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• We may be unable to adequately control the substantial costs associated with our operations.
−Removed: • We have received only a limited number of reservations and orders for the Lucid Air, all of which may be cancelled.
−Removed: • A global economic recession or other downturn may have a material adverse impact on our business, prospects, results of operation and financial condition.
−Removed: • 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.
+Added: • Reservations and orders for our vehicles are cancellable.
+Added: • A global economic recession, government closures of banks and liquidity concerns at other financial institutions, or other downturn may have a material adverse impact on our business, prospects, results of operation and financial condition.
+Added: • We currently depend on revenue generated from a single model and in the foreseeable future will be significantly dependent on a limited number of models.
+Added: • Our business and prospects depend significantly on our brand.
+Added: • We will not have a third-party retail product distribution and full-service network.
+Added: • If we fail to manage our future growth effectively, we may not be able to develop, manufacture, distribute, market and sell our vehicles successfully.
+Added: • We face risks associated with international operations, including unfavorable regulatory, political, tax and labor conditions, which could harm our business.
• The automotive industry has significant barriers to entry that we must overcome in order to manufacture and sell electric vehicles at scale.
• The automotive market is highly competitive, and we may not be successful in competing in this industry.
−Removed: • We will initially depend on revenue generated from a single model and in the foreseeable future will be significantly dependent on a limited number of models.
−Removed: • We will not have a third-party retail product distribution and full-service network.
−Removed: • We have experienced and may in the future experience significant delays in the design, manufacture, launch and financing of our vehicles, including the Lucid Air and Project Gravity, which could harm our business and prospects.
+Added: • We have experienced and may in the future experience significant delays in the design, manufacture, launch and financing of our vehicles, including the Lucid Air and the Lucid Gravity SUV, which could harm our business and prospects.
+Added: • Our ability to continue production and our future growth depends upon our ability to maintain relationships with our existing suppliers and source suppliers for our critical components, and to complete building out our supply chain, while effectively managing the risks due to such relationships.
+Added: • We are dependent on our suppliers, the majority of which are single-source suppliers, and the inability of these suppliers to deliver necessary components of our products according to our schedule and at prices, quality levels and volumes acceptable to us, or our inability to efficiently manage these components or to implement or maintain effective inventory management and other systems, processes and personnel to support ongoing and increased production, could have a material adverse effect on our results of operations and financial condition.
+Added: • Increases in costs, disruption of supply or shortage of materials, in particular for lithium-ion battery cells or semiconductors, could harm our business.
+Added: • If we fail to successfully construct or tool our manufacturing facilities or if our manufacturing facilities become inoperable, we will be unable to produce our vehicles and our business will be harmed.
+Added: • We have limited experience in high volume manufacture of our vehicles.
• If our vehicles fail to perform as expected, our ability to develop, market and sell or lease our products could be harmed.
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• Insufficient reserves to cover future warranty or part replacement needs or other vehicle repair requirements, including any potential software upgrades, could materially adversely affect our business, prospects, financial condition and results of operations.
−Removed: • We have no experience to date in high volume manufacture of our vehicles.
−Removed: • If we fail to successfully tool our manufacturing facilities or if our manufacturing facilities become inoperable, we will be unable to produce our vehicles and our business will be harmed.
−Removed: • Our production and our ability to sustain future growth depends upon our ability to maintain relationships with our existing suppliers and source suppliers for our critical components, and to complete building out our supply chain, while effectively managing the risks due to such relationships.
−Removed: • We are dependent on our suppliers, the majority of which are single-source suppliers, and the inability of these suppliers to deliver necessary components of our products according to our schedule and at prices, quality levels and volumes acceptable to us, or our inability to efficiently manage these components or to implement or maintain effective inventory management and other systems, processes and personnel to support ongoing and increased production, could have a material adverse effect on our results of operations and financial condition.
• We may not be able to accurately estimate the supply and demand for our vehicles, which could result in a variety of inefficiencies in our business and hinder our ability to generate revenue.
If we fail to accurately predict our manufacturing requirements, we could incur additional costs or experience delays.
−Removed: • Increases in costs, disruption of supply or shortage of materials, in particular for lithium-ion cells, or semiconductors, could harm our business.
• Any unauthorized control, manipulation, interruption or compromise of or access to our products or information technology systems could result in loss of confidence in us and our products, harm our business and materially adversely affect our financial performance, results of operations or prospects.
• We are subject to evolving laws, regulations, standards, policies, and contractual obligations related to data privacy and security, and any actual or perceived failure to comply with such obligations could harm our reputation and brand, subject us to significant fines and liability, or otherwise adversely affect our business.
−Removed: • The loss of key personnel or an inability to attract, retain and motivate qualified personnel may impair our ability to expand our business.
+Added: • The loss of key employees or an inability to attract, retain and motivate qualified personnel may impair our ability to expand our business.
• We are highly dependent on the services of Peter Rawlinson, our Chief Executive Officer and Chief Technology Officer.
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Our stockholders do not have the same protections afforded to stockholders of companies that are not controlled companies.
−Removed: • The Sponsor and Ayar beneficially own a significant equity interest in us and may take actions that conflict with other shareholder interests.
+Added: • PIF and Ayar beneficially own a significant equity interest in us and may take actions that conflict with other shareholder interests.
Risks Related to Our Business and Operations
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We are an early-stage company with a limited operating history, operating in a rapidly evolving and highly regulated market.
−Removed: Furthermore, we have only released one commercially available vehicle, and we have no experience manufacturing or selling a commercial product at scale.
+Added: Furthermore, we have only released one commercially available vehicle, and we have limited experience manufacturing or selling a commercial product at scale.
Because we have yet to generate significant revenue from the sale of electric vehicles, and as a result of the capital-intensive nature of our business, we expect to continue to incur substantial operating losses for the foreseeable future.
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• anticipate and adapt to changing market conditions, including consumer demand for certain vehicle types, models or trim levels, technological developments and changes in competitive landscape;
−Removed: • successfully design, build, manufacture and market new variants and models of electric vehicles, such as Project Gravity.
+Added: • successfully design, build, manufacture and market new variants and models of electric vehicles, such as the Lucid Gravity SUV.
We have incurred net losses each year since our inception and expect to incur increasing expenses and substantial losses for the foreseeable future.
−Removed: We have incurred net losses each year since our inception, including net loss of approxi mately $530.1 million and $831.8 million for the three and nine months ended September 30, 2022, respectively.
−Removed: As of September 30, 2022, our accumulated deficit was approximately $6.9 billion.
−Removed: We expect to continue to incur substantial losses and increasing expenses in the foreseeable future as we:
+Added: We have incurred net losses each year since our inception, including net loss of a pprox imately $0.8 billion for the three months ended March 31, 2023.
+Added: As of March 31, 2023, our accumulated deficit was approximately $8.1 billion.
+Added: We expec t to continue to inc ur substantial losses and increasing expenses in the foreseeable future as we:
• continue to design, develop and manufacture our vehicles;
−Removed: • equip and expand our manufacturing facilities to produce our vehicles in Arizona and in international locations such as the Kingdom of Saudi Arabia;
+Added: • equip and expand our research, service, battery, powertrain, and manufacturing facilities to produce our vehicles in Arizona and in international locations such as Saudi Arabia;
• build up inventories of parts and components for our vehicles;
−Removed: • manufacture an available inventory of our vehicles;
−Removed: • develop and deploy vehicle charging partnerships;
−Removed: • expand our design, research, development, maintenance and repair capabilities;
+Added: • manufacture and store an available inventory of our vehicles;
+Added: • develop and deploy geographically dispersed vehicle charging partnerships;
+Added: • expand our design, research, development, maintenance and repair capabilities and facilities;
• increase our sales and marketing activities and develop our distribution infrastructure;
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We have incurred and expect to continue to incur significant expenses, including leases, sales and distribution expenses as we build our brand and market our vehicles;
−Removed: expenses relating to developing and manufacturing our vehicles, tooling and expanding our manufacturing facilities;
−Removed: research and development expenses (including expenses related to the development of the Lucid Air, the Project Gravity SUV and other future products);
+Added: expenses relating to developing and manufacturing our vehicles, constructing, tooling and expanding our manufacturing facilities;
+Added: research and development expenses (including expenses related to the development of the Lucid Air, the Lucid Gravity SUV and other future products);
raw material procurement costs;
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In addition, we expect to incur significant costs servicing and maintaining customers’ vehicles, including establishing our service operations and facilities.
−Removed: As a company, we do not have historical experience forecasting and budgeting for any of these expenses, and these expenses could be significantly higher than we currently anticipate.
+Added: As a company, we have limited historical experience forecasting and budgeting for any of these expenses, and these expenses could be significantly higher than we currently anticipate.
+Added: While we have announced the Restructuring Plan intended to reduce our operating expenses, there is no guarantee that the Restructuring Plan will generate its intended benefits and the charges and expenditures associated with the Restructuring Plan may be greater than anticipated.
+Added: If we are unable to realize the expected operational efficiencies and cost savings, our operating results and financial condition may be materially and adversely affected.
In addition, any disruption to our manufacturing operations, obtaining necessary equipment or supplies, expansion of our manufacturing facilities, or the procurement of permits and licenses relating to our expected manufacturing, sales and distribution model could significantly increase our expenses.
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If we are unable to appropriately price and cost-efficiently design, manufacture, market, sell, distribute and service our vehicles, our margins, profitability and prospects will be materially and adversely affected.
−Removed: We have received only a limited number of reservations and orders for the Lucid Air, all of which may be cancelled.
+Added: Reservations and orders for our vehicles are cancellable.
Our customers may cancel their reservations without penalty and for any reason until they place an order for their vehicle.
In addition, our customers may also cancel their orders, but will lose their deposit.
−Removed: Delays in customer deliveries or delays in the availability of options could result in significant customer cancellations.
−Removed: In addition, customers who placed orders prior to the enactment of the Inflation Reduction Act of 2022 in an effort to maintain eligibility for a federal tax credit, may cancel their orders based upon the initial guidance provided by the Internal Revenue Service that could negatively affect our customers’ ability to receive tax credits for those orders.
−Removed: In addition, any event or incident which generates negative media coverage about us or the safety or quality of our vehicles could also result in significant customer cancellations.
+Added: Delays in customer deliveries, delays in the availability of options, potential changes in customer preferences, competitive developments and other factors could result in significant customer cancellations or cause delays in conversions of reservations to orders.
+Added: In addition, customers who placed orders prior to the enactment of the Inflation Reduction Act of 2022 in an effort to maintain eligibility for a federal tax credit, may decide to cancel their orders based upon the initial guidance provided by the Internal Revenue Service that could negatively affect our customers’ ability to receive tax credits for those orders.
+Added: Any event or incident which generates negative media coverage about us or the safety or quality of our vehicles could also result in significant customer cancellations.
No assurance can be given that reservations or orders will not be cancelled and will ultimately result in the final purchase, delivery and sale or lease of vehicles.
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If we encounter delays in customer deliveries of the Lucid Air that further lengthen wait times or in the event of negative media coverage, a significant number of reservations may be cancelled.
−Removed: A global economic recession or other downturn may have a material adverse impact on our business, prospects, results of operations and financial condition.
−Removed: 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 our business, prospects, financial condition and results of operations.
−Removed: Adverse economic conditions as well as uncertainty about the current and future global economic conditions may cause our customers to defer purchases or cancel their reservations and orders in response to tighter credit, decreased cash availability, fluctuations in foreign currency exchange rates, and weakened consumer confidence.
+Added: 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.
+Added: 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 our business, prospects, financial condition and results of operations.
+Added: Adverse economic conditions as well as uncertainty about the current and future global economic conditions may cause our customers to defer purchases or cancel their reservations and orders in response to higher interest rates, availability of consumer credit, decreased cash availability, fluctuations in foreign currency exchange rates, and weakened consumer confidence.
Reduced demand for our products may result in significant decreases in our product sales, which in turn would have a material adverse impact on our business, prospects, financial condition and results of operations.
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See “—Risks Related to Financing and Strategic Transactions — We will require additional capital to support business growth, and this capital might not be available on commercially reasonable terms, or at all .”
−Removed: 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.
−Removed: The ongoing COVID-19 pandemic poses risks to our business, including through its impact on general economic conditions;
−Removed: manufacturing and supply chain operations;
−Removed: stay-at-home orders;
−Removed: and global financial markets.
−Removed: The pandemic’s impact on economic conditions has led to a global decrease in vehicle sales in markets around the world.
−Removed: Its continued impact on the economy, even after the pandemic has subsided, may cause our customers to defer purchases, cancel their reservations and orders for our vehicles prior to delivery.
−Removed: See “— A global economic recession or other downturn may have a material adverse impact on our business, prospects, financial condition and results of operations.
−Removed: The spread of COVID-19 has also periodically disrupted our manufacturing operations and those of our suppliers.
−Removed: For example, the COVID-19 outbreak in China and the resulting lockdowns have caused parts supply delays with some impact on manufacturing operations in Arizona.
−Removed: Such disruptions to us and our suppliers have negatively impacted, and could continue to negatively impact the production volume of our first vehicle, the Lucid Air sedan, as well other vehicles that we may introduce from time to time.
−Removed: Our manufacturing operations at a limited number of facilities in Casa Grande, Arizona concentrate this risk.
−Removed: In addition, broader impacts of the pandemic have included inflationary pressure, which impacts our cost structure.
−Removed: The pandemic has resulted in the imposition of travel bans and restrictions, quarantines, shelter-in-place and stay-at-home orders and business shutdowns, which have contributed to delays in the anticipated production schedule of the Lucid Air.
−Removed: These measures pose numerous operational risks and logistical challenges to our business.
−Removed: For example, we may be required to limit the number of employees and contractors at our manufacturing facilities in Casa Grande, Arizona or be required to cause a substantial number of employees and/or contractors to quarantine, which could cause further delays in tooling efforts or in the production schedule of the Lucid Air.
−Removed: In addition, regional, national and international travel restrictions have resulted in adverse impacts to our supply chain.
−Removed: For example, in certain instances, international travel restrictions have prevented our supply quality engineers from conducting in-person visits and parts production quality engineering with international suppliers, which has lengthened the time required to finalize and secure certain components of the Lucid Air.
−Removed: Further, our sales and marketing activities have been, and may in the future be, adversely affected due to the cancellation or reduction of in-person sales activities, meetings, events and conferences, and our planned construction and opening of our Lucid studio sales and service facilities in key markets has been delayed.
−Removed: The transition of some of our personnel to a remote or hybrid workforce has also increased demand on our information technology resources and systems and increased data privacy and cybersecurity risks.
−Removed: These restrictive measures could be in place for a significant period of time and may be reinstituted or replaced with more burdensome restrictions if conditions deteriorate, which could adversely affect our start-up, manufacturing and sales and distribution plans and timelines.
−Removed: In addition, the COVID-19 pandemic has resulted in extreme volatility in the global financial markets, which could increase our cost of capital or limit our ability to access financing when we need it.
−Removed: To address the uncertainties of COVID-19 and to help ensure the safety of our team members, we have implemented a vaccination mandate for certain of our employees and for certain individuals to enter many of our facilities and may implement further similar requirements in the future, which may have an impact on our hiring and/or our workforce and adversely impact our manufacturing capabilities and overall business operations.
−Removed: The severity, magnitude and duration of the COVID-19 pandemic, including as a result of new variant and subvariant strains such as the Omicron strain and subvariants, and our economic and regulatory consequences are rapidly changing and uncertain.
−Removed: Accordingly, we cannot predict the ultimate impact of the COVID-19 pandemic on our business, financial condition and results of operations.
−Removed: The automotive industry has significant barriers to entry that we must overcome in order to manufacture and sell electric vehicles at scale.
−Removed: The automobile industry is characterized by significant barriers to entry, including large capital requirements, investment costs of designing, manufacturing, and distributing vehicles, long lead times to bring vehicles to market from the concept and design stage, the need for specialized design and development expertise, regulatory requirements, establishing a brand name and image, and the need to establish sales and service locations.
−Removed: Since we are focused on the design of electric vehicles, we face a variety of added challenges to entry that a traditional automobile manufacturer would not encounter, including additional costs of developing and producing an electric powertrain that has comparable performance to a traditional gasoline engine in terms of range and power, inexperience with servicing electric vehicles, regulations associated with the transport of batteries, the need to establish or provide access to sufficient charging locations and unproven high-volume customer demand for fully electric vehicles.
−Removed: While we have developed and started producing our first electric sedan and have completed the first phase of construction of AMP-1, we have not finished tooling all production lines at AMP-1.
