Lucid Group, Inc. 10-K

Item 1. Business. OVERVIEW Mission Lucid’s mission is to inspire the adoption of sustainable energy by creating advanced technologies and the most captivating luxury electric vehicles (“EV”), centered around the human experience. About Us Lucid is a technology company that is setting new standards with its advanced luxury EV, beginning with the Lucid Air, the most efficient (as measured by miles of range per kilowatt-hour), the longest-range, and the fastest-charging fully electric car in its class on the market today. Lucid (i) designs, engineers and manufactures EVs, EV powertrains and battery systems in-house using our own equipment and factories, (ii) designs and develops proprietary software in-house for Lucid vehicles that can be continuously improved upon through over-the-air (“OTA”) software updates, (iii) offers a refined customer experience at our own geographically distributed retail and service locations and through direct-to-consumer online and retail sales, (iv) plans to supply and license technology to third parties, and (v) boasts a strong product roadmap of future vehicle programs and technologies. Our focus on in-house hardware and software innovation, vertical integration, and a “clean-sheet” approach to engineering and design led to the development of the award-winning Lucid Air. The Lucid Air is a luxury sedan that redefines both the luxury car segment and the EV space, with an EPA-estimated range of up to 516 miles on a single charge (estimated ranges, including EPA-estimated ranges where applicable, is provided for vehicles equipped with 19-inch wheels, and actual range will vary dependent on many factors including vehicle configuration, battery age, driving habits, charging habits, temperatures, accessory use, and other factors). This range is enabled by an efficient and powerful drivetrain that Lucid developed and built in-house through our vertically integrated manufacturing structure. The Lucid Space Concept underpins the Lucid Air’s design, merging a spacious interior with a smaller exterior footprint than other luxury cars with similar space and comfort. This achievement is enabled by our miniaturized drive-train components, which also reduces weight and maximizes storage capacity. The Lucid Air is manufactured at our greenfield EV manufacturing facility in Casa Grande, Arizona, Advanced Manufacturing Plant-1 (“AMP-1”). Our manufacturing footprint in Casa Grande also includes the Lucid Powertrain Manufacturing-1 (“LPM-1”) plant, which we plan to relocate to AMP-1. Expansion activities are underway to bring installed capacity at our Arizona site to 90,000 vehicles per year within 2024. By building AMP-1 from a clean slate, we expect to achieve greater operational efficiencies and more consistent production quality than would be possible through outsourced manufacturing or adaptation of an existing facility. An emphasis on vertical integration of manufacturing capabilities provides us the opportunity to control our technology roadmap, ensure a high degree of quality control, and improve product margins relative to an outsourced manufacturing arrangement. We expect to diversify our vehicle portfolio and increase production capacity through localization of manufacturing in other geographies. In 2022, we broke ground on the Advanced Manufacturing Plant-2 in Saudi Arabia (“AMP-2”), and in 2023, we began semi knocked-down (“SKD”) assembly, with installed annual capacity of 5,000 vehicles. The initial operation is re-assembly of the Lucid Air vehicle ‘kits’ that are pre-manufactured at AMP-1. We plan to significantly expand AMP-2 to completely-built-up (“CBU”) unit production with additional installed annual capacity of 150,000 vehicles with start of production of our Midsize platform scheduled for late 2026, which we expect will expand our market reach into higher-volume vehicle segments. We sell vehicles directly to consumers through our retail sales network and through direct online sales including through Lucid Financial Services. As of December 31, 2023, we have opened thirty-eight studios and service centers in North America, five in Europe and two in the Middle East. In addition, we have various temporary and satellite service centers. We believe that owning and operating our sales network provides an opportunity to closely manage the customer experience, gather direct customer feedback, and ensure that customer interactions are tailored to our customers’ needs. We own and operate a vehicle service network comprised of service centers in major metropolitan areas and a fleet of mobile service vehicles. In addition to our in-house service capabilities, we established and continue to grow an approved list of specially trained collision repair shops which also serve as repair hubs for our mobile service offerings in some cases. We have contracted with a third-party roadside assistance partner for urgent roadside needs. As a technology company, we also complement our in-house service offerings through remote vehicle diagnostics and alerts capabilities, and OTA updates. This combination of in-house capabilities, ancillary service partners, and remote support and update capability is expected to serve our customers’ high service expectations. We began delivering the Lucid Air to customers in October 2021 and we expect to launch additional vehicles. We have leveraged and expanded the technological advancements from the Lucid Air to the Lucid Gravity, a luxury sport utility vehicle (“SUV”), which is scheduled for start of production in late 2024. After the Lucid Air and the Lucid Gravity, start of production of our Midsize platform is scheduled for late 2026. 6 Market Opportunity We are defining electric luxury by uniting our California aesthetic with our high-tech and Silicon Valley roots. Current luxury vehicles are based on traditions established by internal combustion automotive manufacture and design. We believe that we are leading the next wave of innovation in the vehicle space. With the Lucid Air and the Lucid Gravity, we target consumers who desire EVs with a high-end aesthetic and the accompanying luxury experience. Our initial product, the Lucid Air, competes in the global luxury car market. Our competitive advantage is defined by our leading EV hardware and software technology, developed entirely in-house. The Lucid Air is the most efficient (as measured by miles of range per kilowatt-hour), the longest-range, and the fastest-charging fully electric car in its class on the market today. We are defining an exclusive and recognizable brand that is synonymous with luxury and performance. We believe the luxury automotive experience is one comprised of several essential elements, including: (i) high-end comfort and significant attention to detail in design, content, materials, fit and finish, (ii) superior customer interaction, with high-touch customer engagement throughout both the sales cycle and ownership journey, and (iii) convenient service that exceeds that of a non-luxury automotive experience. Our ultimate goal is to make a positive impact on the global climate crisis through mass production of advanced technologies and EVs. Increased government mandates for electrification, combined with the need for clean energy vehicles, are driving electrification of the automotive industry at a rapid pace and on a global scale. The market is still nascent, with approximately 9.6% and 7.4% of new passenger vehicle sales in 2023 represented battery electric vehicle (“BEV”) worldwide and in North America, respectively, according to an estimate from the S&P Global AutoInsight and an actual result from the S&P Global Catalyst Registration, respectively. As our flagship product, the Lucid Air is intended to establish the bar for excellence across all our future products and experiences. We started delivering vehicles to customers in North America in 2021. In 2022, we delivered our first vehicles to customers in Europe and the Middle East. Over the course of 2023, we delivered the entire Lucid Air lineup including the Lucid Air Sapphire, the world’s first luxury electric super-sports sedan, and the Lucid Air Pure, the most attainable Lucid Air model. The Lucid Air has received critical acclaim since it debuted, winning MotorTrend 2022 Car of the Year award, followed by the 2023 World Luxury Car Award, and most recently, the Air Pure earned a place on Car and Driver’s prestigious 2024 10Best list. Our second vehicle, the Lucid Gravity, is a luxury SUV defined by efficiency, performance, and a spacious interior that will set it apart in the SUV class, similar to how the Lucid Air stands out in its class. We plan to enter higher-volume SUV vehicle segment with the Lucid Gravity, which is scheduled for start of production in late 2024. Beyond the Lucid Air and the Lucid Gravity, our business plan also includes start of production of our Midsize platform, which is scheduled for late 2026. Beyond the sale of Lucid branded vehicles, we believe that our technological prowess and manufacturing capabilities present a further opportunity to generate revenue and combat climate change through the sale or licensing of EV powertrain and battery technology to third parties. Such powertrain and battery arrangements could facilitate and accelerate the shift to electrification for traditional automotive original equipment manufacturers (“OEMs”), pure-play EV companies, and prospective partners in the transportation sector and thereby enable the global production of EV in greater volumes and at varying price points. We believe that the sale or licensing of our technology would also enable us to refine our manufacturing efficiencies and the real world, practical operation of our technologies. Competitive Strengths • Revolutionary Powertrain Technology. Our proprietary EV technology delivers outstanding range, charging, and driver-oriented performance without the cost and weight of ever-larger battery packs that are common in other EVs. All variants of the Lucid Air have received EPA-estimated range ratings of over 400 miles and the Lucid Air Grand Touring is the first and only fully electric vehicle to reach an EPA-estimated range of 516 miles. The Air’s proprietary high-voltage electrical architecture, the Wunderbox on-board inverter charger, and our efficient battery management system, all developed in-house by us, enable customers to spend less time charging. For example, the Lucid Air Grand Touring can add approximately 300 miles in about 22 minutes using DC fast charging, while the Lucid Air Pure can add up to 150 miles in about 12 minutes with DC fast charging. Estimates are based on use of a 350 kW DC fast charger and vehicles equipped with 19-inch wheels. Actual rates will vary based upon vehicle equipment and charging conditions. In November 2023, we launched RangeXchange, the first application of the bi-directional charging capability built into the Lucid Air. Using Lucid’s innovative new vehicle-to-vehicle (“V2V”) RangeXchange adapter and the latest mobile charging cable, the Lucid Air can function as the power source to charge another EV. In the future, we plan to introduce additional functionality, such as features that might allow a Lucid Air to serve as a back-up power source for residential applications, such as during emergency power grid outages. 