, 2022 are not necessarily indicative of the results to be expected for the full year ending December 31, 2022 or any other future interim or annual period.

The condensed consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries.

4 unchanged sentences

Actual results could differ from those estimates.

Significant estimates, assumptions and judgments made by management include, among others, inventory valuation, warranty reserve, the determination of the useful lives of property and equipment, fair value of preferred stock warrants, fair value of common stock warrants, fair value of contingent forward contracts liability, valuation of deferred income tax assets and uncertain tax positions, fair value of common stock and other assumptions used to measure stock-based compensation expense, and estimated incremental borrowing rates for assessing operating and financing lease liabilities.

Significant estimates, assumptions and judgments made by management include, among others, inventory valuation, warranty reserve, the determination of the useful lives of property, plant and equipment, fair value of preferred stock warrants, fair value of common stock warrants, fair value of contingent forward contracts liability, estimates of residual value guarantee (“RVG”), valuation of deferred income tax assets and uncertain tax positions, fair value of common stock 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.

2 unchanged sentences

Changes in those estimates resulting from continuing changes in the economic environment will be reflected in the financial statements in future periods.

Reclassifications

Certain prior period balances have been reclassified to conform to the current period presentation in the condensed consolidated financial statements and the accompanying notes.

Cash, Cash Equivalents and Restricted Cash

2 unchanged sentences

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

September 30,

2022 December 31,

2021 June 30,

2021 September 30,

2021 December 31,

10 unchanged sentences

The Company’s significant accounting policies are discussed in Note 2 of the notes to the consolidated financial statements included in the Company’s Form 10-K filed with the SEC on February 28, 2022.

Except for the policy described below, there have been no significant changes to the Company’s accounting policies during the three and six months ended June 30, 2022.

Except for the policies described below, there have been no significant changes to the Company’s accounting policies during the three and nine months ended September 30, 2022.

The Company’s investments in marketable debt securities have been classified and accounted for as available-for-sale and they are stated at fair value.

1 unchanged sentence

Unrealized gains and losses on our investments of available-for-sale securities are recorded in accumulated other comprehensive loss which is included within stockholders’ equity.

Interest, dividends, amortization and accretion of purchase premiums and discounts on our investments of available-for-sale securities are included in other income (expense), net.

Interest, as well as amortization and accretion of purchase premiums and discounts on our investments of available-for-sale securities are included in Interest income.

The cost of securities sold is determined using the specific identification method.

Realized gains and losses on the sale of available-for-sale securities are recorded in other income (expense), net.

Vehicle Sales with Residual Value Guarantee

The Company provides an RVG to its commercial banking partner in connection with its vehicle leasing program.

Under the vehicle leasing program, the Company generally receives full payment for the vehicle sales price at the time of delivery, does not bear casualty and credit risks during the lease term, and is contractually obligated (or entitled) to share a portion of the shortfall (or excess) between the resale value realized by the commercial banking partner and a predetermined resale value.

During the three and nine months ended September 30, 2022, vehicle sales with RVG totaled $ 10.1 million.

At the lease inception, the Company is required to deposit cash collateral equal to a contractual percentage of the residual value of the leased vehicles with the commercial banking partner.

The cash collateral is held in a restricted bank account owned by the commercial banking partner until it is used, as applicable, in settlement of the RVG at the end of the lease term.

Cash collateral is recorded in other long-term assets, subject to asset impairment review at each reporting period.

The Company accounts for the vehicle leasing program in accordance with ASC 842, Leases, ASC 460, Guarantees and ASC 606, Revenue from Contracts with Customers .

The Company is the lessor at inception of a lease and immediately transfers the lease as well as the underlying vehicle to its commercial banking partner, with the transaction being accounted for as a sale under ASC 606.

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 unspecified over-the-air (“ 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 we accumulate more data related to the resale value of our vehicles or as market conditions change, there could be material changes to the estimated guarantee liabilities.

As of September 30, 2022, the RVG liability was immaterial.

Government Grants

Government grants are recognized when the grants are received, and all the conditions specified in the grant have been met.

Grants related to fixed assets are recorded as a deduction in calculating the carrying amount of the related assets and are recognized in profit or loss over the life of a depreciable asset through reduced depreciation expense.

Grants received in advance of the acquisition or construction of assets are recorded initially in deferred liability and then as a deduction in calculating the carrying amount of the related fixed assets upon acquisition or construction of the assets.

Grant receipts are classified as investing cash inflows on a gross basis on the condensed consolidated statements of cash flows.

Recently Adopted Accounting Pronouncements

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NOTE 4 – BALANCE SHEETS COMPONENTS

Inventory as of June 30, 2022 and December 31, 2021 were as follows (in thousands):

Inventory as of September 30, 2022 and December 31, 2021 were as follows (in thousands):

September 30,

2022 December 31,

2 unchanged sentences

Finished goods

171,092 8,963

Total inventory $ 685,321 $ 127,250

Inventory as of June 30, 2022 and December 31, 2021 was comprised of raw materials, work in progress related to the production of vehicles for sale and finished goods inventory including vehicles in transit to fulfill customer orders and new vehicles available for sale.

