What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2023-05-08 compared with 2022-11-08 · 274 added, 569 removed, 545 unchanged (61% of the section changed)

3 unchanged sentences

(in thousands, except share and per share data)

September 30,

2023 December 31,

26 unchanged sentences

STOCKHOLDERS’ EQUITY

Preferred stock, par value $ 0.0001 ;

10,000,000 shares authorized as of September 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 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

15,000,000,000 shares authorized as of March 31, 2023 and December 31, 2022;

1,834,242,999 and 1,830,172,561 shares issued and 1,833,385,174 and 1,829,314,736 shares outstanding as of March 31, 2023 and December 31, 2022, respectively

Additional paid-in capital 11,809,781 11,752,138

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

Treasury stock, at cost, 857,825 shares at March 31, 2023 and December 31, 2022

( 20,716 ) ( 20,716 )

9 unchanged sentences

Three Months Ended

September 30, Nine Months Ended

September 30,

2022 2021 2022 2021

Revenue $ 149,432 $ 57,675

3 unchanged sentences

Selling, general and administrative 168,770 223,159

Restructuring charges 22,496 —

Total cost and expenses 921,593 655,205

1 unchanged sentence

Other income (expense), net

Change in fair value of forward contracts — — — ( 454,546 )

Change in fair value of convertible preferred stock warrant liability — — — ( 6,976 )

Change in fair value of common stock warrant liability ( 40,802 ) 523,330

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

Interest income 40,005 —

Interest expense ( 7,108 ) ( 7,719 )

Other income (expense), net 665 249 9,898 ( 151 )

Other income, net 667 956

Total other income (expense), net ( 7,238 ) 516,567

2 unchanged sentences

Net loss ( 779,528 ) ( 81,286 )

Deemed dividend related to the issuance of Series E convertible preferred stock — — — ( 2,167,332 )

Net loss attributable to common stockholders, basic ( 779,528 ) ( 81,286 )

1 unchanged sentence

Net loss attributable to common stockholders, diluted $ ( 779,528 ) $ ( 604,616 )

Weighted average shares outstanding used in computing net loss per share attributable to common stockholders, basic 1,676,048,504 1,217,032,285 1,666,693,217 432,654,607

Weighted average shares outstanding used in computing net loss per share attributable to common stockholders, diluted 1,690,963,548 1,217,032,285 1,686,576,589 432,654,607

Net loss per share attributable to common stockholders, basic $ ( 0.32 ) $ ( 0.43 ) $ ( 0.50 ) $ ( 8.56 )

Net loss per share attributable to common stockholders, diluted $ ( 0.40 ) $ ( 0.43 ) $ ( 1.09 ) $ ( 8.56 )

Other comprehensive loss

Net unrealized losses on investments, net of tax $ ( 12,575 ) $ — $ ( 13,266 ) $ —

Comprehensive loss ( 542,676 ) ( 524,403 ) ( 845,078 ) ( 1,534,081 )

Deemed dividend related to the issuance of Series E convertible preferred stock — — — ( 2,167,332 )

Weighted average shares outstanding attributable to common stockholders

Basic 1,831,725,009 1,654,322,379

Diluted 1,831,725,009 1,681,545,859

Net loss per share attributable to common stockholders

Basic $ ( 0.43 ) $ ( 0.05 )

Diluted $ ( 0.43 ) $ ( 0.36 )

Other comprehensive income

Net unrealized gains on investments, net of tax $ 4,035 $ —

Comprehensive loss attributable to common stockholders $ ( 775,493 ) $ ( 81,286 )

1 unchanged sentence

LUCID GROUP, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CONVERTIBLE PREFERRED STOCK AND

STOCKHOLDERS’ EQUITY (DEFICIT)

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(in thousands, except share data)

Common Stock Additional

Capital Treasury

Stock Accumulated

Capital Treasury Stock Accumulated

Comprehensive

2 unchanged sentences

Stockholders’

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

Three Months Ended March 31, 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 — — — — — ( 779,528 ) ( 779,528 )

Net unrealized losses on investments, net of tax — — — — ( 12,575 ) — ( 12,575 )

Issuance and sale of common stock for tax withholdings of employee RSUs — — ( 21,654 ) — — — ( 21,654 )

Net unrealized gains on investments, net of tax — — — — 4,035 — 4,035

Tax withholding payments for net settlement of employee awards — — ( 6,499 ) — — — ( 6,499 )

Issuance of common stock upon vesting of employee RSUs 1,870,073 — — — — — —

1 unchanged sentence

Stock-based compensation — — 61,961 — — — 61,961

Balance as of September 30, 2022

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

Preferred Stock Common Stock Additional

Capital Accumulated

Deficit Total

Stockholders’

Equity (Deficit)

Three Months Ended September 30, 2021

Amount Shares (1)

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 )

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 September 30, 2021

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

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

Balance as of March 31, 2023

1,833,385,174 $ 183 $ 11,809,781 $ ( 20,716 ) $ ( 7,537 ) $ ( 8,149,860 ) $ 3,631,851

(1) The number of shares of convertible preferred stock and common stock issued and outstanding prior to the Merger have been retroactively adjusted by the Exchange Ratio to give effect to the reverse recapitalization treatment of the Merger.

See Note 1 “Description of Business” and Note 3 “Reverse Capitalization” for more information.

LUCID GROUP, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CONVERTIBLE PREFERRED STOCK AND

STOCKHOLDERS’ EQUITY (DEFICIT) - continued

(in thousands, except share data)

Common Stock Additional

Capital Treasury

Stock Accumulated

Capital Treasury Stock Accumulated

Comprehensive

2 unchanged sentences

Stockholders’

Nine Months Ended September 30, 2022

Three Months Ended March 31, 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 — — — — — ( 81,286 ) ( 81,286 )

Net unrealized losses on investments, net of tax — — — — ( 13,266 ) — ( 13,266 )

Issuance and sale of common stock for tax withholdings of employee RSUs — — ( 212,895 ) — — — ( 212,895 )

Tax withholding payments for net settlement of employee awards — — ( 182,265 ) — — — ( 182,265 )

Issuance of common stock upon vesting of employee RSUs 7,081,008 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 12,103,110 1 9,113 — — — 9,114

Stock-based compensation — — 174,551 — — — 174,551

Balance as of September 30, 2022

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

Preferred Stock Common Stock Additional

Capital Accumulated

Deficit Total

Stockholders’

Equity (Deficit)

Nine Months Ended September 30, 2021

Amount Shares (1)

Balance as of January 1, 2021 957,159,704 $ 2,494,076 28,791,702 $ 3 $ 38,113 $ ( 1,356,893 ) $ ( 1,318,777 )

Net loss — — — — — ( 1,534,081 ) ( 1,534,081 )

Repurchase of Series B convertible preferred stock ( 3,525,365 ) — — — — — —

Issuance of Series D convertible preferred stock upon exercise of warrants 1,546,799 12,936 — — — — —

Issuance of Series E convertible preferred stock 200,728,229 3,206,159 — — ( 22,395 ) ( 2,129,218 ) ( 2,151,613 )

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 September 30, 2021

Balance as of March 31, 2022

1,666,739,708 $ 167 $ 9,997,176 $ ( 20,716 ) $ — $ ( 6,147,158 ) $ 3,829,469

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

______________________________________________________________

See Note 1 “Description of Business” and Note 3 “Reverse Capitalization” for more information.