7 In June 2023, we entered into an agreement (the “Implementation Agreement”) with Aston Martin Lagonda Global Holdings plc (together with its subsidiaries, “Aston Martin”), under which we and Aston Martin have established a long-term strategic technology and supply arrangement. On November 6, 2023, pursuant to the terms of the Implementation Agreement, integration and supply arrangements became effective, under which we will provide Aston Martin access to our powertrain, battery system, and software technologies, work with Aston Martin to integrate our powertrain and battery components with Aston Martin’s BEV chassis, and supply powertrain and battery components to Aston Martin (collectively, the “Strategic Technology Arrangement”). • Proven, Real World Validation. Our battery technology developed over the past decade has been validated as world-class technology. Through our prototype and production vehicles and our role as the sole battery supplier to the second generation of the premier EV racing series, our patented battery technology has driven more than 95 million real world miles since Lucid’s inception. • Highly Differentiated Performance. Our advancements in battery pack and drivetrain technology, created through a clean-sheet approach to engineering, have resulted in compelling performance and efficiency in our vehicles. The Lucid Air is available in a configuration with 1,234 horsepower, a zero to 60 miles per hour acceleration time of 1.89 seconds and a quarter-mile time of 8.95 seconds. • Directly Owned Manufacturing. Our vehicles are produced at AMP-1, the first purpose-built, greenfield EV manufacturing facility in North America. With the Lucid Air already in production, expansion activities are underway to enable the concurrent production of the Lucid Air and the Lucid Gravity. Key elements of our vehicle engineering enable efficient and advanced manufacturing processes with a high degree of quality control. For example, the aircraft-inspired riveted and bonded monocoque body structure is designed to enhance structural efficiency and replace spot welds in the manufacturing process. Additionally, we manufacture and assemble our complete electric powertrain at LPM-1, including assembly of battery packs, integrated drive units, and the Wunderbox. We designed LPM-1 to simplify the future establishment of similar facilities for an expanded, global manufacturing footprint for vehicles. In September 2023, we also opened AMP-2, which was Saudi Arabia’s first-ever car manufacturing facility and our first manufacturing facility outside the United States, where we commenced SKD assembly operations. • In-House Sales and Service. Consistent with the focus on quality in our manufacturing processes, we implement a direct sales and service strategy to maintain control over the customer experience and ensure that interactions are aligned with the Lucid brand. We enable this tight control over the customer experience by vertically integrating our sales operations instead of relying on a traditional outsourced dealership model. We are also scaling our own service operations to support customers, in addition to growing our established network of partnerships with body shops and other ancillary service partners that meet our expectations for customer service. • Product Design. Our first vehicle, the Lucid Air, fuses art and science to capture the potential of electrification. As our current flagship product, the Air establishes the bar for excellence across all our products and experiences. Our Space Concept represents a technical breakthrough, achieved by rethinking the way an automobile is designed from the ground up. Our reimagining of the car has resulted in class-leading interior space for the driver, passengers, and storage within a compact and efficient exterior. • Favorable Market Trends. The Lucid Air is the first true luxury EV and positions us to build our brand and reputation. By building the Lucid brand and achieving scale and efficiency in our manufacturing footprint, we believe we will have the opportunity over time to create more attainable technology to allow broader adoption in the EV space and the ability to capitalize on adjacent market opportunities. • Management Team Experience. We have assembled a seasoned management team with deep experience in the automotive, EV, and software industries led by Peter Rawlinson, who served as the Chief Engineer of the Tesla Model S program. The management team is rounded out by executives with significant experience from such companies as Apple, Intel, Tesla, Mazda, Audi, Volkswagen, Ford, and Mercedes-Benz, among others. • Strategic Partnerships. We have established strong relationships with suppliers and partners to deliver the Lucid Air. We have battery cell supply agreements in place with leading suppliers in the EV space. Growth Strategy We aim to create opportunity as an automotive company and a technology provider for other automotive OEMs. • Vehicle Roadmap. We have established a planned roadmap for future vehicle lines that includes a variety of vehicle types that are expected to perform well in various customer segments. By utilizing the Lucid Air to establish the brand, we plan to leverage economies of scale and efficiency of operations to unlock sales in higher-volume vehicle segments. We will seek to establish a strong customer base in the luxury and premium vehicle markets across the globe. 8 • International Expansion. We expect to establish manufacturing facilities in multiple geographies along with a retail and service footprint throughout each geographic area. These manufacturing facilities could include facilities for component subassembly, vehicle kit reassembly, and complete built unit vehicle production. We believe that establishing a global manufacturing footprint will help us to grow the brand, scale the business and address market demand in the Middle East, European and Asia-Pacific markets, while also taking action to address climate change. We anticipate that localized supply chain, production, distribution and retail can yield cost savings and environmental benefits with reduced transportation of product to the customer. We began construction of a manufacturing facility in Saudi Arabia in May 2022 and began SKD assembly in September 2023. See “ —Manufacturing. ” • Technology Outbound Sales & Licensing. We are actively engaged in supplying racing teams in a premier EV racing series with the front drive unit and software. We entered into the Strategic Technology Arrangement with Aston Martin under which we will provide Aston Martin access to our powertrain and battery system technology to use in Aston Martin’s initial and certain future EVs. We expect to continue expanding this technology division to supply our world class technology to other automotive OEMs and prospective partners in the transportation sector to help accelerate the adoption of EVs. We are motivated to achieve a future where transportation is sustainable and works with the planet, not against it. The sale of technology solutions to traditional automotive OEMs would support that goal, as would sales to customers in the marine and aviation sectors. Our technology is modular and readily customizable, enhancing our suitability for build-to-print powertrain and battery solutions for other manufacturers. Our Vehicles Lucid Air As our current flagship product, the Lucid Air has established the bar for excellence across all our future products and experiences. The Lucid Air is a state-of-the-art luxury electric sedan featuring California-inspired design and award-winning powertrain technology. Some variants of the Lucid Air offer an EPA-estimated range of 516 miles on a single charge. The Lucid Space Concept offers class-leading interior space, with the Lucid Air providing a massive front trunk (or “frunk”) with a capacity of three times more than leading competitors. From the start of its development, we used the Lucid Space Concept to maximize interior space. This new approach to sedan architecture takes advantage of our miniaturized EV drivetrain to deliver full-size interior volume within a mid-size exterior footprint. This technical breakthrough resulted in class-leading interior space for the driver, passengers, and storage within a compact, agile, and efficient exterior. The Lucid Air offers a bench style rear seat that provides expansive space for three adults with class leading legroom. Some variants of the Lucid Air’s interior are capped with a glass canopy that creates an even more extravagant sense of space. Despite its expansive interior, the Lucid Air is more compact on the exterior than leading internal combustion engine (“ICE”) vehicles in the same class and segment. The centerpiece of the Lucid Air’s human-machine interface is its Glass Cockpit, a beautifully integrated, configurable infotainment system that is designed to provide a seamless connected experience for the driver. This system is presented on a compound three-screen display assembly that curves in front of the driver — including two touch screens. This display is designed to sit in the driver’s line of sight to increase operator safety and reduce time looking away from the road. The Glass Cockpit is augmented by a retractable center screen for a more immersive user interface. The Lucid Air is a true software-defined vehicle, designed to improve over time, with OTA software updates and key hardware already in place in the vehicle. For example, we recently launched RangeXchange, an innovative new feature enabling the Lucid Air to directly charge other EVs. This new capability is enabled by our bi-directional charging technology built into every Air via an OTA software update, as well as the RangeXchange adapter. This holistic systems approach to the integration of hardware and software is what allows us to provide these value-add updates and is what sets us apart in the automotive industry. The Lucid Air has the looks to match its advanced powertrain, with clean styling up front emphasized by slim headlights and a chrome strip that spans from one corner to the other. The hood features sculpting over the wheels to further emphasize power, and the windshield flows as one piece of glass all the way back to the B-pillar. The sleek lines work well with the Lucid Air’s short overhangs and large wheels. This pleasing shape is also functional, providing the Lucid Air Pure a low coefficient of drag at a mere 0.197 and enabling greater range. The Lucid Air’s interior themes are crafted with colors and materials that evoke iconic California locations at various times of day and night. Efficiency is the ultimate measure of EV technology, and we believe our technology leads the industry in this respect, with a range efficiency of up to 4.74 miles of range per kilowatt-hour for some variants of the Lucid Air when equipped with 19-inch wheels. 