We write down inventory for any excess or obsolete inventories or when we believe that the net realizable value of inventories is less than the carrying value.

During the three and six months ended June 30, 2022, we recorded write-downs of $ 81.7 million and $ 178.1 million, respectively, in cost of revenues.

No write-downs were recorded during the three and six months ended June 30, 2021.

Inventory as of September 30, 2022 and December 31, 2021 was comprised of raw materials, work in progress related to the production of vehicles for sale and finished goods inventory including vehicles in transit to fulfill customer orders and new vehicles available for sale.

In the three and nine months ended September 30, 2022, we recorded write downs of $ 186.5 million and $ 364.6 million, respectively, to reduce our inventories to their net realizable values, for any excess or obsolete inventories, and losses from firm purchase commitments.

No write-downs were recorded during the three and nine months ended September 30, 2021.

Property, plant and equipment, net

Property, plant and equipment as of June 30, 2022 and December 31, 2021 were as follows (in thousands):

Property, plant and equipment as of September 30, 2022 and December 31, 2021 were as follows (in thousands):

September 30,

2022 December 31,

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Construction in progress consisted of the following (in thousands):

September 30,

2022 December 31,

Machinery and tooling $ 407,856 $ 132,943

Construction of Arizona plant and KSA Facility 310,685 112,970

Construction of AMP-1 and AMP-2 (1)

435,103 112,970

Leasehold improvements 39,933 31,006

Total construction in progress $ 882,892 $ 276,919

Depreciation and amortization expense was $ 42.5 million and $ 80.7 million, respectively, for the three and six months ended June 30, 2022, and $ 6.8 million and $ 11.7 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 immaterial for the three and six months ended June 30, 2022.

(1) As of September 30, 2022, $ 26.6 million of capital expenditure support received from Ministry of Investment of Saudi Arabia (“MISA”) was recorded as a deduction to AMP-2 construction in progress balance.

See Note 2 “Summary of Significant Accounting Policies” and Note 19 “Related Party Transactions” for additional information.

Depreciation and amortization expense was $ 50.6 million and $ 131.3 million, respectively, for the three and nine months ended September 30, 2022, and $ 14.9 million and $ 26.6 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 $ 1.1 million and $ 1.8 million, respectively, for the three and nine months ended September 30, 2022.

Other current liabilities

Other current liabilities as of June 30, 2022 and December 31, 2021 were as follows (in thousands):

Other current liabilities as of September 30, 2022 and December 31, 2021 were as follows (in thousands):

September 30,

2022 December 31,

7 unchanged sentences

Short-term insurance financing note 2,141 15,281

Short-term borrowings 13,575 —

Operating lease liabilities, current portion 7,815 11,056

3 unchanged sentences

Other long-term liabilities

Other long-term liabilities as of June 30, 2022 and December 31, 2021 were as follows (in thousands):

Other long-term liabilities as of September 30, 2022 and December 31, 2021 were as follows (in thousands):

September 30,

2022 December 31,

1 unchanged sentence

Other long-term liabilities (1)

125,836 3,252

Total other long-term liabilities $ 365,009 $ 188,575

(1) As of September 30, 2022, $ 70.7 million of capital expenditure support received from MISA was recorded as deferred liability within other long-term liabilities.

See Note 2 “Summary of Significant Accounting Policies” and Note 19 “Related Party Transactions” for additional information.

Accrued warranty

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

Three Months Ended September 30, 2022 Nine Months Ended September 30, 2022

Accrued warranty - beginning of period $ 8,311 $ 1,282

Warranty costs incurred ( 3,501 ) ( 5,256 )

Provision for warranty (1)

Accrued warranty - end of period (2)

$ 13,625 $ 13,625

(1) Accrued warranty balance as of September 30, 2022 included estimated costs related to the recalls identified.

(2) Accrued warranty balances were recorded within other current liabilities and other long-term liabilities on our condensed consolidated balance sheets.

NOTE 5 - FAIR VALUE MEASUREMENTS AND FINANCIAL INSTRUMENTS

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The Company's short-term and long-term investments are classified as available-for-sale.

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 June 30, 2022 and December 31, 2021 (in thousands):

June 30, 2022

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, 2022 and December 31, 2021 (in thousands):

September 30, 2022

Amortized cost Gross Unrealized Gains Gross Unrealized Losses Estimated Fair Value Cash and cash equivalents Short-Term Investments Long-Term Investments

3 unchanged sentences

Subtotal 2,796,590 16 ( 10,195 ) 2,786,411 933,177 1,490,735 362,499

government agency securities 6,910 — ( 1 ) 6,909 6,909 — —

Certificates of deposit 234,614 60 ( 248 ) 234,426 7,999 226,427 —

8 unchanged sentences

Total assets measured at fair value $ 6,262,905

During the three and six months ended June 30, 2022, there were no 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 $ 4.2 million as of June 30, 2022, and is recorded in Other current assets on our condensed consolidated balance sheets.

As of June 30, 2022, no allowance for credit losses was recorded related to an impairment of available-for-sale securities.

During the three and nine months ended September 30, 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 $ 5.7 million as of September 30, 2022, and is recorded in Other current assets on our condensed consolidated balance sheets.