−Removed: If we are not able to overcome these barriers, our business, prospects, results of operations and financial condition will be negatively impacted, and our ability to grow our business will be harmed.
−Removed: The automotive market is highly competitive, and we may not be successful in competing in this industry.
−Removed: The global automotive market, particularly for electric and alternative fuel vehicles, is highly competitive, and we expect it will become even more so in the future.
−Removed: In recent years, the electric vehicle industry has grown, with several companies that focus completely or partially on the electric vehicle market.
−Removed: We expect additional companies to enter this market within the next several years.
−Removed: Electric vehicle manufacturers with which we compete include Tesla as well as an increasing number of U.S.-based and international entrants, many of which have announced plans to begin selling their own electric vehicles in the near-term.
−Removed: We also compete with established automobile manufacturers in the luxury vehicle segment, many of which have entered or have announced plans to enter the alternative fuel and electric vehicle market with either fully electric or plug-in hybrid versions of their vehicles.
−Removed: We compete for sales with luxury vehicles with internal combustion engines from established manufacturers.
−Removed: Many of our current and potential competitors have significantly greater financial, technical, manufacturing, marketing and other resources than we do and may be able to devote greater resources to the design, development, manufacturing, distribution, promotion, sale, servicing, and support of their products.
−Removed: In addition, many of these companies have longer operating histories, greater name recognition, larger and more established sales forces, broader customer and industry relationships and other resources than we do.
−Removed: Our competitors may be in a stronger position to respond quickly to new technologies and may be able to design, develop, market and sell their products more effectively than we do.
−Removed: We expect competition in our industry to significantly intensify in the future in light of increased demand for alternative fuel vehicles, continuing globalization, favorable governmental policies, and consolidation in the worldwide automotive industry.
−Removed: Our ability to successfully compete in our industry will be fundamental to our future success in existing and new markets.
−Removed: There can be no assurance that we will be able to compete successfully in our markets.
We currently depend on revenue generated from a single model and in the foreseeable future will be significantly dependent on a limited number of models.
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We expect to rely on sales from the Lucid Air, among other sources of financing, for the capital that will be required to develop and commercialize those subsequent models.
−Removed: To the extent that production of the Lucid Air is delayed or reduced, or if the Lucid Air is not well-received by the market for any reason, our revenue and cash flow would be adversely affected, we may need to seek additional financing earlier than we expect, and such financing may not be available to us on commercially reasonable terms, or at all.
−Removed: We will not have a third-party retail product distribution and full-service network.
−Removed: Third-party dealer networks are the traditional method of vehicle sales distribution and service.
−Removed: Because we sell directly to consumers, we do not have a traditional dealer product distribution and service network.
−Removed: We have limited experience distributing directly to consumers, and we expect that continuing to build a national and global in-house sales and marketing function, including an expanded physical sales, marketing and service footprint via our Lucid studios and service centers, will be expensive and time consuming.
−Removed: If our lack of a traditional dealer distribution and service network results in lost opportunities to generate sales, it could limit our ability to grow.
−Removed: Moreover, our business model of selling directly to consumers and directly servicing all vehicles may be limited by regulatory constraints.
−Removed: To the extent we are unable to successfully execute on such plans in all markets, we may be required to develop a third-party dealer distribution and service network, including developing and implementing the necessary information technology infrastructure to support them, which may prove costly, time-consuming or ineffective.
−Removed: If our use of an in-house sales, marketing and service team is not effective, our results of operations and financial conditions could be adversely affected.
+Added: To the extent that production of the Lucid Air or future models is delayed or reduced, or if the Lucid Air or future models are not well-received by the market for any reason, our revenue and cash flow would be adversely affected, we may need to seek additional financing earlier than we expect, and such financing may not be available to us on commercially reasonable terms, or at all.
+Added: In addition, on April 20, 2022, we entered into an agreement with the Ministry of Finance of Saudi Arabia, under which the Government of Saudi Arabia and its entities and corporate subsidiaries undertook to purchase up to 100,000 vehicles over a ten-year period, with an initial commitment to purchase 50,000 vehicles and an option to purchase up to an additional 50,000 vehicles over the same period.
+Added: The purchase price is determined by the lower of (i) the standard retail price for the applicable vehicle in Saudi Arabia;
+Added: and (ii) the standard retail price for the applicable vehicle in the United States, plus actual cost of logistics, importing, and other actual costs of delivering and homologating vehicles to Saudi Arabian regulations.
+Added: If we experience delays in manufacturing and delivering vehicles ordered by the Government of Saudi Arabia, fail to or experience delays in homologating vehicles to comply with Saudi Arabian regulations, or fail to set the appropriate purchase price for such vehicles, our revenue, cash flow and results of operations and financial condition could be adversely affected.
+Added: Furthermore, if the Government of Saudi Arabia delays the purchase of vehicles, does not exercise its option to purchase additional vehicles, or purchases significantly fewer vehicles than we currently anticipate for any reason, including for reasons beyond our control, our business, prospects, results of operations and financial condition could be materially and adversely affected.
+Added: Our business and prospects depend significantly on our brand.
+Added: Our business and prospects will heavily depend on our ability to develop, maintain, protect and strengthen the “Lucid” brand association with luxury and technological excellence.
+Added: Promoting and positioning our brand will likely depend significantly on our ability to provide a consistently high-quality customer experience, an area in which we have limited experience.
+Added: To promote our brand, we will be required to invest in, and over time we may be required to change our customer development and branding practices, which could result in substantially increased expenses, including the need to use traditional media such as television, radio and print advertising.
+Added: Our ability to successfully position our brand could also be adversely affected by perceptions about the quality of our competitors’ vehicles or our competitors’ success.
+Added: For example, certain of our competitors have been subject to significant scrutiny for incidents involving their self-driving technology and battery fires, which could result in similar scrutiny of us.
+Added: In particular, any negative publicity, whether or not true, can quickly proliferate on social media and harm consumer perception and confidence in our brand.
+Added: The growing use of social media increases the speed with which information and opinions can be shared and, thus, the speed with which a company’s reputation can be affected.
+Added: If we fail to correct or mitigate misinformation or negative information, including information spread through social media or traditional media channels, about us, the products we offer, our customer experience, or any aspect of our brand, our business, sales and results of operations could be adversely impacted.
+Added: From time to time, our vehicles or those of our competitors may be evaluated and reviewed by third parties.
+Added: Perceptions of our offerings in the marketplace may be significantly influenced by these reviews, which are disseminated via various media, including the internet.
+Added: Any negative reviews or reviews which compare us unfavorably to competitors could adversely affect consumer perception about our vehicles and reduce demand for our vehicles, which could have a material adverse effect on our business, results of operations, prospects and financial condition.
Our sales will depend in part on our ability to establish and maintain confidence in our long-term business prospects among consumers, analysts and others within our industry.
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In addition, as discussed above, a significant number of new electric vehicle companies have recently entered the automotive industry, which is an industry that has historically been associated with significant barriers to entry and a high rate of failure.
−Removed: If these new entrants or other manufacturers of electric vehicles go out of business, produce vehicles that do not perform as expected or otherwise fail to meet expectations, such failures may have the effect of increasing scrutiny of others in the industry, including us, and further challenging customer, supplier and analyst confidence in our long-term prospects.
+Added: If these new entrants or other traditional automotive manufacturers now producing electric vehicles go out of business, discontinue production of electric vehicles, produce vehicles that do not perform as expected or otherwise fail to meet expectations, such failures may have the effect of increasing scrutiny of others in the industry, including us, and further challenging customer, supplier and analyst confidence in our long-term prospects.
+Added: We will not have a third-party retail product distribution and full-service network.
+Added: Third-party dealer networks are the traditional method of vehicle sales distribution and service.
+Added: Because we sell directly to consumers, we do not have a traditional dealer product distribution and service network.
+Added: We have limited experience distributing directly to consumers, and we expect that continuing to build a national and global in-house sales and marketing function, including an expanded physical sales, marketing and service footprint via our Lucid studios and service centers, will be expensive and time consuming.
+Added: We have experienced delays in the construction and opening of our Lucid studios and service centers and any significant delays to establish Lucid studios and service centers in key markets in the future could have an adverse effect on our business, results of operations, prospects and financial condition.
+Added: In addition, if our lack of a traditional dealer distribution and service network results in lost opportunities to generate sales, it could limit our ability to grow.
+Added: Moreover, our business model of selling directly to consumers and directly servicing all vehicles may be limited by regulatory constraints.
+Added: To the extent we are unable to successfully execute on such plans in all markets, we may be required to develop a third-party dealer distribution and service network, including developing and implementing the necessary information technology infrastructure to support them, which may prove costly, time-consuming or ineffective.
+Added: If our use of an in-house sales, marketing and service team is not effective, our results of operations and financial conditions could be adversely affected.
Our ability to generate meaningful product revenue will depend on consumer adoption of electric vehicles.
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Any number of changes in the industry could negatively affect consumer demand for electric vehicles in general and our electric vehicles in particular.
−Removed: In addition, demand for electric vehicles may be affected by factors directly impacting automobile prices or the cost of purchasing and operating automobiles such as sales and financing incentives such as tax credits, prices of raw materials and parts and components, cost of fuel, availability of consumer credit, and governmental regulations, including tariffs, import regulation and other taxes.
+Added: In addition, demand for electric vehicles may be affected by factors directly impacting automobile prices or the cost of purchasing and operating automobiles such as sales and financing incentives such as tax credits, prices of raw materials and parts and components, cost of fuel, availability of consumer credit, interest rates, and governmental regulations, including tariffs, import regulation and other taxes.
Volatility in demand may lead to lower vehicle unit sales, which may result in downward price pressure and adversely affect our business, prospects, financial condition and results of operations.
−Removed: Further, sales of vehicles in the automotive industry tend to be cyclical in many markets, which may expose us to increased volatility, especially as we expand and adjust our operations and retail strategies.
+Added: Further, sa les of vehicles in the automotive industry tend to be cyclical in many markets, which may expose us to increased volatility, especially as we expand and adjust our operations and retail strategies.
Specifically, it is uncertain how such macroeconomic factors will impact us as a new entrant in an industry that has globally been experiencing a recent decline in sales.
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The influence of any of the factors described above or any other factors may cause a general reduction in consumer demand for electric vehicles or our electric vehicles in particular, either of which would materially and adversely affect our business, results of operations, financial condition and prospects.
+Added: If we fail to manage our future growth effectively, we may not be able to develop, manufacture, distribute, market and sell our vehicles successfully.
+Added: Any failure to manage our growth effectively could materially and adversely affect our business, prospects, results of operations and financial condition.
+Added: We are expanding our operations significantly and our current and future expansion plans include:
+Added: • expanding our management team;
+Added: • hiring and training new personnel;
+Added: • establishing or expanding design, manufacturing, distribution, sales and service facilities;
+Added: • implementing and enhancing administrative and business infrastructure, governance, systems and processes, including in connection with our maturation as a public company;
+Added: • expanding into new markets and establishing sales, service, administrative, distribution, and/or manufacturing operations in many of those markets.
+Added: We require qualified personnel, including design and manufacturing personnel and service technicians for our vehicles.
+Added: Because our vehicles are based on a different technology platform than traditional internal combustion engines, individuals with sufficient training in electric vehicles may not be available to hire, and as a result, we will need to expend significant time and expense training the employees we do hire.
+Added: Competition for individuals with experience in supply chain management and logistics as well as designing, engineering, manufacturing, producing, selling, and servicing electric vehicles is intense, and we may not be able to identify, attract, integrate, train, motivate or retain sufficient highly qualified personnel in the future.
+Added: Furthermore, the Restructuring Plan, which involves the reduction of our employee workforce, may adversely affect our internal programs and initiatives as well as our ability to recruit and retain skilled and motivated personnel.
+Added: The Restructuring Plan may also be distracting to employees and management and may negatively impact our business operations, reputation, or ability to serve customers.
+Added: We also cannot provide any assurances that we will not have to undertake additional workforce reductions in the future.
+Added: The failure to identify, attract, integrate, train, motivate and retain these employees could seriously harm our business and pros pects.
+Added: In addition, our employee equity program is a key factor in our ability to attract and retain talent and continue to support the growth of the company.
+Added: If we are unable to grant equity awards, or if we are forced to reduce the value of equity awards to be received by the employees for any reason, we may not be able to attract, hire and retain the personnel necessary for our business, which would have a material adverse effect on our business, prospects financial condition and results of operations.
+Added: In addition, our success is substantially dependent upon the continued service and performance of our senior management team and key technical and vehicle management personnel.
+Added: If any key employees were to separate their employment with us, such separation would likely increase the difficulty of managing our current operations and future growth and heighten the foregoing risks.
+Added: We also have limited experience to date in high volume manufacturing of our vehicles.
+Added: We cannot assure our investors that we will be able to develop and implement efficient, automated, low-cost manufacturing capabilities and processes, and reliable sources of component supply that will enable us to meet the quality, price, engineering, design and production standards, as well as the production volumes, required to successfully market our vehicles.
+Added: We have also experienced, and may continue to experience, internal and external logistics challenges with respect to our manufacturing and warehousing facilities, including disruption to manufacturing operations due to the consolidation of our logistics operations with our manufacturing operations at AMP-1.
+Added: Any failure to develop and implement such manufacturing processes and capabilities within our projected costs and timelines could stunt our future growth and impair our ability to produce, market, service and sell or lease our vehicles successfully.
+Added: In addition, our rapid growth, competitive real estate markets, and increasing rental rates, may impact our ability to obtain suitable space to accommodate our growing operations or to renew existing leases on terms favorable to us, if at all.
+Added: Any failure to obtain or renew leases for real property on terms favorable to us when we need them may limit our growth, impact our operations and have an adverse impact on our financial condition.
+Added: If we fail to manage our growth effectively, such failure could result in negative publicity and damage to our brand and have a material adverse effect on our business, prospects, financial condition and results of operations.
+Added: We face risks associated with international operations, including unfavorable regulatory, political, tax and labor conditions, which could harm our business.
+Added: As we expand our international presence and operations, we will be increasingly subject to the legal, political, regulatory and social requirements and economic conditions in these jurisdictions.
+Added: Additionally, as part of our growth strategy, we have been expanding and may continue to expand our sales, maintenance and repair services outside of the United States.
+Added: We have also started the construction of AMP-2 in Saudi Arabia and may continue to further expand our manufacturing activities outside the United States.
+Added: However, we have no experience to date manufacturing our vehicles outside of the United States, and such expansion will require us to make significant expenditures, including the hiring of local employees and establishing facilities and related systems and processes, in advance of generating any revenue.
+Added: We are subject to a number of risks associated with international business activities that may increase our costs, impact our ability to sell, service and manufacture our vehicles, and require significant management attention.
+Added: These risks include:
+Added: • conforming our vehicles to various international regulatory and homologation requirements where our vehicles are sold;
+Added: • establishing localized supply chains and managing international supply chain and logistics costs;
+Added: • establishing sufficient charging points for our customers in those jurisdictions, via partnerships or, if necessary, via development of our own charging networks;
+Added: • difficulty in staffing and managing foreign operations, especially in jurisdictions where no EV ecosystem exist and qualified personnel must be hired and relocated;
+Added: • difficulties attracting customers in new jurisdictions;
+Added: • difficulties establishing international manufacturing operations, including difficulties establishing relationships with or establishing localized supplier bases and developing cost-effective and reliable supply chains for such manufacturing operations and financing such manufacturing operations;
+Added: • d ifficulties controlling costs and potential loss of funding, including as a result of delays in the construction or commencement of operations at AMP-2;
+Added: • foreign government taxes, regulations and permit requirements, including foreign taxes that we may not be able to offset against taxes imposed upon us in the United States, and foreign tax and other laws limiting our ability to repatriate funds to the United States;
+Added: • inflation as well as fluctuations in foreign currency exchange rates and interest rates, including risks related to any forward currency contracts, interest rate swaps or other hedging activities we may undertake;
+Added: • United States and foreign government trade restrictions, tariffs and price or exchange controls;
+Added: • foreign laws, regulations and restrictions, including in the areas of supply chain, labor, sales, service, environment and health and safety, and related compliance costs;
+Added: • increasingly restrictive and complex foreign data privacy and security laws, regulations and obligations;
+Added: • changes in diplomatic and trade relationships, including political risk and customer perceptions based on such changes and risks;
+Added: • political instability, natural disasters, pandemics (including severity, magnitude and the duration of the COVID-19 pandemic), war (including the conflict between Ukraine and Russia) or events of terrorism;
+Added: • the strength of international economies.