9 The Lucid Air is offered at various price points with different specifications. Following the limited-availability Lucid Air Dream Edition, which began deliveries in October 2021, we have subsequently rounded out the product lineup with Grand Touring, Touring, Sapphire and Pure variants of the Lucid Air. The Lucid Air Grand Touring offers the highest range potential and most power in the standard Air lineup, with an EPA-estimated range of 516 miles and 819 horsepower from its two-motor all-wheel drive configuration. The Lucid Air Touring is the quintessential Lucid Air, with better performance, range, energy efficiency, aerodynamics, and packaging than many other competitors. The Lucid Air Pure is the most accessible variant in the Lucid Air lines, and still offers 410 miles of estimated range. We have also commenced deliveries of the special production Lucid Air Sapphire, the highest-performance version of the Lucid Air, boasting 1,234 horsepower from three motors, 427 miles of an EPA-estimated range (when equipped with standard wheel inserts), the ability to accelerate from zero to 60 miles per hour in 1.89 seconds, and a quarter-mile time of 8.95 seconds. As discussed in “ — Technology ” below, the Lucid Air is underpinned by the Lucid Electric Advanced Platform (“LEAP”), which is designed with adjustability to support other vehicle variants to enable greater capital deployment efficiency and speed to market. Future Vehicle Programs The Lucid Gravity, which we unveiled in November 2023 and start of production is scheduled for late 2024, will share many of the same attributes that make the Lucid Air special, including a class-leading spacious interior in a more compact and efficient exterior, and at least 440 miles for our longest range trim. We anticipate the use of Air components in the Lucid Gravity will enable efficiency in design, engineering, and capital expenditure deployment for the Lucid Gravity. We expect to have installed production capacity of 90,000 vehicles per year at AMP-1. We have also developed a roadmap of additional vehicles and platforms that will be accessible at a variety of price points. We have started manufacturing high-end vehicles to establish our brand and expect to progress to higher-volume vehicle segments over time. Technology We are a technology company that has set new standards for sustainable transportation. We have done so in part by developing proprietary EV technology in-house. Core to our DNA is the achievement of technical excellence. Our in-house engineering team is focused on delivering innovation in all facets of vehicle development, including hardware and software development, vehicle design, and passenger comfort. The development of the Lucid Air was predicated on the premise that miniaturizing the powertrain would allow us to redesign what a car can be from the ground up. We have refined our battery technologies over many years in real-world applications, including more than 95 million miles of vehicle testing and the supply of battery packs to all teams in the world’s premier EV racing series. We have used the data accumulated from these activities to refine our technology and thoughtfully develop the Lucid Air, and subsequently the Lucid Gravity. We believe our in-house research and development organization establishes us as a leader across multiple technologies and areas of expertise. Our technological achievements include significant advancements to the core technologies that drive an EV and are instrumental in the LEAP. LEAP was designed and developed in-house, incorporating our six key powertrain elements: (i) battery pack & battery management software, (ii) electric motors, (iii) power electronics, (iv) transmission, (v) control software, and (vi) two-way onboard boost-charger. The LEAP structure is an enabling factor allowing the Lucid Space Concept to support class-leading interior and cargo room for a luxury EV. Areas where our in-house engineering has driven advancement include: • Battery Pack. The Lucid Air’s battery pack translates our motorsport experience and more than 95 million miles of real-world testing into a compact and energy dense unit that was developed in-house with a clean-sheet approach to engineering. The battery pack is designed to be scalable and modular, providing opportunities for cost and range variations as we develop future variants on our LEAP architecture. It is also designed for performance, with advanced cell end-cooling and low resistance technologies designed to reduce heat generation, control battery cell thermal conditions and ultimately increase range. Our battery packs incorporate battery cells from suppliers that have extensive experience in the development and manufacturing of cells for high-performance EV applications and robust battery cycle life. The battery cells incorporated into our battery packs are required to conform to our high standards, including with respect to our targets for range, energy density, recharge/discharge rates and other characteristics, and to support our compact, energy-dense battery pack form. 10 Our battery packs support our vision to revolutionize EV technology through mass industrialization. Our single piece injection molded battery module is race derived yet designed for mass production, with electrical “bus bar” connectors that are integrally captured in the molding in a single operation — a profound technological advancement. The technology developed for the battery pack in the Lucid Air has transferred to the Lucid Gravity, and we believe is suitable for the industrialization of our Midsize platform, and to technologically adjacent markets. See “ — Growth Strategy. ” • Integrated Electric Motor, Inverter and Transmission Drive Unit. For our motor and gearbox system, we developed permanent magnet motors in-house. Combining these motors with an inverter and an integrated gearbox and differential creates an advanced electric drive unit that weighs just 163lb (74kg) and is small enough to fit inside a carry-on roller bag. The Lucid drive unit is capable of producing up to 670 horsepower with power density up to 9.0 horsepower per kg, depending on vehicle trim and variant. This compactness allows for one, two or even three units to be used to power a Lucid Air or Gravity. Further to this, we have developed motor and transmission technology for the world’s premier EVs racing series with a power density of over 14.5 horsepower per kg. The enablers of these electric motor characteristics include a set of inventions that are part of our intellectual property portfolio. Most notably, a new motor winding technology has been introduced to increase power output and reduce electrical losses. The motor also features an innovative cooling system that more effectively removes heat from the stator winding, reducing losses and boosting efficiency. The compactness of these electric drive units lays the foundation for our Space Concept vehicle design approach. The fully integrated transmission and differential also contribute to this approach. Together, these components comprise a unified, integrated rotational system that is both lightweight and extremely efficient. Meanwhile, we leverage a high voltage, silicon-carbide metal–oxide–semiconductor field-effect transistor (“MOSFET”) system in our inverters to increase efficiency, especially in real-world driving conditions. Pursuit of a lightweight platform construction contributes to overall vehicle efficiency. Our technology allows for a lighter powertrain through miniaturization and improvement of key components. For example, the Lucid Air Grand Touring has an EPA-estimated range of 516 miles. Less weight leads to increased efficiency, even as performance is elevated to new levels. Finally, we have also achieved breakthroughs in the advanced thermal management system within our electric motors. We have patented our efficient cooling design, which enables even higher levels of efficiency and performance. • Bi-directional Charging. Our proprietary technology is designed to enable ultra-fast DC and bi-directional AC charging. The available 900V+ architecture and our Wunderbox are key enablers inside the Air’s electrical platform. The Wunderbox is a multi-function unit, developed in-house to ensure compatibility with charging systems of differing voltages. It enables “boost-charging” when needed, such as when connected to 400V charging infrastructure. The Wunderbox is also designed to enable a wide array of future-ready, bi-directional power delivery features, such as vehicle-to-grid (“V2G”) applications for situations such as managing home power outages. In November 2023, we launched RangeXchange, an innovative new feature enabling the Lucid Air to directly charge another EV. This new capability is enabled by our bi-directional charging technology built into every Air via an OTA software update, as well as the RangeXchange adapter. This holistic systems approach to the integration of hardware and software is what allows us to provide these value-add updates and truly sets us apart in the automotive industry. • Software System. The Lucid Air is a true software-defined vehicle. With software-enabled future-ready hardware, Lucid vehicles can evolve over time to best meet customer needs long after they take delivery. With highly advanced processing capabilities, the system is designed to leverage data analytics and OTA updates to improve and refresh the vehicle over time. We have deployed more than 80 OTA software updates for improvements and bug fixes since customers deliveries began in October 2021. In October 2022, we introduced Lucid UX 2.0, our most extensive software update to that point, with hundreds of updates and new features for every Lucid Air on the road. These included new capabilities for the DreamDrive advanced driver assistance systems, enhanced system performance, and new on-screen layouts to make Lucid UX more ergonomically friendly. These software updates are developed, coded, validated, and deployed by Lucid’s in-house hardware and software engineering teams. 