LUCID GROUP, INC.

1 unchanged sentence

(in thousands)

Nine Months Ended

September 30,

Three Months Ended

Cash flows from operating activities

6 unchanged sentences

Inventory and firm purchase commitments write-downs 227,048 96,366

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

Change in fair value of preferred stock warrant liability — 6,976

Change in fair value of common stock warrant liability 40,802 ( 523,330 )

14 unchanged sentences

Purchases of property, plant and equipment ( 241,770 ) ( 185,082 )

Proceeds from government grant 97,267 —

Proceeds from sale of property, plant and equipment — 19

Purchases of investments ( 842,538 ) —

Proceeds from maturities of investments 1,041,151 —

Proceeds from sale of investments 13,244 —

Proceeds from insurance claims 1,197 —

Net cash used in investing activities ( 28,716 ) ( 185,082 )

2 unchanged sentences

Payment for finance lease liabilities ( 1,427 ) ( 1,201 )

Proceeds from short-term insurance financing note — 41,935

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 )

Proceeds from issuance of Series D convertible preferred stock — 3,000

Proceeds from issuance of Series E convertible preferred stock — 600,000

Proceeds from exercise of stock options 2,181 9,114

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 —

Stock repurchases from employees for tax withholdings ( 212,895 ) —

Payment for credit facility issuance costs ( 6,631 ) —

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

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

Tax withholding payments for net settlement of employee awards ( 6,499 ) ( 182,265 )

Net cash used in financing activities ( 5,745 ) ( 187,301 )

Net decrease in cash, cash equivalents, and restricted cash ( 835,725 ) ( 867,032 )

Beginning cash, cash equivalents, and restricted cash 1,737,320 6,298,020

Ending cash, cash equivalents, and restricted cash $ 901,595 $ 5,430,988

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

LUCID GROUP, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - continued

(in thousands)

Nine Months Ended

September 30,

Supplemental disclosure of cash flow information:

Cash paid for interest, net of amounts capitalized $ 857 $ 312

Cash paid for taxes 480 —

Supplemental disclosure of non-cash investing and financing activity:

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

Decrease in purchases of property, plant and equipment included in Accounts payable and other current liabilities $ ( 19,812 ) $ ( 2,753 )

Property, plant and equipment and right-of-use assets obtained through leases $ 3,862 $ 10,008

Issuance of Series D convertible preferred stock upon exercise of preferred stock warrants — 9,936

Issuance of Series E convertible preferred stock contingent forward contracts — 2,167,332

Capital contribution upon forfeit of Series E awards — 15,719

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

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

September 30, 2022

March 31, 2023

NOTE 1 – DESCRIPTION OF BUSINESS

Lucid Group, Inc.

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

(“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.

2 unchanged sentences

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.

See Note 3 “Reverse Recapitalization” for more information.

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.

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 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 devotes its efforts to business planning, selling and servicing of vehicles, 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 March 31, 2023, the Company had incurred operating losses and negative cash flows from operating activities.

For the three months ended March 31, 2023 and 2022, the Company has incurred net losses of $ 779.5 million and $ 81.3 million, respectively.

The Company had an accumulated deficit of $ 8.1 billion as of March 31, 2023.

In 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 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 continues to expand AMP-1, construct its planned Advanced Manufacturing Plant 2 in 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.

The aforementioned activities will require considerable capital, above and beyond the expected cash inflows from the initial sales of the Lucid Air.

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 and investments.

The Company’s existing sources of liquidity include cash, cash equivalents, investments, credit facilities and equity offering.

Historically, the Company funded operations primarily with issuances of 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 of $ 2,012.5 million principal amount of 1.25 % convertible senior notes due in December 2026.

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.

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 $ 266.4 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.

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 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’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) expanding production and manufacturing at existing manufacturing facilities in Casa Grande, Arizona, (iv) phase 2 of construction at AMP-1 in Casa Grande, Arizona, (v) construction of AMP-2 in Saudi Arabia, 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;

further develop its supply chain and manufacturing;

and hire additional management and other key personnel.

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.

1 unchanged sentence

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;

changes in the overall demand for its products and services;

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 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.

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, 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, 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.

2 unchanged sentences

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.

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.

Governmental authorities have continued to implement numerous and constantly evolving measures to attempt to contain the virus, such as travel bans and restrictions, masking recommendations and mandates, vaccine recommendations and mandates, limits on gatherings, quarantines, shelter-in-place orders and business shutdowns.

The Company has taken proactive action to protect the health and safety of its employees, customers, partners and suppliers, consistent with the latest and evolving governmental guidelines.

Until the COVID-19 pandemic is adequately contained, the Company expects to continue to implement appropriate measures.

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 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.

Broader impacts of the pandemic have included inflationary pressure as well as ongoing, industry-wide challenges in logistics and supply chains, such as increased supplier lead times and ongoing constraints 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, 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 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.

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

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, 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, 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.

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 March 31, 2023 and the results of operations for the three months ended March 31, 2023 and 2022.

The results of operations for the three months ended March 31, 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 intercompany balances and transactions have been eliminated in consolidation.

All significant intercompany balances and transactions have been eliminated in consolidation.

Use of Estimates

2 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, 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.

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.

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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 noncurrent assets is primarily related to letters of credit issued to the landlords for certain of the Company’s leasehold facilities.

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 statements of cash flows (in thousands):

September 30,

2022 December 31,

2021 September 30,

2021 December 31,

March 31, 2023 December 31, 2022 March 31, 2022 December 31, 2021

Cash and cash equivalents $ 900,038 $ 1,735,765 $ 5,391,844 $ 6,262,905

7 unchanged sentences

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.

Summary of Significant Accounting Policies

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 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.

The Company classifies its investments as either short-term or long-term based on each instrument’s underlying contractual maturity date.

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, 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.

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, we reduce the transaction price and record a sales return reserve against revenue for estimated variable consideration related to future product returns.

Such return rate estimates are based on historical experience and were not material for the three months ended March 31, 2023 and 2022.

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.

Vehicle sales with RVG totaled $ 18.7 million and nil during the three months ended March 31, 2023 and 2022.

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 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.

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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

In November 2021, the Financial Accounting Standards Board (“FASB”) issued ASU No.

2021-10, Government Assistance (Topic 832):

Disclosures by Business Entities about Government Assistance, which requires annual disclosures about transactions with a government that are accounted for by applying a grant or contribution accounting model by analogy.

The disclosure requirements include information about the nature of the transactions and the related accounting policy, the line items on the balance sheet and income statement that are affected by the transactions, the amount applicable to each financial statement line and significant terms and conditions of the transactions.

The guidance is effective for annual periods beginning after December 15, 2021 and can be applied either prospectively or retrospectively.

The Company adopted ASU 2021-10 prospectively on January 1, 2022.

The adoption of this ASU did not have an impact to the condensed consolidated financial statements and related disclosures.