As of September 30, 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:

June 30, 2022

September 30, 2022

Amortized cost Estimated Fair Value

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Level 3 liabilities consist of convertible preferred stock warrant liability, contingent forward contract liability and common stock warrant liability, of which the fair value was measured upon issuance and is remeasured at each reporting date.

The valuation methodology and underlying assumptions are discussed further in Note 7 “Contingent Forward Contracts,” Note 8 “Convertible Preferred Stock Warrant Liability” and Note 9 “Common Stock Warrant Liability”.

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”, Note 7 “Contingent Forward Contracts,” Note 8 “Convertible Preferred Stock Warrant Liability” and Note 9 “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 contingent forward contract liability, convertible preferred stock warrant liability and common stock warrant liability measured and recorded at fair value on a recurring basis (in thousands):

Three Months Ended June 30,

Warrant Liability Contingent Forward

Contract Liability (1)

Three Months Ended September 30,

Warrant Liability Common Stock Warrant Liability

Fair value-beginning of period $ 536,635 $ —

Issuance — 812,048

Change in fair value ( 140,146 ) 24,787

Settlement — ( 1,176,992 )

Fair value-end of period $ 396,489 $ 836,835

Six Months Ended June 30,

Nine Months Ended September 30,

Warrant Liability Contingent Forward

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Warrant Liability (1)

Warrant Liability

Fair value-beginning of period $ 1,394,808 $ — $ 2,960 $ —

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(1) Convertible preferred stock warrant liability and contingent forward contract liability were fully settled during the six months ended June 30, 2021.

NOTE 6 – LONG-TERM DEBT

NOTE 6 – DEBT

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.

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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 is a summary of the 2026 Notes as of June 30, 2022 and December 31, 2021 (in millions):

June 30, 2022 December 31, 2021

The following is a summary of the 2026 Notes as of September 30, 2022 and December 31, 2021 (in millions):

September 30, 2022 December 31, 2021

Principal Amount $ 2,012.5 $ 2,012.5

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Three Months Ended

June 30, 2022 Six Months Ended

June 30, 2022

September 30, 2022 Nine Months Ended

September 30, 2022

Contractual interest $ 6.2 $ 18.9

1 unchanged sentence

Interest expense $ 7.6 $ 22.7

The 2026 Notes were not eligible for conversion as of June 30, 2022 and December 31, 2021.

The 2026 Notes were not eligible for conversion as of September 30, 2022 and December 31, 2021.

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 June 30, 2022, the Company was in compliance with applicable covenants under the indenture governing the 2026 Notes.

As of September 30, 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 the Kingdom of Saudi Arabia and a subsidiary of the Company (“Lucid LLC”) entered into a loan agreement (as subsequently amended, the “SIDF Loan Agreement”) with the SIDF, an affiliate of Public Investment Fund (“PIF”), which is an affiliate of Ayar, the controlling stockholder of the Company.

On February 27, 2022, Lucid, LLC, a limited liability company established in the Kingdom of 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 Third Investment Company, the controlling stockholder of the Company (“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);

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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 $ 93.2 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 the Company’s planned KSA Facility.

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.

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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 June 30, 2022 , no amounts were outstanding under the SIDF Loan Agreement.

As of September 30, 2022 , no amount s were outstanding under the SIDF Loan Agreement.

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 an affiliate of PIF, which is an affiliate of Ayar, the controlling stockholder of the Company.

GIB is a related party of PIF, which is an affiliate of Ayar.

The GIB Facility Agreement provides for two committed revolving credit facilities in an aggregate principal amount of SAR 1 billion (approximately $ 266.2 million).

SAR $ 650 million (approximately $ 173.2 million) under the GIB Facility Agreement is available as bridge financing (the “Bridge Facility”) of Lucid LLC’s capital expenditures in connection with the KSA Facility.

SAR $ 650 million (approximately $ 173.0 million) under the GIB Facility Agreement is available as bridge financing (the “Bridge Facility”) of Lucid LLC’s capital expenditures in connection with AMP-2.

The remaining SAR 350 million (approximately $ 93.2 million) may be used for general corporate purposes (the “Working Capital Facility”).

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The GIB Facility Agreement contains certain conditions precedent to drawdowns, representations and warranties and covenants of Lucid LLC and events of default.

As of June 30, 2022 , the Company had outstanding borrowings of SAR 25 million (approximat ely $ 6.7 million) from the Working Capital Facility, which was recorded within other current liabilities on condensed consolidated balance sheets.

As of June 30, 2022, available borrowings are SAR 650 million (approximately $ 173.2 million) and SAR 325 million (approximately $ 86.6 million) under the Bridge Facility and Working Capital Facility, respectively.

As of June 30, 2022, the Company was in compliance with applicable covenants under the GIB Facility Agreement.

As of September 30, 2022 , the Company had outstanding borrowings of SAR 51 million (approximately $ 13.6 million) from the Working Capital Facility, which was recorded within other current liabilities on the condensed consolidated balance sheets.

As of September 30, 2022, available borrowings are SAR 650 million (approximately $ 173.0 million) and SAR 299 million (approximately $ 79.6 million) under the Bridge Facility and Working Capital Facility, respectively.