11 In March 2023, we introduced Apple CarPlay integration. Scheduled Charging, introduced in February 2023, allows customers to plug in a Lucid Air to a charger and begin charging at a predetermined time. In addition to these, we introduced several new features including Max A/C, Multitasking Widget, and Easy Entry, and made improvements to existing features including Highway Assist, SiriusXM, and Range Estimation. • Lucid DreamDrive. The Lucid Air is equipped with an extensive sensor suite, high on-board computing power, back-up systems for Advanced Driver Assistance Systems (“ADAS”) and, over time, increased levels of partial autonomy. With 32 sensors onboard, the Lucid Air features one of the most comprehensive sensor suites among currently available production vehicles. The Lucid Air includes certain features with Level 2 ADAS functionality and is capable of software upgrades via OTA updates. Further, by collecting and analyzing fleet data, we expect to enhance our ADAS features and improve the Lucid experience over time. • Lucid’s Micro Lens Array (“MLA”) Lighting. A revolution in optical technology, our MLA was created in-house and allows more accurate control over the intensity distribution of the headlamp than conventional technologies. In a very compact form factor, the technology delivers exceptional contrast, high peak intensity, and high color uniformity. This enables a long-illuminated distance in low-beam mode with good visibility on both sides of the road and low glare for oncoming traffic. The MLA also allows angular distribution adaptation without mechanical movement of the light module only by changing the electrical current to the LED. For example, it can change the beam pattern from a more range focused brighter narrow beam on a highway to a broader mid-distance focused beam in cities or improve illumination of the roadside in curves or intersections. Manufacturing We built North America’s first greenfield, purpose-built EV manufacturing facilities, in Casa Grande, Arizona. Lucid’s manufacturing activities are carried out at Lucid’s vehicle manufacturing plant, AMP-1, and dedicated powertrain manufacturing facility, LPM-1. An emphasis on vertical integration of manufacturing capabilities provides us the opportunity to control our technology roadmap, ensure a high degree of quality control, and improve product margins relative to an outsourced manufacturing arrangement. AMP-1 began production of the Lucid Air in September 2021. Phase 2 of our manufacturing expansion kicked off in mid-2021 and production started in September 2023. Phase 2 adds approximately 3 million square feet of manufacturing space to our facilities in Casa Grande. These expansion activities are expected to enable a 90,000 vehicles per year installed capacity within 2024. Within the AMP-1 phase 2 facility, we produce vehicles using innovative production processes and state-of-the-art equipment. Key elements of our vehicle engineering enable efficient and advanced manufacturing processes with a high degree of quality control. Future expansions of AMP-1 are being planned to account for the launch of future vehicle programs that may be manufactured in Arizona and to accommodate growth in sales volumes. Our AMP-1 phase 2 facility will manufacture all current products as well as the Lucid Gravity. By building the factory from a clean slate and leveraging decades of industry experience, we expect to achieve (i) greater capital efficiencies, (ii) greater operational efficiencies, and (iii) consistent production quality. The key activities that currently take place in AMP-1 include body shell manufacture, painting of body shells, and general assembly. All key manufacturing activities will take place at AMP-1 once the expansion is complete, including stamping, powertrain production, battery remanufacturing, and onsite logistics. In September 2023, we also opened AMP-2, which was Saudi Arabia’s first-ever car manufacturing facility and our first manufacturing facility outside the United States, where we commenced SKD assembly operations. The facility’s initial operation is re-assembly of SKD Lucid Air vehicle “kits” that are pre-manufactured at AMP-1. It is expected to have installed annual capacity of 5,000 vehicles with the intent to scale up operations to meet demand in the Middle East and European markets. A global footprint with localized manufacturing will enable us to serve market demand with locally manufactured vehicles. We designed the production processes in AMP-1 and LPM-1 to be highly repeatable and scalable to standardize manufacturing operations and to build efficiency in our capital planning and deployment. Supply Chain Our supplier partners remain key in delivering our plan. Our vehicle contains thousands of parts and materials from suppliers around the globe. Lucid’s sourcing plans utilize a comprehensive qualification process to assess technical capability, quality, cost, footprint, etc. Challenges in supply chain remain, so collaborative relationships are essential. Lucid works closely with suppliers in the upfront development process and in supporting production needs and requirements. In December 2022, we announced a multi-year sourcing agreement for lithium-ion batteries with Panasonic Energy Co., Ltd. and certain of its affiliates. 12 Go-To-Market Strategy Our typical customer journey begins through our advanced digital platform. We use several channels to educate customers regarding our brand identity, explain the creation of our technology and highlight the people behind our design and technology. The goal is to cultivate a sense of brand loyalty with our customers. Our direct-to-consumer model allows customers the option of building vehicles to order or selecting from available cars via our digital platform. This initial engagement drives customers to our website to learn more about our story and our vehicles. On the website, customers can experience our online vehicle configurator, which provides an immersive and customizable opportunity to interact with our vehicles in a virtual setting. From there, we provide the customer with the option to either place an order online or visit one of our retail stores or gallery locations, which we refer to as “Studios.” We believe that our direct-to-consumer sales model, combined with a digitally enhanced luxury experience through our website and a refined in-store experience, creates opportunities to tailor to each customer’s purchase and ownership preferences. Customers have the option to visit a Studio in person, make their inquiries entirely online, or enjoy a combination of the two experiences. In developing our Studios, we have built a network of retail spaces to enable customers to experience the brand and our products in locations that underscore our design aesthetic. Like the Lucid Air and the Lucid Gravity, the interiors of Lucid Studios showcase color and material themes that represent specific locations within California as well as our focus on innovation with immersive technology experiences. We intend our Studios to provide a pressure-free environment for our customers to comfortably experience the brand and our products. Lucid Studios draw inspiration from the beauty, innovation, and diversity of our home state of California. Retail locations serve both as our sales channels and marketing tools in high-foot-traffic locations within urban areas. As of December 31, 2023, we had forty-five Studios and service center locations opened, including locations in Europe and Middle East markets. We expect to increase coverage throughout North America, Europe, and Middle East markets in 2024. These markets are continuing to adopt EV, and we believe that establishing a strong retail presence will enhance our opportunity to increase our share of our total addressable market. With a focus on convenience, our service operations include vehicle and customer support at customers’ physical locations through our mobile service offerings and certified partners for roadside assistance and collision repairs, as well as through our network of brick-and-mortar service centers. The Lucid Air is also designed to enable OTA updates and remote diagnostics. Rather than investing in a proprietary charging network, we leverage third-party charging networks in North America and Europe. In North America, we have partnerships with Electrify America and Electrify Canada. In Europe, we have partnered with Bosch to aggregate over 1,000 networks across 29 European countries. This gives our customers access to over 630,000 public AC & DC charge points throughout Europe. These partnerships allow us to avoid the capital intensity of establishing our own high-power networks and provides our customers with easy access to established networks across the United States, Canada and Europe. The Lucid Air is also compatible with Combined Charging System (“CCS”) based public and commercial charging stations. Additionally, in 2025, our customers will also have access to the Tesla Supercharging network via a North American Charging Standard (“NACS”) adapter. For at home charging, the Lucid Connected Home Charging Station can be installed to provide convenient, simple, and seamless charging at home. The Lucid Air now supports V2V charging and we expect to support further bi-directional capabilities with the Lucid Air and Lucid Connected Home Charging Station. We have an agreement with the Government of Saudi Arabia, as represented by the Ministry of Finance, under which the Government of Saudi Arabia and its entities and corporate subsidiaries and other beneficiaries undertook to purchase up to 100,000 vehicles, with a minimum purchase quantity of 50,000 vehicles and an option to purchase up to an additional 50,000 vehicles over a ten-year period. We believe that our customer traction is strong and will