NOTE 3 – REVERSE RECAPITALIZATION

On July 23, 2021, upon the consummation of the Merger, all holders of 451,295,965 issued and outstanding Legacy Lucid common stock received shares of Lucid common stock at a deemed value of $ 10.00 per share after giving effect to the exchange ratio of 2.644 (the “Exchange Ratio”) resulting in 1,193,226,511 shares of Lucid common stock issued and outstanding as of the Closing and all holders of 42,182,931 issued and outstanding Legacy Lucid equity awards received Lucid equity awards covering 111,531,080 shares of Lucid common stock at a deemed value of $ 10.00 per share after giving effect to the Exchange Ratio, based on the following events contemplated by the Merger Agreement:

• the cancellation and conversion of all 437,182,072 issued and outstanding shares of Legacy Lucid preferred stock into 437,182,072 shares of Legacy Lucid common stock at 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;

• the surrender and exchange of all 451,295,965 issued and outstanding shares of Legacy Lucid common stock (including Legacy Lucid common stock resulting from the conversion of the Legacy Lucid preferred stock) into 1,193,226,511 shares of Lucid common stock as adjusted by the Exchange Ratio;

• the cancellation and exchange of all 25,764,610 granted and outstanding vested and unvested Legacy Lucid options, which became 68,121,210 Lucid options exercisable for shares of Lucid common stock with the same terms and vesting conditions except for the number of shares exercisable and the exercise price, each of which was adjusted by the Exchange Ratio;

• the cancellation and exchange of all 16,418,321 granted and outstanding vested and unvested Legacy Lucid RSUs, which became 43,409,870 Lucid RSUs for shares of Lucid common stock with the same terms and vesting conditions except for the number of shares, which was adjusted by the Exchange Ratio.

The other related events that occurred in connection with the Closing are summarized below:

• Churchill entered into separate private placement subscription agreements (the “PIPE Investment”) contemporaneously with the execution of the Merger Agreement pursuant to which Churchill agreed to sell and issue an aggregate of 166,666,667 shares of common stock at a purchase price of $ 15.00 per share for an aggregate purchase price of $ 2,500.0 million.

The PIPE Investment closed simultaneously with the Closing of the Merger;

• Churchill Sponsor IV LLC (the “Churchill Sponsor”) exercised its right to convert the outstanding and unpaid amount of $ 1.5 million under the working capital loan provided by the Churchill Sponsor to Churchill into an additional 1,500,000 Private Placement Warrants at a price of $ 1.00 per warrant in satisfaction of such loan;

• Churchill and the Churchill Sponsor entered into a letter agreement (the “Sponsor Agreement”), pursuant to which the Churchill Sponsor agreed that 17,250,000 shares of Churchill’s issued and outstanding common stock beneficially held by the Churchill Sponsor (the “Sponsor Earnback Shares”) and 14,783,333 Private Placement Warrants beneficially held by the Churchill Sponsor (the “Sponsor Earnback Warrants”) to purchase shares of the Churchill’s common stock shall become subject to transfer restrictions and contingent forfeiture provisions upon the Closing of the Merger until Lucid’s stock price exceeded certain predetermined levels in the post-Merger period.

Any such shares and warrants not released from these transfer restrictions during the earnback period, which expires on the fifth anniversary of the Closing, will be forfeited back to Lucid for no consideration.

See Note 12 “Earnback Shares and Warrants” for more information;

• Churchill redeemed 21,644 public shares of Churchill’s Class A common stock at approximately $ 10.00 per share for an aggregate payment of $ 0.2 million.

After giving effect to the Merger and the redemption of Churchill shares as described above, the number of shares of common stock issued and outstanding immediately following the consummation of the Merger was as follows:

Churchill public shares, prior to redemptions 207,000,000

Less redemption of Churchill shares ( 21,644 )

Churchill public shares, net of redemptions 206,978,356

Churchill Sponsor shares (1)

PIPE shares (2)

Total shares of Churchill common stock outstanding immediately prior to the Merger 425,395,023

Legacy Lucid shares 1,193,226,511

Total shares of Lucid common stock outstanding immediately after the Merger (3)(4)

1,618,621,534

(1) The 51,750,000 shares beneficially owned by the Churchill Sponsor as of the Closing of the Merger includes the 17,250,000 Sponsor Earnback Shares.

(2) Reflects the sale and issuance of 166,666,667 shares of common stock to the PIPE Investors at $ 15.00 per share.

(3) Excludes 111,531,080 shares of common stock as of the Closing of the Merger to be reserved for potential future issuance upon the exercise of Lucid options or settlement of Lucid RSUs.

(4) Excludes the 85,750,000 warrants issued and outstanding as of the Closing of the Merger, which includes the 41,400,000 public warrants and the 44,350,000 Private Placement Warrants held by the Churchill Sponsor.

The 44,350,000 Private Placement Warrants beneficially owned by the Churchill Sponsor as of the consummation of the Merger includes the 14,783,333 Sponsor Earnback Warrants.

The Merger has been accounted for as a reverse recapitalization under U.S.

Under this method of accounting, Churchill has been treated as the acquired company for financial reporting purposes.

The reverse recapitalization accounting treatment was primarily determined based on the stockholders of Legacy Lucid having a relative majority of the voting power of Lucid and having the ability to nominate the majority of the members of the Lucid board of directors, senior management of Legacy Lucid comprise the senior management of Lucid, and the strategy and operations of Legacy Lucid prior to the Merger comprise the only ongoing strategy and operations of Lucid.

Accordingly, for accounting purposes, the financial statements of Lucid represent a continuation of the financial statements of Legacy Lucid with the Merger being treated as the equivalent of Legacy Lucid issuing shares for the net assets of Churchill, accompanied by a recapitalization.

The net assets of Churchill were recognized as of the Closing at historical cost, with no goodwill or other intangible assets recorded.

Operations prior to the Merger are presented as those of Legacy Lucid and the accumulated deficit of Legacy Lucid has been carried forward after Closing.

All periods prior to the Merger have been retrospectively adjusted using the Exchange Ratio for the equivalent number of shares outstanding immediately after the Closing to effect the reverse recapitalization.

In connection with the Closing of the Merger, the Company raised $ 4,439.2 million of gross proceeds, including the contribution of $ 2,070.1 million of cash held in Churchill’s trust account from its initial public offering along with $ 2,500.0 million of cash raised by Churchill in connection with the PIPE Investment and $ 0.4 million of cash held in the Churchill operating cash account.

The gross proceeds were net of $ 0.2 million paid to redeem 21,644 shares of Churchill Class A common stock held by public stockholders and $ 131.4 million in costs incurred by Churchill prior to the Closing.

The Company additionally incurred $ 38.9 million of transaction costs, consisting of banking, legal, and other professional fees, of which $ 36.2 million was recorded as a reduction to additional paid-in capital of proceeds and the remaining $ 2.7 million was expensed in July 2021.

The total net cash proceeds to the Company were $ 4,400.3 million.

As of March 31, 2023 and December 31, 2022, the RVG liability was not material.

