I was sitting down yesterday, having a juice with a co-founder of an EV startup (of sorts) and we turned to the topic of executives. Who is the best person to lead a startup car company? Is it a car designer? A gearhead? An engineer? A cold, serious businessperson? I don’t think there’s a definitive answer to this question, but whatever Lucid is doing hasn’t worked yet.
For this Morning Dump I’m going to recycle a now semi-famous TMD headline: “I’m Not Convinced Stellantis Can Stick The Landing.” Stellantis was still making money then, and their CFO was telling people that the second half of the year would be a big return to profits. I didn’t buy it, mostly because it didn’t make any sense. Two years later the executive team was gone and the company had to do a major reset, admitting to basically all the issues I pointed out in that article. Lucid is somehow both in better and worse shape than Stellantis, though I don’t think it’s quite fatal. If they’re lucky, they’ll be like the Knicks at the half last night, and we all know how that ended.
There are numerous threats out there, though, with President Trump admitting the USMCA is dead because America doesn’t need anything from Canada or Mexico. Cool. At least we know how the War in Iran will end; oh, wait, we don’t, which is another risk in the car market for non-EV makers. This is getting bleak, so at the very least let’s end with the good news that Ford is able to get aluminum from its supplier in New York.
Extremely Likable Lucid Engineer Is No Longer At Lucid
So, I’m sitting on the High Line in New York talking to this co-founder, whom I will not name but has a long history in the automotive industry. He’s not from the US and he was marveling at all the Fisker Oceans in New York. I was able to wow him with the Oceans of NYC game. He’s now playing it, meaning that there’s at least one exec trying to find Oceans in New York right now, which is amusing to me.
“Building cars is hard,” he said, remarking that he thought the Fiskers he was getting as Ubers were half-baked, but that he appreciated how difficult it was to build anything, let alone something as complex as a car. Between Thomas Ingenlath at Polestar and Henrik Fisker at various failed iterations of Fisker, car designers have a lousy track record as CEOs. Lucid started with an incredible engineer and built a car that, if you live in the United States at least, is still probably the best EV sedan. The company then went on to build one of the best three-row SUVs of any kind on the planet, though even that car worried David, who was among the first to drive it:
I’m a former engineer, I have a number of friends who work at Lucid, and my conversation with CEO Peter Rawlinson was nothing short of epic. Lucid is an organization run by the best kind of nerds obsessed with maximizing efficiency, and that’s usually a good thing.
But with the Lucid Gravity, I have a suspicion that engineers won most of the arguments with designers, and I have always been firmly in the camp that thinks designers should tell engineers what to do, thereby compelling them to come up with interesting technical solutions. I don’t think it should be the other way around, because design is simply too important, especially in this price class.
I went to an investor day held by the company, and Lucid execs made it clear that they had a grasp on many of the problems. Sitting on a huge amount of cash from the Saudi Public Investment Fund, the company has more runway to figure out its challenges than most, even as it loses big money on every car. It’s also going to make vehicles for Uber, assuming the robotaxi market is something people will care about. The Lucid Cosmos is going to be one of three vehicles on that platform. Like Rivian with the R2, Lucid thinks the under-$50k two-row crossover EV segment, so completely dominated by Tesla with the Model Y, is the place to be. Maybe? Honestly, the Comsos did look a little like it was still beholden to the extreme efficiency that is the company’s greatest achievement and its largest obstacle.
This is all to say that the company is still in a very long transition period to anything that doesn’t generate endless giant losses. I covered a lot of this at the end of Q1 when the company suspended its own production estimate and missed even the low expectations it had to clear:
With the Gravity out the door, Wall Street was looking for the company to make about $440 million and only lose the equivalent of about $2.64 per share. By those measures, Q1 was a big miss, with a loss per share of $3.46, and revenue of $282.5 million. Overall, the company lost $989,485,000, which rounds uncomfortably to $1 billion.
There’s more news, and it’s making people who watch the company a bit uncomfortable. Founder and original CEO Rawlinson stepped down last year, replaced temporarily by another guy, who has then been permanently replaced by new CEO Silvio Napoli. In what feels like a big moment for the company, Lucid announced the departure of Emad Dlala, one of the longest-tenured Lucid employees. As TechCrunch reports:
In a statement to TechCrunch, Lucid Motors confirmed Dlala’s departure and said the company is “transforming its organization to accelerate innovation and strengthen execution under CEO Silvio Napoli.”
As part of that transformation, Lucid Motors said that Vivek Attaluri, the company’s vice president of vehicle engineering, and Marc Solsona Palomar, its vice president of software, will now report directly to Napoli.
“Emad Dlala has elected to leave the company to pursue other opportunities. We thank Emad for his many contributions over the years and wish him continued success in his future endeavors. Lucid remains focused on streamlining our organization and processes to fully leverage the strength of our team and will communicate further actions soon,” the company said in a statement.
Dlala declined to comment.
I went to get a photo Dlala and I got the screenshot above, which just about says it all. Someone at Lucid wasted no time in getting rid of even the photo of the one exec that everyone seemed to like. People are not taking it well. I think a good representative is Out Of Spec‘s Kyle Conner, who wrote on X:
It’s fair to say that Lucid is now no longer the company we’ve known
Emad’s passion for the products and customers was unmatched – I’ve had multiple midnight calls with him discussing challenges and wins (not that he would *ever* complain to me about a video I made ????).
On one occasion I was lucky enough to join his recurring team breakfast gathering at HQ… it was refreshing to see how he led a talented group of engineers with openness, understanding, and high expectations.
It’s sad to see him go at such a critical time for the brand[.]
This is a super pivotal moment for the brand, I agree. The company has to show it can move in the right direction, it has to organize itself around a coherent vision, and it has to produce cars at a scale that keeps its Saudi investors from deciding to walk away. Is Napoli the guy? Some think so, and it’ll take guidance from someone who isn’t beholden to the design or the engineering teams to succeed in the market. They need someone who can be there at the right moment to glide past the defense and tip the ball into the hoop.
They need an OG, if you catch my drift.
Ok, So The USMCA Is Probably Dead
There’s a great delivery in the first act of the musical Hamilton when both Alexander Hamilton and Aaron Burr are seconds at someone else’s duel, foreshadowing the big event in Act II. Burr tries to get Hamilton to admit that duels are stupid and that nothing anyone said was worth dying over. Hamilton sort of agrees, and then goes on to explain all the issues at hand.
Burr, played perfectly by Leslie Odom, Jr., lets out a resigned “Ok, so we’re doing this…”
That’s how I feel about the President’s move to get rid of the United States-Mexico-Canada Agreement (USMCA). While I think most people have known that it’s probably going to end up with a trio of bilateral agreements that the next President is going to have to sort out, even as of this week people were still talking about how to fix USMCA. According to President Trump, via Bloomberg, the USMCA is as good as dead:
“I’m not looking to renew it,” Trump told reporters Wednesday at the White House. “Because to be honest with you, the United States does much better. We don’t need anything that Canada has, we don’t need anything that Mexico has, but they need everything that we have, and they have to treat us better.”
I do think America needs both Mexico and Canada, and it’s especially true that the automotive industry needs both countries. Hopefully, this is just going to be a negotiating tactic.
Chinese Consumers Aren’t Buying Gas Cars, Which Is Bad For American Companies
The conflict in Iran will end, eventually, I’m sure. Until then, the higher gas prices are collapsing the market in China, which is a place where American and other automakers still need customers.
Sales at General Motors’ main China joint venture, SAIC-GM, plunged for the second straight month in May on higher pump prices after growing in the first quarter on an uptick in demand for gasoline models.
China’s new-car volume continued to slide last month as oil prices stoked by the war in Iran coupled with a stagnating economy to impact overall demand.
Industrywide deliveries of new sedans, crossovers, SUVs and multipurpose vehicles fell 22 percent to 1.51 million in May, with gasoline models plunging 37 percent to below 559,000, according to the China Passenger Car Association.
Global brands, still deriving the bulk of their sales from internal combustion products, continued their retreat as domestic players with stronger electrified lineups better weathered the downturn.
Yeesh.
Ford Will Start Getting Aluminum From Its Supplier, Finally
The fires at Ford supplier Novelis were so bad that the company has only just started getting production together, probably costing the automaker billions of dollars. According to the Detroit Free Press, Novelis is finally back:
As Ford continues to push to add 50,000 extra units of trucks to its inventory to partly make up for the lost truck production after the first fire last year, Novelis in Oswego, New York, is finally back online.
In a statement on June 10, Novelis spokeswoman Julie Groover said Novelis restarted the hot mill at Novelis factory in Oswego on June 8 and it is once again operational after being idled since last September.
“Restarting the Oswego hot mill is an important step forward for our operations and, most importantly for our customers,” Steve Fisher, CEO of Novelis Inc., said in a statement. “We are deeply grateful for the flexibility and partnerships our customers have shown, as well as the extraordinary efforts of our employees, suppliers and industry peers who came together to support continuity of supply.”
If you’re Ford, this can’t happen fast enough.
What I’m Listening To While Writing TMD
It’s time for a posse cut!!!!! “Thank You New York Knicks.”
The Big Question
Can Lucid stick the landing?
Top photo: Lucid
“We don’t need anything that Canada has”
Except crude:
https://afdc.energy.gov/data/10621
As a native, long time Texan, I really thought you would be in the Spurs camp. I lived in Beaumont TX for six years and also spent multiple weeks working in Manhattan during that time. Now retired and living out west in Washington, I still have friends in TX and also friends in NYC. I am torn between the two. May the better team win. My time in NYC was being paid for by customers. But I think I’d rather live in SA. (I never got tired of the River Walk.) It’s certainly more affordable.
As for TBQ… I guess I hope they do, but I don’t think I will ever be contributing to their bottom line. Rivians are ugly. Teslas are not painful to look at. Trillionaire Elon (on paper anyway doesn’t need the money). And making monthly 1500-mile round trips down to CA to help my 90-year-old mom deal with her stuff, a pure EV is just not going to work for me. Just did the timing belt on my 2017 80K mile Accord, it should be fine.
I spent a long time planning to buy a Lucid Air Grand Touring, largely because of its incredible engineering, efficiency, range, etc. Then it turned into an exercise in convincing myself that it would still be a good car to own in spite of the company’s myriad issues and growing instability. Then the rational part of my brain asserted itself. I put down a deposit on a Rivian R2 this week and won’t be looking back.
I often give David a hard time, but this has got to be one of the most accurate things I’ve ever read.
“I have always been firmly in the camp that thinks designers should tell engineers what to do, thereby compelling them to come up with interesting technical solutions. I don’t think it should be the other way around, because design is simply too important.”
I will say though, good designers know when you listen to the engineers.
When I think “Lucid Engineering”, I automatically default to what happened the TWO lucids that Engineering Explain had.
One was lemon lawed and the other he voluntarily returned because it kept breaking.
My freshmen year neighbor was from there, and it’s pronounced:
Oss-sway-go
In case you care.
…there is a reason why Peter Rawlinson isn’t there anymore. He was such a fucking child about Elon and trying to specifically make a better model S, that he ignored everyone around him who said to make an SUV over the past decade.
Now they have an SUV that was built too late… and it looks like a van.
Can we have the world where Lucid sticks the landing and Open AI collapses before they can drag down the stock market?
No worries on open ai, MS, Amazon or Google will get the remains. Same as Anthropic. The rest, Grok et-al aren’t in the running.
The market will absolutely crash after SpaceX, ChatGPT, and Claude all go public. There will be nothing to look forward to after that. It’s gonna suck for a LOOOONG time.
I’m Not Convinced That (insert automotive company name here) Can Stick The Landing.
While I would like Lucid to stick the landing, I’m not sure it will. When I was car shopping a few weeks ago, I looked at a Lucid Air Pure. It seemed pretty nice for a base model, and did a much better job of selling itself as a luxury car than any Tesla I’ve been in. BUT, the depreciation was absolutely massive, which is the only thing that allowed me to look at it, and the desirability is limited to nerdy engineers like me – neither my spouse nor anyone I’d mentioned it to had even heard of Lucid. I fear there may not be enough well-heeled individuals willing to stomach the rapid depreciation to keep Lucid afloat for much longer.
I don’t care what kind of car Lucid makes next, only that they call it the Lucid Dream
They already kind of did that, with the Lucid Air Dream Edition. In fact, their ADAS is called DreamDrive.
Do I hope Lucid makes it? Yes
Do I have $98k to drop on a second car? No
Like Rivian with the R2, Lucid thinks the under-$50k two-row crossover EV segment, so completely dominated by Tesla with the (long in the tooth, past its prime) Model Y, is the place to be. Maybe?
Maybe? Maybe? JHC
so he abandons yet another deal wich was claimed to be the “best deal ever” when it was signed for reasons being “not a good deal”. Why would anyone agree to ANY deal with the usa ever again?
In the future, when somebody writes the definitive book on this period in time, that book will be called Asshole Nation.
Losing a billion dollars a year is the new hotness. Just put AI in the car, profit.
““I’m not looking to renew it,” Trump told reporters Wednesday at the White House. “Because to be honest with you, the United States does much better.”
Understand that whatever Crooked Trump says, the opposite is usually closer to the truth.
He just ruins everything. It’s impressive how damn terrible he is in every way.
He even cursed the Knicks when he went to their game. And fell asleep.
I think he knew he would get another night or 2 of Kimmel being bumped past midnight.
Honestly, I think he says whatever makes him feel good at a particular moment. Feels good to say we don’t need Mexico? Say it. Feels good to say that CBS and journalists and election officials are all crooked? So say it. Feels good to say you’re going to take inflation down to the lowest it’s ever been? Say it. Feels good to say that you love the inflation? Say it.
I think he needs to take a road trip and get away from the sycophants for a bit.
I just returned from visiting family in Michigan. A rural area that last year had Trump flags everywhere. In a 200 mile drive out into the “thumb” I saw less than 5 Trump flags still flying.
Heck my mother in law even got rid of her Rambo Trump flag.
“Heck my mother in law even got rid of her Rambo Trump flag.”
Did she burn it? I’d like to think she burned it…
I didn’t ask – just quietly observed a high level of complaining about the prices of everything and a lack of Trump memorabilia.
These days if he were to take a road trip it’d be at 35 in a 60 zone with his left blinker on the whole way.
This is heartening.
Only one diehard is still flying his Trump flag in my neighborhood here in God’s Waiting Room, FL. And that guy is outnumbered about 20:1 by No More Kings flags. Heartening, indeed.
The last NMK protest day saw at least 5000 protestors on one side of Rt 41, and about 5, yes *5* sad Trumpsters with a bull horn on the other side facing them.
Were there stickers of Trump saying “I DID THIS!” on all the gas station pumps?
No. Just pumps playing annoying ads at high volume. At least the gas was cheap ($4 a gallon)
Next time you visit bring some stickers.
Almost. He’s a sales/marketing person. He says what he thinks will get him what he wants, usually with a relatively short time horizon. It’s been surprisingly effective, because he doesn’t lie like a traditional politician. Usually they’d spin, de-emphasize, or dance around but they rarely outright lied. So when they said something plainly and repeatedly, there was a good chance it had at least a kernel of truth.
As it is and always has been. I’ve been watching the great orange on since he slithered on stage in the 70’s and tat is his go to approach. He probably picked it up in one of the Wharton classes he occasionally attended.
I hope Lucid gets it together and pulls through. They haven’t been around long so maybe these are just the expected teething issues – “building cars is hard.”
I love the Air and wouldn’t mind one in my garage when they get some age on them. I briefly considered one when I bought my last car the closest service center is too far to be practical and there just aren’t that many cars around.
Maybe if Lucid gets a less-likable engineer in, the engineers won’t win all of the arguments and produce stuff like the Gravity, which may be an engineering marvel but was doomed to failure in the market from the moment someone decided it should look like that.
I think it goes without saying that almost everything he says is wrong to one degree or another, but this is wrong on a level that is worth looking closer at.
One of the big reasons the US is a world power is geography. We are isolated from all of our enemies by vast landmasses and oceans, which means the continental US has basically never felt a direct impact of any global conflict. But here’s the thing – part of maintaining that isolation is keeping a cordial relationship with our neighbors. If we cut ties to Mexico and Canada, what’s to stop them from letting the Chinese build military bases on our doorstep? We’ve already started to push them into the arms of China with our shitty behavior, and if this continues that will only get worse.
Even if you want to take an extremely cynical viewpoint on this, we want to keep Mexico and Canada close because they operate as excellent human shields against the rest of the world. It’s a stunning indictment of this whole evil regime that they’re so focused on personal enrichment they’ll let the country they reside in burn to the ground as long as their number is bigger than the next guy’s.
The hyperwealthy don’t *live* anywhere. They will just charter a helicopter to their private airfield when the angry masses reach the walls of their compound and start again somewhere else with a mild climate and social safety net.
going to be pretty hard for the wealthy to protect their helicopter from a cheap drone strike you can easily create in your garage.
That’s what the surveillance economy is for, gotta make sure they can see you buying anti-helicopter drone materials
Meanwhile their bank accounts are MASSIVE unfathomable numbers of commas. If i had 3 million dollars in my bank acount i could spend between 160,000 and 220,000 a year without ever thouching my 3 million dollars. I would never ‘work’ a day in my life i would just travel the world and chill till the end of my days. these people are SICK with their greed. instead of being shunned for their harding they are looked as idols and “powerful”
Yeah, I agree with this. It just doesn’t seem right that once you hit a certain level of wealth, it just becomes completely self-sustaining with no work on your own part beyond hiring a good financial firm (although yes, they do work hard). And it seems even more ridiculous that there are people who are so far beyond that level that they can fund their families doing nothing of consequence in perpetuity, and yet the rest of the world has to bend to their wishes to make much, much more money.
I get what you are saying but bleeding down 5 – 7% of your nest egg a year is a very aggressive withdrawal rate. A more typical rate is 3 – 4% which is $90K to $120K a year on 3 million.
$90K isn’t a bad passive income (current median household income in the USA is about $85K) but it isn’t travel the world on a yacht kind of money. More like backpack across the world money or stay home and live a middle class life kind of money.
(The traditional 4% rule was based on historical US returns that said a portfolio that was 60% stock / 40% bonds would remain above $0 for 30 years 95% of the time. At 5% draw down the model has a 70% success rate and 7% a 35% chance of success)
I think your styling point is spot on. It does look NICE but it’s not what consumers want right now. It reminds me of the pontiac aztek when it was first released people wanted to barf looking at it. 20 years later every car kinda looks like an aztek. Thats what happens when you strike out to “be different’ sometimes you change the status quo and sometimes consumers tell you to “read the room” .
I’m not even sure it’s necessarily that forward-looking. For all the issues I have with the R2, I think Rivian did a smart thing with the way they hid the aero taper at the rear with the “spoiler”. It looks like a traditional crossover, but it has a lot of the efficiency benefits of a purely wind tunnel-optimized design.
In fact, that’s a perfect example of what Lucid probably needs to do. When the aero engineers get their way 100% you end up with the Gravity. When the engineers and the designers compromise, you end up with the R2. It remains to be seen whether either will be successful, but I like Rivian’s odds much better right now.
Lucid revealed how much effeciency is put on the table in the name of styling. Lucid is still the most effecient EV the problem is they are also six figure luxury vehicles so saving money is not a particularly compelling reason to buy a car in that price range.
“If we cut ties to Mexico and Canada, what’s to stop them from letting the Chinese build military bases on our doorstep?”
The fact they’d have Chinese military bases in their bedrooms.
I’m unclear in general on the “lose money with each car” phrase. I recall that, back in the ’90s, Saturn sold each car for more than the bill of materials + labor, but that the billions of dollars spent setting up the company & designing the cars meant that it never penciled out.
So is Lucid losing money on each Air in the latter sense, or in the former? Because to me those are very different situations with very different solutions. Like, if Lucid can’t get the production cost of a vehicle below the sales price, then no, they don’t have a future. But if it’s a matter of not paying down startup costs, then there’s a (narrow) path.
To borrow Hoser’s restaurant analogy, there’s a difference between trying to sell a $20 wholesale steak for $20, and you’re not covering labor at all, and trying to sell a $20 wholesale steak for $40, but it doesn’t cover costs bc you’ve got 1 server per table. The former model is just f***ed, because you don’t even have a path to breaking even on operations, let alone capital costs, but the latter model, you have a chance to adjust your labor basis and maybe find a cheaper purveyor.
But, to be clear: most restaurants fail because they’re undercapitalized to begin with, and spend too much of whatever capital they have on things like remodeling and fancy dishware, which is $$ that can’t be recouped or repurposed. And maybe Lucid simply spent too much up front to ever cover those costs. But as long as SA is willing to be patient, if they’re at least covering ongoing costs with sales, there’s a chance.
“but the latter model, you have a chance to adjust your labor basis and maybe find a cheaper purveyor.”
Assuming you can find enough customers willing to pay $40 + tax, tip and whatnot for a $20 steak when there’s a retail grocery store next door selling a $20 steak for $21 with no tax or tip and a Grocery Outlet down the street selling a hit-it’s-expiration-date but otherwise perfectly fine $20 steak for $5 with no tax or tip.
Highly capital-intensive businesses like automakers and airlines can “lose” HUGE amounts of money and still be cash-flow positive and thus sustainable businesses for a long time thanks to the miracle that is being able to write off depreciation expense on all that massively expensive hardware they need. Not to say Lucid isn’t lighting money on fire.