continue to grow as we expand our footprint in Saudi Arabia. Government Regulations and Credits Environmental Regulations We operate in an industry that is subject to extensive environmental regulation, which has become more stringent over time. The laws and regulations to which we are or may become subject govern, among other things, water use; air emissions; use of recycled materials; energy sources; the storage, handling, treatment, transportation, and disposal of hazardous materials; the protection of the environment, natural resources, and endangered species; and the remediation of environmental contamination. Compliance with such laws and regulations at an international, regional, national, state, provincial and local level is and will be an important aspect of our ability to continue our operations. Environmental standards applicable to us are established by United States laws and regulations and those of other jurisdictions in which we operate, standards adopted by regulatory agencies and the permits and licenses we are required to obtain. Each of these sources is subject to 13 periodic modifications and what we anticipate will be increasingly stringent requirements. Violations of these laws, regulations or permits and licenses may result in substantial civil and criminal fines, penalties and orders to cease the violating operations or to conduct or pay for corrective works. In some instances, violations may also result in the suspension or revocation of permits and licenses. Many countries and U.S. states have announced a requirement for the sale of zero-emission vehicles only within proscribed timeframes, some as early as 2030, and we as an EV manufacturer are already able to comply with these requirements across our entire product portfolio as we expand. Our competitors, by contrast, will need to reconcile an expensive infrastructure with factories and equipment tailored for production of ICE vehicles, along with workforces trained to produce ICE vehicles and intellectual property portfolios geared for ICE vehicles. Emissions Credits We expect that the manufacture, sale, and/or registration of Zero Emission Vehicles (“ZEVs”) in various regions will earn certain regulatory credits that we can sell to other manufacturers. This may include ZEV credits in up to 16 U.S. jurisdictions referred to collectively as the “ZEV States” that require compliance with program mandates (California, Colorado, Connecticut, Maine, Maryland, Massachusetts, Minnesota, Nevada, New Jersey, New Mexico, New York, Oregon, Rhode Island, Vermont, Virginia and Washington). Lucid’s sales of ZEVs also generate credits that can be sold to other manufacturers under several other regulatory schemes that control emissions from automobiles. This would also include Corporate Average Fuel Economy (“CAFE”) credits under the U.S. Department of Transportation standards, greenhouse gas and other emission limitations credits from U.S. Environmental Protection Agency (“EPA”) programs, Low-Emission Vehicle (“LEV”) credits in California and most of the ZEV States plus Delaware, Pennsylvania and the District of Columbia, and similar credits in each of Europe, Canada, and Middle East. ZEV credits are calculated under applicable regulation and are paid in relation to ZEVs sold and registered, including BEVs. ZEV programs generally assign ZEV credits to each vehicle manufacturer. Vehicle manufacturers are required to maintain ZEV credits equal to a set percentage of non-EV sold and registered in California and ZEV States. Each vehicle sold and registered in the state earns a number of credits based on the drivetrain type and the all-electric range of the vehicle under the Urban Dynamometer Driving Schedule Test Cycle. For reference, the ZEV credit requirement in California was 17% in 2023 and will rise to 22% in 2025. If a vehicle manufacturer does not sell enough EVs to meet its quota, it can choose to buy credits from other manufacturers who do or it would be required to pay a $5,000 fine for each credit it is short. We expect this requirement to provide an opportunity to generate revenue from the sale of ZEV credits. While we expect these environmental regulations to provide a tailwind to our growth, it is possible for certain regulations to result in margin pressures. For example, regulations that effectively impose EV production quotas on auto manufacturers may lead to an oversupply of EV, which in turn could promote price decreases. Changes to these incentives and regulations could affect our revenues and gross margins. Other Credits and Benefits We may benefit from additional opportunities under government regulations and legislation, such as the following: • Customer tax credits and other benefits arising from government regulation may spur interest in our products and business. Our EVs qualify for the $7,500 federal tax credit under IRS Section 45W when sold for commercial uses, including those leased to customers, and may be eligible for incentives for EVs such as in Norway, which currently waives various toll charges and road taxes for BEVs and high-occupancy lane driving privileges available to purchasers in certain U.S. states such as California. • We may be eligible for various tax credits, abatements and other benefits, including: the federal 30C Alternative Fuel Infrastructure tax credit for alternative fuel infrastructure; the federal 45X Advanced Energy Production Credit; the Qualified Facilities tax credit in Arizona; a California sales and use tax exclusion under the California Alternative Energy and Advanced Transportation Financing Authority; and other hiring and job training grants and income tax credits in both Arizona and California. • We may also be eligible for a loan pursuant to the Advanced Technology Vehicles Manufacturing Loan Program administered by the U.S. Department of Energy. EPA Emissions and Certificate of Conformity The U.S. Clean Air Act requires that we obtain a Certificate of Conformity issued by the EPA and a California Executive Order issued by the California Air Resources Board (“CARB”) certifying that our vehicles comply with applicable emissions requirements. A Certificate of Conformity is required for vehicles sold in the United States, and an Executive Order from CARB is required for vehicles sold in states that 14 have adopted California standards. CARB sets the California standards for emissions control for certain regulated pollutants for new vehicles and engines sold in California. States that have adopted the California emission standards as approved by EPA also recognize the CARB Executive Order for sales of vehicles. In addition to California, there are 17 states plus the District of Columbia that have adopted California’s stricter emissions LEV standards, including New York, Massachusetts, Vermont, Maine, Pennsylvania, Connecticut, Rhode Island, Washington, Oregon, New Jersey, Maryland, Delaware, Colorado, Minnesota, Nevada, Virginia and New Mexico. Although the Lucid Air has zero emissions, we are required to seek an EPA Certificate of Conformity and, for vehicles sold in California or any of the other 18 U.S. jurisdictions that have adopted the stricter California emission standards, a CARB Executive Order. Compliance with the program is required in each state two model years following adoption of the program. Vehicle Safety and Testing Our vehicles are subject to, and will be required to comply with, numerous regulatory requirements established by the National Highway Traffic Safety Administration (“NHTSA”), including applicable U.S. Federal Motor Vehicle Safety Standards (“FMVSS”). The Lucid Air fully complies with all applicable FMVSS without any exemptions, and we expect our future vehicles to either fully comply or comply with limited exemptions related to new technologies. Additionally, there are regulatory changes being considered for several FMVSS, and while we anticipate compliance, there is no assurance that we will comply with such changes under the final versions as enacted. We must self-certify that our vehicles meet all applicable FMVSS, as well as the NHTSA bumper standard, or otherwise are exempt, before our vehicles can be sold in the United States. Numerous FMVSS will apply to our vehicles, such as crash-worthiness requirements, crash avoidance requirements and EV-specific requirements. We will also be required to comply with other federal laws and regulations administered by NHTSA, including, among other things, ensuring our vehicles do not contain defects related to motor vehicle safety, recall requirements, the CAFE standards, Theft Prevention Act standards, consumer information labeling requirements, reporting required notices, bulletins and other communications, Early Warning Reporting, foreign recall reporting, and owner’s manual requirements. The Automobile Information and Disclosure Act requires manufacturers of motor vehicles to disclose certain information regarding the manufacturer’s suggested retail price, optional equipment and pricing. In addition, this law requires inclusion of city and highway fuel economy ratings, as determined by the EPA, as well as crash test ratings as determined by NHTSA if such tests are conducted. We intend to expand our offerings outside of the United States, and in connection with such expansion our vehicles will be subject to foreign safety, environmental and other regulations. Many of those regulations are different from those applicable in the United States and may require redesign and/or retesting. For example, the European Union (“E.U.”) has established approval and oversight rules requiring that a national authority certify compliance with heightened safety rules, emissions limits and production requirements before vehicles can be sold in each E.U. member state. In addition to the various territorial legal requirements we are obligated to meet, the Lucid Air is engineered with the expectation that it will deliver overall five-star performance in the two main voluntary vehicle safety performance assessment programs, the U.S. New Car Assessment Program (“NCAP”) and the Euro NCAP. Five-star is the maximum attainable score. These programs have introduced several additional safety related tests aimed at improving the safety of passenger vehicles, both for occupants and pedestrians involved in collisions with vehicles. Some of these tests are derived from legal requirements, such as side impact, but have higher performance requirements. Others are unique to the programs. Areas covered by these tests included: • Mobile Progressive Deformable Barrier; • Full Width Rigid Barrier; • Mobile Side Impact Barrier; • Side Pole; • Far Side Impact; • Whiplash; • Vulnerable Road Users (Pedestrians and Cyclists); • Safety Assist; and • Rescue and Extrication. ADAS Regulations We have equipped the Lucid Air with certain advanced driver assistance features. Generally, laws pertaining to driver assistance features and self-driving vehicles are evolving globally, and in some cases may create restrictions on advanced driver assistance or self-driving features that Lucid may develop. 