As of September 30, 2022, the Company was in compliance with applicable covenants under the GIB Facility Agreement.

ABL Credit Facility

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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 (“FCCR”) financial covenant, in each case on terms set forth in the credit agreement governing the ABL Credit Facility.

As of June 30, 2022, the Company was in compliance with applicable covenants under the ABL Credit Facility.

As of June 30, 2022, the Company had no outstanding borrowings under the ABL Credit Facility.

Availability under the ABL Credit Facility was $ 252.9 million as of June 30, 2022, after giving effect to the borrowing base.

As of September 30, 2022, the Company was in compliance with applicable covenants under the ABL Credit Facility.

As of September 30, 2022, the Company had no outstanding borrowings and $ 36.8 million outstanding letters of credit under the ABL Credit Facility.

Availability under the ABL Credit Facility was $ 303.7 million as of September 30, 2022, 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 on condensed consolidated balance sheets and amortized over the facility term using the straight-line method.

During the three months ended June 30, 2022, amortization of the deferred issuance costs and commitment fee were not material.

During the three and nine months ended September 30, 2022, amortization of the deferred issuance costs and commitment fee were not material.

NOTE 7 - CONTINGENT FORWARD CONTRACTS

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Since the Series D contingent forward contract liability was fully settled in June 2020, there was no related outstanding contingent forward contract liability as of December 31, 2020.

As discussed in Note 10 “Convertible Preferred Stock”, in September 2020, along with the execution of the Securities Purchase Agreement, the Company granted Ayar Third Investment Company (“Ayar”) the right to purchase the Company’s additional Series E convertible preferred stock upon the Company’s satisfaction of certain milestones in November 2020.

As discussed in Note 10 “Convertible Preferred Stock”, in September 2020, along with the execution of the Securities Purchase Agreement, the Company granted Ayar the right to purchase the Company’s additional Series E convertible preferred stock upon the Company’s satisfaction of certain milestones in November 2020.

The Company determined Ayar’s right to participate in future Series E convertible preferred stock financing to be freestanding similar to a derivative in the form of contingent forward contracts and recorded the initial valuation of $ 0.8 million into contingent forward contract liabilities.

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The Company determined the right to participate in future Series E convertible preferred share financing to be a freestanding financial instrument similar to a derivative in the form of contingent forward contracts and recorded the initial valuation of $ 1,444.9 million and $ 722.4 million for the third closing and fourth closing, respectively, as contingent forward contract liabilities.

Since the contingent forward contract liability related to the third closing was fully settled in the same month following the execution of the amendment, the Company recorded no related fair value remeasurements in the condensed consolidated statements of operations.

The Company issued Offer Notices to certain of the Company’s management and members of the Board of Directors in March 2021 and April 2021.

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The Company recorded the award’s full fair value on each recipient’s grant date as stock-based compensation, and derecognized the related contingent forward contract liability.

The Company revalued the contingent forward contract liability for the remaining participants and recorded $ 12.4 million and $ 454.5 million fair value remeasurement loss related to the contingent forward contract liability for the three and six months ended June 30, 2021, respectively, with the final fair value of the contingent forward contract liability of $ 1.2 billion reclassified into Series E convertible preferred stock upon the fourth closing in April 2021.

The Company revalued the contingent forward contract liability for the remaining participants and recorded $ 454.5 million fair value remeasurement loss related to the contingent forward contract liability for the nine months ended September 30, 2021, with the final fair value of the contingent forward contract liability of $ 1.2 billion reclassified into Series E convertible preferred stock upon the fourth closing in April 2021.

There was no related outstanding contingent forward contract liability as of December 31, 2021.

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In March and September 2017, the Company issued two convertible preferred stock warrants to purchase a total of 1,546,799 shares of Series D convertible preferred stock, with an exercise price of $ 1.94 per share.

The Company recorded the convertible preferred stock warrants at fair value using a Monte-Carlo simulation at issuance, which had been subsequently remeasured to fair value each reporting period with the changes recorded in the condensed consolidated statements of operations.

In February 2021, all the outstanding warrants were settled in its entirety at an exercise price of $ 1.94 per share for an aggregate purchase price of $ 3.0 million.

Upon final settlement, the Company converted the warrant into $ 12.9 million Series D convertible preferred stock, and recorded $ 7.0 million losses related to fair value remeasurements of the warrants in the condensed consolidated statements of operations for the six months ended June 30, 2021.

NOTE 9 - COMMON STOCK WARRANT LIABILITY

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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 $ 1,394.8 million as of December 31, 2021.

The Private Placement Warrants remained unexercised and were remeasured to fair value of $ 536.6 million as of June 30, 2022, resulting in a gain of $ 334.8 million and $ 858.2 million, respectively, for the three and six months ended June 30, 2022 recognized in the condensed consolidated statements of operations.

The Private Placement Warrants remained unexercised and were remeasured to fair value of $ 396.5 million as of September 30, 2022, resulting in a gain of $ 140.1 million and $ 998.3 million, respectively, for the three and nine months ended September 30, 2022 recognized in the condensed consolidated statements of operations and comprehensive loss.