+Added: If we fail to successfully address these risks, our business, prospects, results of operations and financial condition could be materially harmed.
+Added: The automotive industry has significant barriers to entry that we must overcome in order to manufacture and sell electric vehicles at scale.
+Added: The automobile industry is characterized by significant barriers to entry, including large capital requirements, investment costs of designing, manufacturing, and distributing vehicles, long lead times to bring vehicles to market from the concept and design stage, the need for specialized design and development expertise, regulatory requirements, establishing a brand name and image, and the need to establish sales and service locations.
+Added: Since we are focused on the design of electric vehicles, we face a variety of added challenges to entry that a traditional automobile manufacturer would not encounter, including additional costs of developing and producing an electric powertrain that has comparable performance to a traditional gasoline engine in terms of range and power, inexperience with servicing electric vehicles, regulations associated with the transport of batteries, the need to establish or provide access to sufficient charging locations and unproven high-volume customer demand for fully electric vehicles.
+Added: While we have developed and started producing our first electric sedan and have completed the first phase of construction of AMP-1, we have not finished tooling all production lines at AMP-1.
+Added: If we are not able to overcome these barriers, our business, prospects, results of operations and financial condition will be negatively impacted, and our ability to grow our business will be harmed.
+Added: The automotive market is highly competitive, and we may not be successful in competing in this industry.
+Added: The global automotive market, particularly for electric and alternative fuel vehicles, is highly competitive, and we expect it will become even more so in the future.
+Added: In recent years, the electric vehicle industry has grown, with the emergence of several companies that focus completely or partially on the electric vehicle market.
+Added: In addition, traditional automotive manufacturers are also producing and selling electric and alternative fuel vehicles.
+Added: We expect additional companies to enter this market within the next several years.
+Added: Electric vehicle manufacturers with which we compete include Tesla, an increasing number of U.S.-based and international entrants and traditional automotive manufacturers, many of which have begun, or announced plans to begin, selling their own electric vehicles in the near-term.
+Added: We also compete with established automobile manufacturers in the luxury vehicle segment, many of which have entered or have announced plans to enter the alternative fuel and electric vehicle market with either fully electric or plug-in hybrid versions of their vehicles.
+Added: We compete for sales with luxury vehicles with internal combustion engines from established manufacturers.
+Added: Many of our current and potential competitors have significantly greater financial, technical, manufacturing, marketing and other resources than we do and may be able to devote greater resources to the design, development, manufacturing, distribution, promotion, sale, servicing, and support of their products, including the ability to significantly reduce prices of their products.
+Added: In addition, many of these companies have longer operating histories, greater name recognition, larger and more established sales forces, broader customer and industry relationships and other resources than we do.
+Added: Our competitors may be in a stronger position to respond quickly to changing market conditions and new technologies and may be able to design, develop, market and sell their products more effectively than we do.
+Added: For example, some of our competitors have recently announced vehicle price reductions, which may result in downward price pressure and reduced demand for our vehicles.
+Added: However, we may not be able to adjust our pricing strategies and even if we do adjust our pricing strategies, there can be no assurance that such adjustments will allow us to successfully compete against our competitors, which may have a material adverse effect on our brand, business, prospects, inventory levels, results of operations and financial conditions.
+Added: We expect competition in our industry to significantly intensify in the future in light of increased demand for alternative fuel vehicles, continuing globalization, favorable governmental policies, macroeconomic uncertainty, and consolidation in the worldwide automotive industry.
+Added: Our ability to successfully compete in our industry will be fundamental to our future success in existing and new markets.
+Added: There can be no assurance that we will be able to compete successfully in our markets.
Developments in electric vehicle or alternative fuel technology or improvements in the internal combustion engine may adversely affect the demand for our vehicles.
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Any failure by us to successfully react to changes in existing technologies or the development of new technologies could materially harm our competitive position and growth prospects.
−Removed: Extended periods of low gasoline or other petroleum-based fuel prices could adversely affect demand for our vehicles, which would adversely affect our business, prospects, results of operations and financial condition.
−Removed: A portion of the current and expected demand for electric vehicles results from concerns about volatility in the cost of gasoline and other petroleum-based fuel, the dependency of the United States on oil from unstable or hostile countries, government regulations and economic incentives promoting fuel efficiency and alternative forms of energy, as well as concerns about climate change resulting in part from the burning of fossil fuels.
−Removed: If the cost of gasoline and other petroleum-based fuel decreases significantly, the outlook for the long-term supply of oil to the United States improves, the government eliminates or modifies its regulations or economic incentives related to fuel efficiency and alternative forms of energy or there is a change in the perception that the burning of fossil fuels negatively impacts the environment, the demand for electric vehicles, including our vehicles, could be reduced, and our business and revenue may be harmed.
−Removed: Gasoline and other petroleum-based fuel prices have historically been extremely volatile, particularly during the ongoing COVID-19 pandemic, and it is difficult to ascertain whether such volatility will continue to persist.
−Removed: Lower gasoline or other petroleum-based fuel prices over extended periods of time may lower the perception in government and the private sector that cheaper, more readily available energy alternatives should be developed and produced.
−Removed: If gasoline or other petroleum-based fuel prices remain at deflated levels for extended periods of time, the demand for electric vehicles, including our vehicles, may decrease, which would have an adverse effect on our business, prospects, financial condition and results of operations.
The unavailability, reduction or elimination of certain government and economic programs could have a material adverse effect on our business, prospects, financial condition and results of operations.
We expect to benefit from government and economic programs that encourage the development, manufacture or purchase of electric vehicles, such as zero emission vehicle credits, greenhouse gas credits and similar regulatory credits, the loss of which could harm our ability to generate revenue from the sale of such credits to other manufacturers;
−Removed: tax credits and other incentives to consumers, without which the net cost to consumers of our vehicles would increase, potentially reducing demand for our products;
+Added: tax credits and other incentives to consumers, without which the net cost to consumers of our vehicles could increase, potentially reducing demand for our products;
and investment tax credits for equipment, tooling and other capital needs, without which we may be unable to procure the necessary infrastructure for production to support our business and timeline;
and certain other benefits, including a California sales and use tax exclusion and certain other hiring and job training credits in California and Arizona.
−Removed: We may also benefit from government loan programs, such as loans under the Advanced Technology Vehicles Manufacturing Loan Program administered by the U.S.
−Removed: Department of Energy.
+Added: We may also benefit from government loan programs.
Any reduction, elimination or selective application of tax and other governmental programs and incentives because of policy changes, the reduced need for such programs due to the perceived success of the electric vehicle, fiscal tightening or other reasons may result in the diminished competitiveness of the electric vehicle industry generally or our electric vehicles in particular, which would adversely affect our business, prospects, financial condition and results of operations.
Further, we cannot assure you that the current governmental incentives and subsidies available for purchasers of electric vehicles will remain available.
−Removed: For example, beginning in 2023, the recently enacted Inflation Reduction Act of 2022 eliminated the $7,500 federal tax credit for sedans that have a manufacturer’s suggested retail price over $55,000.
−Removed: See “—Risks Related to Our Business and Operations — We have received only a limited number of reservations and orders for the Lucid Air, all of which may be cancelled .”
+Added: For example, beginning in 2023, the Inflation Reduction Act of 2022 eliminated the $7,500 federal sales tax credit for sedans that have a manufacturer’s suggested retail price over $55,000.
+Added: See “— We have received only a limited number of reservations and orders for the Lucid Air, all of which may be cancelled .”
While certain U.S.
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If we are not successful in obtaining any of these additional incentives and we are unable to find alternative sources of funding to meet our planned capital needs, our business and prospects could be materially adversely affected.
−Removed: If we fail to manage our future growth effectively, we may not be able to develop, manufacture, distribute, market and sell our vehicles successfully.
−Removed: Any failure to manage our growth effectively could materially and adversely affect our business, prospects, results of operations and financial condition.
−Removed: We are expanding our operations significantly and our current and future expansion plans include:
−Removed: • expanding our management team;
−Removed: • hiring and training new personnel;
−Removed: • establishing or expanding design, manufacturing, distribution, sales and service facilities;
−Removed: • implementing and enhancing administrative and business infrastructure, systems and processes, including in connection with our maturation as a public company;
−Removed: • expanding into new markets and establishing sales, service, administrative, distribution, and/or manufacturing operations in many of those markets.
−Removed: We intend to continue to hire a significant number of additional personnel, including design and manufacturing personnel and service technicians for our vehicles.
−Removed: Because our vehicles are based on a different technology platform than traditional internal combustion engines, individuals with sufficient training in electric vehicles may not be available to hire, and as a result, we will need to expend significant time and expense training the employees we do hire.
−Removed: Competition for individuals with experience in supply chain management and logistics as well as designing, engineering, manufacturing and servicing electric vehicles is intense, and we may not be able to identify, attract, integrate, train, motivate or retain additional highly qualified personnel in the future.
−Removed: The failure to identify, attract, integrate, train, motivate and retain these additional employees could seriously harm our business and pros pects.
−Removed: Our employee equity program is a key factor in our ability to attract and retain talent and continue to support the growth of the company.
−Removed: If we are unable to grant equity awards, or if we are forced to reduce the value of equity awards we grant due to shortage of shares available for issuance under our stock incentive plan, we may not be able to attract, hire and retain the personnel necessary for our business, which would have a material adverse effect on our business, prospects financial condition and results of operations.
−Removed: In addition, our success is substantially dependent upon the continued service and performance of our senior management team and key technical and vehicle management personnel.
−Removed: If any key personnel were to separate their employment with us, such separation would likely increase the difficulty of managing our future growth and heighten the foregoing risks.
−Removed: We also have no experience to date in high volume manufacturing of our vehicles.
−Removed: We cannot assure our investors that we will be able to develop and implement efficient, automated, low-cost manufacturing capabilities and processes, and reliable sources of component supply that will enable us to meet the quality, price, engineering, design and production standards, as well as the production volumes, required to successfully market our vehicles.
−Removed: We have also experienced, and may continue to experience, logistics challenges with respect to our manufacturing and warehousing facilities.
−Removed: Any failure to develop and implement such manufacturing processes and capabilities within our projected costs and timelines could stunt our future growth and impair our ability to produce, market, service and sell or lease our vehicles successfully.
−Removed: In addition, our rapid growth, competitive real estate markets, and increasing rental rates, may impact our ability to obtain suitable space to accommodate our growing operations or to renew existing leases on terms favorable to us, if at all.
−Removed: Any failure to obtain or renew leases for real property on terms favorable to us when we need them may limit our growth, impact our operations and have an adverse impact on our financial condition.
−Removed: If we fail to manage our growth effectively, such failure could result in negative publicity and damage to our brand and have a material adverse effect on our business, prospects, financial condition and results of operations.
We may be unable to offer attractive leasing and financing options for the Lucid Air and future vehicles, which would adversely affect consumer demand for the Lucid Air and our future vehicles.
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We are subject to risks associated with autonomous driving and advanced driver assistance system technology, and we cannot guarantee that our vehicles will achieve our targeted assisted or autonomous driving functionality within our projected timeframe, if ever.
−Removed: Our vehicles are designed with advanced driver assistance system (“ ADAS ”) hardware and software, and we expect to release a Lucid Air software update and launch Project Gravity with Level 2 (partial automation) ADAS functionality, which we plan to upgrade with additional capabilities over time.
+Added: Our vehicles are designed with advanced driver assistance system (“ADAS”) hardware and software.
+Added: We have released a Lucid Air software update, and expect to launch the Lucid Gravity SUV, with Level 2 (partial automation) ADAS functionality, which we plan to upgrade with additional capabilities over time.
ADAS technologies are emerging and subject to known and unknown risks, and there have been accidents and fatalities associated with such technologies.
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If we are unable to develop competitive Level 2 or more advanced ADAS technologies in-house or acquire access to such technologies via partnerships or investments in other companies or assets, we may be unable to equip our vehicles with competitive ADAS features, which could damage our brand, reduce consumer demand for our vehicles or trigger cancellations of reservations and could have a material adverse effect on our business, results of operations, prospects and financial condition.
−Removed: ADAS technology is also subject to considerable regulatory uncertainty, which exposes us to additional risks.
+Added: ADAS technology is also subject to regulatory uncertainty, which exposes us to additional risks.
See “— Risks Related to Litigation and Regulation — ADAS technology is subject to uncertain and evolving regulations.
−Removed: Our business and prospects depend significantly on our brand.
−Removed: Our business and prospects will heavily depend on our ability to develop, maintain, protect and strengthen the “Lucid” brand association with luxury and technological excellence.
−Removed: Promoting and positioning our brand will likely depend significantly on our ability to provide a consistently high-quality customer experience, an area in which we have limited experience.
−Removed: To promote our brand, we will be required to invest in, and over time we may be required to change our customer development and branding practices, which could result in substantially increased expenses, including the need to use traditional media such as television, radio and print advertising.
−Removed: Our ability to successfully position our brand could also be adversely affected by perceptions about the quality of our competitors’ vehicles or our competitors’ success.
−Removed: For example, certain of our competitors have been subject to significant scrutiny for incidents involving their self-driving technology and battery fires, which could result in similar scrutiny of us.
−Removed: In particular, any negative publicity, whether or not true, can quickly proliferate on social media and harm consumer perception and confidence in our brand.
−Removed: The growing use of social media increases the speed with which information and opinions can be shared and, thus, the speed with which a company’s reputation can be affected.
−Removed: If we fail to correct or mitigate misinformation or negative information, including information spread through social media or traditional media channels, about us, the products we offer, our customer experience, or any aspect of our brand, our business, sales and results of operations could be adversely impacted.
−Removed: From time to time, our vehicles or those of our competitors may be evaluated and reviewed by third parties.
−Removed: Perceptions of our offerings in the marketplace may be significantly influenced by these reviews, which are disseminated via various media, including the internet.
−Removed: Any negative reviews or reviews which compare us unfavorably to competitors could adversely affect consumer perception about our vehicles and reduce demand for our vehicles, which could have a material adverse effect on our business, results of operations, prospects and financial condition.
−Removed: We face risks associated with international operations, including unfavorable regulatory, political, tax and labor conditions, which could harm our business.
−Removed: We anticipate having operations and subsidiaries in Europe, the Middle East and China that are subject to the legal, political, regulatory and social requirements and economic conditions in these jurisdictions.
−Removed: Additionally, as part of our growth strategy, we have been expanding and may continue to expand our sales, maintenance and repair services outside of the United States.
−Removed: We have also started the construction of AMP-2 in the Kingdom of Saudi Arabia and may continue to further expand our manufacturing activities outside the United States.
−Removed: However, we have no experience to date manufacturing, selling or servicing our vehicles outside of the United States, and such expansion would require us to make significant expenditures, including the hiring of local employees and establishing facilities and related systems and processes, in advance of generating any revenue.
−Removed: We are subject to a number of risks associated with international business activities that may increase our costs, impact our ability to sell, service and manufacture our vehicles, and require significant management attention.
−Removed: These risks include:
−Removed: • conforming our vehicles to various international regulatory requirements where our vehicles are sold, or homologation;
−Removed: • establishing localized supply chains and managing international supply chain and logistics costs;
−Removed: • establishing sufficient charging points for our customers in those jurisdictions, via partnerships or, if necessary, via development of our own charging networks;
−Removed: • difficulty in staffing and managing foreign operations;
−Removed: • difficulties attracting customers in new jurisdictions;
−Removed: • difficulties establishing international manufacturing operations, including difficulties establishing relationships with or establishing localized supplier bases and developing cost-effective and reliable supply chains for such manufacturing operations and financing such manufacturing operations;
−Removed: • d ifficulties controlling costs and potential loss of funding, including as a result of delays in the construction, or commencement of operations at AMP-2;
−Removed: • foreign government taxes, regulations and permit requirements, including foreign taxes that we may not be able to offset against taxes imposed upon us in the United States, and foreign tax and other laws limiting our ability to repatriate funds to the United States;
−Removed: • inflation as well as fluctuations in foreign currency exchange rates and interest rates, including risks related to any forward currency contracts, interest rate swaps or other hedging activities we may undertake;
−Removed: • United States and foreign government trade restrictions, tariffs and price or exchange controls;
−Removed: • foreign laws, regulations and restrictions, including in the areas of supply chain, labor, environmental and health and safety, and related compliance costs;
−Removed: • foreign data privacy and security laws, regulations and obligations;
−Removed: • changes in diplomatic and trade relationships, including political risk and customer perceptions based on such changes and risks;
−Removed: • political instability, natural disasters, pandemics (including severity, magnitude and the duration of the COVID-19 pandemic), war (including the conflict between Ukraine and Russia) or events of terrorism;
−Removed: • the strength of international economies.