15 While there are currently no U.S. federal regulations specifically pertaining to self-driving vehicles or self-driving equipment, NHTSA has published recommended guidelines on self-driving vehicles and retains the authority to investigate and/or act on the safety of any vehicle, equipment or features operating on public roads. Certain U.S. states also have legal restrictions on the operation, registration or licensure of self-driving vehicles, and many other states are considering similar restrictions. This regulatory patchwork increases the legal complexity with respect to self-driving vehicles in the United States. In markets that follow the regulations of the United Nations Economic Commission for Europe, some requirements restrict the design of advanced driver assistance or self-driving features, which can compromise or prevent their use entirely. Other applicable laws, both current and proposed, may hinder the path and timeline to introducing such features in the markets where they apply. Other jurisdictions, including China, continue to consider self-driving regulation. Any implemented regulations may differ materially from those in the United States and Europe, which may further increase the legal complexity of advanced driver assistance and self-driving features and limit or prevent certain features. Automobile Manufacturer and Dealer Regulation In the United States, state laws regulate the manufacture, distribution, sale and service of automobiles, and generally require motor vehicle manufacturers and dealers to be licensed in order to sell vehicles directly to residents. Certain states do not permit automobile manufacturers to be licensed as dealers or to act in the capacity of a dealer, or otherwise restrict a manufacturer’s ability to deliver or service vehicles. To sell vehicles to residents of states where we are not licensed as a dealer, we expect to conduct the transfer of title out of the state. In certain such states, we expect to open Studios that serve an educational purpose and where the title transfer may not occur. Some automobile dealer trade associations have challenged the legality of our operations and direct selling operations by OEMs in court and have used administrative and legislative processes to attempt to prohibit or limit such OEMs’ ability to operate existing stores or expand to new locations. Certain dealer associations have also actively lobbied state licensing agencies and legislators to interpret existing laws or enact new laws in ways not favorable to our planned direct sales and service model. We expect dealer trade associations to continue to lobby state licensing agencies and legislators to interpret existing laws or enact new laws in ways not favorable to our business model; however, we intend to oppose such efforts to limit our ability to operate and intend to proactively support legislation, and litigation when necessary, that enables our business model. Battery Safety and Testing Regulation Our battery packs are designed to conform to mandatory regulations that govern transport of “dangerous goods,” defined to include lithium-ion batteries, which may present a risk in transportation. The governing regulations, which are issued by the Pipeline and Hazardous Materials Safety Administration, are based on the United Nations (“U.N.”) Recommendations on the Safe Transport of Dangerous Goods Model Regulations and related U.N. Manual Tests and Criteria. The regulations vary by mode of shipping transportation, such as by ocean vessel, rail, truck or air. We plan to complete all applicable transportation tests for our battery packs, demonstrating our compliance with applicable regulations. We use lithium-ion cells in the high voltage battery packs in our vehicles. The use, storage and disposal of battery packs is regulated under federal law. Our battery packs are intended to meet the applicable compliance requirements of the UN Manual of Tests and Criteria demonstrating our ability to ship battery packs by any method. These tests include: • Altitude simulation — simulating air transport; • Thermal cycling — assessing cell and battery seal integrity; • Vibration — simulating vibration during transport; • Shock — simulating possible impacts during transport; • External short circuit — simulating an external short circuit; and • Overcharge — evaluating the ability of a rechargeable battery to withstand overcharging. 16 Data Privacy and Cybersecurity Regulation We are subject to a variety of increasingly stringent federal, state, local and international laws and regulations relating to data privacy and cybersecurity, including, among other laws and regulations, the E.U.’s General Data Protection Regulation (“GDPR”), the UK General Data Protection Regulation (“UK GDPR”) (i.e. a version of the GDPR as implemented into the law of the United Kingdom), Saudi Arabia’s Personal Data Protection Law (“PDPL”), the rules and regulations promulgated under the authority of the Federal Trade Commission (“FTC”), the Gramm Leach Bliley Act, the California Consumer Privacy Act of 2018 (as amended by the California Privacy Rights Act of 2020, collectively, “CCPA”), certain other comprehensive state data privacy and cybersecurity laws and regulations, and various state data breach notification laws. We are also impacted by regulations obligating us to share vehicle repair-related information with third parties, including repair shops and repair tool hardware developers, under what are commonly called “right-to-repair” laws. In addition, the United Nations Economic Commission for Europe has introduced regulations governing connected vehicle cybersecurity in the E.U. which are mandatory for all new vehicle types from July 2022 and all new vehicles produced from July 2024. See “Risk Factors — Risks Related to Cybersecurity and Data Privacy” for more information regarding applicable cybersecurity and data privacy laws and regulations and risks related to cybersecurity and data privacy and “Item 1C — Cybersecurity” for more information regarding our cybersecurity risk management program. Competition We face competition from both traditional automotive OEMs and an increasing number of newer companies focused on electric and other alternative fuel vehicles. We expect this competition to increase, particularly as the transportation sector continues to shift towards low-emission, zero-emission or carbon neutral solutions. The Lucid Air, the Lucid Gravity, and planned future vehicles are expected to compete with both traditional luxury internal combustion vehicles from established automotive OEMs and electric and other alternative fuel vehicles from both new manufacturers and established automotive OEMs, many of which have entered or have announced plans to enter the alternative fuel and electric vehicle market. Many major automobile manufacturers, including luxury automobile manufacturers, have EVs available today, and other current and prospective automobile manufacturers are also developing EVs. In addition, numerous manufacturers offer hybrid vehicles, including plug-in versions, with which our vehicles also compete. We believe the primary competitive factors on which we will compete include, but are not limited to: • product quality, reliability and safety; • range, efficiency and charging speeds; • product performance; • technological innovation, including with respect to ADAS features; • access to charging options; • design, styling and luxury; • service options and customer experience; • management team experience at bringing EV and other disruptive technologies to market; • manufacturing efficiency; • brand recognition and prestige; and • product price. We believe that we compete favorably on the basis of these factors. However, many of our current and potential competitors have substantially greater financial, technical, manufacturing, marketing and other resources than us. Our competitors may be able to deploy greater resources to the design, development, manufacturing, distribution, promotion, sales, marketing and support of their products. Additionally, many of our competitors also have greater name recognition, longer operating histories, larger sales forces, broader customer and industry relationships and other tangible and intangible resources that exceed ours. Furthermore, many of our competitors operate with a traditional sales and dealer distribution model for vehicles that may be viewed more favorably by potential customers. These competitors also compete with us in recruiting and retaining qualified research and development, sales, marketing and management personnel, as well as in acquiring technologies complementary to, or necessary for, our products. Additional mergers and acquisitions in the EV and luxury automotive markets may result in even more resources being concentrated in our competitors. 