The 44,350,000 Private Placement Warrants included the 14,783,333 Sponsor Earnback Warrants subject to the contingent forfeiture provisions.

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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:

June 30, 2022 December 31, 2021

September 30, 2022 December 31, 2021

Fair value of Private Placement Warrants per share

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The level 3 fair value inputs used in the Monte-Carlo simulation models and Black-Scholes option pricing models were as follows:

June 30, 2022 December 31, 2021

September 30, 2022 December 31, 2021

Volatility 80.00 % 85.00 %

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Upon the Closing of the Merger, the Company cancelled and converted all 1,155,909,367 shares of issued and outstanding convertible preferred stock into 1,155,909,367 shares of Lucid common stock based upon the conversion rate as calculated pursuant to Legacy Lucid’s memorandum and articles of association at the date and time that the Merger became effective.

As of June 30, 2022 and December 31, 2021, there were no issued and outstanding shares of convertible preferred stock.

As of September 30, 2022 and December 31, 2021, there were no issued and outstanding shares of convertible preferred stock.

In 2014 through April 2021, the Company had issued Series A, Series B, Series C, and Series D and Series E convertible preferred stock (“Series A,” “Series B,” “Series C,” “Series D,” “Series E,” respectively) (collectively, the “Convertible Preferred Stock”).

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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 June 30, 2022 and December 31, 2021, there were no issued and outstanding shares of preferred stock.

As of September 30, 2022 and December 31, 2021, there were no issued and outstanding shares of preferred stock.

On July 23, 2021, in connection with the reverse recapitalization treatment of the Merger, the Company effectively issued 425,395,023 new shares of common stock upon the Closing.

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at $ 24.15 per share.

No common stock was repurchased for the three and six months ended June 30, 2022 and 2021.

No common stock was repurchased for the three and nine months ended September 30, 2022 and 2021.

Common Stock Reserved for Issuance

The Company’s common stock reserved for future issuances as of June 30, 2022 and December 31, 2021, were as follows:

The Company’s common stock reserved for future issuances as of September 30, 2022 and December 31, 2021, were as follows:

September 30,

2022 December 31,

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Stock Options

A summary of stock option activity for the six months ended June 30, 2022 was as follows:

A summary of stock option activity for the nine months ended September 30, 2022 was as follows:

Outstanding Options

Number of Options Weighted Average Exercise Price Weighted-Average Remaining Contractual Term Intrinsic Value (in thousands)

Balance—December 31, 2021 64,119,902 $ 1.08 6.6 $ 2,370,666

Options granted

Balance as of December 31, 2021 64,119,902 $ 1.08 6.60 $ 2,370,666

Options exercised

2 unchanged sentences

( 2,289,081 ) 1.71

Balance—June 30, 2022 46,268,897 $ 1.15 6.84 $ 742,613

Options vested and exercisable June 30, 2022 31,731,833 $ 0.93 6.26 $ 515,722

As of June 30, 2022, unrecognized stock-based compensation cost related to outstanding unvested stock options that are expected to vest was $ 8.6 million, which is expected to be recognized over a weighted-average period of 2.1 years.

Restricted Stock Unit

A summary of RSU award activity was as follows:

Balance as of September 30, 2022

43,132,157 $ 1.17 6.69 $ 554,954

Options vested and exercisable as of September 30, 2022 31,474,979 $ 0.97 6.24 $ 410,294

As of September 30, 2022, unrecognized stock-based compensation cost related to outstanding unvested stock options that are expected to vest was $ 9.3 million, which is expected to be recognized over a weighted-average period of 1.9 years.

Restricted Stock Units

A summary of restricted stock units (“RSUs”) activity for the nine months ended September 30, 2022 was as follows:

Restricted Stock Units

Time-Based Shares Performance-Based Shares Total Shares Weighted-Average Grant-Date Fair Value

4 unchanged sentences

Cancelled/Forfeited ( 2,133,132 ) — ( 2,133,132 ) 17.20

Balance as of June 30, 2022

Balance as of September 30, 2022

37,300,903 2,090,140 39,391,043 $ 20.80

As of June 30, 2022, unrecognized stock-based compensation cost related to outstanding unvested time-based RSUs that are expected to vest was $ 563.3 million, which is expected to be recognized over a weighted-average period of 2.9 years.

As of September 30, 2022, unrecognized stock-based compensation cost related to outstanding unvested time-based RSUs that are expected to vest was $ 554.0 million, which is expected to be recognized over a weighted-average period of 3.0 years.

All performance-based RSUs granted to the CEO are subject to performance and market conditions.

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Expected dividends —

The Company recognizes compensation expense on a graded vesting schedule over the requisite vesting period for the time-based awards and over the derived service period for the CEO performance-based awards.

The Company recognizes compensation expense on a graded vesting schedule 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 six months ended June 30, 2022, the market capitalization 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.

We recorded stock-based compensation expense of $ 85.4 million for the four tranches during the six months ended June 30, 2022, and no such expense was recognized in the same period in the prior year.

As of June 30, 2022, the unamortized expense for the fifth tranche, representing 2,090,140 RSUs, was $ 13.9 million which will be recognized over a period of 1.2 years.

