UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(MARK ONE)

x	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
	For the quarterly period ended June 30, 2024

or

o	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
	For the transition period from              to

Commission File Number: 001-39408

Lucid Group, Inc.

(Exact name of registrant as specified in its charter)

Delaware	85-0891392
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

7373 Gateway Boulevard, Newark, CA 94560

(Address of principal executive offices) (Zip code)

(510) 648-3553

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading symbol(s)	Name of each exchange on which registered
Class A Common Stock, $0.0001 par value per share	LCID	The Nasdaq Stock Market LLC

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    x  Yes   o  No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    x  Yes    o  No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large Accelerated Filer	x	Accelerated Filer	o
Non-accelerated Filer	o	Smaller Reporting Company	o
		Emerging Growth Company	o

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act).    o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). o  Yes    x  No

Number of shares of the registrant’s common stock outstanding at July 30, 2024: 2,318,876,700

INDEX TO FORM 10-Q

		Page
PART I. FINANCIAL INFORMATION
	Cautionary Note Regarding Forward-Looking Statements	3
	Frequently Used Terms	4
Item 1.	Condensed Consolidated Financial Statements (Unaudited)	6
	Condensed Consolidated Balance Sheets as of June 30, 2024 and December 31, 2023 (Unaudited)	6
	Condensed Consolidated Statements of Operations and Comprehensive Loss for the Three and Six Months Ended June 30, 2024 and 2023 (Unaudited)	7
	Condensed Consolidated Statements of Redeemable Convertible Preferred Stock and Stockholders’ Equity for the Three and Six Months Ended June 30, 2024 and 2023 (Unaudited)	8
	Condensed Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2024 and 2023 (Unaudited)	10
	Notes to Condensed Consolidated Financial Statements (Unaudited)	11
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	38
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	52
Item 4.	Controls and Procedures	53
PART II. OTHER INFORMATION
Item 1.	Legal Proceedings	54
Item 1A.	Risk Factors	54
Item 5.	Other Information	104
Item 6.	Exhibits	104
SIGNATURES		106

2

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q contains statements that express our opinions, expectations, beliefs, plans, objectives, assumptions or projections regarding future events or future results and therefore are, or may be deemed to be, “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933 (the “Securities Act”), and Section 21E of the Securities and Exchange Act of 1934 (the “Exchange Act”). Forward-looking statements may be identified by the use of words such as “estimate,” “plan,” “project,” “forecast,” “intend,” “will,” “shall,” “expect,” “anticipate,” “believe,” “seek,” “target,” “continue,” “could,” “may,” “might,” “possible,” “potential,” “predict,” “scheduled” or other similar expressions that predict or indicate future events or trends or that are not statements of historical matters. They appear in a number of places throughout this Quarterly Report on Form 10-Q and include, but are not limited to, statements regarding our intentions, beliefs or current expectations concerning, among other things, results of operations, financial condition, liquidity, capital expenditures, prospects, growth, production volumes, strategies and the markets in which we operate, including expectations of financial and operational metrics, projections of market opportunity, market share and product sales, expectations and timing related to commercial product launches, future strategies and products, including with respect to energy storage systems and automotive partnerships, technology, manufacturing capabilities and facilities, studio openings, sales channels and strategies, future vehicle programs, expansion and the potential success of our direct-to-consumer strategy, our financial and operating outlook, future market launches and international expansion, including our manufacturing facility in Saudi Arabia and related timing and value to us, and our needs for additional financing. Such forward-looking statements are based on available current market material and our current expectations, beliefs and forecasts concerning future developments. Factors that may impact such forward-looking statements include:

•changes in domestic and foreign business, market, financial, political and legal conditions, including government closures of banks and liquidity concerns at other financial institutions, a potential global economic recession or other downturn and global conflicts or other geopolitical events;

•risks related to changes in overall demand for our products and services and cancellation of orders for our vehicles;

•risks related to prices and availability of commodities, our supply chain, logistics, inventory management and quality control, and our ability to complete the tooling of our manufacturing facilities over time and scale production of the Lucid Air and other vehicles;

•risks related to the uncertainty of our projected financial information;

•risks related to the timing of expected business milestones and commercial product launches;

•risks related to the expansion of our manufacturing facility, the construction of new manufacturing facilities and the increase of our production capacity;

•risks related to the issuance and sale of shares of our Redeemable Convertible Preferred Stock;

•our ability to manage expenses and control costs;

•risks related to future market adoption of our offerings;

•the effects of competition and the pace and depth of electric vehicle adoption generally on our business;

•changes in regulatory requirements, governmental incentives and fuel and energy prices;

•our ability to rapidly innovate;

•our ability to enter into or maintain partnerships with original equipment manufacturers, vendors and technology providers, including our ability to realize the anticipated benefits of our transaction with Aston Martin;

•our ability to effectively manage our growth and recruit and retain key employees, including our chief executive officer and executive team;

•risks related to potential vehicle recalls;

•our ability to establish and expand our brand, and capture additional market share, and the risks associated with negative press or reputational harm;

•our ability to effectively utilize zero emission vehicle credits and obtain and utilize certain tax and other incentives;

•our ability to conduct equity, equity-linked, or debt financing in the future;

•our ability to pay interest and principal on our indebtedness;

•future changes to vehicle specifications which may impact performance, pricing, and other expectations;

•the outcome of any potential litigation, government and regulatory proceedings, investigations and inquiries; and

•other factors disclosed in this Quarterly Report on Form 10-Q or our other filings with the Securities and Exchange Commission (the “SEC”).

3

The forward-looking statements contained in this Quarterly Report on Form 10-Q are based on our current expectations and beliefs concerning future developments and their potential effects on our business. There can be no assurance that future developments affecting our business will be those that we have anticipated. These forward-looking statements involve a number of risks, uncertainties (some of which are beyond our control) or other assumptions that may cause actual results or performance to be materially different from those expressed or implied by these forward-looking statements. These risks and uncertainties include, but are not limited to, those factors described under the heading “Risk Factors” in Part II, Item 1A. Should one or more of these risks or uncertainties materialize, or should any of the assumptions prove incorrect, actual results may vary in material respects from those projected in these forward-looking statements. There may be additional risks that Lucid currently does not know or that Lucid currently believes are immaterial that could also cause actual results to differ from those contained in the forward-looking statements. In addition, forward-looking statements reflect our expectations, plans or forecasts of future events and views as of the date of this Quarterly Report on Form 10-Q. We do not undertake any obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as may be required under applicable securities laws. The forward-looking statements should not be relied upon as representing our assessments as of any date subsequent to the date of this Quarterly Report on Form 10-Q.

Frequently Used Terms

Unless otherwise stated in Item 1. Financial Statements and accompanying footnotes, or the context otherwise requires, references in this Quarterly Report on Form 10-Q to:

“2026 Notes” are to the 1.25% Convertible Senior Notes due 2026;

“AMP-1” are to our Advanced Manufacturing Plant-1 in Casa Grande, Arizona;

“AMP-2” are to our planned Advanced Manufacturing Plant-2 in Saudi Arabia, which consists of a semi knocked-down (“SKD”) portion that has been completed and a completely-built-up (“CBU”) portion that will be constructed;

“Ayar” are to Ayar Third Investment Company, an affiliate of PIF and the controlling stockholder of the Company;

“Board” or “Board of Directors” are to the board of directors of Lucid Group Inc., a Delaware corporation;

“Certificate of Designations” refers to Series A Certificate of Designations and Series B Certificate of Designations, together;

“Churchill” or “CCIV” are to Churchill Capital Corp IV, a Delaware corporation and our predecessor company prior to the consummation of the Transactions, which changed its name to Lucid Group, Inc. following the consummation of the Transactions, and its consolidated subsidiaries;

“Churchill IPO” are to the initial public offering by Churchill which closed on August 3, 2020;

“Closing” are to the consummation of the Transactions;

“Closing Date” are to July 23, 2021, the date on which the Transactions were consummated;

“common stock” are to the Class A common stock of Lucid Group, Inc., par value $0.0001 per share;

“ESG” are to Environmental, Social and Governance;

“EV” are to electric vehicle;

“Investor Rights Agreement” are to the Investor Rights Agreement, dated as of February 22, 2021 and as amended from time-to-time, by and among the Company, the Sponsor, Ayar and certain other parties thereto;

“Legacy Lucid” are to Atieva, Inc., d/b/a Lucid Motors, an exempted company incorporated with limited liability under the laws of the Cayman Islands, and its consolidated subsidiaries before the Closing Date;

“LPM-1” are to our Lucid Powertrain Manufacturing Plant-1 in Casa Grande, Arizona;

“Merger” are to the merger of a merger subsidiary of Churchill and Atieva, Inc., with Atieva, Inc. surviving such merger as a wholly owned subsidiary of Churchill;

4

“Merger Agreement” are to that certain Agreement and Plan of Merger, dated as of February 22, 2021, by and among Churchill, Legacy Lucid and Air Merger Sub, Inc., a Delaware corporation and a direct, wholly-owned subsidiary of Churchill, as the same has been or may be amended, modified, supplemented or waived from time-to-time;

“PIF” are to the Public Investment Fund, the sovereign wealth fund of Saudi Arabia;

“Private Placement Warrants” are to Churchill’s warrants issued to the Sponsor in a private placement simultaneously with the closing of the Churchill IPO;

“Redeemable Convertible Preferred Stock” are to the Series A Convertible Preferred Stock and Series B Convertible Preferred Stock, together;

“Series A Redeemable Convertible Preferred Stock” are to the Series A Convertible Preferred Stock of Lucid Group, Inc., par value $0.0001 per share;

“Series A Subscription Agreement” refers to the subscription agreement entered into on March 24, 2024, by the Company and Ayar to purchase from the Company 100,000 shares of its Series A Convertible Preferred Stock;

“Series B Redeemable Convertible Preferred Stock” are to the Series B Convertible Preferred Stock of Lucid Group, Inc., par value $0.0001 per share;

“Series B Subscription Agreement” refers to the subscription agreement entered into on August 4, 2024, by the Company and Ayar to purchase from the Company 75,000 shares of its Series B Convertible Preferred Stock;

“Sponsor” are to Churchill Sponsor IV LLC, a Delaware limited liability company and an affiliate of M. Klein and Company;

“Transactions” are to the Merger, together with the other transactions consummated under the Merger Agreement and the related agreements; and

“Warrant Agreement” are to the Warrant Agreement, dated July 29, 2020, entered into in connection with the Churchill IPO by and between Continental Stock Transfer & Trust Company and Churchill.

Unless the context otherwise requires, all references in this section to “Lucid,” the “Company,” “we,” “us,” “our,” and other similar terms refer to Legacy Lucid and its subsidiaries prior to the Closing, and Lucid Group, Inc., a Delaware corporation, and its subsidiaries after the Closing.

5

PART I – FINANCIAL INFORMATION

Item 1. Financial Statements.

LUCID GROUP, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

(in thousands, except share and per share data)

	June 30, 2024		December 31, 2023
ASSETS
Current assets:
Cash and cash equivalents	$	1,353,581	$	1,369,947
Short-term investments	1,862,848		2,489,798
Accounts receivable, net (including $77,808 and $35,526 from a related party as of June 30, 2024 and December 31, 2023, respectively)	101,370		51,822
Inventory	509,888		696,236
Prepaid expenses	71,637		69,682
Other current assets	102,164		79,670
Total current assets	4,001,488		4,757,155
Property, plant and equipment, net	3,065,711		2,810,867
Right-of-use assets	212,877		221,508
Long-term investments	687,641		461,029
Other noncurrent assets	204,049		180,626
Investments in equity securities of a related party	51,502		81,533
TOTAL ASSETS	$	8,223,268	$	8,512,718
LIABILITIES
Current liabilities:
Accounts payable	$	113,634	$	108,724
Accrued compensation	137,374		92,494
Finance lease liabilities, current portion	7,099		8,202
Other current liabilities (including $79,735 and $92,258 associated with related parties as of June 30, 2024 and December 31, 2023, respectively)	752,779		798,990
Total current liabilities	1,010,886		1,008,410
Finance lease liabilities, net of current portion	76,533		77,653
Common stock warrant liability	19,071		53,664
Long-term debt	1,999,547		1,996,960
Other long-term liabilities (including $148,121 and $178,311 associated with related parties as of June 30, 2024 and December 31, 2023, respectively)	555,923		524,339
Derivative liability associated with Series A redeemable convertible preferred stock (related party)	394,100		—
Total liabilities	4,056,060		3,661,026
Commitments and contingencies (Note 12)
REDEEMABLE CONVERTIBLE PREFERRED STOCK
Series A redeemable convertible preferred stock, par value $0.0001; 10,000,000 shares authorized as of June 30, 2024 and December 31, 2023; 100,000 and 0 shares issued and outstanding as of June 30, 2024 and December 31, 2023, respectively (related party)	651,311		—
STOCKHOLDERS’ EQUITY
Common stock, par value $0.0001; 15,000,000,000 shares authorized as of June 30, 2024 and December 31, 2023; 2,319,543,729 and 2,300,111,489 shares issued and 2,318,685,904 and 2,299,253,664 shares outstanding as of June 30, 2024 and December 31, 2023, respectively	232		230
Additional paid-in capital	15,063,541		15,066,080
Treasury stock, at cost, 857,825 shares at June 30, 2024 and December 31, 2023	(20,716)		(20,716)
Accumulated other comprehensive income (loss)	(4,159)		4,850
Accumulated deficit	(11,523,001)		(10,198,752)
Total stockholders’ equity	3,515,897		4,851,692
TOTAL LIABILITIES, REDEEMABLE CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS’ EQUITY	$	8,223,268	$	8,512,718

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

6

LUCID GROUP, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

(Unaudited)

(in thousands, except share and per share data)

	Three Months Ended June 30,				Six Months Ended June 30,
	2024		2023		2024		2023
Revenue (including revenue of $36,470 and $0 from a related party for the three months ended June 30, 2024 and 2023, and $87,836 and $0 for the six months ended June 30, 2024 and 2023, respectively)	$	200,581	$	150,874	$	373,321	$	300,306
Costs and expenses
Cost of revenue	470,355		555,805		875,151		1,056,329
Research and development	287,170		233,474		571,797		463,277
Selling, general and administrative	210,245		197,748		423,477		366,518
Restructuring charges	20,228		1,532		20,228		24,028
Total cost and expenses	987,998		988,559		1,890,653		1,910,152
Loss from operations	(787,417)		(837,685)		(1,517,332)		(1,609,846)
Other income (expense), net
Change in fair value of common stock warrant liability	7,539		42,133		34,593		1,331
Change in fair value of equity securities of a related party	(9,390)		—		(29,323)		—
Change in fair value of derivative liability associated with Series A redeemable convertible preferred stock (related party)	103,000		—		103,000		—
Interest income	54,553		39,525		105,184		79,530
Interest expense	(6,673)		(6,690)		(14,174)		(13,798)
Other expense, net	(5,067)		(928)		(6,074)		(261)
Total other income (expense), net	143,962		74,040		193,206		66,802
Loss before provision for (benefit from) income taxes	(643,455)		(763,645)		(1,324,126)		(1,543,044)
Provision for (benefit from) income taxes	(65)		587		123		716
Net loss	(643,390)		(764,232)		(1,324,249)		(1,543,760)
Accretion of Series A redeemable convertible preferred stock (related party)	(146,861)		—		(150,762)		—
Net loss attributable to common stockholders, basic and diluted	$	(790,251)	$	(764,232)	$	(1,475,011)	$	(1,543,760)
Weighted-average shares outstanding attributable to common stockholders, basic and diluted	2,310,360,525		1,912,459,833		2,306,209,050		1,871,884,313
Net loss per share attributable to common stockholders, basic and diluted	$	(0.34)	$	(0.40)	$	(0.64)	$	(0.82)
Other comprehensive income (loss)
Net unrealized gains (losses) on investments, net of tax	$	(957)	$	(2,999)	$	(4,219)	$	1,036
Foreign currency translation adjustments	(802)		586		(4,790)		586
Total other comprehensive income (loss)	(1,759)		(2,413)		(9,009)		1,622
Comprehensive loss	(645,149)		(766,645)		(1,333,258)		(1,542,138)
Accretion of Series A redeemable convertible preferred stock (related party)	(146,861)		—		(150,762)		—
Comprehensive loss attributable to common stockholders	$	(792,010)	$	(766,645)	$	(1,484,020)	$	(1,542,138)

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

7

LUCID GROUP, INC.

CONDENSED CONSOLIDATED STATEMENTS OF REDEEMABLE CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS’ EQUITY

(Unaudited)

(in thousands, except share data)

	Redeemable Convertible Preferred Stock			Common Stock			Additional Paid-In Capital		Treasury Stock		Accumulated Other Comprehensive Income (Loss)		Accumulated Deficit		Total Stockholders’ Equity
Three Months Ended June 30, 2024	Shares	Amount		Shares	Amount
Balance as of March 31, 2024	100,000	$	504,450	2,306,928,813	$	231	$	15,134,686	$	(20,716)	$	(2,400)	$	(10,879,611)	$	4,232,190
Net loss	—	—		—	—		—		—		—		(643,390)		(643,390)
Other comprehensive loss	—	—		—	—		—		—		(1,759)		—		(1,759)
Tax withholding payments for net settlement of employee awards	—	—		—	—		(2,070)		—		—		—		(2,070)
Issuance of common stock upon vesting of employee RSUs	—	—		6,472,275	1		(1)		—		—		—		—
Issuance of common stock under employee stock purchase plan	—	—		4,601,557	—		11,104		—		—		—		11,104
Issuance of common stock upon exercise of stock options	—	—		683,259	—		786		—		—		—		786
Accretion of Series A redeemable convertible preferred stock (related party)	—	146,861		—	—		(146,861)		—		—		—		(146,861)
Stock-based compensation	—	—		—	—		65,897		—		—		—		65,897
Balance as of June 30, 2024	100,000	$	651,311	2,318,685,904	$	232	$	15,063,541	$	(20,716)	$	(4,159)	$	(11,523,001)	$	3,515,897

	Common Stock			Additional Paid-In Capital		Treasury Stock		Accumulated Other Comprehensive Income (Loss)		Accumulated Deficit		Total Stockholders’ Equity
Three Months Ended June 30, 2023	Shares	Amount
Balance as of March 31, 2023	1,833,385,174	$	183	$	11,809,781	$	(20,716)	$	(7,537)	$	(8,149,860)	$	3,631,851
Net loss	—	—		—		—		—		(764,232)		(764,232)
Other comprehensive loss	—	—		—		—		(2,413)		—		(2,413)
Tax withholding payments for net settlement of employee awards	—	—		(3,879)		—		—		—		(3,879)
Issuance of common stock upon vesting of employee RSUs	4,565,661	1		(1)		—		—		—		—
Issuance of common stock under employee stock purchase plan	2,287,592	—		15,089		—		—		—		15,089
Issuance of common stock upon exercise of stock options	2,801,737	—		2,926		—		—		—		2,926
Issuance of common stock under Underwriting Agreement, net of issuance costs	173,544,948	17		1,184,207		—		—		—		1,184,224
Issuance of common stock under 2023 Subscription Agreement to a related party, net of issuance costs	265,693,703	27		1,812,614		—		—		—		1,812,641
Stock-based compensation	—	—		83,633		—		—		—		83,633
Balance as of June 30, 2023	2,282,278,815	$	228	$	14,904,370	$	(20,716)	$	(9,950)	$	(8,914,092)	$	5,959,840

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

8

LUCID GROUP, INC.

CONDENSED CONSOLIDATED STATEMENTS OF REDEEMABLE CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS’ EQUITY - continued

(Unaudited)

(in thousands, except share data)

	Redeemable Convertible Preferred Stock			Common Stock			Additional Paid-In Capital		Treasury Stock		Accumulated Other Comprehensive Income (Loss)		Accumulated Deficit		Total Stockholders’ Equity
Six Months Ended June 30, 2024	Shares	Amount		Shares	Amount
Balance as of January 1, 2024	—	—		2,299,253,664	$	230	$	15,066,080	$	(20,716)	$	4,850	$	(10,198,752)	$	4,851,692
Net loss	—	—		—	—		—		—				(1,324,249)		(1,324,249)
Other comprehensive loss	—	—		—	—		—		—		(9,009)				(9,009)
Tax withholding payments for net settlement of employee awards	—	—		—	—		(5,312)		—		—		—		(5,312)
Issuance of common stock upon vesting of employee RSUs	—	—		12,732,126	2		(2)		—		—		—		—
Issuance of common stock under employee stock purchase plan	—	—		4,601,557	—		11,104		—		—		—		11,104
Issuance of common stock upon exercise of stock options	—	—		2,098,557	—		2,311		—		—		—		2,311
Issuance of Series A redeemable convertible preferred stock, net of derivative liability and issuance costs (related party)	100,000	500,549		—	—		—		—		—		—		—
Accretion of Series A redeemable convertible preferred stock (related party)	—	150,762		—	—		(150,762)		—		—		—		(150,762)
Stock-based compensation	—	—		—	—		140,122		—		—		—		140,122
Balance as of June 30, 2024	100,000	$	651,311	2,318,685,904	$	232	$	15,063,541	$	(20,716)	$	(4,159)	$	(11,523,001)	$	3,515,897

	Common Stock			Additional Paid-In Capital		Treasury Stock		Accumulated Other Comprehensive Income (Loss)		Accumulated Deficit		Total Stockholders’ Equity
Six Months Ended June 30, 2023	Shares	Amount
Balance as of January 1, 2023	1,829,314,736	$	183	$	11,752,138	$	(20,716)	$	(11,572)	$	(7,370,332)	$	4,349,701
Net loss	—	—		—		—		—		(1,543,760)		(1,543,760)
Other comprehensive income	—	—		—		—		1,622		—		1,622
Tax withholding payments for net settlement of employee awards	—	—		(10,378)		—		—		—		(10,378)
Issuance of common stock upon vesting of employee RSUs	6,435,734	1		(1)		—		—		—		—
Issuance of common stock under employee stock purchase plan	2,287,592	—		15,089		—		—		—		15,089
Issuance of common stock upon exercise of stock options	5,002,102	—		5,107		—		—		—		5,107
Issuance of common stock under Underwriting Agreement, net of issuance costs	173,544,948	17		1,184,207		—		—		—		1,184,224
Issuance of common stock under 2023 Subscription Agreement to a related party, net of issuance costs	265,693,703	27		1,812,614		—		—		—		1,812,641
Stock-based compensation	—	—		145,594		—		—		—		145,594
Balance as of June 30, 2023	2,282,278,815	$	228	$	14,904,370	$	(20,716)	$	(9,950)	$	(8,914,092)	$	5,959,840

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

9

LUCID GROUP, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

(in thousands)

	Six Months Ended June 30,
	2024		2023
Cash flows from operating activities:
Net loss	$	(1,324,249)	$	(1,543,760)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization	135,021		105,201
Amortization of insurance premium	17,314		21,128
Non-cash operating lease cost	15,136		12,278
Stock-based compensation	120,709		125,195
Inventory and firm purchase commitments write-downs	277,541		503,679
Change in fair value of common stock warrant liability	(34,593)		(1,331)
Change in fair value of equity securities of a related party	29,323		—
Change in fair value of derivative liability associated with Series A redeemable convertible preferred stock (related party)	(103,000)		—
Net accretion of investment discounts/premiums	(44,308)		(39,162)
Other non-cash items	4,944		11,458
Changes in operating assets and liabilities:
Accounts receivable (including $(42,282) and $0 from a related party for the six months ended June 30, 2024 and 2023, respectively)	(49,612)		(978)
Inventory	(83,410)		(447,962)
Prepaid expenses	(19,269)		(31,035)
Other current assets	(22,310)		18,488
Other noncurrent assets	(23,392)		(109,758)
Accounts payable	3,181		(95,999)
Accrued compensation	44,880		5,679
Other current liabilities	(39,360)		(55,092)
Other long-term liabilities	71,722		20,349
Net cash used in operating activities	(1,023,732)		(1,501,622)
Cash flows from investing activities:
Purchases of property, plant and equipment (including $(34,068) and $(40,918) from a related party for the six months ended June 30, 2024 and 2023, respectively)	(432,512)		(445,485)
Purchases of investments	(1,854,127)		(2,147,253)
Proceeds from maturities of investments	2,287,894		1,982,489
Proceeds from sale of investments	5,000		148,388
Other investing activities	—		(4,827)
Net cash provided by (used in) investing activities	6,255		(466,688)
Cash flows from financing activities:
Proceeds from issuance of common stock under Underwriting Agreement, net of issuance costs	—		1,184,224
Proceeds from issuance of common stock under 2023 Subscription Agreement to a related party, net of issuance costs	—		1,812,641
Proceeds from issuance of Series A redeemable convertible preferred stock to a related party	1,000,000		—
Payments of issuance costs for Series A redeemable convertible preferred stock	(2,343)		—
Payment for finance lease liabilities	(1,929)		(3,079)
Proceeds from borrowings from a related party	—		4,266
Repayment of borrowings from a related party	(4,266)		—
Proceeds from exercise of stock options	2,311		5,107
Proceeds from employee stock purchase plan	11,104		15,089
Tax withholding payments for net settlement of employee awards	(5,312)		(10,378)
Net cash provided by financing activities	999,565		3,007,870
Net (decrease) increase in cash, cash equivalents, and restricted cash	(17,912)		1,039,560
Beginning cash, cash equivalents, and restricted cash	1,371,507		1,737,320
Ending cash, cash equivalents, and restricted cash	$	1,353,595	$	2,776,880
Supplemental disclosure of cash flow information:
Cash paid for interest, net of amounts capitalized	$	11,587	$	11,307
Cash paid for taxes	$	42	$	23
Supplemental disclosure of non-cash investing and financing activity:
Increases (decreases) in purchases of property, plant and equipment included in accounts payable and other current liabilities	$	(14,310)	$	13,689
Government grant (related party) reflected in property, plant and equipment	$	(32,640)	$	(50,415)
Property, plant and equipment and right-of-use assets obtained through leases	$	7,392	$	21,567

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

10

LUCID GROUP, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

June 30, 2024

NOTE 1 – DESCRIPTION OF BUSINESS

Overview

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

Throughout the notes to the condensed consolidated financial statements, unless otherwise noted, the “Company,” “we,” “us” or “our” and similar terms refer to Legacy Lucid and its subsidiaries prior to the consummation of the Merger, and Lucid and its subsidiaries after the consummation of the Merger.

Liquidity

The Company devotes its efforts to business planning, selling and servicing of vehicles, providing technology access, research and development, construction and expansion of manufacturing facilities, expansion of retail studios and service center capacities, recruiting of management and technical staff, acquiring operating assets, and raising capital.

From inception through June 30, 2024, the Company has incurred operating losses and negative cash flows from operating activities. For the six months ended June 30, 2024 and 2023, the Company has incurred net losses of $1,324.2 million and $1,543.8 million, respectively. The Company had an accumulated deficit of $11.5 billion as of June 30, 2024.

The Company completed the first phase of the construction of its Advanced Manufacturing Plant-1 in Casa Grande, Arizona (“AMP-1”) in 2021, transitioned general assembly to the AMP-1 phase 2 manufacturing facility and completed the semi knocked-down (“SKD”) portion of its Advanced Manufacturing Plant-2 in Saudi Arabia (“AMP-2”) in September 2023. The Company began commercial production of its first vehicle, the Lucid Air, in September 2021 and delivered its first vehicles in late October 2021. The Company continues to expand AMP-1, construct the completely-built-up (“CBU”) portion of AMP-2, and build a network of retail sales and service locations. The Company has plans for continued development of additional vehicle model types for future release. The aforementioned activities will require considerable capital, which is above and beyond the expected cash inflows from the initial sales of the Lucid Air. As such, the future operating plan involves considerable risk if secure funding sources are not identified and confirmed.

The Company’s existing sources of liquidity include cash, cash equivalents, investments, credit facilities, and issuance of convertible preferred stock. Historically, the Company funded operations primarily with issuances of common stock and convertible notes.

In 2022, the Company entered into a loan agreement with the Saudi Industrial Development Fund (“SIDF”) with an aggregate principal amount of up to approximately $1.4 billion, a five-year senior secured asset-based revolving credit facility (“ABL Credit Facility”) with an initial aggregate principal commitment amount of up to $1.0 billion and revolving credit facilities (the “GIB Facility Agreement”) with Gulf International Bank (“GIB”) in an aggregate principal amount of approximately $266.1 million. The GIB Facility Agreement provided for two committed revolving credit facilities, of which $173.0 million was available as a bridge financing (the “Bridge Facility”) and $93.1 million was for general corporate purposes (the “Working Capital Facility”).

In March 2023, the Company amended the GIB Facility Agreement (together with the GIB Facility Agreement, the “Amended GIB Facility Agreement”) to combine the Bridge Facility and the Working Capital Facility into a committed $266.6 million revolving credit facility (the “GIB Credit Facility”), which bears interest at a rate of 1.40% per annum over SAIBOR (based on the term of borrowing) and associated fees. See Note 6 “Debt” for more information.

On August 4, 2024, the Company entered into a $750 million five-year unsecured delayed draw term loan credit facility (the “DDTL Credit Facility”) with Ayar, an affiliate of PIF. See Note 17 “Subsequent Events” for more information.

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On November 8, 2022, the Company entered into an equity distribution agreement (the “Equity Distribution Agreement”) with BofA Securities, Inc., Barclays Capital Inc. and Citigroup Global Markets Inc., under which the Company could offer and sell shares of its common stock having an aggregate offering price up to $600.0 million (the “At-the-Market Offering”). On November 8, 2022, the Company also entered into a subscription agreement (the “2022 Subscription Agreement”) with Ayar Third Investment Company, the controlling stockholder of the Company (“Ayar”), pursuant to which Ayar agreed to purchase from the Company, up to $915.0 million of shares of its common stock in one or more private placements through March 31, 2023. In December 2022, the Company completed its At-the-Market Offering program pursuant to the Equity Distribution Agreement for net proceeds of $594.3 million after deducting commissions and other issuance costs and also consummated a private placement of shares to Ayar pursuant to the 2022 Subscription Agreement for $915.0 million. No shares remain available for sale under the Equity Distribution Agreement.

On May 31, 2023, the Company entered into an underwriting agreement (the “Underwriting Agreement”) with BofA Securities, Inc. (the “Underwriter”), under which the Underwriter agreed to purchase from the Company shares of the Company’s common stock in a public offering for aggregate net proceeds to the Company of $1.2 billion. On May 31, 2023, the Company also entered into a subscription agreement (the “2023 Subscription Agreement”) with Ayar, pursuant to which Ayar agreed to purchase from the Company shares of the Company’s common stock in a private placement for aggregate net proceeds of $1.8 billion. In June 2023, the Company completed the public offering pursuant to the Underwriting Agreement for aggregate net proceeds of $1.2 billion and also consummated the private placement to Ayar pursuant to the 2023 Subscription Agreement for aggregate net proceeds of $1.8 billion. See Note 16 “Related Party Transactions” for more information.

On March 24, 2024, the Company entered into a subscription agreement (the “Series A Subscription Agreement”) with Ayar. Pursuant to the Series A Subscription Agreement, Ayar agreed to purchase from the Company 100,000 shares of its Series A convertible preferred stock, par value $0.0001 per share (the “Series A Redeemable Convertible Preferred Stock”), for an aggregate purchase price of $1.0 billion in a private placement. On March 29, 2024, the Company issued the shares to Ayar pursuant to the Series A Subscription Agreement and received aggregate gross proceeds of $1.0 billion. The Series A Redeemable Convertible Preferred Stock is convertible at the option of the holder (i) at any time the closing price per share of the common stock on the trading date immediately preceding the date on which the holder delivers the relevant notice of conversion is at least a certain price threshold as noted in the certificate of designations of Series A Redeemable Convertible Preferred Stock of the Company (the “Series A Certificate of Designations”) or (ii) during specified periods preceding a fundamental change or optional redemption by the Company under the terms of the Series A Redeemable Convertible Preferred Stock. See Note 8 “Redeemable Convertible Preferred Stock” for more information.

On August 4, 2024, the Company entered into a subscription agreement (the “Series B Subscription Agreement”) with Ayar. See Note 17 “Subsequent Events” for more information.

Certain Significant Risks and Uncertainties

The Company’s current business activities consist of (i) generating sales from the deliveries and service of vehicles, (ii) research and development efforts to design, engineer and develop high-performance fully electric vehicles and advanced electric vehicle powertrain components, including battery pack systems, (iii) further construction of AMP-1 phase 2 in Casa Grande, Arizona, (iv) construction of the CBU portion of AMP-2 in Saudi Arabia, (v) expansion of its retail studios and service centers capabilities throughout North America and across the globe, and (vi) providing its technology access to third parties. The Company is subject to the risks associated with such activities, including the need to further develop its technology, its marketing, and distribution channels; the need to further develop its supply chain and manufacturing; and the need to hire additional management and other employees. Successful completion of the Company’s development program and, ultimately, the attainment of profitable operations are dependent upon future events, including our ability to access potential markets, and secure long-term financing on commercially reasonable terms.

The Company participates in a dynamic high-technology industry. Changes in any of the following areas could have a material adverse impact on the Company’s future financial position, results of operations, and/or cash flows: changes in the overall demand for its products and services; advances and trends in new technologies; competitive pressures; acceptance of the Company’s products and services; litigation or claims against the Company based on intellectual property (including patents), regulatory, or other factors; and the Company’s ability to attract and retain employees necessary to support its business operations.

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A global economic recession or other downturn, whether due to inflation, global conflicts or other geopolitical events, public health crises, interest rate increases or other policy actions by major central banks, government closures of banks and liquidity concerns at other financial institutions, or other factors, may have an adverse impact on the Company’s business, prospects, financial condition and results of operations. Adverse economic conditions as well as uncertainty about the current and future global economic conditions may cause the Company’s customers to defer purchases or cancel their orders in response to higher interest rates, availability of consumer credit, decreased cash availability, fluctuations in foreign currency exchange rates, and weakened consumer confidence. Reduced demand for the Company’s products may result in significant decreases in product sales, which in turn would have a material adverse impact on the Company’s business, prospects, financial condition and results of operations. Because of the Company’s premium brand positioning and pricing, an economic downturn is likely to have a heightened adverse effect on the Company compared to many of its electric vehicle and traditional automotive industry competitors, to the extent that consumer demand for luxury goods is reduced in favor of lower-priced alternatives. In addition, any economic recession or other downturn could also cause logistical challenges and other operational risks if any of the Company’s suppliers, sub-suppliers or partners become insolvent or are otherwise unable to continue their operations, fulfill their obligations to the Company, or meet the Company’s future demand. In addition, the deterioration of conditions in the broad financing markets may limit the Company’s ability to obtain external financing to fund its operations and capital expenditures on terms favorable to the Company, if at all. See “Risk Factors” in Part II, Item 1A of this Quarterly Report on Form 10-Q (the “Quarterly Report”) for more information regarding risks associated with a global economic recession, including under the caption “A global economic recession, government closures of banks and liquidity concerns at other financial institutions, or other downturn may have a material adverse impact on our business, prospects, results of operations and financial condition.”

In the current circumstances, any impact on the Company’s financial condition, results of operations or cash flows in the future continues to be difficult to estimate and predict, as it depends on future events that are highly uncertain and cannot be predicted with accuracy.

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation and Principles of Consolidation

The accompanying unaudited condensed consolidated financial statements included herein have been prepared in accordance with generally accepted accounting principles in the United States of America (“U.S. GAAP”) and applicable rules and regulations of the U.S. Securities and Exchange Commission (the “SEC”) regarding interim financial reporting. Certain information and disclosures normally included in the financial statements prepared in accordance with U.S. GAAP have been condensed or omitted pursuant to such rules and regulations. These unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes included in the Company’s Form 10-K filed with the SEC on February 27, 2024.

In management’s opinion, these unaudited condensed consolidated financial statements have been prepared on the same basis as the annual financial statements and reflect all adjustments, which include normal recurring adjustments, necessary for the fair statement of the Company’s financial position as of June 30, 2024 and the results of operations for the three and six months ended June 30, 2024 and 2023. The results of operations for the three and six months ended June 30, 2024 are not necessarily indicative of the results to be expected for the full year ending December 31, 2024 or any other future interim or annual period.

The condensed consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries. All significant intercompany balances and transactions have been eliminated in consolidation.

Use of Estimates

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates. Significant estimates, assumptions and judgments made by management include, among others, inventory valuation, warranty reserve, useful lives of property, plant and equipment, fair value of common stock warrants, fair value of derivative liability associated with the redeemable convertible preferred stock, estimates of residual value guarantee (“RVG”) liability, deferred revenue related to technology access fees and over-the-air (“OTA”) software updates, sales return reserves, assumptions used to measure stock-based compensation expense, and estimated incremental borrowing rates for assessing operating and finance leases. These estimates and assumptions are based on management’s best estimates and judgment. Management evaluates its estimates and assumptions on an ongoing basis using historical experience and other factors, including the current economic environment, which management believes to be reasonable under the circumstances. The Company adjusts such estimates and assumptions when facts and circumstances dictate. Changes in those estimates resulting from continuing changes in the economic environment will be reflected in the financial statements in future periods.

Reclassifications

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

13

Cash, Cash Equivalents and Restricted Cash

The Company considers all highly liquid investments with an original maturity at the date of purchase of three months or less to be cash equivalents.

Restricted cash in other current assets is primarily related to letters of credit issued to the landlords for certain of the Company’s leased facilities.

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

	June 30, 2024		December 31, 2023
Cash and cash equivalents	$	1,353,581	$	1,369,947
Restricted cash included in other current assets	14		1,560
Total cash, cash equivalents, and restricted cash	$	1,353,595	$	1,371,507

Accounts Receivable, Net

Accounts receivable consists of receivables from our customers and from financial institutions offering financing products to our customers for the sale of vehicles, sales of powertrain kits, services, and regulatory credits. The Company provides an allowance against accounts receivable for any potential uncollectible amounts. The Company recorded immaterial allowance for uncollectible amounts as of June 30, 2024 and December 31, 2023.

Concentration of Credit Risk

Financial instruments that potentially subject the Company to concentration of credit risk consist of cash, cash equivalents, investments and accounts receivable. The Company places its cash primarily with domestic financial institutions that are federally insured within statutory limits, but its deposits exceed federally insured limits. As of June 30, 2024 and December 31, 2023, accounts receivable from the EV purchase agreement with the Government of Saudi Arabia, a related party of PIF, which is an affiliate of Ayar, as represented by the Ministry of Finance (the “EV Purchase Agreement”), represented 76.8% and 68.5% of the total accounts receivable balance, respectively. See Note 16 “Related Party Transactions” for more information.

Concentration of Supply Risk

The Company is dependent on its suppliers, the majority of which are single-source suppliers, and the inability of these suppliers to deliver necessary components of its products according to the schedule and at prices, quality levels and volumes acceptable to the Company, or its inability to efficiently manage these components, could have a material adverse effect on the Company’s results of operations and financial condition.

Revenue from Contracts with Customers

Vehicle Sales

Vehicle Sales without Residual Value Guarantee

Vehicle sales revenue is generated from the sale of electric vehicles to customers. There are two performance obligations identified in vehicle sale arrangements. These are the vehicle including an onboard advanced driver assistance system (“ADAS”), and the right to unspecified OTA software updates to be provided as and when available over the term of the basic vehicle warranty, which is generally 4 years. Payment is typically received at the time of delivery or shortly after delivery of the vehicle to the customer, except for vehicle sales under the EV Purchase Agreement. The Company recognizes revenue related to the vehicle when the customer obtains control of the vehicle which occurs at a point in time either upon completion of delivery to the agreed upon delivery location or upon pick up of the vehicle by the customer. As the unspecified OTA software updates are provided when-and-if they become available, revenue related to OTA software updates is recognized ratably over the basic vehicle warranty term, commencing when control of the vehicle is transferred to the customer.

At the time of revenue recognition, the Company reduces the transaction price and records a sales return reserve against revenue for estimated variable consideration related to future product returns. Return rate estimates are based on historical experience and sales return reserve balance was not material as of June 30, 2024 and December 31, 2023.

14

Vehicle Sales with Residual Value Guarantee

The Company provides an RVG to its commercial banking partner in connection with its vehicle leasing program. Vehicle sales with RVG totaled $118.7 million and $190.9 million during the three and six months ended June 30, 2024, respectively, and $36.8 million and $55.5 million for the same periods in the prior year. Under the vehicle leasing program, the Company generally receives payment for the vehicle sales price at the time of delivery or shortly after the delivery. The Company recognizes revenue when control transfers upon delivery when the consumer-lessee takes physical possession of the vehicle, and bifurcates the RVG at fair value and accounts for it as a guarantee liability. The remaining amount of the transaction price is allocated among the performance obligations, including the vehicle, the right to unspecified OTA software updates and remarketing activities, in proportion to the standalone selling price of the Company’s performance obligations. The guarantee liability represents the estimated amount the Company expects to pay at the end of the lease term. The Company is released from residual risk upon either expiration or settlement of the RVG. The Company evaluates variables such as third-party residual value publications, risk of future price deterioration due to changes in market conditions and reconditioning costs to determine the estimated RVG liability. The RVG liabilities were not material as of June 30, 2024 and December 31, 2023.

As of June 30, 2024 and December 31, 2023, the Company recorded $38.9 million and $28.7 million of total deferred revenue primarily related to OTA and remarketing activities for vehicle sales, respectively. The Company recorded $10.9 million and $7.7 million of the total deferred revenue within other current liabilities and the remaining $28.0 million and $21.0 million within other long-term liabilities in the condensed consolidated balance sheets as of June 30, 2024 and December 31, 2023, respectively. Revenue recognized during the three and six months ended June 30, 2024 and 2023 from the prior period deferred revenue balances was not material.

Other

Other consists of revenue from non-warranty after-sales vehicle services, sales of battery pack systems, powertrain kits, retail merchandise, and regulatory credits.

The disaggregation of the Company’s revenue by geographic area based on the sales location of vehicles was as follows (in thousands):

	Three Months Ended June 30,				Six Months Ended June 30,
	2024		2023		2024		2023
North America	$	155,090	$	137,522	$	269,846	$	286,284
Middle East	40,649		6,082		95,231		6,750
Other international	4,842		7,270		8,244		7,272
Total Revenue	$	200,581	$	150,874	$	373,321	$	300,306

Redeemable Convertible Preferred Stock

Accounting for the redeemable convertible preferred stock requires an evaluation to determine if liability classification is required under ASC 480-10. Liability classification is required for freestanding financial instruments that are (1) subject to an unconditional obligation requiring the issuer to redeem the instrument by transferring assets, such as those that are mandatorily redeemable, (2) instruments other than equity shares that embody an obligation of the issuer to repurchase its equity shares, or (3) certain types of instruments that obligate the issuer to issue a variable number of equity shares.

Securities that do not meet the scoping criteria to be classified as a liability under ASC 480 are subject to redeemable equity guidance, which prescribes securities that may be subject to redemption upon an event not solely within the Company’s control to be classified as temporary equity. Securities classified in temporary equity are initially measured at the proceeds received, net of issuance costs and excluding the fair value of bifurcated embedded derivatives, if any. Subsequent measurement of the carrying value of the redeemable convertible preferred stock is required as the instrument is probable of becoming redeemable. The Company accretes the redeemable convertible preferred stock to its redemption value. In certain circumstances, the redemption price may vary based on changes in stock price, in which case the Company recognizes changes in the redemption value immediately as they occur and adjust the carrying value of the security to equal the then current maximum redemption value at the end of each reporting period.

15

Derivative Liability

The Company evaluates all of its financial instruments, including convertible notes and redeemable convertible preferred stock, to determine if such instruments are derivatives or contain features that qualify as embedded derivatives. The Company applies significant judgment to identify and evaluate complex terms and conditions in these contracts and agreements to determine whether embedded derivatives exist. Embedded derivatives must be separately measured from the host contract if all the requirements for bifurcation are met. The assessment of the conditions surrounding the bifurcation of embedded derivatives depends on the nature of the host contract. Bifurcated embedded derivatives are recognized at fair value, with changes in fair value recognized in the condensed consolidated statements of operations and comprehensive loss at each reporting period end. Bifurcated embedded derivatives are classified as a separate asset or liability in the condensed consolidated balance sheet.

The Company’s derivative liability is related to the conversion features embedded in the Series A Redeemable Convertible Preferred Stock. See Note 8 “Redeemable Convertible Preferred Stock” for more information.

Except for the policies described above, there have been no significant changes to accounting policies during the three and six months ended June 30, 2024.

Recently Issued Accounting Pronouncements Not Yet Adopted

In November 2023, the Financial Accounting Standards Board (“FASB”) issued ASU No. 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures, which requires incremental segment information disclosure on an annual and interim basis. This amendment includes disclosure of significant segment expenses which are regularly provided to the CODM and included within each reported measure of segment profit or loss; other segment items by reportable segment and a description of its composition; reportable segment’s profit or loss and assets; additional measures of segment profit or loss if the CODM uses more than one measure of a segment’s profit or loss in assessing segment performance, and the title and position of the entity’s CODM and how the CODM uses the reported measures of segment profit or loss in assessing segment performance and determining resource allocation. The Company with a single reportable segment is required to provide all the disclosures from this amendment. The guidance is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024. Early adoption is permitted, and should be applied retrospectively. The Company is evaluating the impact of this amendment to the related financial statement disclosures and expects to adopt them for the year ended December 31, 2024.

In December 2023, the FASB issued ASU No. 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures, which requires incremental annual income tax disclosures. This amendment includes disclosures of specific categories in the rate reconciliation and additional information for reconciling items that meet a quantitative threshold; income taxes paid (net of refunds received) disaggregated by federal, state, and foreign taxes, and also disaggregated by individual jurisdictions that meet a quantitative threshold; income (or loss) from continuing operations before income tax expenses (or benefit) disaggregated between domestic and foreign; and income tax expense (or benefit) from continuing operations disaggregated by federal, state and foreign. The guidance is effective for annual periods beginning after December 15, 2024. Early adoption is permitted and should be applied prospectively (with retrospective application permitted). The Company is evaluating the impact of this amendment to the related financial statement disclosures.

In March 2024, the SEC issued its final rule that requires certain climate-related disclosures in annual reports, including governance, oversight, and risk management processes on material climate-related risks; material impact of climate risks on the Company’s strategy, business model, and outlook; material climate targets and goals; and material financial statements impacts due to severe weather events and other natural conditions. This SEC rule provides phased effective dates, starting with fiscal years beginning on or after January 1, 2025. The SEC rule is currently stayed pending the outcome of litigation, and the Company is evaluating the impact of this rule on its annual reports.

The Company has considered all other recently issued accounting pronouncements and does not believe the adoption of such pronouncements will have a material impact on its financial statements or notes thereto.

NOTE 3 - RESTRUCTURING

On May 24, 2024, the Company announced a restructuring plan (the “2024 Restructuring Plan”) intended to optimize operating expenses in response to evolving business needs and productivity improvement through a reduction in workforce. The Company expects to substantially complete the 2024 Restructuring Plan by the end of the third quarter of 2024, subject to local law and consultation requirements. As a result of the 2024 Restructuring Plan, the Company expects to record total restructuring charges of approximately $21 million to $25 million, primarily related to severance payments, employee benefits, employee transition and stock-based compensation. During the three and six months ended June 30, 2024, the Company recorded restructuring charges of $20.2 million related to the 2024 Restructuring Plan within restructuring charges in the condensed consolidated statements of operations and comprehensive loss. The restructuring charges were primarily related to severance payments, employee benefits, employee transition and stock-based compensation, net of a reversal of previously recognized stock-based compensation expense.

16

On March 28, 2023, the Company announced a restructuring plan (the “2023 Restructuring Plan”) intended to reduce operating expenses in response to evolving business needs and productivity improvement through a reduction in workforce. The Company completed the 2023 Restructuring Plan during the first quarter of 2024. During the three and six months ended June 30, 2023, the Company recorded restructuring charges of $1.5 million and $24.0 million, respectively, and recorded no restructuring charges for the same periods in the current year related to the 2023 Restructuring Plan.

A summary of restructuring liabilities associated with the restructuring plans was as follows (in thousands):

	Three Months Ended June 30,				Six Months Ended June 30,
	2024		2023		2024		2023
Restructuring liabilities - beginning of period	$	—	$	23,939	$	54	$	—
Restructuring charges excluding non-cash items(1)(2)	21,708		1,532		21,708		25,471
Cash payments	(4,141)		(23,766)		(4,195)		(23,766)
Restructuring liabilities - end of period	$	17,567	$	1,705	$	17,567	$	1,705

(1) Excluded non-cash items of $1.5 million for the three and six months ended June 30, 2024 related to the 2024 Restructuring Plan, which was net of accelerated stock-based compensation expense of $3.2 million and a reversal of $4.7 million related to previously recognized stock-based compensation expenses for unvested restricted stock awards.

(2) Excluded non-cash items of $1.4 million for the six months ended June 30, 2023 related to the 2023 Restructuring Plan, which was net of accelerated stock-based compensation expense of $3.4 million and a reversal of $4.8 million related to previously recognized stock-based compensation expenses for unvested restricted stock awards.

As of June 30, 2024, the restructuring liabilities of $17.6 million associated with the 2024 Restructuring Plan were included in accrued compensation in the condensed consolidated balance sheet. There were no restructuring liabilities associated with the 2023 Restructuring Plan as of June 30, 2024. Restructuring liabilities associated with the 2023 Restructuring Plan were immaterial as of December 31, 2023.

NOTE 4 – BALANCE SHEETS COMPONENTS

Inventory

Inventory as of June 30, 2024 and December 31, 2023 was as follows (in thousands):

	June 30, 2024		December 31, 2023
Raw materials	$	157,605	$	210,283
Work in progress	68,199		53,227
Finished goods	284,084		432,726
Total Inventory	$	509,888	$	696,236

Inventory as of June 30, 2024 and December 31, 2023 was comprised of raw materials, work in progress related to the production of vehicles for sale and SKD units for final assembly in Saudi Arabia, and finished goods inventory including new vehicles available for sale, vehicles in transit to fulfill customer orders, and internally used vehicles which the Company intends to sell. The Company recorded write-downs of $154.2 million and $292.0 million, respectively, for the three and six months ended June 30, 2024, and $295.0 million and $522.0 million, respectively, for the same periods in the prior year, to reduce its inventories to its net realizable values and for any excess or obsolete inventories, as well as losses from firm purchase commitments.

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Property, plant and equipment, net

Property, plant and equipment, net as of June 30, 2024 and December 31, 2023 was as follows (in thousands):

	June 30, 2024		December 31, 2023
Land and land improvements	$	69,718	$	69,718
Building and improvements(1)	662,401		576,097
Machinery, tooling and vehicles(2)	1,101,630		1,045,485
Computer equipment and software	85,037		74,336
Leasehold improvements	242,297		221,619
Furniture and fixtures	47,018		45,315
Finance leases	90,499		94,285
Construction in progress	1,399,601		1,185,413
Total Property, plant and equipment	3,698,201		3,312,268
Less accumulated depreciation and amortization	(632,490)		(501,401)
Property, plant and equipment, net	$	3,065,711	$	2,810,867

(1) As of June 30, 2024 and December 31, 2023, $125.1 million and $120.2 million of capital expenditure support received from Ministry of Investment of Saudi Arabia (“MISA”) was primarily recorded as a deduction to the AMP-2 building balance, respectively. See Note 16 “Related Party Transactions” for more information.

(2) Included $35.9 million and $32.5 million of service loaner vehicles as of June 30, 2024 and December 31, 2023, respectively.

Construction in progress represents the costs incurred in connection with the construction of buildings or new additions to the Company’s plant facilities, including tooling with outside vendors. Costs classified as construction in progress include all costs of obtaining the asset, installation of the asset, and bringing it to the location and the condition necessary for its intended use. No depreciation is provided for construction in progress until such time as the asset is completed and is ready for its intended use. Construction in progress consisted of the following (in thousands):

	June 30, 2024		December 31, 2023
Machinery and tooling	$	946,708	$	728,751
Construction of AMP-1 and AMP-2(1)	434,655		430,878
Leasehold improvements	18,238		25,784
Total construction in progress	$	1,399,601	$	1,185,413

(1) As of June 30, 2024 and December 31, 2023, $39.9 million and $12.1 million, of capital expenditure support received from MISA was recorded primarily as a deduction to the AMP-2 facility construction in progress balance, respectively. See Note 16 “Related Party Transactions” for more information.

Depreciation and amortization expense was $66.2 million and $135.0 million, respectively, for the three and six months ended June 30, 2024, and $55.4 million and $105.2 million, respectively, for the same periods in the prior year. The amount of interest capitalized on construction in progress related to significant capital asset construction was immaterial for the three and six months ended June 30, 2024 and 2023.

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Other current liabilities

Other current liabilities as of June 30, 2024 and December 31, 2023 were as follows (in thousands):

	June 30, 2024		December 31, 2023
Engineering, design, and testing accrual	$	52,977	$	42,176
Construction in progress	103,832		156,414
Accrued purchases(1)	38,210		44,957
Retail leasehold improvements accrual	4,190		6,005
Third-party services accrual	36,025		41,478
Tooling liability	86,075		49,925
Short-term borrowings	68,238		72,533
Operating lease liabilities, current portion	30,228		28,431
Reserve for loss on firm inventory purchase commitments	140,605		143,566
Accrued warranty	14,922		22,677
Other current liabilities	177,477		190,828
Total other current liabilities	$	752,779	$	798,990

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

Other long-term liabilities

Other long-term liabilities as of June 30, 2024 and December 31, 2023 were as follows (in thousands):

	June 30, 2024		December 31, 2023
Operating lease liabilities, net of current portion	$	234,358	$	244,122
Other long-term liabilities(1)(2)	321,565		280,217
Total other long-term liabilities	$	555,923	$	524,339

(1) As of June 30, 2024 and December 31, 2023, $67.7 million and $62.5 million of capital expenditure support received from MISA was recorded as deferred liability within other long-term liabilities in the condensed consolidated balance sheets, respectively. See Note 16 “Related Party Transactions” for more information.

(2) As of June 30, 2024 and December 31, 2023, $109.9 million and $107.8 million of deferred revenue was recorded within other long-term liabilities in the condensed consolidated balance sheets, respectively, in connection with the strategic technology and supply arrangement, and integration and supply arrangements with Aston Martin Lagonda Global Holdings plc (together with its subsidiaries, “Aston Martin”). See Note 16 “Related Party Transactions” for more information.

Accrued warranty

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

	Three Months Ended June 30,				Six Months Ended June 30,
	2024		2023		2024		2023
Accrued warranty - beginning of period(2)	$	48,163	$	25,875	$	46,076	$	22,949
Warranty costs incurred	(17,818)		(11,570)		(35,886)		(19,830)
Provision for warranty(1)	48,151		47,881		68,306		59,067
Accrued warranty - end of period(2)	$	78,496	$	62,186	$	78,496	$	62,186

(1) Provision for warranty for the three and six months ended June 30, 2024 and 2023 included estimated costs related to the recalls identified and/or special campaigns to repair or replace items under warranties. During the three and six months ended June 30, 2024, the Company recorded $30.7 million and $41.5 million provision associated with a special warranty campaign, respectively.

(2) Accrued warranty balance of $14.9 million and $22.7 million, respectively, was recorded within other current liabilities, and $63.6 million and $23.4 million, respectively, was recorded within other long-term liabilities, in the condensed consolidated balance sheets as of June 30, 2024 and December 31, 2023.

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NOTE 5 - FAIR VALUE MEASUREMENTS AND FINANCIAL INSTRUMENTS

The accounting standard for fair value measurements provides a framework for measuring fair value and requires expanded disclosures regarding fair value measurements. Fair value is defined as the price that would be received for an asset or the “exit price” that would be paid to transfer a liability in the principal or most advantageous market in an orderly transaction between independent market participants on the measurement date. The Company measures financial assets and liabilities at fair value at each reporting period using a fair value hierarchy, which requires the Company to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. A financial instrument classification within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement. This hierarchy prioritizes the inputs into three broad levels as follows:

•Level 1—Quoted prices (unadjusted) in active markets for identical assets or liabilities.

•Level 2—Observable inputs other than quoted prices in active markets for identical assets and liabilities, quoted prices for identical or similar assets or liabilities in inactive markets, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.

•Level 3—Inputs that are generally unobservable and typically reflect management’s estimates of assumptions that market participants would use in pricing the asset or liability. Factors used to develop the estimated fair value are unobservable inputs that are not supported by market activity. The sensitivity of the fair value measurement to changes in unobservable inputs may result in a significantly higher or lower measurement.

Cash, cash equivalents and investments are reported at their respective fair values on the Company’s condensed consolidated balance sheets. The Company’s short-term and long-term investments are classified as available-for-sale securities.

The following table sets forth the Company’s financial assets subject to fair value measurements on a recurring basis by level within the fair value hierarchy as of June 30, 2024 and December 31, 2023 (in thousands):

	June 30, 2024
									Reported As:
	Amortized cost		Gross Unrealized Gains		Gross Unrealized Losses		Estimated Fair Value		Cash and cash equivalents		Short-Term Investments		Long-Term Investments
Cash	$	495,575	$	—	$	—	$	495,575	$	495,575	$	—	$	—
Level 1:
Money market funds	661,932		—		—		661,932		661,932		—		—
U.S. Treasury securities	2,110,009		214		(3,054)		2,107,169		162,832		1,411,255		533,082
Subtotal	2,771,941		214		(3,054)		2,769,101		824,764		1,411,255		533,082
Level 2:
Certificates of deposit	23,313		6		—		23,319		—		23,319		—
Time deposits	100,000		—		—		100,000		—		100,000		—
Commercial paper	112,951		—		(41)		112,910		18,803		94,107		—
Corporate debt securities	403,412		211		(458)		403,165		14,439		234,167		154,559
Subtotal	639,676		217		(499)		639,394		33,242		451,593		154,559
Total	$	3,907,192	$	431	$	(3,553)	$	3,904,070	$	1,353,581	$	1,862,848	$	687,641

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	December 31, 2023
									Reported As:
	Amortized cost		Gross Unrealized Gains		Gross Unrealized Losses		Estimated Fair Value		Cash and cash equivalents		Short-Term Investments		Long-Term Investments
Cash	$	516,673	$	—	$	—	$	516,673	$	516,673	$	—	$	—
Level 1:
Money market funds	698,702		—		—		698,702		698,702		—		—
U.S. Treasury securities	2,033,711		2,480		(2,073)		2,034,118		104,572		1,638,537		291,009
Subtotal	2,732,413		2,480		(2,073)		2,732,820		803,274		1,638,537		291,009
Level 2:
Certificates of deposit	105,993		97		(22)		106,068		—		106,068		—
Time Deposits	50,000		—		—		50,000		50,000		—		—
Commercial paper	299,248		191