17 Intellectual Property Intellectual property is important to our business. Our commercial success depends in part on our ability to obtain, maintain, enforce, defend, and protect the intellectual property and other proprietary technology that we develop, to operate without infringing, misappropriating or otherwise violating the intellectual property and proprietary rights of others; and to prevent others from infringing, misappropriating or violating our intellectual property and proprietary rights. We rely on a combination of patents, trademarks, copyrights, trade secrets, know-how, continuing technological innovation, confidential information and other measures to develop and maintain our proprietary position including through employee, contractor, consultant and third-party nondisclosure and invention assignment agreements and other contractual arrangements. Regardless of the coverage we seek under our existing patent applications, there is always a risk that alterations from our products or processes may provide sufficient basis for a competitor to avoid infringement claims. In addition, the coverage claimed in a patent application can be significantly reduced before a patent is issued and courts can reinterpret patent scope after issuance. Many jurisdictions, including the United States, permit third parties to challenge issued patents in administrative proceedings, which may result in further narrowing or even cancellation of patent claims. We cannot provide any assurance that any patents will be issued from our pending or any future applications or that any current or future issued patents will adequately protect our intellectual property. For this and other risks related to our intellectual property, proprietary technology, inventions and improvements, please see the section entitled “Risk Factors — Risks Related to Our Business and Operations — Risks Related to Intellectual Property.” As of December 31, 2023, we owned approximately 189 issued U.S. patents, 103 pending U.S. patent applications, 199 issued foreign patents, 78 pending foreign patent applications and 90 pending Patent Cooperation Treaty patent applications. As of December 31, 2023, we also owned approximately 9 registered U.S. trademarks and 18 pending U.S. trademark applications, as well as 356 registered foreign trademarks and 156 pending foreign trademark applications in approximately 33 countries worldwide in addition to the European Union. As of December 31, 2023, we also owned approximately 30 issued U.S. design patents and 58 pending U.S. design patent applications, as well as 177 issued foreign design patents/industrial designs and 93 pending foreign design patent/industrial design applications. We expect to develop additional intellectual property and proprietary technology as our engineering and validation activities proceed. Technologies that we have and intend to invest in and develop include engineering software, powertrain systems and controls, infotainment, cybersecurity, telematics and electrical architecture hardware and software. As we develop our technology, we will continue to build our intellectual property portfolio, including by pursuing patent and other intellectual property protection when we believe it is possible, cost-effective, beneficial and consistent with our overall intellectual property protection strategy. In addition to the intellectual property that we own, we also procure key technologies under our supply chain agreements, and we license key technologies under our license agreements. See “—  Our Vehicles ” and “—  Technology ” above for more information. The terms of individual issued patents extend for varying periods depending on the date of filing of the patent application or the date of patent issuance and the legal term of patents in the countries in which they are obtained. Generally, utility patents issued for applications filed in the United States are granted a term of 20 years from the earliest effective filing date of a non-provisional patent application, assuming the patent has not been terminally disclaimed over a commonly-owned patent or a patent naming a common inventor, or over a patent not commonly owned but that was disqualified as prior art as the result of activities undertaken within the scope of a joint research agreement. The life of a patent, and the protection it affords, is therefore limited and once the patent lives of our issued patents have expired, we may face competition, including from other competing technologies. The duration of foreign patents varies in accordance with provisions of applicable local law, but typically is also 20 years from the earliest effective filing date. The actual protection afforded by a patent may vary from country to country and can depend upon many factors, including the type of patent, the scope of its coverage, the availability of patent term adjustments or extensions, the availability of legal remedies in a particular country and the validity and enforceability of the patent. As a result, our owned patent portfolio may not provide us with sufficient rights to exclude others from commercializing products similar or identical to ours. 18 Furthermore, we rely upon trade secrets, know-how, confidential information, unpatented technologies, continuing technological innovation and other proprietary information to develop, protect and maintain our competitive position and aspects of our business that are not amenable to, or that we do not presently consider appropriate for, patent protection and prevent competitors from reverse engineering or copying our technologies. However, the foregoing rights, technologies and information are difficult to protect. We seek to protect them by, in part, using confidentiality agreements with our employees, contractors, consultants and any potential commercial partners and collaborators and invention assignment agreements with our employees. We also have implemented or intend to implement confidentiality agreements or invention assignment agreements with our selected contractors, consultants, and potential commercial partners. These agreements are designed to protect our proprietary information and, in the case of the invention assignment agreements, to grant us ownership of technologies that are developed through a relationship with a third party. These agreements may be breached, and we may not have adequate remedies for any breach. There can be no assurance that these agreements will be self-executing or otherwise provide meaningful protection for our trade secrets or other intellectual property or proprietary information or technology. In addition, our trade secrets may otherwise become known or be independently discovered by competitors. To the extent that our commercial partners, collaborators, employees, contractors, and consultants use intellectual property owned by others in their work for us, disputes may arise as to the rights in related or resulting know-how and inventions. Our commercial success will also depend in part on not infringing, misappropriating or otherwise violating the intellectual or proprietary rights of third parties. The issuance of third-party patents could require us to alter our development or commercial strategies, change our products or processes, obtain licenses to additional third-party patents or other intellectual property or cease certain activities. Our breach of any license agreements or failure to obtain a license to proprietary rights that we may require to develop or commercialize our future products or technologies may have an adverse impact on us. Given that patent applications in the United States and certain other jurisdictions are maintained in secrecy for 18 months or potentially longer, and since publication of discoveries in the scientific or patent literature often lags behind actual discoveries, we cannot be certain of the patent protection being sought by third parties and/or the priority of inventions covered by such patent applications. Moreover, we may have to participate in interference, revocation, derivation, re-examination, post-grant review, inter partes review or opposition proceedings brought by third parties or declared by the U.S. Patent and Trademark Office or an equivalent foreign body. See “ Risk Factors — Risks Related to Our Business and Operations — Risks Related to Intellectual Property ” for more information regarding these and other risks related to our intellectual property portfolio and their potential effect on us. HUMAN CAPITAL RESOURCES At Lucid, we strongly believe in the power of our talented employees and partners to create, build, and support the world’s most captivating luxury EV available in the market. We seek to attract and retain employees whose respective professional and personal backgrounds can help craft an unparalleled suite of state-of-the-art, technologically advanced, California-inspired vehicles for consumers worldwide. Towards these goals, as of December 31, 2023, we employed approximately 6,500 full-time employees globally. Our employees are primarily based at our headquarters in Newark, California, at our regional headquarters in Riyadh, Saudi Arabia, at our EV manufacturing facilities in Casa Grande, Arizona, and King Abdullah Economic City (“KAEC”), Saudi Arabia, and at our retail stores and service centers throughout the United States and Canada, Europe, and Saudi Arabia. We believe that our mission-first passion to inspire the adoption of sustainable transportation would not be possible without a broad array of experiences, professional and personal backgrounds, and individual identities across our team. We work hard to attract a pool of diverse candidates for all open positions. As of December 31, 2023, approximately 71% of Lucid’s employees in the United States were identified as Black or African American, Hispanic or Latino, Asian, American Indian or Alaskan Native, Native Hawaiian or Pacific Islander, and two or more races or ethnicities. Our Culture When design is led by inspiration, invention by insight, and engineering by experience, we believe that anything is possible. Our relentless focus on innovation, luxury, and sustainability moves us toward a future where you no longer must choose between doing great things and doing the right thing. We are a collective of future visionaries; those who can think and do differently, that thrive on challenge and collaboration. Inspired by infinite possibilities, we strive to make a profound difference in the world. We are a team that values innovation, harnesses our passions, and embraces the entrepreneurial mind of limitless potential. We recognize, welcome, and appreciate the unique experiences and diverse perspectives that each of our employees bring with them, that in turn fuel our shared successes. We strive to foster an open, egalitarian culture where all ideas and concerns can be raised to any member of leadership. It is a core belief that each employee has a unique lens which helps propel Lucid’s mission forward. To that end, we urge all employees to communicate their thoughts and to use any channel they deem warranted to share their perspective towards our mission. This approach helps fuel innovation, prevent stumbling blocks, and engages all employees towards being a member of one, unified team. 19 Safety We have instilled an expectation and culture of safety in our workplace. As a manufacturing company, we are committed to ensuring workplace health, safety and environmental protection for our employees, suppliers, business partners, customers, and all our stakeholders. We protect the health and safety of our employees through a proactive and