For the three and six months ended June 30, 2022, the Company withheld approximately 0.5 million and 8.5 million shares of common stock, respectively, by net settlement to meet the related tax withholding requirements related to the CEO time-based and performance-based RSUs.

During the nine months ended September 30, 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.

We recorded stock-based compensation expense of $ 85.4 million for the four tranches during the nine months ended September 30, 2022, and no such expense was recognized in the same period in the prior year.

As of September 30, 2022, the unamortized expense for the fifth tranche, representing 2,090,140 RSUs, was $ 11.0 million which will be recognized over a period of 1.0 years.

For the three and nine months ended September 30, 2022, the Company withheld approximately 0.4 million and 8.9 million shares of common stock, respectively, by net settlement to meet the related tax withholding requirements related to the CEO time-based and performance-based RSUs.

Employee Stock Purchase Plan (“ESPP”)

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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 June 30, 2022, unrecognized stock-based compensation cost related to the ESPP was $ 35.9 million, which is expected to be recognized over a weighted-average period of 1.9 years.

As of September 30, 2022, unrecognized stock-based compensation cost related to the ESPP was $ 29.0 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 six months ended June 30, 2022 and 2021, was classified in the condensed consolidated statements of operations as follows (in thousands):

Three Months Ended June 30, Six Months Ended June 30,

Total employee and nonemployee stock-based compensation expense for the three and nine months ended September 30, 2022 and 2021, 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,

2022 2021 2022 2021

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Total $ 83,302 $ 236,956 $ 352,245 $ 366,200

Total stock-based compensation expense for the three and six months ended June 30, 2021 included the $ 20.7 million and $ 123.6 million share-based compensation expense, respectively, related to the Series E convertible preferred shares issuance in March 2021 and April 2021.

Total stock-based compensation expense for the three and nine months ended September 30, 2021 included $ 235.6 million stock-based compensation expense related to the RSUs.

The nine months ended September 30, 2021 also included $ 123.6 million stock-based compensation expense, respectively, related to the Series E convertible preferred stock issuance in March 2021 and April 2021.

Refer to Note 7 “Contingent Forward Contracts” and Note 10 “Convertible Preferred Stock” for further detail.

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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 classified 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, 2022, assets and liabilities associated with the finance lease were $ 79.3 million and $ 80.0 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 the sales proceeds received as a financial liability within other long-term liabilities on our condensed consolidated balance sheets as of September 30, 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,

2022 December 31,

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Total finance lease liabilities $ 89,151 $ 10,266

The components of lease expense are as follows within the Company’s condensed consolidated statement of operations (in thousands):

Three Months Ended June 30, Six Months Ended June 30,

The components of lease expense are 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,

2022 2021 2022 2021

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

September 30,

2022 December 31,

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Finance leases 5.67 % 5.58 %

As of June 30, 2022, the maturities of the Company’s operating and finance lease liabilities (excluding short-term leases) were as follows (in thousands):

As of September 30, 2022, the maturities of the Company’s operating and finance lease liabilities (excluding short-term leases) were as follows (in thousands):

Operating Leases Finance Leases

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Contractual Obligations

As of June 30, 2022 and December 31, 2021, the Company had $ 746.7 million and $ 286.0 million, respectively, in commitments related to the Arizona manufacturing plant and equipment.

These commitments represent future expected payments on open purchase orders entered into as of June 30, 2022 and December 31, 2021.

T he Company entered into a non-cancellable long-term commitment to purchase certain inventory components.

The estimated future payments having a remaining term in excess of one year as of June 30, 2022 was as follows (in thousands):

As of September 30, 2022 and December 31, 2021, the Company had $ 697.4 million and $ 286.0 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, 2022 and December 31, 2021.

T he 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, 2022 was as follows (in thousands):

Years ended December 31,

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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 Complaint will be successful or that it will avoid liability in these matters.

On December 3, 2021, the Company received a subpoena from the Securities and Exchange Commission (the “SEC”) requesting the production of certain documents related to an investigation by the SEC.

Although there is no assurance as to the scope or outcome of this matter, the investigation appears to concern the merger between Churchill Capital Corp.

IV and Atieva, Inc.

and certain projections and statements.

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.

Although there is no assurance as to the scope or outcome of this matter, the investigation appears to concern the Merger.

The Company is cooperating fully with the SEC in its review.

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4:22-cv-00531-YGR (N.D.

Cal.) (filed on January 26, 2022) and Zsata Williams-Spinks v.

Peter Rawlinson, et al.

4:22-cv-01115-YGR (N.D.

Cal.) (filed on February 23, 2022).

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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 complaints name as defendants Lucid Group, Inc.

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The complaint also names the Company as a nominal defendant.

Based on allegations that are similar to those in the Mangino and Goel actions, 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 seek compensatory damages, punitive damages, interest, and attorneys’ fees and expenses.

To the Company’s understanding, the matter has not been served on any defendant to date.

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 actions.

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.

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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 and utilities infrastructure in the amount of $ 43.9 million and $ 30.4 million as of June 30, 2022 and December 31, 2021, respectively, for which no liabilities are recorded on the condensed consolidated balance sheets.