−Removed: If we fail to successfully address these risks, our business, prospects, results of operations and financial condition could be materially harmed.
Uninsured or underinsured losses could result in payment of substantial damages, which would decrease our cash reserves and could harm our cash flow and financial condition.
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This may require a change in our insurance purchasing philosophy and strategy which can result in the assumption of greater risks to offset insurance market fluctuations.
+Added: The COVID-19 pandemic has adversely affected, and we cannot predict its ultimate impact on, our business, prospects, results of operations and financial condition.
+Added: The COVID-19 pandemic has been a risk to our business, including through its impact on general economic conditions, manufacturing and supply chain operations, labor markets, changes in customer behavior, and global financial markets.
+Added: The pandemic’s impact on economic conditions has led to a global decrease in vehicle sales in markets around the world.
+Added: Its continued impact on the economy, even after the pandemic has subsided, may cause our customers to defer purchases, cancel their reservations and orders for our vehicles prior to delivery.
+Added: See “— A global economic recession, government closures of banks and liquidity concerns at other financial institutions, or other downturn may have a material adverse impact on our business, prospects, financial condition and results of operations.
+Added: The spread of COVID-19, or the outbreak of another pandemic, can disrupt our manufacturing operations and those of our suppliers.
+Added: For example, the COVID-19 outbreak in China and the resulting lockdowns caused parts supply delays with some impact on manufacturing operations in Arizona in 2022.
+Added: Such disruptions to us and our suppliers have negatively impacted, and could negatively impact in the future the production volume of the Lucid Air, as well other vehicles that we may introduce from time to time.
+Added: Our manufacturing operations at a limited number of facilities in Casa Grande, Arizona concentrate this risk.
+Added: In addition, broader impacts of the pandemic have included inflationary pressure, which impacts our cost structure.
+Added: The pandemic has resulted in the imposition of travel bans and restrictions, quarantines and business shutdowns due to localized spikes in COVID-19 cases, which have contributed to delays in the anticipated production schedule of the Lucid Air and potential development of future
+Added: These measures pose numerous operational risks and logistical challenges to our business.
+Added: In addition, regional, national and international travel restrictions have resulted in adverse impacts to our supply chain.
+Added: For example, in certain instances, international travel restrictions have prevented our supply quality engineers from conducting in-person visits and parts production quality engineering with international suppliers, which has lengthened the time required to finalize and secure certain components of the Lucid Air.
+Added: The transition of some of our personnel to a remote or hybrid workforce has also increased demand on our information technology resources and systems and increased data privacy and cybersecurity risks and increased risk of absenteeism.
+Added: The severity, magnitude and duration of the COVID-19 pandemic, or another pandemic, and the economic and regulatory consequences arising from it are rapidly changing and uncertain.
+Added: Accordingly, we cannot predict the ultimate impact of the COVID-19 pandemic on our business, financial condition and results of operations.
+Added: Extended periods of low gasoline or other petroleum-based fuel prices could adversely affect demand for our vehicles, which would adversely affect our business, prospects, results of operations and financial condition.
+Added: A portion of the current and expected demand for electric vehicles results from concerns about volatility in the cost of gasoline and other petroleum-based fuel, the dependency of the United States on oil from unstable or hostile countries, government regulations and economic incentives promoting fuel efficiency and alternative forms of energy, as well as concerns about climate change resulting in part from the burning of fossil fuels.
+Added: If the cost of gasoline and other petroleum-based fuel decreases significantly, the outlook for the long-term supply of oil to the United States improves, the government eliminates or modifies its regulations or economic incentives related to fuel efficiency and alternative forms of energy or there is a change in the perception that the burning of fossil fuels negatively impacts the environment, the demand for electric vehicles, including our vehicles, could be reduced, and our business and revenue may be harmed.
+Added: Gasoline and other petroleum-based fuel prices have historically been extremely volatile and it is difficult to ascertain whether such volatility will continue to persist.
+Added: Lower gasoline or other petroleum-based fuel prices over extended periods of time may lower the perception in government and the private sector that cheaper, more readily available energy alternatives should be developed and produced.
+Added: If gasoline or other petroleum-based fuel prices remain at deflated levels for extended periods of time, the demand for electric vehicles, including our vehicles, may decrease, which would have an adverse effect on our business, prospects, financial condition and results of operations.
Increasing scrutiny and changing expectations from global regulations, our investors, customers and employees with respect to our ESG practices may impose additional costs on us or expose us to new or additional risks.
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Any harm to our reputation could impact our employees’ engagement and retention and the willingness of our customers and partners to do business with us.
−Removed: It is possible that our stakeholders may not be satisfied with our ESG disclosures, practices, or the speed of their adoption, and our systems may not be adequate to meet increasing global regulations on ESG topics.
+Added: It is possible that our stakeholders may not be satisfied with our ESG disclosures, practices, or the speed of their adoption, and our systems may not be adequate to comply with increasing global regulations on ESG topics, such as human rights and sustainability reporting.
Actual or perceived shortcomings with respect to our ESG initiatives and reporting may subject us to litigation and could negatively impact our business.
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In addition, a variety of organizations have developed ratings to measure the performance of companies on ESG topics, and the results of these assessments are widely publicized.
−Removed: Investment in funds that specialize in companies that perform well in such assessments are increasingly popular, and major institutional investors have publicly emphasized the
−Removed: importance of such ESG measures to their investment decisions.
+Added: Investment in funds that specialize in companies that perform well in such assessments are increasingly popular, and major institutional investors have publicly emphasized the importance of such ESG measures to their investment decisions.
Unfavorable or downgraded ratings of our company or our industries, as well as non-inclusion or removal of our stock on ESG-oriented investment funds, may lead to negative investor sentiment and the diversion of investment to other companies or industries, which could have a negative impact on our stock price.
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Risks Related to Manufacturing and Supply Chain
−Removed: We have experienced and may in the future experience significant delays in the design, manufacture, launch and financing of our vehicles, including the Lucid Air and Project Gravity, which could harm our business and prospects.
+Added: We have experienced and may in the future experience significant delays in the design, manufacture, launch and financing of our vehicles, including the Lucid Air and the Lucid Gravity SUV, which could harm our business and prospects.
Our plan to commercially manufacture and sell our vehicles is dependent upon the timely availability of funds, upon our finalizing of the related design, engineering, component procurement, testing, build-out and manufacturing plans in a timely manner and also upon our ability to execute these plans within the planned timeline.
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Any future delays in the financing, design, manufacture and launch of the Lucid Air, including planned future variants, and any future electric vehicles could materially damage our business, prospects, financial condition and results of operations.
−Removed: Many of our vehicles are still in the development and/or testing phase and production of the Project Gravity SUV is not expected to begin until 2024, and may occur later or not at all.
+Added: Many of our vehicles are still in the development and/or testing phase and production of the Lucid Gravity SUV is not expected to begin until 2024, and may occur later or not at all.
Additionally, prior to mass production of our electric vehicles, we will also need the vehicles to be fully approved for sale according to differing requirements, including but not limited to regulatory requirements, in the different geographies where we intend to launch our vehicles.
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Furthermore, we rely on third party suppliers for the development, manufacture, and/or provision and development of many of the key components and materials used in our vehicles, as well as provisioning and servicing equipment in our manufacturing facilities.
−Removed: We have been affected by ongoing, industry-wide challenges in logistics and supply chains, such as increased port congestion, intermittent supplier delays, a shortfall of semiconductor supply, and international travel restrictions preventing supply quality engineers from conducting in-person visits and quality engineering for parts production.
−Removed: These challenges have affected our ability, and the ability of our suppliers, to obtain parts, components and manufacturing equipment on a timely basis, and in some instances have resulted in increased costs.
+Added: We have been affected by ongoing, industry-wide challenges in logistics and supply chains, such as increased supplier lead times and ongoing constraints of semiconductor supply.
+Added: These challenges have affected our ability, and the ability of our suppliers, to obtain parts, components and manufacturing equipment on a timely basis, and in some instances have resulted in increased costs and delays to the construction and expansion of our facilities.
We expect that the risk of unexpected disruptions will continue for the foreseeable future.
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Any significant delay or other complication in the production ramp of the Lucid Air or the development, manufacture, launch and production ramp of our future products, features and services, including complications associated with expanding our production capacity and supply chain or obtaining or maintaining related regulatory approvals, or inability to manage such ramps cost-effectively, could materially damage our brand, business, prospects, financial condition and results of operations.
−Removed: The continued development of and the ability to manufacture our vehicles, including the Lucid Air and Project Gravity, are and will be subject to risks, including with respect to:
+Added: The continued development of and the ability to manufacture our vehicles, including the Lucid Air and the Lucid Gravity SUV, are and will be subject to risks, including with respect to:
• our ability to ensure readiness of firmware features and functions to be integrated into the Lucid Air as planned and on the desired timeline;
−Removed: • our ability to finalize release candidate specifications for Project Gravity as planned and on the desired timeline;
+Added: • our ability to finalize release candidate specifications for the Lucid Gravity SUV as planned and on the desired timeline;
• any delays by us in delivering final component designs to our suppliers or any changes to such component designs;
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• our ability to adequately reduce and control the costs of key parts and materials;
+Added: • our ability to significantly reduce freight costs, including in-bound freight costs;
• our ability to manage any transitions or changes in our production process, planned or unplanned;
• the occurrence of product defects that cannot be remedied without adversely affecting the production;
−Removed: • our ability to secure necessary funding;
+Added: • our ability to secure neces sary funding;
• our ability to negotiate and execute definitive agreements with various suppliers for hardware, software, or services necessary to engineer or manufacture our vehicles;
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• our ability to maintain arrangements on commercially reasonable terms with our suppliers, delivery and other partners, after sales service providers, and other operationally significant third parties;
−Removed: • other delays, backlog in manufacturing and research and development of new models, and cost overruns;
−Removed: • the severity, magnitude and duration of the ongoing COVID-19 pandemic, including related business interruptions and other effects;
+Added: • other delays, backlog in manufacturing and research and development of new mo dels, and cost overruns;
+Added: • the severity, magnitude and duration of the COVID-19 pandemic, including related business interruptions and other effects;
• any other risks identified herein.
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Our success, including our ability to continue production of the Lucid Air, will depend on our ability to enter into supplier agreements and maintain our relationships with hundreds of suppliers that are critical to the output and production of our vehicles.
−Removed: To date, we have not secured long-term supply agreements for all of our components and for some components such as battery cells, our supply agreements do not guarantee sufficient quantities of components for our vehicle production ramp curve.
+Added: To date, we have not secured long-term supply agreements for all of our components and for some components, our supply agreements do not guarantee sufficient quantities of components for our vehicle production ramp curve.
We plan to seek opportunities to secure long-term committed supply agreements for certain of these components.
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Any attempts to increase the announced or expected prices of our vehicles in response to increased costs could be viewed negatively by our potential customers and could adversely affect our business, prospects, financial condition or results of operations.
−Removed: We may also be at a disadvantage in negotiating supply agreements for the production of our vehicles due to our limited operating history.
+Added: We may also be at a disadvantage in negotiating supply agreements for the production of our vehicles as well as for the design and construction of our manufacturing facilities due to our limited operating history.
In addition, given that in many cases we are an aggregator of automotive parts produced by third party manufacturers, there is the possibility that supply agreements for the parts and components for our vehicles could be at costs that make it difficult for us to operate profitably.
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Additionally, our third-party suppliers may be unable to obtain required certifications or provide necessary warranties for their products that are necessary for use in our vehicles.
−Removed: We have been affected by ongoing, industry-wide challenges in logistics and supply chains, such as increased port congestion, intermittent supplier delays, a shortfall of semiconductor supply, and international travel restrictions preventing supply quality engineers from conducting in-person visits and quality engineering for parts production.
−Removed: We expect that these industry-wide trends may continue to affect the ability of us and our suppliers to obtain parts, components and manufacturing equipment on a timely basis for the foreseeable future, and may result in increased costs.
+Added: We have been affected by ongoing, industry-wide challenges in logistics and supply chains, such as increased supplier lead times and ongoing constraints of semiconductor supply.
+Added: We expect that these industry-wide trends may continue to affect the ability of us and our suppliers to obtain parts, components and manufacturing equipment, including electrical and mechanical equipment for AMP-2 and the Phase 2 expansion of AMP-1, on a timely basis for the foreseeable future, and may result in increased costs.
Changes in our supply chain or production needs in order to meet our quality targets and development timelines as well as due to design changes have resulted in cost increases from our suppliers.
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Further, if we are unsuccessful in our efforts to control and reduce supplier costs, our results of operations will suffer.
+Added: Alternatively, if our production decreases significantly below our projections for any reason, we may not meet all of our purchase commitments with suppliers with whom we have non-cancelable long-term purchase commitments.
+Added: If we are unable to fully utilize our purchase commitments, we may face penalties or increased prices and there could be a material adverse effect on our results of operations.
In addition, we have experienced, and in the future could continue to experience, delays if our suppliers do not meet agreed upon timelines, experience capacity constraints, or deliver components that do not meet our quality standards or other requirements.
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If we continue to experience logistics challenges, are unable to accurately match the timing and quantities of component purchases to our actual needs, successfully recruit and retain personnel with relevant experience, timely comply with applicable regulations, or successfully implement automation, inventory management and other systems or processes to accommodate the increased complexity in our supply chain and manufacturing operations, we may incur unexpected production disruption, storage, transportation and write-off costs, which could have a material adverse effect on our results of operations and financial condition.
−Removed: Furthermore, unexpected changes in business conditions, materials pricing, labor issues, wars, governmental changes, tariffs, natural disasters, health epidemics such as the ongoing COVID-19 pandemic, and other factors beyond our and our suppliers’ control could also affect these suppliers’ ability to deliver components to us on a timely basis.
+Added: Furthermore, unexpected changes in business conditions, materials pricing, labor issues, wars, governmental changes, tariffs, natural disasters, health epidemics such as the COVID-19 pandemic, and other factors beyond our and our suppliers’ control could also affect these suppliers’ ability to deliver components to us on a timely basis.
We have also identified certain of our suppliers, including certain suppliers we deem critical, as having poor financial health or being at risk of bankruptcy.
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In addition, if our suppliers experience substantial financial difficulties, cease operations or otherwise face business disruptions, including as a result of the effects of the COVID-19 pandemic, we may be required to provide substantial financial support to ensure supply continuity, which could have an additional adverse effect on our liquidity and financial condition.
−Removed: Increases in costs, disruption of supply or shortage of materials, in particular for lithium-ion cells or semiconductors, could harm our business.
+Added: Increases in costs, disruption of supply or shortage of materials, in particular for lithium-ion battery cells or semiconductors, could harm our business.
As we scale commercial production of our vehicles or any future energy storage systems, we have experienced and may continue to experience increases in the cost of or a sustained interruption in the supply or shortage of materials.
Any such increase, supply interruption or shortage could materially and adversely impact our business, results of operations, prospects and financial condition.
−Removed: For example, as we continue our phased construction of our AMP-1 facility, we have experienced increases in steel prices and cost of construction labor.
−Removed: In addition, we use various materials in our business, including aluminum, steel, lithium, nickel, copper, cobalt, neodymium, terbium, praseodymium and manganese, as well as lithium-ion cells and semiconductors from suppliers.
+Added: For example, as we continue our phased construction of our AMP-1 facility, we have experienced increases in material and infrastructure equipment prices and cost of construction labor.
+Added: In addition, we use various materials in our business, including aluminum, steel, lithium, nickel, copper, cobalt, neodymium, terbium, praseodymium and manganese, as well as lithium-ion battery cells and semiconductors from suppliers.
The prices for these materials fluctuate, and their available supply may be unstable, depending on market conditions, inflationary pressure and global demand for these materials, including as a result of increased production of electric vehicles, energy storage products by our competitors and the global supply chain crisis, and could adversely affect our business and results of operations.
−Removed: For instance, we are exposed to multiple risks relating to lithium-ion cells.
+Added: For instance, we are exposed to multiple risks relating to lithium-ion battery cells.