Deferred revenue related to OTA and remarketing activities for vehicle sales were $ 18.5 million and $ 15.4 million as of March 31, 2023 and December 31, 2022, respectively.

Other consists of revenue from non-warranty after-sales vehicle services and parts, sales of battery pack system, 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 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 months ended March 31, 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 expects to substantially complete the Restructuring Plan by the end of the second quarter of 2023, subject to local law and consultation requirements.

As a result of the Restructuring Plan, the Company expects to record total restructuring charges of approximately $ 24 million, primarily related to severance payments, employee benefits, employee transition and stock-based compensation.

During the three months ended March 31, 2023, the Company recorded charges of $ 22.5 million related to severance payments, employee benefits and stock-based compensation, net of a reversal of previously recognized stock-based compensation expense.

These charges were recorded within restructuring charges on 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

March 31, 2023

Restructuring liabilities - beginning of period $ —

Restructuring charges excluding non-cash items (1)

Restructuring liabilities - end of period $ 23,939

(1) Excluded non-cash items of $ 1.4 million, 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 March 31, 2023, the restructuring liabilities of $ 23.9 million associated with the Restructuring Plan were included in accrued compensation on the condensed consolidated balance sheet.

No payments were made during the three months ended March 31, 2023.

NOTE 4 – BALANCE SHEETS COMPONENTS

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

September 30,

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

2023 December 31,

4 unchanged sentences

Total Inventory $ 1,017,570 $ 834,401

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.

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

During the three months ended March 31, 2023 and 2022, the Company recorded write-downs of $ 227.0 million and $ 96.4 million, respectively, 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 as of September 30, 2022 and December 31, 2021 were as follows (in thousands):

September 30,

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

2023 December 31,

11 unchanged sentences

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 and bringing it to the location in the condition necessary for its intended use.

No depreciation is provided for construction in progress until such time as the assets are completed and are ready for use.

Costs classified as construction in progress include all costs of obtaining the asset, installation of the asset, and bringing it to the location in 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,

Machinery and tooling (1)

$ 628,358 $ 515,662

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

2 unchanged sentences

Total construction in progress $ 1,175,910 $ 1,077,179

(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.

(1) As of March 31, 2023 and December 31, 2022, $ 50.8 million and $ 33.3 million of capital expenditure support received from Ministry of Investment of Saudi Arabia (“MISA”) was recorded as a deduction to the AMP-2 construction in progress balance, respectively.

See Note 15 “Related Party Transactions” for more information.

Depreciation and amortization expense was $ 49.8 million and $ 38.2 million for the three months ended March 31, 2023 and 2022, respectively.

The amount of interest capitalized on construction in progress related to significant capital asset construction was $ 1.8 million and nil for the three months ended March 31, 2023 and 2022, respectively.

Other current liabilities

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

September 30,

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

2023 December 31,

6 unchanged sentences

Tooling liability 17,532 21,714

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

Short-term borrowings 9,595 9,595

Operating lease liabilities, current portion 15,753 11,269

Reserve for loss on firm commitments (2)

71,797 22,640

Accrued warranty liability 10,813 10,464

Other current liabilities 169,625 161,525

Total Other current liabilities $ 774,108 $ 634,567

(1) Accrued purchases primarily reflect inventory purchases and related transportation charges that had not been invoiced.

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

(2) Primarily represent reserve for losses on firm inventory purchase commitments.

Other long-term liabilities

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

September 30,

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

2023 December 31,

3 unchanged sentences

Total Other long-term liabilities $ 360,770 $ 378,212

(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.

(1) As of March 31, 2023 and December 31, 2022, $ 46.5 million and $ 64.0 million of capital expenditure support received from MISA was recorded as deferred liability within other long-term liabilities, respectively.

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, 2022 Nine Months Ended September 30, 2022

Three Months Ended March 31, 2023

Accrued warranty - beginning of period $ 22,949

2 unchanged sentences

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.

(1) Accrued warranty balance as of March 31, 2023 included estimated costs related to the recalls identified.

(2) Accrued warranty balance of $ 10.8 million and $ 15.1 million were recorded within other current liabilities and other long-term liabilities, respectively, on our condensed consolidated balance sheet as of March 31, 2023 .

NOTE 5 - FAIR VALUE MEASUREMENTS AND FINANCIAL INSTRUMENTS

9 unchanged sentences

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.

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

Cash, cash equivalents and investments are reported at their respective fair values on the Company's 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 March 31, 2023 and December 31, 2022 (in thousands):

March 31, 2023

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

Cash $ 238,623 $ — $ — $ 238,623 $ 238,623 $ — $ —

Cash and cash equivalents $ 356,602 $ — $ — $ 356,602 $ 356,602 $ — $ —

Money market funds 434,842 — — 434,842 434,842 — —

1 unchanged sentence

Subtotal 2,201,906 546 ( 6,193 ) 2,196,259 494,618 1,443,875 257,766

government agency securities 53,852 24 ( 74 ) 53,802 — 53,802 —

Certificates of deposit 110,152 54 ( 55 ) 110,151 — 110,151 —

4 unchanged sentences

December 31, 2022

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

Cash and cash equivalents $ 321,667 $ — $ — $ 321,667 $ 321,667 $ — $ —

Cash $ 160,888

Money market funds 1,377,540 — — 1,377,540 1,377,540 — —

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

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 assets measured at fair value $ 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, 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.

During the three months ended March 31, 2023 and 2022, there were immaterial and no realized gains or losses on the sale of available-for-sale securities, respectively.

Accrued interest receivable excluded from both the fair value and amortized cost basis of the available-for-sale securities was $ 5.8 million and $ 7.5 million as of March 31, 2023 and December 31, 2022, respectively, and was recorded in other current assets on our condensed consolidated balance sheets.

As of March 31, 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, 2022

March 31, 2023

Amortized cost Estimated Fair Value

2 unchanged sentences

Total $ 2,527,640 $ 2,520,104

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.

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”, Note 7 “Contingent Forward Contracts,” Note 8 “Convertible Preferred Stock Warrant Liability” and Note 9 “Common Stock Warrant Liability”.

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 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 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

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

Nine Months Ended September 30,

Warrant Liability Contingent Forward

Contract Liability (1)

Preferred Stock

Warrant Liability (1)

Warrant Liability

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 March 31,

Fair value-beginning of period $ 140,590 $ 1,394,808

Issuance — 2,167,332 — 812,048

Change in fair value 40,802 ( 523,330 )

Settlement — ( 2,621,878 ) ( 9,936 ) —

Fair value-end of period $ 181,392 $ 871,478

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

NOTE 6 – DEBT

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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 September 30, 2022 and December 31, 2021 (in millions):

September 30, 2022 December 31, 2021

The following is a summary of the 2026 Notes as of March 31, 2023 and December 31, 2022 (in millions):

March 31, 2023 December 31, 2022

Principal Amount $ 2,012.5 $ 2,012.5

4 unchanged sentences

The components of interest expense related to the 2026 Notes were as follows (in millions):

Three Months Ended

September 30, 2022 Nine Months Ended

September 30, 2022

Three Months Ended March 31,

Contractual interest $ 6.3 $ 6.3

1 unchanged sentence

Interest expense $ 7.6 $ 7.5

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

The 2026 Notes were not eligible for conversion as of March 31, 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, 2022, the Company was in compliance with applicable covenants under the indenture governing the 2026 Notes.

As of March 31, 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 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”).

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);

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

As of March 31, 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 a revolving credit facility agreement (the “GIB Facility Agreement”) with GIB, maturing on February 28, 2025.

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

SAR $ 650 million (approximately $ 173.0 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”).

Loans under the Bridge Facility and the Working Capital Facility will have a maturity of no more than 12 months.

The Bridge Facility will bear interest at a rate of 1.25 % per annum over 3-month SAIBOR and the Working Capital Facility will bear interest at a rate of 1.70 % per annum over 3-month SAIBOR and associated fees.

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 $ 266.4 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 GIB Facility Agreement will terminate, and all amounts then outstanding thereunder will become payable, on the maturity date of the GIB Facility Agreement.

The 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, 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.

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 March 31, 2023, the Company had outstanding borrowings of SAR 36 million (approximately $ 9.6 million) with interest rate of 7.20 %.

As of March 31, 2023, availability under the GIB Credit Facility was SAR 963 million (approximately $ 256.7 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 on the condensed consolidated balance sheets.

As of March 31, 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 a new five-year senior secured asset-based revolving credit facility (“ABL Credit Facility”) with a syndicate of banks that may be used for working capital and general corporate purposes.

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.

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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 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.

As of March 31, 2023 and December 31, 2022, the Company was in compliance with applicable covenants under the ABL Credit Facility.

As of March 31, 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 $ 37.9 million and $ 37.4 million as of March 31, 2023 and December 31, 2022, respectively.

Availability under the ABL Credit Facility was $ 483.8 million (including $ 39.7 million cash and cash equivalents) and $ 441.4 million (including $ 37.3 million cash and cash equivalents) as of March 31, 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 on condensed consolidated balance sheets and amortized over the facility term using the straight-line method.

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

In September 2018, the Company entered into a securities purchase agreement with PIF.

Along with the execution of the securities purchase agreement, the Company granted PIF the right to purchase the Company’s Series D convertible preferred stock in future periods.

The Company determined PIF’s right to participate in future Series D convertible preferred stock financing to be freestanding similar to a derivative in the form of contingent forward contracts and recorded the initial valuation of $ 18.6 million as a debt discount to the Convertible Notes issued in September 2018.

In March 2020, the Company received $ 200.0 million in exchange for 82,496,092 shares of Series D convertible preferred shares as partial settlement of the Series D contingent forward contract liability and revalued the contingent forward contract liability to the then fair value of $ 36.4 million and reclassified $ 18.2 million of the contingent forward contract liability into Series D convertible preferred stock.

In June 2020, upon satisfaction of the second set of milestones (refer to Note 10 “Convertible Preferred Stock”), the Company received the remaining $ 200.0 million in exchange for 82,496,121 shares of Series D convertible preferred stock as final settlement of the Series D contingent forward contract liability and revalued the contingent forward contracts liability to the then fair value of $ 39.6 million and reclassified the liability into Series D convertible preferred stock.

The Series D contingent forward contract liability incurred a total fair value loss of $ 8.7 million during the year ended December 31, 2020.

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 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.

In December 2020, Ayar waived the Company’s remaining outstanding obligations, and the Company received $ 400.0 million for the issuance of Series E convertible preferred stock.

Upon settlement, the Company revalued the Series E contingent forward contracts to the then fair value of $ 110.5 million and reclassified the contingent forward contract liability into Series E convertible preferred stock.

The Company recorded a loss of $ 109.7 million related to fair value remeasurements of the Series E contingent forward contracts during the year ended December 31, 2020.

In February 2021, the Company and Ayar entered into Amendment No.

1 to the original Series E Preferred Stock Purchase Agreement (“Amendment No.

Under the Amendment No.

1, Ayar and the Company agreed to enter into the third closing of additional 133,818,821 Series E convertible preferred stock at $ 2.99 per share, aggregating to $ 400.0 million.

Upon the signing of the Amendment No.

1, the Company received the issuance proceeds of $ 400.0 million from Ayar in February 2021.

Amendment No.

1 also allowed the Company to provide an opportunity to all current convertible preferred stockholders other than Ayar (“Eligible Holders”) to enter into the fourth closing to purchase up to 23,737,221 shares of Series E convertible preferred stock on a pro rata basis at $ 2.99 per share, aggregating to $ 71.0 million.

In addition, the amendment allowed the Company to offer for purchase at the fourth closing at $ 2.99 per share, a number of Series E Preferred Stock to senior management employees, directors, consultants, advisors and/or contractors of the Company (“Additional Purchasers”) and Ayar.

Refer to Note 10 “Convertible Preferred Stock”.

In April 2021, the Company issued 66,909,408 Series E convertible preferred stock from the fourth closing at $ 2.99 per share for cash consideration of $ 200.0 million.

The Company received $ 107.1 million of the total issuance proceeds in March 2021 and the remaining $ 92.9 million in April 2021.

See Note 10 “Convertible Preferred Stock” for more information.

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 and comprehensive loss.

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.

The Series E convertible preferred stock issued from the fourth closing included 3,034,194 shares to the Company’s management and 1,658,705 shares to members of the Board of Directors.

The total issuance to the Company’s management included 535,275 shares offered to the CEO in April 2021.

The offer to employees in the fourth closing to participate in future Series E convertible preferred stock financing represent a fully vested, equity classified award.

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 $ 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.

The fair value of the Series E convertible preferred stock contingent forward contract liability for the third closing was determined using a forward payoff.

The Company’s inputs used in determining the fair value on the issuance date and settlement date, were as follows:

Stock Price $ 13.79

Volatility 100.00 %

Expected term (in years) 0.01

Risk-free rate 0.03 %

The fair value of the Series E convertible preferred stock contingent forward contract liability for the fourth closing was determined using a forward and an option payoff.

The Company’s inputs used in determining the fair value on the issuance date were as follows:

Fair value of Series E convertible preferred share $ 13.79

Volatility 100.00 %

Expected term (in years) 0.11

Risk-free rate 0.03 %

The fair value of the Series E convertible preferred stock contingent forward contract liability for the fourth closing was determined as the difference between the Series E convertible preferred stock fair value and the purchase price.

The Company estimated the fair value of each of the Series E convertible preferred stock on the settlement date by taking the closing price of Churchill’s Class A common stock on April 1, 2021 of $ 23.78 multiplied by the expected exchange ratio at the time, and discounted for lack of marketability.

NOTE 8 - CONVERTIBLE PREFERRED STOCK WARRANT LIABILITY

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 and comprehensive loss.

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 and comprehensive loss for the nine months ended September 30, 2021.

During the three months ended March 31, 2023, amortization of the deferred issuance costs and commitment fee were immaterial.

NOTE 7 - 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 $ 140.6 million as of December 31, 2022.

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.

The earnback triggering events were satisfied during the year ended December 31, 2021 such that the 14,783,333 Sponsor Earnback Warrants vested and are no longer subject to the transfer restrictions and contingent forfeiture provisions.

See Note 12 “Earnback Shares and Warrants” for more information.

The Company initially estimated the fair value of the Private Placement Warrants that were subject to the contingent forfeiture provisions using a Monte-Carlo simulation which estimates a distribution of potential outcomes over the earnback period related to the achievement of the volume-weighted average trading sale price (the “VWAP”) thresholds.

The present value of the payoff in each simulation is calculated, and the fair value of the liability is determined by taking the average of all present values.

The fair value of the Private Placement Warrants that were subject to the contingent forfeiture provisions were as follows:

July 23, 2021

Fair value of Tranche 1 with $ 20.00 VWAP threshold per share

Fair value of Tranche 2 with $ 25.00 VWAP threshold per share

Fair value of Tranche 3 with $ 30.00 VWAP threshold per share

The Private Placement Warrants remained unexercised and were remeasured to fair value of $ 181.4 million as of March 31, 2023.

The Company recognized a loss of $ 40.8 million and a gain of $ 523.3 million for the three months ended March 31, 2023 and 2022, respectively, 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, 2022 December 31, 2021

March 31, 2023 December 31, 2022

Fair value of Private Placement Warrants per share

$ 4.09 $ 3.17

Assumptions used in the Monte-Carlo simulation models and 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.

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.

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Treasury securities with a maturity equivalent to the warrants’ expected life.

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

September 30, 2022 December 31, 2021

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

March 31, 2023 December 31, 2022

Volatility 85.00 % 80.00 %

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Dividend yield — % — %

NOTE 10 – CONVERTIBLE PREFERRED STOCK

Convertible Preferred Stock

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 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”).

Convertible preferred stock was carried at its issuance price, net of issuance costs.

In September 2018, concurrent with the execution of the Security Purchase Agreement with PIF, the Company entered into a Stock Repurchase Agreement (the “Repurchase Agreement”) with Blitz Technology Hong Kong Co.

Limited and LeSoar Holdings, Limited (the “Sellers”) to repurchase Series C convertible preferred stock.

From September 2018 to December 31, 2019, the Company repurchased in aggregate 11,331,430 shares of Series C convertible preferred stock with $ 60.0 million at a per share price of $ 5.30 from the first and second Company repurchase.

Third Company Repurchase (Series C - August 2020)

In August 2020, the Company entered into a Stock Repurchase Agreement with the Sellers.

Pursuant to the Stock Repurchase Agreement, the Company agreed to repurchase 9,656,589 shares of Series C convertible preferred stock owned by the Sellers in August 2020 at a price of $ 1.02 per share for total of $ 9.9 million.

The carrying value of the repurchased Series C convertible preferred stock is $ 20.4 million.

As such, the Company recognized $ 10.5 million in additional paid-in capital under stockholder’s equity in the condensed consolidated balance sheet as of December 31, 2020 related to the difference in fair value and carrying value of the Series C stock repurchased.

Fourth Company Repurchase (Series C - December 2020)

In December 2020, the Company entered into a Stock Repurchase Agreement with Blitz Technology Hong Kong Co.

Limited (“Blitz”).

The Company agreed to repurchase 1,850,800 Series C convertible preferred stock from Blitz at a price of $ 1.21 per share, aggregating to $ 2.2 million.

As the carrying amount of each share of Series C was $ 2.42 aggregating to $ 4.5 million in September 2020, the Company recognized $ 2.2 million as additional paid-in capital under stockholders’ deficit in the condensed consolidated balance sheet as of December 31, 2020, related to the difference in fair value and carrying value of the Series C shares repurchased.

Fifth Company Repurchase (Series B - December 2020)

On December 22, 2020, the Company entered into an agreement with JAFCO Asia Technology Fund V (“JAFCO”) whereby the Company agreed to repurchase 3,525,332 Series B convertible preferred stock having a carrying value of $ 4.0 million, from JAFCO for a total consideration of $ 3.0 million.

The agreement resulted in an extinguishment of the Series B convertible preferred stock and the Company recognized $ 1.0 million in additional paid-in capital being the difference in fair value of the consideration payable and the carrying value of the Series B convertible preferred stock.

As of the date of extinguishment and as of December 31, 2020 the Series B convertible preferred stock subject to repurchase had been mandatorily redeemable within 45 days of the agreement and accordingly had been reclassified to other accrued liabilities on the condensed consolidated balance sheets.

Series D Preferred Stock Issuance

In 2018, the Security Purchase Agreement with PIF granted PIF rights to purchase the Company’s Series D convertible stock at various tranches.

The first tranche of $ 200.0 million had been issuable upon the approval of the PIF’s equity investment into the Company by CFIUS (refer to Note 7 “Contingent Forward Contracts”).

The second and third tranches of $ 400.0 million each had been issuable upon the Company’s satisfaction of certain milestones related to further development and enhancement in marketing, product, and administrative activities.

In April 2019, upon CFIUS’s approval of PIF’s equity investment into the Company, the Company received the first $ 200.0 million proceeds from PIF.

In October 2019, the Company received additional $ 400.0 million upon achieving the first set of milestones.

Together with the conversion of $ 272.0 million Convertible Notes and accrued interest, the Company issued 374,777,280 shares of Series D convertible preferred stock at a price of $ 2.33 per share, for net proceeds of approximately $ 872.0 million during the year ended December 31, 2019.

In March 2020, the Company received $ 200.0 million of the remaining $ 400.0 million in proceeds from PIF and issued 82,496,092 shares of Series D in exchange.

In June 2020 the Company successfully satisfied certain of the second set of milestones related to further development and enhancement in marketing, product, and administrative activities, and received a waiver from PIF for the remaining milestones.

The Company received the remaining $ 200 million proceeds in exchange for 82,496,121 shares of Series D convertible preferred stock.

See activities related to the PIF Convertible Notes and Series D convertible preferred stock funding as below (in thousands):

Conversion of Convertible Notes $ 271,985

Series D received in April 2019 200,000

Series D received in October 2019 400,000

Series D received in March 2020 200,000

Contingent forward contract liability reclassified to Series D in March 2020 18,180

Series D received in June 2020 200,000

Contingent forward contract liability reclassified to Series D in June 2020 21,384

Conversion of preferred stock warrant to Series D in February 2021 3,000

Reclassification of preferred stock warrant liability to Series D in February 2021 9,936

Total proceeds of Series D $ 1,324,485

Series E Convertible Preferred Stock Issuance

In September 2020, the Company entered into an arrangement with Ayar to issue and sell Series E convertible preferred stock pursuant to a securities purchase agreement (the “SPAE”).

Along with the execution of the SPAE, the Company granted Ayar the right to purchase 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 as a contingent forward contract liability.

The contingent forward contract terms were included within the SPAE, which dictated a price of $ 2.99 per share of Series E convertible preferred stock.

The Company needed to satisfy two sets of milestone conditions relating to further development and enhancement in marketing, product, and administrative activities for Ayar to provide funding under the SPAE.

Immediately upon closing of the SPAE, the Company received the full first tranche of $ 500.0 million in funding in exchange for 167,273,525 Series E convertible preferred stock as the requirement for the first milestones were met prior to execution of the purchase agreement.

Subsequently, the Company successfully satisfied certain of the second set of milestones and received a waiver from PIF for the remaining milestones;

and on December 24, 2020, the investor provided $ 400.0 million of funding in exchange for 133,818,821 shares as the final issuance of Series E convertible preferred stock related to the second milestones.

Upon final settlement, the Company re-valued the liability associated with the contingent forward contract to the then fair value of $ 110.5 million from a contingent liability of $ 0.8 million and derecognized the liability as the contract was settled in its entirety.

The Company recognized the increase in fair value of $ 109.7 million in the consolidated statements of operations and reclassified the liability into convertible preferred stock on the Company’s consolidated balance sheets as of December 31, 2020.

In February 2021, the Company and Ayar entered into Amendment No.

1 to the original Series E Preferred Stock Purchase Agreement (“Amendment No.

Under the Amendment No.

1, Ayar and the Company agreed to enter into the third closing of additional 133,818,821 shares of Series E convertible preferred stock at $ 2.99 per share, aggregating to $ 400.0 million.

Upon the signing of the Amendment No.

1, the Company received the issuance proceeds of $ 400.0 million from Ayar in February 2021.

Amendment No.

The aggregate number of Series E Preferred Stock sold at the third closing and fourth closing would not exceed 200.7 million shares (“Extension Amount”).

Ayar committed to purchase the entire Extension Amount to the extent not subscribed by Eligible Holders or Additional Purchasers.

In April 2021, the Company issued 66,909,408 Series E convertible preferred stock from the fourth closing at $ 2.99 per share for cash consideration of $ 200.0 million.

The Company received $ 107.1 million of the entire cash consideration in March 2021, and the remaining $ 92.9 million in April 2021.

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.

The Series E convertible preferred stock issued from the fourth closing included 3,034,194 shares to the Company’s management and 1,658,705 shares to members of the Board of Directors.

The total issuance to the Company’s management includes 535,275 shares offered to the CEO in April 2021.

The offer to employees to participate in a future Series E convertible preferred stock financing represented a fully vested, equity classified award.

The excess of the award’s fair value over the purchase price of $ 123.6 million on each recipient’s grant date during the year ended December 31, 2021 was recorded as stock-based compensation.

Along with the execution of Amendment No.

1, the Company also increased the authorized number of common shares and convertible preferred stock to 1,316,758,889 and 1,155,909,398 stock, respectively.

NOTE 8 – STOCKHOLDERS’ EQUITY

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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 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.

The Company also converted all 1,155,909,367 shares of its issued and outstanding convertible preferred stock into 1,155,909,367 new shares of common stock as of the Closing of the Merger based upon the conversion rate as calculated pursuant to Legacy Lucid’s memorandum and articles of association.

Immediately following the Merger, there were 1,618,621,534 shares of common stock outstanding with a par value of $ 0.0001 .

The holder of each share of common stock is entitled to one vote.

Common Stock Warrants

On July 23, 2021, in connection with the reverse recapitalization treatment of the Merger, the Company effectively issued 41,400,000 publicly-traded warrants to purchase shares of its common stock.

Each whole warrant entitled the holder to purchase one share of the Company’s common stock at a price of $ 11.50 per share.

The public warrants were exercisable as of August 22, 2021 and expire on July 23, 2026, if not yet exercised by the holder or redeemed by the Company.

During the year ended December 31, 2021, an aggregate of 41,034,197 public warrants were exercised, of which 25,966,976 were exercised on a cashless basis.

The aggregate cash proceeds received from the exercise of these public warrants were $ 173.3 million.

The Company redeemed the remaining 365,803 public warrants that were not exercised by the holders at a redemption price of $ 0.01 per warrant.

A summary of activity of the Company’s issued and outstanding public warrants was as follows:

Public warrants issued in connection with Merger on July 23, 2021 41,400,000

Number of public warrants exercised ( 41,034,197 )

Public warrants redeemed ( 365,803 )

Issued and outstanding public warrants as of December 31, 2021

As of March 31, 2023 and December 31, 2022, there were no issued and outstanding shares of preferred 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.

Treasury Stock

In fiscal year 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.

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

No common stock was repurchased during the three months ended March 31, 2023 and 2022.

Common Stock Reserved for Issuance

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,

Private warrants to purchase common stock 44,350,000 44,350,000

The Company’s common stock reserved for future issuances as of March 31, 2023 was as follows:

Private Placement Warrants to purchase common stock 44,350,000

Stock options outstanding 36,450,296

3 unchanged sentences

Total shares of common stock reserved 183,500,034

NOTE 12 – EARNBACK SHARES AND WARRANTS

During the period between the Closing and the five-year anniversary of the Closing, the Churchill Sponsor has subjected the 17,250,000 Sponsor Earnback Shares of issued and outstanding common stock and 14,783,333 Sponsor Earnback Warrants of issued and outstanding Private Placement Warrants to potential forfeiture to Lucid for no consideration until the occurrence of each tranche’s respective earnback triggering event.

The earnback triggering events related to achieving a volume-weighted average trading sale price greater than or equal to $ 20.00 , $ 25.00 , and $ 30.00 , respectively, for any 40 trading days within any 60 consecutive trading day period were satisfied during the year ended December 31, 2021.

As a result, the 17,250,000 Sponsor Earnback Shares of issued and outstanding common stock and 14,783,333 Sponsor Earnback Warrants of issued and outstanding Private Placement Warrants were vested and no longer subject to the transfer restrictions and contingent forfeiture provisions.

NOTE 9 – STOCK-BASED AWARDS

Stock Options

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

A summary of stock option activity for the three months ended March 31, 2023 was as follows:

Outstanding Options

1 unchanged sentence

Balance as of December 31, 2022

39,011,116 $ 1.19 6.52 $ 224,721

Options exercised

2 unchanged sentences

( 360,455 ) 2.90

Balance as of September 30, 2022

Balance as of March 31, 2023

36,450,296 $ 1.19 6.27 $ 253,828

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:

Options vested and exercisable as of March 31, 2023

29,237,493 $ 1.03 5.96 $ 206,986

As of March 31, 2023, unrecognized stock-based compensation cost related to outstanding unvested stock options that are expected to vest was $ 4.7 million, which is expected to be recognized over a weighted-average period of 1.4 years.

Restricted Stock Units (“RSUs”)

A summary of RSUs activity for the three months ended March 31, 2023 was as follows:

Restricted Stock Units

5 unchanged sentences

Cancelled/Forfeited ( 1,184,767 ) — ( 1,184,767 ) 18.64

Balance as of September 30, 2022

Balance as of March 31, 2023

44,064,453 2,090,140 46,154,593 $ 17.04

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.

As of March 31, 2023, unrecognized stock-based compensation cost related to outstanding unvested time-based RSUs that are expected to vest was $ 525.6 million, which is expected to be recognized over a weighted-average period of 2.8 years.

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

5 unchanged sentences

Expected dividends —

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

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 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.

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.

We recorded stock-based compensation expense of $ 85.4 million for the four tranches during the year ended December 31, 2022.

As of March 31, 2023, the unamortized expense for the fifth tranche, representing 2,090,140 RSUs, was $ 5.4 million which will be recognized over a period of 0.5 years.

For the three months ended March 31, 2023 and 2022, the Company withheld approximately 0.5 million and 8.0 million shares, respectively, of common stock 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”)

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, 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.

As of March 31, 2023, unrecognized stock-based compensation cost related to the ESPP was $ 33.3 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, 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

Total employee and nonemployee stock-based compensation expense for the three months ended March 31, 2023 and 2022, was classified in the condensed consolidated statements of operations and comprehensive loss as follows (in thousands):

Three Months Ended March 31,

Cost of revenue $ 574 $ 8,599

1 unchanged sentence

Selling, general and administrative 26,705 116,196

Restructuring charges ( 1,443 ) —

Total $ 53,819 $ 174,551

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.

NOTE 10 – LEASES

1 unchanged sentence

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.

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 March 31, 2023 and December 31, 2022, assets associated with the finance lease were $ 79.3 million.

As of March 31, 2023 and December 31, 2022, liabilities associated with the finance lease were $ 74.7 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.

1 unchanged sentence

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 Company recorded the sales proceeds received as a financial liability within other long-term liabilities on our condensed consolidated balance sheets as of March 31, 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,

10 unchanged sentences

Total finance lease liabilities $ 89,084 $ 91,922

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

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 March 31,

Operating lease expense:

7 unchanged sentences

Total lease expense $ 15,909 $ 11,597

(1) Includes short-term leases, which are immaterial.

(1) Excluded short-term leases, which were immaterial.

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

September 30,

2023 December 31,

5 unchanged sentences

Finance leases 5.57 % 5.57 %

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):

As of March 31, 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

10 unchanged sentences

Long-term portion of lease obligations $ 239,588 $ 78,845

As of March 31, 2023, the Company entered into additional leases for facilities and equipment that have not yet commenced with undiscounted future lease payments of $ 26.8 million.

The leases are expected to commence over the next twelve months.

NOTE 11 - COMMITMENTS AND CONTINGENCIES

Contractual Obligations

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.

As of March 31, 2023 and December 31, 2022, the Company had $ 534.0 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 March 31, 2023 and December 31, 2022.

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):

The estimated future payments having a remaining term in excess of one year as of March 31, 2023 were as follows (in thousands):

Years ended December 31,

Commitment (1)

2023 (remainder of the year) $ 138,209

Thereafter 2,709,174

Total $ 5,058,255

(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

9 unchanged sentences

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.

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

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.

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.

22 unchanged sentences

The complaints in these actions seek certification of the actions as class actions, 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 complaint will be successful or that it will avoid liability in these matters.

9 unchanged sentences

Indemnification

In the ordinary course of business, the Company may provide indemnification of varying scope and terms to customers, vendors, investors, directors, and officers 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.

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.

1 unchanged sentence

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 $ 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.

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 $ 54.1 million and $ 52.5 million as of March 31, 2023 and December 31, 2022, respectively, for which no liabilities are recorded on the condensed consolidated balance sheets.

NOTE 12 - INCOME TAXES

1 unchanged sentence

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 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.

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 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.

The Company’s effective tax rate for the three months ended March 31, 2023 and 2022 was 0.0 % and ( 0.4 )%, respectively, due to minimal profits in foreign jurisdictions and U.S.

losses for which no benefit will be realized.

There were no material changes to the Company’s unrecognized tax benefits during the three months ended March 31, 2023, and the Company does not expect to have any significant changes to unrecognized tax benefits through the end of the fiscal year.

NOTE 13 - NET LOSS PER SHARE

The weighted-average number of shares of common stock outstanding prior to the Merger have been retroactively adjusted by the Exchange Ratio to give effect to the reverse recapitalization treatment of the Merger.

Shares of common stock issued as a result of the conversion of Legacy Lucid convertible preferred stock in connection with the Closing have been included in the basic net loss per share calculation on a prospective basis.

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,

2022 2021 2022 2021

Net loss $ ( 530,101 ) $ ( 524,403 ) $ ( 831,812 ) $ ( 1,534,081 )

Deemed dividend related to the issuance of Series E convertible preferred stock — — — ( 2,167,332 )

Three Months Ended

Net loss attributable to common stockholders, basic $ ( 779,528 ) $ ( 81,286 )

3 unchanged sentences

Private Placement Warrants using the treasury stock method

14,915,044 — 19,883,372 —

Weighted-average shares outstanding, diluted 1,831,725,009 1,681,545,859

3 unchanged sentences

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 warrants to purchase common stock — 34,494,445

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

Private Placement Warrants to purchase common stock 44,350,000 —

Options outstanding to purchase common stock 36,450,296 50,700,238

3 unchanged sentences

Total 171,854,493 121,673,641

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.

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 March 31, 2023 and 2022.

NOTE 14 - EMPLOYEE BENEFIT PLAN

2 unchanged sentences

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, 2022 and 2021.

The Company made no matching contribution to the 401(k) Plan for the three months ended March 31, 2023 and 2022.

NOTE 15 - RELATED PARTY TRANSACTIONS

1 unchanged sentence

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 $ 0.3 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

In December 2021, we entered into an agreement with The Klein Group, LLC (“Klein”), an affiliate of Churchill Sponsor IV LLC who owns more than 5 % of our common stock.

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 $ 0.4 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 program ended during the year ended December 31, 2022.

No expenses were incurred under the agreement during the three months ended March 31, 2023 and 2022, respectively.

The amount due from PIF was nil and $ 1 million as of March 31, 2023 and December 31, 2022, respectively.

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 Saudi Arabia.

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

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.

The right-of-use assets related to this lease was $ 4.8 million as of March 31, 2023 and December 31, 2022.

The lease liabilities were $ 5.5 million and $ 5.4 million as of March 31, 2022 and December 31, 2022, respectively.

The lease expense recorded for the three months ended March 31, 2023 and 2022 were immaterial.

SIDF Loan Agreement

5 unchanged sentences

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.

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 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.

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 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.

In 2022, the Company received support of SAR 366 million (approximately $ 97.3 million) in cash.

The Company recorded $ 46.5 million and $ 64.0 million as deferred liability within other long-term liabilities on the condensed consolidated balance sheets as of March 31, 2023 and December 31, 2022, respectively.

The Company also recorded $ 50.8 million and $ 33.3 million as a deduction in calculating the carrying amount of the related assets on the condensed consolidated balance sheets as of March 31, 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 on the condensed consolidated statements of cash flows.

GIB Facility Agreement

1 unchanged sentence

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).

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 $ 266.4 million) GIB Credit Facility which may be used for general corporate purposes.

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.

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 62.1 million (approximately $ 16.6 million) for the three months ended March 31, 2023, and no t material for the three months ended March 31, 2022.

Amounts due to Al Bawani under these agreements were SAR 21.2 million (approximately $ 5.6 million) as of March 31, 2023, and SAR 42.1 million (approximately $ 11.2 million) as of December 31, 2022, respectively.

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.

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.

See Note 8 “Stockholders’ Equity” for more information.

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