The Company has indemnification obligations with respect to letters of credit and surety bond primarily used as security against facility leases and utilities infrastructure in the amount of $ 51.4 million and $ 30.4 million as of September 30, 2022 and December 31, 2021, respectively, for which no liabilities are recorded on the condensed consolidated balance sheets.

NOTE 16 - INCOME TAXES

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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 for the three and six months ended June 30, 2022 and the same periods in the prior year differs from the U.S.

The Company's effective tax rate for the three and nine months ended September 30, 2022 and the same periods in the prior year differs from the U.S.

statutory rate of 21% as a result of our U.S.

losses for which no benefit will be realized, as well as state taxes and our foreign operations which are subject to tax rates that differ from those in the United States.

The Company recorded an income tax provision for the three and six months ended June 30, 2022 of $ 68 thousand and $ 391 thousand, respectively, as compared to $ 5 thousand and $ 9 thousand for the same periods in the prior year.

Income tax provision was $ 0.1 million and $ 0.5 million, respectively, for the three and nine months ended September 30, 2022, and immaterial for the same periods in the prior year.

The increase in the income tax provision was driven by the increased activities in foreign jurisdictions.

This resulted in an effective tax rate of 0.0 % and ( 0.1 )%, respectively, for the three and six months ended June 30, 2022, and 0.0 % for the same periods in the prior year.

There we re no material ch anges to the Company’s unrecognized tax benefits during the three and six months ended June 30, 2022 , and the Company does not expect to have any significant changes to unrecognized tax benefits through the end of the fiscal year.

This resulted in an effective tax rate of 0.0 % and ( 0.1 )%, respectively, for the three and nine months ended September 30, 2022, and 0.0 % for the same periods in the prior year.

There were no material changes to the Company’s unrecognized tax benefits during the three and nine months ended September 30, 2022, and the Company does not expect to have any significant changes to unrecognized tax benefits through the end of the fiscal year.

NOTE 17 - NET LOSS PER SHARE

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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 June 30, Six Months Ended June 30,

Three Months Ended September 30, Nine Months Ended September 30,

2022 2021 2022 2021

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Weighted-average shares outstanding, diluted 1,690,963,548 1,217,032,285 1,686,576,589 432,654,607

1,686,815,404 36,298,508 1,684,328,007 34,484,767

Net loss per share:

Basic $ ( 0.32 ) $ ( 0.43 ) $ ( 0.50 ) $ ( 8.56 )

$ ( 0.33 ) $ ( 7.21 ) $ ( 0.69 ) $ ( 92.13 )

(1) The presentation of our diluted loss per share for the six months ended June 30, 2022 reflects correction of an immaterial error in our previously reported diluted loss per share for the three months ended March 31, 2022 for the inclusion of the dilutive effect of our Private Placement Warrants.

The adjustment resulted in a change in diluted loss per share from $( 0.05 ) to $( 0.36 ) and the diluted weighted average shares outstanding from 1,654,322,379 to 1,681,545,859 for the three months ended March 31, 2022.

Diluted $ ( 0.40 ) $ ( 0.43 ) $ ( 1.09 ) $ ( 8.56 )

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 2022 2021

Convertible preferred stock (on an as-converted basis) — 1,155,909,367

Private warrants to purchase common stock — 34,494,445

Public warrants to purchase common stock — 9,317,468

Options outstanding to purchase common stock 43,132,157 67,013,622

3 unchanged sentences

Total 122,239,268 137,984,401

The 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 conditions have not been satisfied as of June 30, 2022.

The 2,090,140 and 16,024,411 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 conditions have not been satisfied as of September 30, 2022 and 2021, respectively.

The 11,500,000 shares and 9,855,555 shares of common stock equivalents subject to the remaining Sponsor Earnback Shares and Sponsor Earnback Warrants, respectively, are excluded from the anti-dilutive table above as of September 30, 2021 as the underlying shares remain contingently issuable as the earnback triggering events had not yet been satisfied.

NOTE 18 - EMPLOYEE BENEFIT PLAN

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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 six months ended June 30, 2022 and 2021.

The Company made no matching contribution to the 401(k) Plan for the three and nine months ended September 30, 2022 and 2021.

NOTE 19 - RELATED PARTY TRANSACTIONS

Public Investment Fund Internship Agreement

In July 2021, we entered into an agreement with PIF, which is an affiliate of Ayar, the controlling stockholder of the Company, to implement a recruitment and talent development program pursuant to which we 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.

In July 2021, we entered into an agreement with PIF, which is an affiliate of Ayar, to implement a recruitment and talent development program pursuant to which we 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.

We expect to be reimbursed by PIF in an aggregate of approximately $ 1 million in 2022 for such expenses.

The expenses incurred under the agreement were $ 0.7 million for the three and six months ended June 30, 2022.

The expenses incurred under the agreement were $ 0.3 million and $ 1.0 million, respectively, for the three and nine months ended September 30, 2022, and nil for the same periods in the prior year.

Professional Services Contract

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Pursuant to the agreement, Klein will provide strategic advice and assistance in connection with capital markets and other strategic matters.