These risks include:
−Removed: • the inability or unwillingness of current battery manufacturers to build or operate battery cell manufacturing plants to supply the numbers of lithium-ion cells required to support the growth of the electric vehicle industry as demand for such cells increases;
−Removed: • the inability or unwillingness of current battery manufacturers to reserve production capacity or guarantee pricing;
−Removed: • an increase in the cost, or decrease in the available supply, of materials, such as cobalt, used in lithium-ion cells;
−Removed: • disruption in the supply of cells due to quality issues or recalls by battery cell manufacturers;
−Removed: • fluctuations in the value of any foreign currencies, and the Korean Won in particular, in which battery cell and related raw material purchases are or may be denominated against the U.S.
+Added: • an increase in the cost, or decrease in the available supply, of materials, such as cobalt, used in lithium-ion battery cells;
+Added: • disruption in the supply of lithium-ion battery cells due to quality issues or recalls by manufacturers;
+Added: • our ability to manage our supply and inventory of lithium-ion battery cells;
+Added: • fluctuations in the value of any foreign currencies, in which lithium-ion battery cells and related raw material purchases are or may be denominated against the U.S.
Our ability to manufacture our vehicles or any future energy storage systems will depend on the continued supply of battery cells for the battery packs used in our products.
We have limited flexibility in changing battery cell suppliers, and any disruption in the supply of battery cells from such suppliers could disrupt production of our vehicles until a different supplier is fully qualified.
+Added: In addition, we have entered into agreements with Panasonic Energy Co., Ltd.
+Added: and certain of its affiliates for the supply of lithium-ion battery cells, pursuant to which we have made certain non-cancelable long-term purchase commitments.
+Added: If our production decreases significantly below our projections for any reason, we may not meet all of our purchase commitments.
+Added: If we are unable to fully utilize our purchase commitments, there could be a material adverse effect on our results of operations.
Furthermore, our ability to manufacture our vehicles depends on continuing access to semiconductors and components that incorporate semiconductors.
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In addition, such technology may not satisfy the cost, performance useful life and warranty characteristics we anticipate in our business plan, which could materially adversely affect our business, prospects and results of operations.
−Removed: If we fail to successfully tool our manufacturing facilities or if our manufacturing facilities become inoperable, we will be unable to produce our vehicles and our business will be harmed.
−Removed: While we have completed the initial phase of construction at AMP-1, tooling our facilities for production of our vehicles and our future expansion plans are complicated and present significant challe nges.
+Added: If we fail to successfully construct or tool our manufacturing facilities or if our manufacturing facilities become inoperable, we will be unable to produce our vehicles and our business will be harmed.
+Added: While we have completed the initial phase of construction at AMP-1, tooling our facilities for production of our vehicles and our future expansion plans are complicated and present significant challe nges and may require us to take vehicle production offline.
In addition, certain o f our suppliers may be unable to complete tooling with respect to finalized components of our vehicles in the planned timeframe after we deliver final component specifications, which could adversely affect our ability to continue commercial production of the Lucid Air on the expected timing and at the quality levels we require.
As with any large-scale capital project, these efforts could be subject to delays, cost overruns or other complications.
−Removed: For example, the installation and production readiness of certain general assembly equipment for our Phase 2 expansion of AMP-1 is expected to be delayed by our supplier until early 2023 due to its supply chain impacts and disruption related to the conflict in Ukraine.
+Added: For example, the installation and production readiness of certain general assembly equipment for our Phase 2 expansion of AMP-1 has commenced but is expected to be delayed by supply chain issues and market conditions such as limited availability of qualified construction labor in Casa Grande, Arizona.
+Added: In addition, we may encounter problems or disputes with our vendors for a variety of reasons, including for reasons beyond our control, and such disputes, with or without merit, could also cause significant delays and cost overruns.
These risks could be exacerbated because we are building our facilities from the ground up to support our electric vehicle production processes, which differ substantially from traditional automobile production processes for which expertise is more readily available.
−Removed: In connection with the commencement of commercial production at AMP-1, we have hired and trained and continue to hire and train a significant number of employees and integrate a yet-to-be-fully-developed supply chain.
+Added: In connection with the commencement of commercial production at AMP-1, we have hired and trained and continue to hire, retain, and train a significant number of employees and integrate a yet-to-be-fully-developed supply chain.
Any failure to continue commercial production on schedule would lead to additional costs and would delay our ability to generate meaningful revenues.
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All of the foregoing could hinder our ability to successfully launch and grow our business and achieve a competitive position in the market.
−Removed: In addition, if any of our manufacturing facilities are not constructed in conformity with our requirements, repair or remediation may be required to support our planned phased manufacturing build-out and could require us to take vehicle production offline, delay implementation of our planned phased manufacturing build-out, or construct alternate facilities, which could materially limit our manufacturing capacity, delay planned increases in manufacturing volumes, delay the start of production of the Project Gravity SUV or other future vehicles, or adversely affect our ability to timely sell and deliver our electric vehicles to customers.
+Added: In addition, if any of our manufacturing facilities are not constructed in conformity with our requirements, repair or remediation may be required to support our planned phased manufacturing build-out and could require us to take vehicle production offline, delay implementation of our planned phased manufacturing build-out, or construct alternate facilities, which could materially limit our manufacturing capacity, delay planned increases in manufacturing volumes, delay the start of production of the Lucid Gravity SUV or other future vehicles, or adversely affect our ability to timely sell and deliver our electric vehicles to customers.
Any repair or remediation efforts could also require us to bear substantial additional costs, including both the direct costs of such activities and potentially costly litigation or other legal proceedings related to any identified defect, and there can be no assurance that our insurance policies or other recoveries would be sufficient to cover all or any of such costs.
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Although we do not currently expect that we will be required to take vehicle production offline or reduce our planned manufacturing volumes, the repairs or remediation are expected to entail significant costs, and we may be unable to recover some or all of such costs from the applicable contractor(s).
+Added: The construction of our facilities and our operations are also subject to review and inspection by officials in the jurisdictions where our facilities are located, including without limitation, fire officials and building construction officials.
+Added: We have recently received results from inspections by local officials at our facilities, both existing and currently under construction, in Casa Grande, Arizona, citing failing marks, and we are actively engaged with the local authorities and have retained outside experts to address all of the specific issues identified by those officials as well as to devise means and methods that ensure an ongoing safe and compliant work environment.
+Added: Failure to address issues raised by local authorities may result in government-ordered temporary cessation of our construction and/or production operations, which could require us to take vehicle production offline or reduce our planned manufacturing volumes, all of which could have a material adverse effect on our business, results of operations, cash flows, financial condition or prospects.
We rely on complex machinery for our operations, and production involves a significant degree of risk and uncertainty in terms of operational performance, safety, security and costs.
−Removed: We expect to utilize a number of new manufacturing technologies, techniques and processes for our vehicles, such as motor winding equipment, and we may utilize additional new technologies, techniques and processes in the future.
+Added: We utilize a number of new manufacturing technologies, techniques and processes for our vehicles, such as motor winding equipment, and we may utilize additional new technologies, techniques and processes in the future.
Certain design features in our vehicles present additional manufacturing challenges, such as large display screens and ADAS hardware.
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Unexpected malfunctions of the manufacturing plant components may significantly decrease our operational efficiency, including by forcing manufacturing shutdowns in order to conduct repairs or troubleshoot manufacturing problems.
−Removed: Our facilities may also be harmed or rendered inoperable by natural or man-made disasters, including but not limited to earthquakes, tornadoes, flooding, fire, power outages, environmental hazards and remediation, costs associated with decommissioning of equipment, labor disputes and strikes, difficulty or delays in obtaining governmental permits and licenses, damages or defects in electronic systems, industrial accidents or health epidemics, such as the recent COVID-19 pandemic, which may render it difficult or impossible for us to manufacture our vehicles for some period of time.
+Added: Our facilities may also be harmed or rendered inoperable by natural or man-made disasters, including but not limited to earthquakes, tornadoes, flooding, fire, power outages, sandstorms, environmental hazards and remediation, costs associated with decommissioning of equipment, labor disputes and strikes, lack of availability of qualified construction labor, difficulty or delays in obtaining governmental permits and licenses, damages or defects in electronic systems, industrial accidents or health epidemics, such as the COVID-19 pandemic, which may render it difficult or impossible for us to manufacture our vehicles for some period of time.
The inability to produce our vehicles or the backlog that could develop if our manufacturing plant is inoperable for even a short period of time may result in the loss of customers or harm our reputation.
−Removed: Although we maintain insurance for damage to our property and the disruption of our business, this insurance may not be sufficient to cover all of our potential losses and may not continue to be available to us on acceptable terms, if at all.
−Removed: Should operational risks materialize, they may result in the personal injury to or death of our workers, the loss of production equipment, damage to manufacturing facilities, monetary losses, delays and unanticipated fluctuations in production, environmental damage, administrative fines, increased insurance costs and potential legal liabilities, all which could have a material adverse effect on our business, results of operations, cash flows, financial condition or prospects.
+Added: Although we maintain insurance for damage to our property, this insurance may not be sufficient to cover all of our potential losses and may not continue to be available to us on acceptable terms, if at all, based on insurance market conditions or our evolving risk profile.
+Added: Should operational risks materialize, they may result in the personal injury to or death of our workers, the loss of production equipment, damage to manufacturing facilities, monetary losses, delays and unanticipated fluctuations in production, environmental damage, administrative fines, increased insurance costs and potential legal liabilities, all of which could have a material adverse effect on our business, results of operations, cash flows, financial condition or prospects.
If we update or discontinue the use of our manufacturing equipment more quickly than expected, we may have to shorten the useful lives of any equipment to be retired as a result of any such update, and the resulting acceleration in our depreciation could negatively affect our financial results.
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The useful life of any equipment that would be retired early as a result would be shortened, causing the depreciation on such equipment to be accelerated, and our results of operations could be negatively impacted.
−Removed: We have no experience to date in high volume manufacture of our vehicles.
+Added: We have limited experience in high volume manufacture of our vehicles.
We cannot provide any assurance as to whether we will be able to develop and implement efficient, automated, low-cost logistics and production capabilities and processes and reliable sources of component supply that will enable us to meet the quality, price, engineering, design and production standards, as well as the production volumes, required to successfully mass market our vehicles.
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If our vehicles fail to perform as expected, our ability to develop, market and sell or lease our products could be harmed.
−Removed: Our vehicles or the components installed therein have in the past and may in the future contain defects in design and manufacture that may cause them not to perform as expected or that may require repairs, recalls, and design changes, any of which would require significant financial and other resources to successfully navigate and resolve.
+Added: Our vehicles or the components installed therein have in the past and may in the future contain defects in design or manufacture that may cause them not to perform as expected or that may require repairs, recalls, or design changes, any of which would require significant financial and other resources to successfully navigate and resolve.
Our vehicles use a substantial amount of software code to operate, and software products are inherently complex and may contain defects and errors when first introduced.
−Removed: If our vehicles contain defects in design and manufacture that cause them not to perform as expected or that require repair, or certain features of our vehicles such as bi-directional charging or ADAS features take longer than expected to become available, are legally restricted or become subject to additional regulation, our ability to develop, market and sell our products and services could be harmed.
+Added: If our vehicles contain defects in design or manufacture that cause them not to perform as expected or that require repair, or certain features of our vehicles such as bi-directional charging or ADAS features take longer than expected to become available, are legally restricted or become subject to additional regulation, our ability to develop, market and sell our products and services could be harmed.
Although we will attempt to remedy any issues we observe in our products as effectively and rapidly as possible, such efforts could significantly distract management’s attention from other important business objectives, may not be timely, may hamper production or may not be to the satisfaction of our customers.
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There can be no assurance that we will be able to detect and fix any defects in our products prior to their sale or lease to customers.
−Removed: Any defects, delays or legal restrictions on vehicle features, or other failure of our vehicles to perform as expected, could harm our reputation and result in delivery delays, product recalls, product liability claims, breach of warranty claims and significant warranty and other expenses, and could have a material adverse impact on our business, results of operations, prospects and financial condition.
+Added: Any defects, delays or legal restrictions on vehicle features, or other failure of our vehicles to perform as expected, could harm our reputation and result in delivery delays, product recalls, product liability claims, breach of warranty claims or significant warranty and other expenses, and could have a material adverse impact on our business, results of operations, prospects and financial condition.
Any such defects or noncompliance with legal requirements could also result in safety recalls.
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If we or our partners are unable to adequately service our vehicles, our business, prospects, financial condition and results of operations may be materially and adversely affected.
−Removed: Because commercial production of the Lucid Air has recently begun, we have limited experience servicing or repairing our vehicles.
+Added: We have limited experience servicing or repairing our vehicles and their integrated software.
Servicing electric vehicles is different than servicing vehicles with internal combustion engines and requires specialized skills, including high voltage training and servicing techniques.
Furthermore, some vehicle repairs may be done via over-the-air software updates, which poses additional risks to the vehicles’ software if any issues arise during an update.
−Removed: In addition, we plan to partner with certain third parties to perform some of the service on our vehicles, and there can be no assurance that we will be able to enter into acceptable arrangements with any such third-party providers or develop and implement the necessary information technology infrastructure to support them.
+Added: In addition, we may partner with certain third parties to perform some of the service on our vehicles, and there can be no assurance that we will be able to enter into acceptable arrangements with any such third-party providers or develop and implement the necessary information technology infrastructure to support them.
Further, although such servicing partners may have experience in servicing other electric vehicles, they will initially have no experience in servicing our vehicles.
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We provide a new vehicle limited warranty on all vehicles and powertrain components and systems we sell.
−Removed: Now that our vehicles are in commercial production, we will need to maintain reserves to cover part replacement and other vehicle repair needs, including any potential software upgrades or warranty claims.
+Added: We will need to maintain reserves to cover part replacement and other vehicle repair needs, including any potential software upgrades or warranty claims.
In addition, we expect to provide a manufacturer’s warranty on any future products, including energy storage systems we sell and may provide additional warranties on installation workmanship or performance guarantees.
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We will be required to provide forecasts of our demand to our suppliers several months prior to the scheduled delivery of vehicles to our prospective customers.
−Removed: Currently, there is no historical basis for making judgments about the demand for our vehicles or our ability to develop, manufacture, and deliver vehicles, or our profitability in the future.
+Added: Currently, there is limited historical basis for making judgments about the demand for our vehicles or our ability to develop, manufacture, and deliver vehicles, or our profitability in the future.
If we overestimate our requirements, our suppliers may have excess inventory, which indirectly would increase our costs.
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Our facilities or operations could be adversely affected by events outside of our control, such as natural disasters, wars, health epidemics or pandemics, or security incidents.
−Removed: We and our suppliers may be impacted by natural disasters, wars, health epidemics or pandemics, security incidents or other events outside of our control.
−Removed: For example, our corporate headquarters are located in seismically active regions in Northern California, and our manufacturing facilities in Arizona are located in a sandstorm-, flood- and tornado-prone area.
+Added: We and our suppliers may be impacted by weather events, natural disasters, wars, health epidemics or pandemics, security incidents or other events outside of our control.
+Added: For example, our corporate headquarters are located in seismically active regions in Northern California, and our manufacturing facilities in Arizona and Saudi Arabia are located in sandstorm-, flood- and/or tornado-prone areas.
If major disasters such as earthquakes, wildfires, floods, tornadoes or other events occur, or our information technology systems or communication networks break down or operate improperly, our headquarters and manufacturing facilities may be seriously damaged, or we may have to stop or delay production and shipment of our products.
−Removed: In addition, the ongoing COVID-19 pandemic has impacted economic markets, manufacturing operations, supply chains, employment and consumer behavior in nearly every geographic region and industry across the world, and we have been, and may in the future be, adversely affected as a result.
+Added: In addition, the COVID-19 pandemic has impacted economic markets, manufacturing operations, supply chains, employment and consumer behavior in nearly every geographic region and industry across the world, and we have been, and may in the future be, adversely affected as a result.
Furthermore, we could be impacted by physical security incidents at our facilities, which could result in significant damage to such facilities that could require us to delay or discontinue production of our vehicles.
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Any such events or failures of our vehicles, battery packs or warning systems could subject us to lawsuits, product recalls, or redesign efforts, all of which would be time consuming and expensive.
−Removed: Also, negative public perceptions regarding the suitability of lithium-ion cells for automotive applications or any future incident involving lithium-ion cells, such as a vehicle or other fire, even if such incident does not involve our vehicles, could seriously harm our business and reputation.
−Removed: In addition, as we expand our service network and scale the manufacturing of our vehicles and any future energy storage products, we will need to store lithium-ion cells at our facilities and we have, and may in the future, experience thermal events.
+Added: Also, negative public perceptions regarding the suitability of lithium-ion battery cells for automotive applications, disposal and recycling of lithium-ion battery cells, or any future incident involving lithium-ion battery cells, such as a vehicle or other fire, even if such incident does not involve our vehicles, could seriously harm our business and reputation.
