Key Points
Lucid missed badly on earnings last night.
Cash burn is Lucid's biggest problem.
The company hopes to reduce cash burn by $1.4 billion annually.
Lucid Group (NASDAQ: LCID) stock tumbled 15% through 10:50 a.m. ET Wednesday after missing on earnings last night.
Heading into the report, analysts already weren't optimistic, predicting Lucid would lose $2.36 per share on $422.3 million in sales. Per-share losses actually totaled $2.78, however, and Lucid managed only $405.3 million in quarterly sales.
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Lucid Q2 earnings
The fact that these earnings were awful isn't lost on Lucid, which is promising an "operational reset" to fix its problems.
Despite producing 4,774 vehicles (24% more than in last year's Q2), Lucid managed to sell only 3,953 of them -- up 19%, but still up less than the increase in production. Revenue did grow a substantial 56% year over year, but that still wasn't enough to turn Lucid profitable. Cash burn accelerated 46%, with Lucid burning another $1.5 billion in the quarter.
That leaves Lucid with less than $733 million in the bank (not enough to last it another quarter), alongside more than $3 billion in long-term debt and "other long-term liabilities."
What's next for Lucid?
This cash burn rate is arguably the biggest problem facing the electric car company -- and it's the problem Lucid is working most actively to fix. Management says it's "identified $1.4 billion cash flow improvement opportunities in 2026 across operating expenses, capital expenditures, and working capital." Still, that would cover only one quarter of burn at the company's current burn rate -- and the year is four quarters long!
At the same time, Lucid is sinking more cash into building a second factory, "AMP-2" in Saudi Arabia, which will build even more of the EVs it's struggling to sell. Plans to build robotaxis for Uber (NYSE: UBER) might help create demand.
If that demand fails, though, look out below!
Rich Smith has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Uber Technologies. The Motley Fool has a disclosure policy.