systematic approach to safety and health management. To demonstrate this, in 2023, we maintained ISO 45001 and ISO 14001 certifications for our Arizona manufacturing site which validates our system of continuous improvement to reduce occupational risk and improve worker safety. Diversity, Equity and Inclusion At Lucid, diversity, equity, inclusion is an essential part of who we are. We value the diverse perspectives, experiences, and identities of our employees who reflect the communities we serve. Our differences spark innovation and drive us forward, which is why we are committed to fostering an equitable and inclusive culture that empowers us to bring our best selves to work and achieve our mission to build a better future together. Our people centric and data-driven DEI strategy focuses on three pillars: 1. Growing a diverse workforce by attracting, hiring, and promoting talent from all backgrounds 2. Fostering an equitable and inclusive culture by promoting policies, practices, and programs that support and engage all employees 3. Being key contributors to the community by engaging with and investing in local communities where we operate Of note, Lucid sponsors seven employee resource groups to support and empower historically excluded affinities: Women at Lucid, Pride at Lucid, Veterans at Lucid, Black at Lucid, Hola at Lucid, AaPI at Lucid, and Sustainability at Lucid. These seven groups help foster Lucid’s inclusive and dynamic workforce while helping to fuel our business objective of centering our suite of vehicles on the human experience. Compensation and Benefits We offer competitive compensation to attract and retain the best people in the world, and we help care for our people so they can focus on our mission. Our employees' total compensation package includes market-competitive cash compensation and equity awards to all employees. We offer full-time employees equity at the time of hire and through annual equity grants because we want them to be owners of the company and committed to our long-term success. In 2023, we strengthened our support for employees and their families through the introduction of new health and wellness benefits. We are pleased to support employees and families through a comprehensive suite of insurance and retirement offerings, most of which can be individually selected by each employee to best fit their needs. ENVIRONMENTAL IMPACT As an EV company relentlessly focused on efficiency, our products are a key part of transforming the transportation space to a more sustainable model. But having sustainable products alone is not enough; we are dedicated to a holistic environmental, social, and governance (“ESG”) strategy to maximize our ability to positively impact our environment and society, meet investor expectations, and instill pride and purpose in our employees and customers. • ESG Strategy : Our dedicated ESG team is driving our efforts to implement leading environmental, social, and governance strategy and program. In 2021, we completed a high-level ESG materiality assessment to identify key topics for our ESG strategy. This effort included insight on investors, ratings and rankings, company leadership interviews, research on peers and consumer trends, and a business/investor media review. During 2022 and 2023, we continued to keep a pulse on the dynamic ESG field to allocate resources to the most significant ESG topics to our business. Our ESG Steering Committee, comprised of senior executive leaders, meets on a regular basis to drive our strategic roadmapping in the ESG topics such as climate and GHG emissions, DEI, and ESG partnerships. We enhanced our ESG disclosures, and plan to continue to build our internal capabilities for data collection and disclosure for high-level reporting on ESG performance, in alignment with leading industry standards. • United Nations Global Compact: In April 2023, we joined the United Nations Global Compact (“UN Global Compact”), the world’s largest voluntary corporate sustainability initiative that seeks to mobilize a global movement of sustainable companies and stakeholders. The UN Global Compact challenges companies to conduct business responsibly by aligning their operations and strategies with the United Nations’ Ten Principles relating to human rights, labor, environmental practices, and anti-corruption. By joining, we have committed to act in accordance with the UN Sustainable Development Goals. Member organizations commit not only to sustainable practices but also to enhancing transparency. Signatories report yearly on their commitment to the universal sustainability principles and development goals. 20 • Product Efficiency: Efficiency is a key measure of the in-house technology embedded in our products, contributing to our goal of a best-in-class experience for our customers while benefiting the environment. The Lucid Air continues to be the longest-range fully electric car (the Lucid Air Grand Touring has an EPA-estimated range of 516 miles per charge) and has some of the highest driving efficiency (the Lucid Air Pure with 4.74 miles of range per kilowatt-hour), and the Lucid Air has one of the lowest coefficient of drag of any vehicle on the market (0.197 coefficient of drag with 19-inch wheels). These achievements are based on a relentless focus on efficiency through the EV powertrain, battery pack and system, and a highly aerodynamic design. This focus on efficiency also enables our vehicles to travel further per electron of energy. Each extra mile that we extract per kilowatt-hour of energy means less energy required and fewer carbon emissions from the electrical grid. This same efficient technology and approach enables the possibility of vehicles with smaller, lower-cost battery packs that retain competitive range — which in turn would benefit the environment by requiring fewer battery cells per vehicle. • Future Adaptations of our Technology: We are exploring opportunities to adapt and expand the impact of our technology. For example, by providing our advanced technology access to other organizations and researching other use cases for our compelling technology, we can spread the benefits of efficiency and enable EV adoption through and beyond Lucid’s own vehicles. Our state-of-the-art technology is showcased in the execution of the award-winning the Lucid Air lineup. The industry-topping capabilities of the Lucid Air are a compelling proof point for the growing interest in getting access to our technology. In 2023, we entered into the Strategic Technology Arrangement with Aston Martin to provide them technology access to our powertrain and battery system technology, which will be at the center of their all-new in-house battery EV platform. This landmark arrangement marks the first such relationship for Lucid, a realization of a vision that expands the reach of Lucid's products, paves the way for more mainstream applications, and accelerates electrification in the automotive industry. • Environmental Operations: From our production facility in Casa Grande, Arizona to our vehicle reassembly facility in Saudi Arabia, we have designed our manufacturing sites to minimize carbon emissions where practical through energy efficiency. Our factory in Casa Grande, Arizona, is the first greenfield EV factory in North America, and it was designed to minimize carbon emissions where practical through energy efficient design and plans for renewable energy generation onsite. We strive to reduce the environmental impact of manufacturing while maintaining our relentless drive to produce high-quality vehicles for our customers. We currently have up to a 1 mega-watt (“MW”) capacity solar power system in Arizona (with a total capacity of up to 2 MW including our headquarters in California) and we are actively working to increase renewable energy generation. Our operations pair with an environmental, health, and safety policy that encompasses training, measurement, and monitoring of data, and corrective actions for continuous improvement. Additionally, to emphasize our focus on quality, environment, and occupational health and safety, our Arizona factory has been ISO 9001, 45001, and 14001 certified, a globally recognized Quality Management System (“QMS”), Occupational Health and Safety Management System (“OH&S MS”), and Environmental Management System (“EMS”) respectively. GOVERNANCE We recognize that sound governance practices are critical to ethical business practices and our overall success as an organization and business. • Corporate Governance: Our corporate governance best practices include: a majority independent Board under SEC and Nasdaq rules; a diverse Board with 3 female directors and 4 members of under-represented communities; an independent chairman of the Board; and no classified board structure (all directors must be elected every year). • Business Ethics: We have a publicly available Code of Business Conduct and Ethics and a framework to receive and investigate reports of policy violations. The Code of Business Conduct and Ethics is available on our Investor Relations website at https://ir.lucidmotors.com under the subheading “Governance.” • Compliance: We are implementing a robust compliance program centered around a clear statement of principles and an expectation for both legal compliance and high ethical standards. We intend to achieve these goals through ongoing training and discussions with our employees, clear policies and guidelines, internal controls over financial transactions, technological solutions to automate screenings for legal compliance and a reporting hotline which enables employees and service providers to share allegations of any legal or ethical matters on an anonymous basis. AVAILABLE INFORMATION We are required to file annual, quarterly and current reports, proxy statements and other information with the SEC. We also maintain an Investor Relations website at https://ir.lucidmotors.com . Through our website, we make available, free of charge, the following documents of Lucid as soon as reasonably practicable after they are electronically filed with, or furnished to, the SEC: Annual Reports on Form 10-K; proxy statements for our annual and special shareholder meetings; Quarterly Reports on Form 10-Q; Current Reports on Form 8-K; Forms 3, 4 and 5 and Schedules 13D; and amendments to those documents. Our SEC filings are available on the SEC’s website at www.sec.gov. Our website, the SEC’s website and the information contained therein or linked thereto are not part of this Annual Report. 21