+Added: In addition, as we expand our service network, increase our recycling practices and scale the manufacturing of our vehicles and any future energy storage products, we will need to store lithium-ion battery cells at our facilities and we have, and may in the future, experience thermal events.
Any mishandling of battery cells or safety issue or fire related to the cells could disrupt our operations.
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Our data center and our third-party service providers’ or vendors’ data centers could be subject to break-ins, sabotage and intentional acts of vandalism causing potential disruptions.
−Removed: We may also be subject to certain laws and regulations, such as “Right to Repair” laws, that could require us to provide third-party access to our vehicle systems.
+Added: We may also be subject to certain laws and regulations, such as “Right to Repair” laws, that could require us to provide third-party access to certain vehicle and vehicle-connected systems.
Some of our systems will not be fully redundant, and our disaster recovery planning cannot account for all eventualities.
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Similar regulations are also in effect, or expected to come into effect, in certain other international jurisdictions.
−Removed: These and other regulations could adversely affect the timing of our entry into the European or other markets, and if such regulations or other future regulations are inconsistent with our approach to automotive cybersecurity, we would be required to modify our systems to comply with such regulations, which would impose additional costs and delays and could expose us to potential liability to the extent our automotive cybersecurity systems and practices are inconsistent with such regulation.
+Added: These and other regulations could adversely affect our business in European or other markets, and if such regulations or other future regulations are inconsistent with our approach to automotive cybersecurity, we would be required to modify our systems to comply with such regulations, which would impose additional costs and delays and could expose us to potential liability to the extent our automotive cybersecurity systems and practices are inconsistent with such regulation.
We may not have adequate insurance coverage to cover losses associated with any of the foregoing, if any.
−Removed: The successful assertion of one or more large claims against us that exceeds our available insurance coverage, or results in changes to our insurance policies (including premium increases or the imposition of large deductible or co-insurance requirements), could have an adverse effect on our business.
+Added: The costs of investing and remediating a large data breach, or the successful assertion of one or more large claims against us that exceeds our available insurance coverage, or results in changes to our insurance policies (including premium increases or the imposition of large deductible or co-insurance requirements), could have an adverse effect on our business.
In addition, we cannot be sure that our existing insurance coverage will continue to be available on acceptable terms or that our insurers will not deny coverage as to any future claim.
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We may not be able to monitor and react to all developments in a timely manner.
−Removed: For example, the European Union adopted the General Data Protection Regulation (“ GDPR ”) , which became effective in May 2018, California adopted the California Consumer Privacy Act of 2018 (“ CCPA ”) , which became effective in January 2020, Canada adopted the Personal Information Protection and Electronic Documents Act (“ PIPEDA ”) and continues to amend the statute, the United Arab Emirates adopted the Data Protection Law (“ DPL ”), which became effective in January 2022, and the Kingdom of Saudi Arabia enacted the Personal Data Protection Law (“ PDPL ”) which will take effect in March 2023.
+Added: For example, the European Union adopted the General Data Protection Regulation (“GDPR”) , which became effective in May 2018, California adopted the California Consumer Privacy Act of 2018 (“CCPA”) , which became effective in January 2020, Canada adopted the Personal Information Protection and Electronic Documents Act (“PIPEDA”) and continues to amend the statute, the United Arab Emirates adopted the Data Protection Law (“DPL”), which became effective in January 2022, and Saudi Arabia enacted the Personal Data Protection Law (“PDPL”) which is expected to take effect in 2023.
Each of the GDPR, the CCPA, the PIPEDA, the DPL and the PDPL impose additional obligations on companies regarding the handling of personal data and provide certain individual privacy rights to persons whose data is collected.
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The cost of compliance, and the potential for fines and penalties for non-compliance, with GDPR may have a significant adverse effect on our business and operations.
−Removed: Recent legal developments in the European Economic Area (“ EEA ”), including recent rulings from the Court of Justice of the European Union and from various EU member state data protection authorities, have created complexity and uncertainty regarding transfers of personal data from the EEA to the United States and other so-called third countries outside the EEA.
+Added: Legal developments in the European Economic Area (“EEA”), including rulings from the Court of Justice of the European Union and from various EU member state data protection authorities, have created complexity and uncertainty regarding transfers of personal data from the EEA to the United States and other so-called third countries outside the EEA.
Similar complexities and uncertainties also apply to transfers from the United Kingdom to third countries.
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The CPRA also creates a new state agency, the California Privacy Protection Agency (“CPPA”), that will be vested with the authority to implement and enforce the CCPA (as modified by CPRA and any related regulations).
−Removed: The CPPA has recently published draft regulations under the CCPA and CPRA that, if enacted, would impose additional regulatory obligations on us.
Other states, including Connecticut, Utah, Virginia, and Colorado, have enacted or are in the process of enacting, or considering similar laws.
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Risks Related to Our Employees and Human Resources
−Removed: The loss of key personnel or an inability to attract, retain and motivate qualified personnel may impair our ability to expand our business.
+Added: The loss of key employees or an inability to attract, retain and motivate qualified personnel may impair our ability to expand our business.
Our success is substantially dependent upon the continued service and performance of our senior management team and key technical and vehicle management personnel.
Our employees, including our senior management team, are at-will employees, and therefore may terminate employment with us at any time with no advance notice.
−Removed: Although we do not currently anticipate widespread departure of our senior leadership team or other key employees, it is always possible that we could lose some key personnel, especially if we are unable to grant sufficient equity awards or if the volatility of our stock price increases.
−Removed: The replacement of any members of our senior management team or other key personnel likely would involve significant time and costs and may significantly delay or prevent the achievement of our business objectives.
+Added: It is always possible that we could lose some key employees, especially if we are unable to grant sufficient or competitive compensation, including equity awards and bonuses, or if the volatility of our stock price increases.
+Added: In addition, the Restructuring Plan, which involves the reduction of our employee workforce, may adversely affect our internal programs and initiatives as well as our ability to recruit and retain skilled and motivated personnel.
+Added: The Restructuring Plan may also be distracting to employees and management and may negatively impact our business operations, reputation, or ability to serve customers.
+Added: We also cannot provide any assurances that we will not have to undertake additional workforce reductions in the future.
+Added: The replacement of any members of our senior management team or other key employees likely would involve significant time and costs and may significantly delay or prevent the achievement of our business objectives.
Our future success also depends, in part, on our ability to continue to attract, integrate and retain highly skilled personnel.
−Removed: Competition for personnel is frequently intense, especially in the San Francisco Bay Area, where we have a substantial presence and need for highly skilled personnel, including, in particular, engineers and Arizona, where we have a substantial presence and a need for a large skilled repair, logistics, supply chain, and manufacturing workforce.
+Added: Competition for personnel is frequently intense, especially in the San Francisco Bay Area, where we have a substantial presence and need for highly skilled personnel, including, but not limited to, in particular, engineers, and Arizona, where we have a substantial presence and a need for a large skilled repair, logistics, supply chain, and manufacturing workforce.
As with any company with limited resources, there can be no guarantee that we will be able to attract such individuals or that the presence of such individuals will necessarily translate into our profitability.
−Removed: Because we operate in a newly emerging industry, there may also be limited personnel available with relevant business experience, and such individuals may be subject to non-competition and other agreements that restrict their ability to work for us.
+Added: Because we operate in a newly emerging industry, there may also be limited personnel available with relevant expertise or business experience, and such individuals may be subject to non-competition and other agreements that restrict their ability to work for us.
This challenge may be exacerbated for us as we attempt to transition from start-up to full-scale commercial vehicle manufacturing and sales in a very short period of time under the unforeseeable business conditions which continue to evolve as a result of the impact of COVID-19 and the ongoing conflict in Ukraine.
−Removed: Our inability to attract and retain key personnel may materially and adversely affect our business operations.
+Added: Our inability to attract and retain key employees may materially and adversely affect our business operations.
Any failure by our management to effectively anticipate, implement and manage the changes required to sustain our growth would have a material adverse effect on our business, financial condition and results of operations.
3 unchanged sentences
Rawlinson were to discontinue his service with us due to death, disability or any other reason, we would be significantly disadvantaged.
−Removed: We will need to hire and train a significant number of employees to engage in full-scale commercial manufacturing operations, and our business could be adversely affected by labor and union activities.
−Removed: We will need to hire and train a significant number of employees to engage in full capacity commercial manufacturing operations.
−Removed: This needs to be accomplished in a very short period of time in order for us to scale commercial production and sales and service operations.
−Removed: There are various risks and challenges associated with hiring, training and managing a large workforce, such as establishing efficient communication channels, procedures and rules of conduct, hiring an adequate number of experienced manufacturing, supply chain management and logistics managerial personnel and creating an effective company culture, and these risks and challenges may be exacerbated by the short period of time in which we intend to scale up our salary and hourly workforce.
−Removed: Although the area surrounding our Casa Grande, Arizona manufacturing facilities is home to a highly trained workforce with experience in engineering and manufacturing, this workforce does not have significant experience with electric vehicle manufacturing, and related processes such as inventory management, logistics and quality control, and many jobs will require significant training and we may need to spend significant resources to ensure employees adhere to such training.
+Added: We will need to hire, retain, and train a significant number of employees for our business operations, and our business could be adversely affected by labor and union activities.
+Added: We will need to hire, retain, and train a significant number of employees to engage in full capacity commercial manufacturing operations and for us to scale commercial production and sales and service operations.
+Added: There are various risks and challenges associated with hiring, retention, training and managing a large workforce, such as establishing and maintaining efficient communication channels, procedures and rules of conduct, hiring an adequate number of experienced manufacturing, supply chain management and logistics managerial personnel and creating and maintaining an effective company culture.
+Added: Although the area surrounding our Casa Grande, Arizona manufacturing facilities is home to a highly trained workforce with experience in engineering and manufacturing, this workforce does not have significant experience with electric vehicle manufacturing, and related processes such as inventory management, logistics and quality control, and many jobs will require significant training and we may need to spend significant resources to ensure employees obtain and adhere to such training.
Further, competition for employees in the Casa Grande, Arizona has increased and may continue to increase in the future, which may impact the ability or cost to hire in the area.
−Removed: If we are unsuccessful in hiring and training a workforce in a timely and cost-effective manner, our business, financial condition and results of operations could be adversely affected.
+Added: If we are unsuccessful in hiring, retaining, and training a workforce in a timely and cost-effective manner, our business, financial condition and results of operations could be adversely affected.
Furthermore, although none of our United States based employees are currently represented by a labor union and none of our international employees are currently represented by a labor union that we are aware of at this time, it is common throughout the automobile industry generally for many employees at automobile companies to belong to a union, which can result in higher employee costs and increased risk of work stoppages.
Moreover, regulations in some jurisdictions outside of the U.S.
−Removed: mandate employee participation in industrial collective bargaining agreements, work councils, or similar activities with certain consultation rights with respect to the relevant companies’ operations.
+Added: mandate employee participation in industrial collective bargaining agreements, work councils, or similar activities with certain consultation rights with respect to the relevant companies’ operations, or companies are required to apply collective bargaining agreements, implement works councils or similar bodies with certain consultation rights related to the activities of the companies involved.
In the event our employees seek to join or form a labor union, we could be subject to risks as we engage in an attempt to finalize negotiations with any such union, including potential work slowdowns or stoppages, delays and increased costs.
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If compliance results in delays or substantial expenses, our business could be adversely affected.
−Removed: We also expect to become subject to laws and regulations applicable to the supply, manufacture, import, sale and service of automobiles internationally, including in Europe, the Middle East and China.
+Added: We currently are, and expect to become, subject to laws and regulations applicable to the supply, manufacture, import, sale and service of automobiles in an increasing number of international jurisdictions.
Applicable regulations in countries outside of the U.S., such as standards relating to vehicle safety, transportation of dangerous goods, fuel economy and emissions, among other things, are often materially different from requirements in the United States.
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Product recalls may result in adverse publicity, damage our reputation and adversely affect our business, prospects, results of operations and financial condition.
−Removed: For example, in February 2022 we voluntarily recalled certain vehicles due to a potential issue regarding the manufacture of the front strut damper by our supplier, in May 2022 we recalled certain vehicles due to a potential issue regarding the wiring harness connected to in-vehicle displays, and in September 2022 we recalled certain vehicles due to a potential issue regarding the front tow eye bracket attached to the subframe.
−Removed: We may in the future voluntarily or involuntarily initiate additional recalls if any of our electric vehicles or components (including our batteries) prove to be defective or noncompliant with applicable federal motor vehicle safety standards.
+Added: For example, we have conducted several vehicle recalls due to a number of potential issues in the past and we may in the future voluntarily or involuntarily initiate additional recalls if any of our electric vehicles or components (including our batteries) prove to be defective or noncompliant with applicable federal motor vehicle safety standards.
If a large number of vehicles are the subject of a recall or if needed replacement parts are not in adequate supply, we may be unable to service and repair recalled vehicles for a significant period of time.
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From time to time, we may be subject to claims, lawsuits, government investigations and other proceedings involving product liability, consumer protection, competition and antitrust, intellectual property, privacy, securities, tax, labor and employment, health and safety, our direct distribution model, environmental claims, commercial disputes and other matters that could adversely affect our business, results of operations, cash flows and financial condition.
−Removed: In the ordinary course of business, we have been the subject of complaints or litigation, including claims related to shareholders, disability access, and employment matters.
+Added: In the ordinary course of business, we have been the subject of complaints or litigation, including claims related to shareholders, business disputes, disability access, and employment matters.
For example, beginning on April 18, 2021, two individual actions and two putative class actions were filed in federal courts in Alabama, California, New Jersey and Indiana, asserting claims under the federal securities laws against the Company (f/k/a Churchill Capital Corp IV), its wholly owned subsidiary, Atieva, Inc.
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The Complaint seeks certification of the action as a class action as well as compensatory damages, interest thereon, and attorneys’ fees and expenses.
−Removed: The Company moved to dismiss the Complaint on February 14, 2022.
+Added: 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.
+Added: 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.
−Removed: On December 3, 2021, we received a subpoena from the SEC requesting the production of certain documents related to an investigation by the SEC.
−Removed: Although there is no assurance as to the scope or outcome of this matter, the investigation appears to concern the Merger.
−Removed: We are cooperating fully with the SEC in its review.
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.
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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.
+Added: 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.
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The Company is advancing defendants’ fees and expenses incurred in their defense of the actions.
−Removed: Litigation and regulatory proceedings may be protracted and expensive, and the results are difficult to predict.
+Added: Litigation and regulatory proceedings may be protracted an d expensive, and the results are difficult to predict.
Additionally, our litigation costs could be significant, even if we achieve favorable outcomes.
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The results of litigation, investigations, claims and regulatory proceedings cannot be predicted with certainty, and determining reserves for pending litigation and other legal and regulatory matters requires significant judgment.
−Removed: There can be no assurance that our expectations will prove correct, and even if these matters are resolved in our favor or without significant cash settlements, these matters, and the time and resources necessary to litigate or resolve them, could harm our business, results of operations, cash flows and financial condition.
+Added: There can be no assurance that our expectations will prove correct, and even if these matters are resolve d in our favor or without significant cash settlements, these matters, and the time and resources necessary to litigate or resolve them, could harm our business, results of operations, cash flows and financial condition.
In addition, the threat or announcement of litigation or investigations by governmental authorities or other parties, irrespective of the merits of the underlying claims, may itself have an adverse impact on the trading price of our common stock.
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Delays, denials or restrictions on any of the applications for or assignment of the permits to operate our manufacturing facilities could adversely affect our ability to execute on our business plans and objectives based on our current target production capacity or our future target production capacity.
−Removed: See “— Risks Related to Manufacturing and Supply Chain — We have experienced and may in the future experience significant delays in the design, manufacture, launch and financing of our vehicles, including the Lucid Air and Project Gravity, which could harm our business and prospects.
+Added: See “— Risks Related to Manufacturing and Supply Chain — We have experienced and may in the future experience significant delays in the design, manufacture, launch and financing of our vehicles, including the Lucid Air and the Lucid Gravity SUV, which could harm our business and prospects.
We are subject to various environmental, health and safety laws and regulations that could impose substantial costs on us and cause delays in expanding our production facilities.
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Environmental, health and safety laws and regulations are complex, and we have limited experience and resources to comply with them.
+Added: For example, regulations regarding battery storage, recycling, disposal and processing are relatively new and the lack of uniform regulations and guidance may increase our cost of compliance.
Moreover, we may be affected by future amendments to such laws or other new environmental, health and safety laws and regulations which may require us to change our operations, potentially resulting in a material adverse effect on our business, prospects, results of operations and financial condition.
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We expect to introduce certain ADAS technologies into our vehicles over time.
−Removed: ADAS technology is subject to considerable regulatory uncertainty as the law evolves to catch up with the rapidly evolving nature of the technology itself, all of which is beyond our control.
+Added: ADAS technology is subject to regulatory uncertainty as the law evolves to catch up with the rapidly evolving nature of the technology itself, all of which is beyond our control.
There is a variety of international, federal and state regulations that may apply to self-driving and driver-assisted vehicles, which include many existing vehicle standards that assume a human driver will be controlling the vehicle at all times.
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trade policy, including the imposition of tariffs or revocation of normal trade relations and the resulting consequences, could adversely affect our business, prospects, results of operations and financial condition.
−Removed: government has adopted a new approach to trade policy and in some cases has attempted to renegotiate or terminate certain existing bilateral or multi-lateral trade agreements.
−Removed: It has also imposed tariffs on certain foreign goods, including steel and certain vehicle parts, which have begun to result in increased costs for goods imported into the United States.
+Added: government has adopted an evolving approach to trade policy and in some cases has attempted to renegotiate or terminate certain existing bilateral or multi-lateral trade agreements.
+Added: It has also imposed tariffs on certain foreign goods, including steel and certain vehicle parts, which have resulted in increased costs for goods imported into the United States.
In response to these tariffs, a number of U.S.
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In December 2021, the United States adopted the Uyghur Forced Labor Prevention Act (“UFLPA”) which creates a rebuttable presumption that any goods, wares, articles, and merchandise mined, produced, or manufactured in whole or in part in the Xinjiang Uyghur Administrative Region of China or that are produced by certain entities are prohibited from importation into the United States and are not entitled to entry.
−Removed: These import restrictions come into effect on June 21, 2022.
+Added: These import restrictions came into effect on June 21, 2022.
While we are not presently aware of any direct impacts these restrictions will have on its supply chain, the UFLPA may materially and negatively impact our ability to import the goods and products we rely on to manufacture our products and operate our business.
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These economic sanctions and other restrictions continue to evolve, and the long-term potential impact on our operations and business is still unclear.
−Removed: In addition, the United States recently enacted federal legislation that revokes normal trade relations between Russia and Belarus.
−Removed: As a result of this and recent executive action increasing import duty rates on certain Russia-origin products, imports of merchandise that is of Russian- or Belarussian-origin are subject to potentially higher import duty rates.
+Added: In addition, the United States enacted federal legislation that revokes normal trade relations between Russia and Belarus.
+Added: As a result of this and executive action increasing import duty rates on certain Russia-origin products, imports of merchandise that is of Russian- or Belarussian-origin are subject to potentially higher import duty rates.
To the extent such merchandise is found in our cross-border supply chains and subject to higher duties, the suspension of normal trade relations with Russian and Belarus could increase our input costs, which could have adverse impacts on our business and financial condition.
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Our ability to compete effectively is dependent in part upon our ability to obtain, maintain, enforce and protect our intellectual property and proprietary technology, but we may not be able to prevent third parties from unauthorized use of our intellectual property and proprietary technology, which could harm our business and competitive position.
−Removed: We establish and protect our intellectual property and proprietary technology through a combination of licensing agreements, third-party nondisclosure and confidentiality agreements and other contractual provisions, as well as through patent, trademark, copyright and trade secret laws in the United States and other jurisdictions.
+Added: We establish and protect our intellectual property and proprietary technology through a combination of licensing agreements, third-party nondisclosure and confidentiality agreements and other contractual rights, as well as through patent, trademark, copyright and trade secret laws in the United States and other jurisdictions.
+Added: Monitoring unauthorized use of our intellectual property is costly and challenging, and the steps we have taken or will take to prevent misappropriation may not be successful.
Despite our efforts to obtain and protect intellectual property rights, there can be no assurance that these protections will be available in all cases or will be adequate to prevent our competitors or other third parties from copying, reverse engineering or otherwise obtaining and using our technology or products or seeking court declarations that they do not infringe, misappropriate or otherwise violate our intellectual property.
1 unchanged sentence
The measures we take to obtain, maintain, protect and enforce our intellectual property, including preventing unauthorized use by third parties, may not be effective for various reasons, including the following:
−Removed: • any patent applications we file may not result in the issuance of patents;
+Added: • any trademark or patent applications we file may not result in the issuance of trademarks or patents;
• we may not be the first inventor of the subject matter to which we have filed a particular patent application, and we may not be the first party to file such a patent application;
−Removed: • the scope of our issued patents may not be broad enough to protect our inventions and proprietary technology;
+Added: • the claims under any of our issued patents may not be broad enough to (i) protect our inventions and proprietary technology nor (ii) prevent third parties from creating, developing, or implementing technologies that are similar to ours or offer similar performance;
• our issued patents may be challenged or invalidated by our competitors or other third parties;
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• competitors and other third parties may independently develop technologies that are the same or similar to ours;
+Added: • the intellectual property rights of others could also bar us from licensing and exploiting any patents that issue from our pending applications;
• the costs associated with enforcing patents or other intellectual property rights, or confidentiality and invention assignment agreements may make enforcement impracticable;
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We may be sued by third parties for alleged infringement, misappropriation or other violation of their intellectual property, which could be time-consuming and costly and result in significant legal liability.
−Removed: There is considerable patent and other intellectual property development activity in our industry.
+Added: There are considerable issued patent, pending patent applications, and other intellectual property development, ownership, and activity in our industry.
Companies, organizations and individuals, including our competitors, may hold or obtain patents, trademarks or other intellectual property that would prevent, limit or interfere with our ability to make, use, develop, sell, lease, market or otherwise exploit our vehicles, components or other technology, which could make it more difficult for us to operate our business.
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In addition, we may pay substantial settlement amounts or royalties on future product sales to resolve claims or litigation, whether or not legitimately or successfully asserted against us.
−Removed: Even if we were to prevail in the actual or potential claims or litigation against us, any claim or litigation regarding our intellectual property could be costly and time-consuming and divert the attention and resources of our management and key personnel from our business operations.
+Added: Even if we were to prevail in the actual or potential claims or litigation against us, any claim or litigation regarding our intellectual property could be costly and time-consuming and divert the attention and resources of our management and key employees from our business operations.
Such disputes, with or without merit, could also cause potential customers to refrain from purchasing our products or otherwise cause us reputational harm and negative publicity.
−Removed: Furthermore, many of our employees were previously employed by other automotive companies or by suppliers to automotive companies.
+Added: Furthermore, many of our employees were previously employed by other automotive companies or by suppliers to automotive companies, or related industries.
We may be subject to claims that we or our employees have inadvertently or otherwise used or disclosed trade secrets or other proprietary information of these employees’ former employers.
Litigation may be necessary to defend against these claims.
−Removed: If we fail in defending such claims, in addition to paying monetary damages, we may lose valuable intellectual property or personnel.
−Removed: A loss of key personnel, our trade secrets, or our other work product could hamper or prevent our ability to commercialize our products, which could severely harm our business.
+Added: If we fail in defending such claims, in addition to paying monetary damages, we may be enjoined from using certain technology, product, services, or knowledge or, we may lose valuable intellectual property or personnel.
+Added: A loss of key employees, our trade secrets, or our other work product could hamper or prevent our ability to commercialize our products, which could severely harm our business.
Even if we are successful in defending against these claims, litigation could result in substantial costs and demand on management resources.
1 unchanged sentence
Some of our products contain open-source software, which may pose particular risks to our proprietary software, products and services in a manner that could harm our business.
−Removed: We use open source software in our products and anticipate using open source software in the future.
+Added: We use open-source software, available from third parties, in our products and anticipate using open-source software in the future.
Some open-source software licenses require those who distribute open-source software as part of their own software product to publicly disclose all or part of the source code to such software product or to make available any derivative works of the open-source code on unfavorable terms or at no cost, and we may be subject to such terms.
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While we monitor our use of open-source software, compliance with open source licenses by us and third party suppliers of software to us, and try to ensure that none is used in a manner that would require us to disclose our proprietary source code or that would otherwise breach the terms of an open source agreement, such use could inadvertently occur, or could be claimed to have occurred.
−Removed: Additionally, we could face claims from third parties claiming ownership of, or demanding release of, the open source software or derivative works that we developed using such software, which could include our proprietary source code, or otherwise seeking to enforce the terms of the applicable open source license.
+Added: Additionally, we could face claims from third parties claiming non-compliance, ownership of, or demanding release of, the open-source software or derivative works that we developed using such software, which could include our proprietary source code, or otherwise seeking to enforce the terms of the applicable open source license.
These claims could result in litigation and could require us to make our software source code freely available, purchase a costly license or cease offering the implicated products or services unless and until we can re-engineer them to avoid infringement, which may be a costly and time-consuming process, and we may not be able to complete the re-engineering process successfully.
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We have funded our operations since inception primarily through equity and debt financings.
−Removed: For example, we issued approximately $2 billion of 1.25% convertible senior notes due 2026 in December 2021 (the “2026 Notes”) and we entered into a credit agreement that provides for a $1.0 billion senior secured asset-based revolving credit facility in June 2022 (the “ABL Credit Facility”).
−Removed: In addition, we have, through our subsidiary, entered into a loan agreement with the Saudi Industrial Development Fund for an aggregate principal amount of up to SAR 5.19 billion in February 2022 (the “SIDF Loan Agreement”) and also entered into a revolving credit facility agreement with Gulf International Bank for an aggregate principal amount of SAR 1 billion in April 2022 (the “GIB Facility Agreement”).
+Added: For example, we issued approximately $2.0 billion of 1.25% convertible senior notes due 2026 in December 2021 (the “2026 Notes”), entered into a credit agreement that provides for a $1.0 billion senior secured asset-based revolving credit facility in June 2022 (the “ABL Credit Facility”), completed an “at-the-market” equity offering program for net proceeds of $594.3 million after deducting commissions and other issuance costs and consummated a private placement of common stock to Ayar for aggregate proceeds of $915.0 million in December 2022 .
+Added: In addition, we have, through our subsidiary, entered into a loan agreement with the Saudi Industrial Development Fund for an aggregate principal amount of up to SAR 5.19 billion in February 2022 (the “SIDF Loan Agreement”) and also entered into a revolving credit facility agreement with Gulf International Bank for an aggregate principal amount of SAR 1 billion in April 2022, which was amended in March 2023 (as amended, the “Amended GIB Facility Agreement”) .
We anticipate that we will need to raise additional funds through equity, equity-linked or debt financings.
1 unchanged sentence
We do not expect to achieve positive cash flow from operations for several years, if at all.
−Removed: In addition, during fiscal year 2022, we have and we expect to settle tax withholding obligations in connection with vesting of the restricted stock units granted to Peter Rawlinson, our Chief Executive Officer and Chief Technology Officer, that were previously granted to him in March 2021 through “net settlement,” i.e., by remitting cash to satisfy the tax withholding obligation and withholding a number of the vested shares on each vesting date.
+Added: In addition, we have and we expect to settle tax withholding obligations in connection with vesting of the restricted stock units granted to Peter Rawlinson, our Chief Executive Officer and Chief Technology Officer, that were previously granted to him in March 2021 through “net settlement,” i.e., by remitting cash to satisfy the tax withholding obligation and withholding a number of the vested shares on each vesting date.
The amount of the tax withholding due on each vesting date will be based on the fair value of our common stock on such vesting date.
1 unchanged sentence
Our plan to continue the commercial production of our vehicles and grow our business is dependent upon the timely availability of funds and further investment in design, engineering, component procurement, testing, and the build-out of manufacturing capabilities.
+Added: For example, we have entered into agreements with Panasonic Energy Co., Ltd.
+Added: and certain of its affiliates to purchase an aggregate of approximately $5 billion of lithium-ion battery cells, subject to certain conditions and adjustments, beginning in 2023 through 2031.
In addition, the fact that we have a limited operating history means that we have limited historical data on the demand for our vehicles.
3 unchanged sentences
We may not be able to obtain additional financing on terms favorable to us, if at all.
−Removed: Our ability to obtain such financing could be adversely affected by a number of factors, including general conditions in the global economy and in the global financial markets, including recent volatility and disruptions in the capital and credit markets, including as a result of the ongoing COVID-19 pandemic, inflation, interest rate changes and the ongoing conflict between Ukraine and Russia, or investor acceptance of our business model.
+Added: Our ability to obtain such financing could be adversely affected by a number of factors, including general conditions in the global economy and in the global financial markets, including recent volatility and disruptions in the capital and credit markets, including as a result of inflation, government closures of banks and liquidity concerns at other financial institutions, interest rate changes, the ongoing conflict between Ukraine and Russia and the COVID-19 pandemic, or investor acceptance of our business model.
These factors may make the timing, amount, terms and conditions of such financing unattractive or unavailable to us.
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We adopted ASU 2020-06 for the year ended December 31, 2021, including interim periods within that fiscal year.
−Removed: In accordance with ASU 2020-06, we expect that the 2026 Notes we issued will be reflected as a liability on our balance sheets, with the initial carrying amount equal to the principal amount of the 2026 Notes, net of issuance costs.
+Added: In accordance with ASU 2020-06, we accounted for the issuance of the 2026 Notes as a liability on our balance sheets, with the initial carrying amount equal to the principal amount of the 2026 Notes, net of issuance costs.
The issuance costs will be treated as a debt discount for accounting purposes, which will be amortized into interest expense over the term of the 2026 Notes.
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• make an acquisition of our company less attractive or more difficult.
−Removed: In addition, under the SIDF Loan Agreement, the GIB Facility Agreement, and the ABL Credit Facility, we are subject to customary affirmative and negative covenants regarding our business and operations, including limitations on our ability to, among other things, pay dividends, incur debt, create liens and encumbrances, redeem or repurchase stock, dispose of assets (including dispositions of material intellectual property), consummate acquisitions or other investments, prepay certain debt, engage in transactions with affiliates, engage in sale and leaseback transactions, consummate mergers and other fundamental changes, enter in to restrictive agreements or modify their organizational documents.
+Added: In addition, under the SIDF Loan Agreement, the Amended GIB Facility Agreement, and the ABL Credit Facility, we are subject to customary affirmative and negative covenants regarding our business and operations, including limitations on our ability to, among other things, pay dividends, incur debt, create liens and encumbrances, redeem or repurchase stock, dispose of assets (including dispositions of material intellectual property), consummate acquisitions or other investments, prepay certain debt, engage in transactions with affiliates, engage in sale and leaseback transactions, consummate mergers and other fundamental changes, enter in to restrictive agreements or modify their organizational documents.
Any debt financing secured by us in the future could also involve such covenants as well as additional restrictive covenants relating to our capital-raising activities and other financial and operational matters, which may make it more difficult for us to obtain additional capital to pursue business opportunities, including potential acquisitions or divestitures.
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We may not have sufficient funds to satisfy all amounts due under the other indebtedness and the 2026 Notes.
−Removed: A rating agency may not rate the 2026 Notes or may assign a rating that is lower than expected.
−Removed: We do not intend to seek to have the 2026 Notes rated by any rating agency.
−Removed: However, if one or more rating agencies rate the 2026 Notes and assign a rating that is lower than the rating that investors expect, or reduce their rating in the future, then the trading price of our common stock and the 2026 Notes could significantly decline.
−Removed: In addition, market perceptions of our creditworthiness will directly affect the trading price of the 2026 Notes.
−Removed: Accordingly, if a ratings agency rates any of our indebtedness in the future or downgrades or withdraws the rating, or puts us on credit watch, then the trading price of the 2026 Notes will likely decline.
−Removed: We may be unable to draw down the full amounts available under the ABL Credit Facility, the SIDF Loan Agreement and the GIB Facility Agreement.
+Added: We may be unable to draw down the full amounts available under the ABL Credit Facility, the SIDF Loan Agreement and the Amended GIB Facility Agreement.
The ABL Credit Facility has an initial aggregate principal commitment amount of up to $1.0 billion.
1 unchanged sentence
In addition, there is no guarantee that we will have sufficient eligible borrowing base in the future to be able to draw down the full amount available under the ABL Credit Facility.
−Removed: In addition, amounts committed under the SIDF Loan Agreement and the GIB Facility Agreement are only available for certain specific purposes and subject to conditions on drawdowns.
+Added: In addition, amounts committed under the SIDF Loan Agreement and the Amended GIB Facility Agreement are only available for certain specific purposes and subject to conditions on drawdowns.
Any inability to draw down the full amounts committed under these facilities, should the need arise, may have an adverse effect on our cash flows and liquidity.
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Our current and future alliances could subject us to a number of risks, including risks associated with sharing proprietary information, non-performance by the third party and increased expenses in establishing new strategic alliances, any of which may materially and adversely affect our business.
−Removed: We may have limited ability to monitor or control the actions of these third parties and, to the extent any of these strategic
−Removed: third parties suffer negative publicity or harm to their reputation from events relating to their business, we may also suffer negative publicity or harm to our reputation by virtue of our association with any such third party.
+Added: We may have limited ability to monitor or control the actions of these third parties and, to the extent any of these strategic third parties suffer negative publicity or harm to their reputation from events relating to their business, we may also suffer negative publicity or harm to our reputation by virtue of our association with any such third party.
Moreover, identifying and executing on such opportunities could demand substantial management time and resources, and negotiating and financing relationships involves significant costs and uncertainties.
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federal and state NOL carryforwards from taxable years prior to 2018 will begin to expire in 2031.
−Removed: As of September 30, 2022, we also had U.S.
+Added: As of March 31, 2023, we also had U.S.
federal research and development credit carryforwards which will begin to expire in 2036 and state research and development credit carryforwards with no expiration.
−Removed: As of September 30, 2022, we maintain a full valuation allowance for our net deferred tax assets.
−Removed: federal and state NOL carryforwa rds and certain tax credits may be subject to significant limitations under Section 382 and Section 383 of the U.S.
+Added: As of March 31, 2023, we maintain a full valuation allowance for our net deferred tax assets.
+Added: federal and state NOL carryforwards and certain tax credits may be subject to significant limitations under Section 382 and Section 383 of the U.S.
tax code, respectively, and similar provisions of state law.
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A failure to comply with such requirements, as interpreted and applied, could also have a material adverse effect on our results of operations, financial condition or business.
−Removed: In addition, most members of our management team have limited experience managing a publicly traded company, interacting with public company investors, and complying with the increasingly complex laws pertaining to public companies.
−Removed: These new obligations and constituents will require significant attention from our senior management and could divert their attention away from the day-to-day management of our business, which could adversely affect our business, results of operations, cash flows, and financial condition.
+Added: These obligations and constituents will require significant attention from our senior management and could divert their attention away from the day-to-day management of our business, which could adversely affect our business, results of operations, cash flows, and financial condition.
As a public company, we are subject to the reporting requirements of the Exchange Act and the requirements of the Sarbanes-Oxley Act.
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These activities may divert management’s attention from other business concerns, which could have a material adverse effect on our results of operations, financial condition or business.
−Removed: We recently ceased to be an emerging growth company, and now are required to comply with certain heightened reporting requirements, including those relating to auditing standards and disclosure about our executive compensation.
+Added: We ceased to be an emerging growth company, and now are required to comply with certain heightened reporting requirements, including those relating to auditing standards and disclosure about our executive compensation.
The Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”), contains provisions that, among other things, relax certain reporting requirements for “emerging growth companies,” including certain requirements relating to auditing standards and compensation disclosure.
6 unchanged sentences
In addition, because we relied on exemptions available to emerging growth companies, our historical public filings contained less information about our executive compensation and internal control over financial reporting than issuers that are not emerging growth companies.
−Removed: We expect to incur additional costs associated with the heightened reporting requirements described above, including the requirement to provide auditor’s attestation report on our system of internal controls over financial reporting pursuant to Section 404(b) of the Sarbanes-Oxley Act, as well as additional audit costs resulting from PCAOB requirements.
+Added: We have incurred additional costs associated with the heightened reporting requirements described above, including the requirement to provide auditor’s attestation report on our system of internal controls over financial reporting pursuant to Section 404(b) of the Sarbanes-Oxley Act, as well as additional audit costs resulting from PCAOB requirements.
In addition, our auditors may identify control deficiencies of varying degrees of severity, and we may incur significant costs to remediate those deficiencies or otherwise improve our internal controls.
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In addition, we are required to report any control deficiencies that constitute a “material weakness” in our internal control over financial reporting.
−Removed: We had previously identified material weaknesses in our internal control over financial reporting in 2020, which has since been remediated.
−Removed: However, we cannot assure you that our internal control over financial reporting will be effective in the future or that a material weakness will not be discovered with respect to a prior period for which we had previously believed that our internal control over financial reporting was effective.
+Added: We cannot assure you that our internal control over financial reporting will be effective in the future or that a material weakness will not be discovered with respect to a prior period for which we had previously believed that our internal control over financial reporting was effective.
If we are not able to maintain or document effective internal control over financial reporting, our independent registered public accounting firm will not be able to certify as to the effectiveness of our internal control over financial reporting.
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We may be required to take write-downs or write-offs, restructuring and impairment or other charges that could have a significant negative effect on our financial condition, results of operations and stock price, which could cause you to lose some or all of your investment.
−Removed: We may be forced to later write-down or write-off assets, restructure operations, or incur impairment or other charges that could result in losses.
+Added: We may be required to later write-down or write-off assets, restructure operations, or incur impairment or other charges that could result in losses.
Even though these charges may be non-cash items and not have an immediate impact on our liquidity, charges of this nature could contribute to negative market perceptions about us or our securities.
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Risks Related to Our Common Stock
−Removed: There is no guarantee that an active and liquid public market for our securities will be sustained.
−Removed: Prior to the Merger, Churchill was a blank check company and there was no public market for Legacy Lucid Common Shares since Legacy Lucid was a private company.
−Removed: A liquid trading market for our common stock may not be sustained.
−Removed: In the absence of a liquid public trading market for our common stock:
−Removed: • holders of our common stock may not be able to liquidate their investment in shares of our common stock;
−Removed: • holders of our common stock may not be able to resell their shares of our common stock at favorable prices, or at all;
−Removed: • the market price of shares of our common stock may experience significant price volatility;
−Removed: • there may be less efficiency in carrying out purchase and sale orders with respect to our common stock.
−Removed: Additionally, if our securities become delisted from Nasdaq for any reason, and are quoted on the OTC Bulletin Board, an inter-dealer automated quotation system for equity securities that is not a national securities exchange, the liquidity and price of our securities may be more limited than if we were quoted or listed on Nasdaq or another national securities exchange.
−Removed: You may be unable to sell your securities unless a market can be established or sustained.
The price of our common stock is volatile, and this volatility may negatively impact the market price of our common stock and the trading price of the 2026 Notes.
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• sales of substantial amounts of our common stock by our directors, officers or significant stockholders or the perception that such sales could occur, including the expiration of the lock-up periods applicable to certain holders of our common stock pursuant to the Sponsor Agreement;
−Removed: • general economic and political conditions, such as recessions, interest rates, pandemics (such as COVID-19), inflation, changes in diplomatic and trade relationships, fluctuations in foreign currency exchange rates, acts of war or terrorism, and natural disasters;
+Added: • general economic and political conditions, such as recessions, interest rates, pandemics (such as COVID-19), inflation, government closures of banks and liquidity concerns at other financial institutions, changes in diplomatic and trade relationships, fluctuations in foreign currency exchange rates, acts of war or terrorism, and natural disasters;
• other risk factors listed in this section “Risk Factors.”
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A loss of investor confidence in the market for the stocks of other companies which investors perceive to be similar to ours could depress our stock price and the trading price of the 2026 Notes regardless of our business, prospects, financial conditions or results of operations.
−Removed: Broad market and industry factors, including, most recently, the impact of the conflict between Ukraine and Russia, natural disasters, the novel coronavirus, COVID-19, and any other global pandemics, as well as general economic, political and market conditions such as recessions, inflation, or interest rate changes, may seriously affect the market price of our common stock and other securities, regardless of our actual operating performance.
−Removed: These fluctuations may be even more pronounced in the trading market for our stock shortly following the Transactions.
+Added: Broad market and industry factors, including, the impact of the conflict between Ukraine and Russia, natural disasters, the COVID-19 pandemic, and any other global pa ndemics, as well as general economic, political and market conditions such as recessions, inflation, government closures of banks and liquidity concerns at other financial institutions, or interest rate changes, may seriously affect the market price of our common stock and other securities, regardless of our actual operating performance.
A decline in the market price of our securities also could adversely affect our ability to issue additional securities and our ability to obtain additional financing in the future.
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The market price of shares of our common stock could decline as a result of substantial sales of common stock, particularly by our significant stockholders, a large number of shares of common stock becoming available for sale or the perception in the market that holders of a large number of shares intend to sell their shares.
−Removed: Pursuant to the Investor Rights Agreement, the Sponsor has agreed to restrictions on the sale or transfer of shares of common stock, Private Placement Warrants and Working Capital Warrants held by it for a period of 18 months after the Closing of the Transactions.
−Removed: However, following the expiration of this lock-up period, the Sponsor will not be restricted from selling our securities held by it, other than by applicable securities laws.
−Removed: In addition, pursuant to the Investor Rights Agreement, Ayar, the Sponsor, and certain other parties thereto are entitled to, among other things, certain registration rights, including demand, piggy-back and shelf registration rights.
+Added: In addition, pursuant to the Investor Rights Agreement, Ayar, and certain other parties thereto are entitled to, among other things, certain registration rights, including demand, piggy-back and shelf registration rights.
If one or more of these stockholders were to sell a substantial portion of the shares they hold, it could cause the trading price of our common stock to decline.
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Our stockholders will not have the same protections afforded to stockholders of companies that are not controlled companies.
−Removed: As of September 30, 2022, Ayar held approximate ly 60.4% of our common stock.
+Added: As of March 31, 2023, PIF, both directly and indirectly through Ayar, held approximate ly 60.5% of our common stock.
As a result, we are a “controlled company” within the meaning of the Nasdaq rules, and as a result, we qualify for exemptions from certain corporate governance requirements.
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Such concentration of voting power could also have the effect of delaying, deterring or preventing a change of control or other business combination that might otherwise be beneficial to our stockholders, could deprive our stockholders of an opportunity to receive a premium for their common stock as part of a sale of our company and might ultimately affect the market price of our common stock and the trading price of the 2026 Notes.
−Removed: The Sponsor and Ayar beneficially own a significant equity interest in us and may take actions that conflict with your interests.
−Removed: The interests of the Sponsor and Ayar may not align with our interests and the interests of our other stockholders or securityholders.
−Removed: The Sponsor and Ayar are each in the business of making investments in companies and may acquire and hold interests in businesses that compete directly or indirectly with us.
−Removed: The Sponsor and Ayar and their respective affiliates, may also pursue acquisition opportunities that may be complementary to our business and, as a result, those acquisition opportunities may not be available to us.
+Added: PIF and Ayar beneficially own a significant equity interest in us and may take actions that conflict with your interests.
+Added: The interests of PIF and Ayar may not align with our interests and the interests of our other stockholders or securityholders.
+Added: PIF and Ayar are each in the business of making investments in companies and may acquire and hold interests in businesses that compete directly or indirectly with us.
+Added: PIF and Ayar and their respective affiliates, may also pursue acquisition opportunities that may be c omplementary to our business and, as a result, those acquisition opportunities may not be available to us.
+Added: Securities or industry analysts may not publish or cease publishing research or reports about us, our business, our market, or change their recommendations regarding our common stock adversely, which could cause the price and trading volume of our common stock to decline.
+Added: The trading market for our common stock can be influenced by the research and reports that industry or securities analysts may publish about us, our business and operations, our market, or our competitors.
+Added: Similarly, if any of the analysts who do cover us change their recommendation regarding our stock adversely, or provide more favorable relative recommendations about our competitors, the price of our common stock may decline.
+Added: If any analyst who covers us were to cease coverage of us or fail to regularly publish reports on us, we could lose visibility in the financial markets, which could cause our stock price or trading volume to decline.
We do not anticipate paying any cash dividends for the foreseeable future.
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As a result, capital appreciation in the price of our common stock, if any, will be your only source of gain on an investment in our common stock.
−Removed: See the section titled “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Liquidity and Capital Resources” in this Quarterly Report.
−Removed: Our current bylaws designate a state court within the State of Delaware, to the fullest extent permitted by law, as the sole and exclusive forum for certain types of actions and proceedings that may be initiated by our stockholders, which could limit the ability of our stockholders to obtain a favorable judicial forum for disputes with us or with our directors, officers or employees and may discourage stockholders from bringing such claims.
+Added: Se e the section titled “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Liquidity and Capital Resources” in this Quarterly Report.
+Added: There is no guarantee that an active and liquid public market for our securities will be sustained.
+Added: If a liquid trading market for our common stock is not sustained:
+Added: • holders of our common stock may not be able to liquidate their investment in shares of our common stock;
+Added: • holders of our common stock may not be able to resell their shares of our common stock at favorable prices, or at all;
+Added: • the market price of shares of our common stock may experience significant price volatility;
+Added: • there may be less efficiency in carrying out purchase and sale orders with respect to our common stock.
+Added: Additionally, if our securities become delisted from Nasdaq for any reason, and are quoted on the OTC Bulletin Board, an inter-dealer automated quotation system for equity securities that is not a national securities exchange, the liquidity and price of our securities may be more limited than if we were quoted or listed on Nasdaq or another national securities exchange.
+Added: You may be unable to sell your securities unless a market can be established or sustained.
+Added: Our current bylaws designate a state court within the State of Delaware, to the fullest extent permitted by law, as the sole and exclusive forum for certain types of actions and proceedings that may be initiated by our stockholders, which could limit the ability of our stockholders to obtain a favorable judicial forum f or disputes with us or with our directors, officers or employees and may discourage stockholders from bringing such claims.
Under our current bylaws, unless we consent in writing to the selection of an alternative forum, the sole and exclusive forum will be a state court within the State of Delaware (or, if no state court located within the State of Delaware has jurisdiction, the federal district court for the District of Delaware) for:
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These provisions could also make it more difficult for stockholders to nominate directors for election to our Board and take other corporate actions, which could also affect the price investors are willing to pay for our common stock or the 2026 Notes.
−Removed: Securities or industry analysts may not publish or cease publishing research or reports about us, our business, our market, or change their recommendations regarding our common stock adversely, which could cause the price and trading volume of our common stock to decline.
−Removed: The trading market for our common stock can be influenced by the research and reports that industry or securities analysts may publish about us, our business and operations, our market, or our competitors.
−Removed: Similarly, if any of the analysts who do cover us change their recommendation regarding our stock adversely, or provide more favorable relative recommendations about our competitors, the price of our common stock may decline.
−Removed: If any analyst who covers us were to cease coverage of us or fail to regularly publish reports on us, we could lose visibility in the financial markets, which could cause our stock price or trading volume to decline.
The exhibits listed on the Exhibit Index to this Form 10-Q are filed herewith or incorporated by reference herein:
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Number Filing
−Removed: 10.1 Lease and Option to Purchase between Pinal County, as landlord, and Lucid USA, Inc., as tenant, dated August 10, 2022
+Added: 3.1 Third Amended and Restated Certificate of Incorporation of the Company
+Added: 8-K 001-39408 April 25, 2023 3.1
+Added: 3.2 Second Amended and Restated Bylaws of the Company
+Added: 8-K 001-39408 March 3, 2023 3.2
+Added: 10.1 Amendment to the Credit Facility Agreement, entered into on March 12, 2023, between Lucid LLC and Gulf International Bank Saudi Arabia (English version only)
+Added: 10.3^ Lucid Group, Inc.
+Added: Second Amended and Restated 2021 Stock Incentive Plan (including the Lucid Group, Inc.
+Added: 2021 Employee Stock Purchase Plan, attached thereto)
+Added: 8-K 001-39408 April 25, 2023 10.1
31.1 Certification of Principal Executive Officer Required Under Rule 13a-14(a) and 15d-14(a) of the Securities Exchange Act of 1934, as amended
−Removed: 31.2 Certification of Principal Financial Officer Required Under Rule 13a-14(a) and 15d-14(a) of the Securities Exchange Act of 1934, as amended
+Added: 31.2 Certification of Chief Financial Officer Required Under Rule 13a-14(a) and 15d-14(a) of the Securities Exchange Act of 1934, as amended
32.1 Certification of Principal Executive Officer pursuant to 18 U.S.C.
Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
−Removed: 32.2 Certification of Principal Financial Officer pursuant to 18 U.S.C.
+Added: 32.2 Certification of Chief Financial Officer pursuant to 18 U.S.C.
Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
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LUCID GROUP, INC.
−Removed: November 8, 2022
/s/ Sherry House
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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.