The cost incurred under the agreement was $ 0.3 million and $ 0.6 million for the three and six months ended June 30, 2022, and nil for the same periods in the prior year.

In February 2022, we entered into a lease agreement with KAEC, an affiliate of PIF, for our first international manufacturing plant in the Kingdom of Saudi Arabia.

The cost incurred under the agreement was $ 0.4 million and $ 1.0 million for the three and nine months ended September 30, 2022, and nil for the same periods in the prior year.

In February 2022, we 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 the Kingdom of Saudi Arabia.

The lease has an initial term of 25 years expiring in Year 2047.

As of June 30, 2022, the right-of-use assets and lease liabilities related to this lease were $ 5.0 million and $ 5.2 million, respectively.

The lease expense recorded during the three and six months ended June 30, 2022 was immaterial.

As of September 30, 2022, the right-of-use assets and lease liabilities related to this lease were $ 4.9 million and $ 5.3 million, respectively.

The lease expense recorded during the three and nine months ended September 30, 2022 was immaterial.

SIDF Loan Agreement

In February 2022, Lucid LLC entered into the SIDF Loan Agreement with the SIDF, an affiliate of PIF, which is an affiliate of Ayar, the controlling stockholder of the Company.

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 “Long-Term Debt” for more information.

See Note 6 “Debt” for more information.

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

In February 2022, Lucid LLC entered into agreements with MISA, an affiliate of PIF, under which the Company will receive economic incentives over time, subject to certain conditions and milestones, in connection with Lucid LLC’s on-going design and construction of the Company’s KSA Facility.

In the three and six months ended June 30, 2022, no payments or incentives were received under these 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 are 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 agreement, 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 chronic 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 completely-built-up (“CBU”) operations at AMP-2 at the latest.

During the three and nine months ended September 30, 2022, the Company received support of SAR 366 million (approximately $ 97.3 million) in cash, of which $ 70.7 million was recorded as deferred liability within other long-term liabilities and $ 26.6 million was recorded as a deduction in calculating the carrying amount of the related assets on the condensed consolidated balance sheet.

There are no unfulfilled conditions and contingencies attached to the payments received.

Payment receipts are classified as investing cash inflows on 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 an affiliate of PIF, which is an affiliate of Ayar, the controlling stockholder of the Company.

GIB is a related party of PIF, which is an affiliate of Ayar.

The GIB Facility Agreement provides for two committed revolving credit facilities in an aggregate principal amount of SAR 1 billion (approximately $ 266.2 million).

See Note 6 “Long-Term Debt” for more information.

See Note 6 “Debt” for more information.

NOTE 20 – SUBSEQUENT EVENTS

At-the-Market Offering

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.

(collectively, the “Managers”), under which the Company may offer and sell, from time to time, shares of its common stock having an aggregate offering price up to $ 600 million.

Subject to the terms and conditions of the Equity Distribution Agreement, the Managers may sell the shares by any method permitted by law including, without limitation, in ordinary brokers’ transactions, to or through a market maker, in privately negotiated transactions, in block trades, in transactions that are deemed to be “at the market offerings” as defined in Rule 415 under the Securities Act or through a combination of any such methods of sale.

The Equity Distribution Agreement will terminate on the earlier of September 1, 2025, its termination by the parties pursuant to the terms of the Equity Distribution Agreement, or the issuance and sale of all of the shares through any Manager pursuant to the terms under the Equity Distribution Agreement.

Subscription Agreement

In addition, on November 8, 2022, the Company entered into a Subscription Agreement (the “Subscription Agreement”) with Ayar, pursuant to which Ayar has agreed to purchase from the Company, subject to certain conditions, up to $ 915 million (the “Maximum Investment Amount”) of shares of its common stock in one or more private placements through March 31, 2023 (the “Ayar Investment”).

The number of shares that Ayar will purchase from the Company in the Ayar Investment will be equal to the number of shares of its common stock that the Company actually sells pursuant to the Equity Distribution Agreement, multiplied by a ratio, the numerator of which is approximately 60.4 %, which is the number of shares of its common stock owned by Ayar as a percentage of the total number of shares of its common stock outstanding as of September 30, 2022, and the denominator of which is approximately 39.6 %, rounded down to the nearest whole share.

The Company will settle the Ayar Investment on the last trading day of each calendar quarter based on the number of shares that are actually sold pursuant to the Equity Distribution Agreement during such calendar quarter, at a price per share equal to the weighted average price to the public of the shares that are actually sold pursuant to the Equity Distribution Agreement during such calendar quarter.

In addition, Ayar will have the right, but not the obligation, to enter into a subscription agreement substantially on the terms and subject to the conditions set forth in the Subscription Agreement in respect of any increase to the maximum offering amount under the Equity Distribution Agreement and/or any new at-the-market offering of the Company’s common stock made or commenced, respectively, during the term of the Subscription Agreement.

The Subscription Agreement will terminate automatically upon the earlier of March 31, 2023, the date upon which the Company has sold to Ayar shares for an aggregate purchase price equal to the Maximum Investment Amount, or its termination by the parties pursuant to the terms of the Subscription Agreement.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements