Hello, and thank you for standing by. Welcome to Lucid Group's Q2 2023 earnings conference call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question-and-answer session. To ask the question during the session, you will need to press star one one on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star one one again. I would now like to hand the conference over to Maynard Um. Sir, you may begin. Thank you. Welcome to Lucid Group's Q2 2023 earnings call. Joining me today are Peter Rawlinson, our CEO and CTO, and Sherry House, our CFO. Before handing the call over to Peter, let me remind you that some of the statements on this call include forward-looking statements under Federal Securities law. These include, without limitation, statements regarding the future financial performance of the company, production and delivery volumes, financial and operating outlook and guidance, macroeconomic and industry trends, company initiatives, and other future events. These statements are based on the predictions and expectations as of today, and actual events or results may differ due to a number of risks and uncertainties. We refer you to the cautionary language and the risk factors in our most recent filings with the SEC and the forward-looking statements on page 2 of our investor deck, available on the Investor Relations section of our website at ir.lucidmotors.com. In addition, management will make reference to non-GAAP financial measures during this call. A discussion of why we use non-GAAP financial measures and information regarding reconciliation of our GAAP, GAAP versus non-GAAP results is available in our earnings press release issued earlier this afternoon, as well as in the investor deck. With that, I'd like to turn the call over to Lucid's CEO and CTO, Peter Rawlinson. Peter, please go ahead. Thank you, Maynard, and thank you everyone for joining us for our Q2 earnings call. We hit several major milestones in Q2, none of which could have been accomplished without the incredible commitment of our employees. Thank you to the Lucid team for your passion and dedication in driving our mission forward. We also have many exciting events and announcements planned in the second half of this year that I'm very eager to share with you. Before I do, let me start with our major Q2 milestones and provide an update on our progress of our initiatives. In June, we announced a landmark agreement with Aston Martin, providing them access to our Sapphire electric vehicle powertrain technology. Indeed, Sapphire-enabled Aston Martin EVs. Aston Martin chose Lucid following a competitive process to ensure that they accessed what they felt was not only the best, but also the most advanced and suitable technology available on the planet. This agreement represents the advent of a core pillar of Lucid Group, namely our technology, supply, and licensing, and in so doing, reaffirms the commercial value of our patented technologies. We believe this could represent a harbinger of future opportunities, not only in applications for the automotive market, but also in markets such as commercial transportation and even aviation. In the Q2, we raised $3 billion in capital to fund the forward business, removing financial concern and demonstrating the strength of our partnership with our core partner, the Public Investment Fund. Sherry will go into greater financial detail on both the Aston Martin agreement and the capital raise later in her prepared remarks. In Q2, we produced 2,173 vehicles and delivered 1,404. In addition, we had a significant number of vehicles that were in transit to Saudi Arabia. These were cars which were produced but not yet delivered, which we have started delivering to customers in Q3. Sherry will further elaborate upon this as well. Over the last two quarters, I spoke about the company's two strategic priorities: growing brand awareness and cost efficiencies. While we still have work to do, I'm pleased to say that some of the initiatives we've actioned are seeing solid progress. We saw another strong increase in the number of test rides sequentially through Q2. The third-party data shows that our brand awareness in the luxury and premium segment is growing to a much stronger place. As our fleet size grows, so does the number of Lucid Air sightings. We believe that there is a marketing and demand benefit when we achieve a critical mass of vehicles on the road, and we are making headway here. We continue to garner strong accolades and received an authoritative, independent summary of how Lucid Air stacks up against the competition, with MotorTrend most recently naming the Lucid Air the best electric luxury vehicle you can buy in 2023. It's also important to highlight that Lucid is being asked with increasing frequency by government and non-government organization partners to showcase our cars and technology at a growing number of events in the U.S. and Europe. Our name recognition and positive brand associations are growing significantly in the government, trade associations, and non-government organization space. We'll also be launching a customer referral program, which we think will get our loyal customers excited about the opportunities for both physical and experiential redemptions. Our customers are some of our most ardent advocates, and we want to reward them for their fervor. With our brand awareness moving in the right direction, we're now putting more energy behind it to capitalize upon the interest, including the recent reinstatement of Lucid's original pricing. Sherry will talk more about this in her prepared remarks. Looking into the second half of the year, we have many exciting events and announcements coming. We're on track to execute on deliveries under the purchase agreement with the government of Saudi Arabia, and thus far, I'm pleased with consumer and government demand in the region. In September, we expect to start producing Lucid Air Pure rear-wheel drive. Now, the Pure rear-wheel drive will be able to achieve 419 miles on an EPA cycle with just an 88 kilowatt hour battery pack. Let me do the quick math for you. This equates to an efficiency of approximately 4.74 miles per kilowatt hour. Indeed, at 4.74 miles per kilowatt hour, the single motor Lucid Air Pure tops every other EV on the U.S. market. What this efficiency means for customers is the ability to go further with less battery. Because the battery is smaller, this means, in turn, that the car weighs less, is more agile, and more importantly, can cost less than a vehicle of similar range, which needs a larger battery pack. To get greater distance, smaller battery, lower materials cost, lower running cost, lower total cost of ownership, immense interior space, and much better for the environment. What really excites me is this technology that enables this 4.74 miles per kilowatt hour for Air, will in turn enable more affordable products in the future. In fact, as the price of the vehicle goes down, the cost of the battery becomes even more significant because it is the largest single cost of the vehicle. This is where efficiency becomes most critical. Now, I've been asked many times, "Lucid have an advantage for now, but how long before others go and catch up?" My reply to this is always the same: Far from this gap shrinking, we're working assiduously to grow that gap, because it's critical to the planet that we achieve higher efficiency EVs. Achieving the 4.74 miles per kilowatt hour is testament to that. We won't stop pushing the envelope on our technology. Work has been well underway on our next-generation power technology for our mid-size platform. Also in September, we plan to commence production of Sapphire. Pre-production has, in fact, already begun, and we've held a number of viewings for media and early customers already. Sapphire will boast a 0 to 60 time of 1.89 seconds, a 0 to 100 miles an hour time of 3.84 seconds, and a standing quarter-mile time of 8.95 seconds. Whilst I think the power and the performance is impressive, I can only begin to tell you how immensely delightful and responsive Sapphire is just to drive normally, even when you choose to exploit a mere fraction of the performance. This, to me, is one of its most surprising, engaging, even endearing attributes. Sapphire fuses hypercar performance, delightful handling, the tractability and turning response of torque vectoring, with everyday usable in an unprecedented combination. In October, we'll be hosting a special launch event, as well as making the first Sapphire customer deliveries. Outside of North America, we are continuing to expand our footprint. We plan to open our Dusseldorf studio in late September, and I'm particularly excited about the prospects for this market. We took the Lucid Air Dream performance to the Autobahn, where its best-in-class drag coefficient, range, and high-speed stability turned many heads on some of the most iconic roads in Europe. Also in September, we plan to have the opening ceremony for our manufacturing facility in Saudi Arabia. We're incredibly excited about this official opening of our second Lucid factory and our first manufacturing facility outside of the United States. Finally, the announcement everyone has hotly been anticipating. We plan to formally unveil the Lucid Air Lucid Gravity to the world in November at a special launch event that will be live-streamed for everyone to watch. Turning to software, in the Q2, we pushed 7 over-the-air software updates with some major enhancements. I can't emphasize enough the significance of our ability to enhance almost every part of the vehicle with software updates. We have a more significant vision for our software strategy, one that we think very, very few in the industry can match, and I'm really excited about the long-term potential here. Please stay tuned. To sum up, despite an uncertain macro environment, I'm very excited about the back half of this year. We plan to start executing on purchase agreement with the government of Saudi Arabia, produce and deliver Pure rear-wheel drive, produce and deliver Sapphire, officially opening our manufacturing facility in Saudi Arabia, and of course, unveil Gravity at our marquee launch event in November. More to come that we're not quite ready to announce yet. I really cannot wait for you to experience these amazing cars. With that, let me turn it over to Sherry for an update on our financials. Sherry? Thank you, Peter, and thank you to those who are taking the time to join us today. Before sharing our Q2 results, I'd also like to extend my sincere gratitude - sectors this year. We successfully closed the transaction in June. As Peter mentioned, we also announced a landmark technology deal with Aston Martin. Aston Martin will pay Lucid a technology access fee of $232 million, comprising $100 million in ordinary shares of Aston Martin and aggregate cash payments of $132 million, phased over a period of three years, with the ordinary shares and $33 million of the cash payable to Lucid following deal closing, which is expected later this year. Aston Martin will also commit to an effective minimum spend with Lucid on powertrain components of $225 million, in addition to engineering integration fees. Monetizing Lucid's award-winning technology is a key part of our forward strategy, and we're delighted to commence this new arm of our business with a partner as well respected as Aston Martin. Concurrent with our earnings release, we announced the finalization of our milestone agreement with the government of Saudi Arabia, with an initial commitment to purchase 50,000 vehicles and an option to purchase up to an additional 50,000 over a 10-year period. It's a powerful affirmation of our products and a testament to our strategic relationship with the country. On the manufacturing front, our Saudi Arabia semi-knockdown, also referred to as SKD facility, is nearly complete and is on track for production in September. We expect to scale deliveries from this facility in Q3 for both consumers as well as various government entities within KSA. This SKD facility will be capable of up to 5,000 units per year and is part of our larger AMP2 campus, which at full scale, is expected to produce up to 155,000 units per year. Before I turn to our Q2 financial results, let me briefly touch on the reinstated pricing. At the beginning of this year, we spoke about our two strategic priorities: brand awareness and cost initiatives. The targeted actions we took to invigorate our marketing programs in the luxury and premium segments is resulting in greater brand awareness. A few moments ago, Peter spoke to the third-party validation of our stronger brand position. We started seeing evidence of this with our order volumes increasing towards the end of July, and we aim to capitalize on this brand awareness momentum by taking actions to improve vehicle affordability for customers. Hence, we have reinstated pricing levels to those which we contemplated in our original business plan. The early reception has been very strong, with a 3x increase in orders in the first full day of the program as compared to the end of July. The return on investment that we're now seeing gives us more confidence in the next steps of our plan to further improve brand awareness and importantly, conversion. Turning to costs. We have realized cost improvements in a number of areas, though we've also had some offsets. In 2022, we realized cost reductions in our Bill of Materials, and in 2023, we've experienced significant improvements in our logistics costs through more efficient routing, combined with declining rates globally. Our manufacturing labor costs have also come down, and our manufacturing efficiency has gone up as a result of our workforce reduction in productivity initiatives implemented earlier this year. However, we still see tremendous opportunity across the organization for cost downs that have been identified as part of a 5-part cost control program that we implemented in the first half of this year. We believe that some of the largest opportunities exist in bill of material costs, manufacturing overhead, scrap reduction, and professional services spend. While some of these cost reductions can be realized this year, we expect much more will be realized in 2024. To provide some context, many of the bill of material cost reductions take time to implement and validate. Additionally, realization of these savings requires us to work through our existing inventory balance first. We're still carrying high inventory levels, partly due to COVID, and partly due to the optimization required in material planning as we bring on new vehicle variants. As a result, both cost downs as well as other savings in areas such as commodity price reductions, won't be realized until we work through this existing inventory, which we expect will meaningfully occur in 2024. It's important to note that we also see other forms of income in the next few quarters. We estimate IRA benefits of around $2,000 per vehicle, which we do not currently recognize in our results. Additionally, we've now signed several emission credit deals and expect to recognize revenue starting in Q3. Although the total amount is not material yet, we are seeing further interest and opportunity here. Turning to our 2023 Q2 financial results. We produced 2,173 vehicles, up 213% year-over-year, and delivered 1,404 vehicles, up approximately 107% year-over-year, though flattish sequential relative to our expectations for units to be up quarter-on-quarter. In addition, we had a significant number of vehicles that were in transit to Saudi Arabia. We had planned to get these vehicles to Saudi Arabia and out for delivery before the Eid and summer holidays, though they were delayed due to supplier issues. Those issues are now largely resolved, and we expect deliveries to customers and the government of Saudi Arabia to ramp this quarter and in Q4. Turning to the P&L. In Q2, we recorded revenue of $150.9 million, which represented a year-over-year increase of 55%. Cost of revenue was $555.8 million for the Q2. Our gross margin was down on a quarter-over-quarter basis. The reduction in gross margin was driven by impairment charges of approximately $295 million in Q2, related to lower of cost or net realizable value, that we also refer to as LCNRV, which was largely due to reinstatement of the original pricing program, obsolescence, and losses from firm purchase commitments. Other sources of the cost of revenue increase this quarter included component scrap and one-time costs related to special campaigns to repair or replace under warranties. Now, moving to operating expenses. R&D expense totaled approximately $233.5 million, up 2% sequentially, with the largest factor attributable to higher stock-based compensation expense due to our annual equity refresh taking place within the quarter. SG&A expense was approximately $197.7 million, up 17% sequentially. The sequential increase was attributable to higher payroll-related expenses and higher stock-based compensation expense, as well as IT and G&A investments as we build out the global business. We opened one new studio in Q2, bringing our total studios and service centers at the end of the quarter to 41. This excludes our temporary and satellite service centers. The number of studio openings can vary quarter to quarter, we'll continue to be strategic and judicious with our site expansion, and we'll also leverage cost-effective pop-up studios, which have been highly effective in complementing our studios for brand awareness. On the service side, we ended Q2 with 43 mobile vans in the fleet and 74 nationwide approved body shops. We expect to increase the number of satellite service centers, which will cost-effectively provide additional locations for Lucid customers. Our stock-based compensation in the quarter was $71.4 million. We also recorded a non-cash benefit of $42.1 million, related to the change in fair value of our common stock warrant liability. As a reminder, this non-cash impact can be influenced quarter to quarter by a number of factors, with one of the larger factors being Lucid's share price at the end of the quarter. In Q2, we achieved an Adjusted EBITDA loss of $710.3 million. Moving to the balance sheet. We ended the quarter with approximately $5.5 billion in cash, cash equivalents, and investments, with total liquidity of approximately $6.25 billion. We've been able to consistently sustain a strong balance sheet over time. As we've done for the last 2 years, we'll continue to be opportunistic in exploring and diversifying access to financing sources. Turning to inventory. Inventory decreased 16.5% sequentially due to the reduction in raw materials and inventory write-down. Presuming that supply chain pressures continue to stabilize, we see a pathway to a significant reduction in raw material days of inventory on hand as we work toward greater predictability in the transportation channel and refine our inventory management processes and systems. Capital expenditures were $203.7 million, down 15.7% versus Q1. Moving to the outlook. We're reiterating our production outlook for more than 10,000 vehicles in 2023. We've noted in the past that production is not our bottleneck, but we're being prudent in managing vehicle inventory. For those of you updating your models, I want to point out that the SKD vehicles that are partially assembled in Arizona and completed in KSA will not be counted as a production unit until they are finished in KSA. An increasing amount of our production volume will be coming from KSA as we finish out the year. Although we typically don't provide delivery or gross margin guidance, we wanna provide some direction to help you with your modeling. We expect deliveries to be up the back half of the year, and we expect Q4 to be our largest quarter of the year as we ramp sales to customers in the government of Saudi Arabia, ramp Pure all-wheel drive, and introduce our most affordable variant, Pure rear-wheel drive, in September. There are many controllable and uncontrollable variables that can affect gross margin. Let me provide a little color on our expectations based on what we know today. We expect gross margin to improve through the back half of the year. We expect the improvement to be driven by higher volume, as well as lower LCNRV, and an expectation for fewer one-off expenses than occurred in Q2 of this year. With regard to our liquidity position, we ended the quarter with total liquidity of approximately $6.25 billion. We expect this will give us runway through the start of production of Gravity and into 2025. Moving to CapEx, we expect capital expenditures for 2023 to be between $1.1 billion-$1.3 billion, reflecting some efficiencies which were identified over the last quarter, and deferrals in our capital outlay. CapEx will support our continued growth objectives as we strategically invest in manufacturing capacity and capabilities, some moderate investment in retail studios and service center capabilities across the globe, and other areas supporting growth of Lucid's business. I'd like to close by saying that we recognize the uncertainties in the macro environment, and we're being thoughtful about how we navigate through this. We're pleased so far with the progress we're seeing across some of our targeted initiatives and the momentum in our brand awareness and orders. We're also excited by what's coming in the remainder of the year. We're getting the Air into more customers' hands this quarter in Saudi Arabia. We will deliver Pure rear-wheel drive, our most affordable Air trim, in September. We'll start deliveries of the Air Sapphire in October, and in November, we'll have our big Gravity unveil. A lot to be excited about in the two quarters ahead. With that, let me turn it back to Maynard to get your questions. Maynard? Thanks, Sherry. We'll now start the Q&A portion of the call. Today's Q&A will feature questions from some of our retail investors, which is an important constituency of our shareholder base, through the Say Technologies platform, followed by live analyst questions. Before we take questions from those on the phone, let's move to the Say questions here. The first question: What is the current status of your mid-size EV development? Are you still planning on building it, or alternatively, providing licensing your platform to another OEM, similar to Aston Martin recent deal? Are you still aiming for a mid-decade release? Well, I'm delighted that the mid-size EV development is on schedule for mid-to-late decade. It's gonna represent a further development in our technology and really take the efficiency story to the next level. That's really important. Expect all the attributes of efficiency, the space concept that you see in our current vehicles, the charging speed that you experienced in the Air to be there. For that, we're developing our next-generation powertrain, and we're already started working on that. That needs to be ready to sync with the start of production of the platform. We're looking at all opportunities. The car's gonna be a global vehicle. We're gonna make it much more accessible in terms of its price point. This was always the strategy, the vision of Lucid, to start with high-end product we're seeing with Air and Gravity, to develop the world's most advanced technology, and then to use that, to deploy it, to make electric cars more attainable. A center point of that whole thesis is: How far can we go with how little battery? How efficient can we make the car? That's what ultra-high voltage is all about, that's what our technology is all about. That's gonna manifest itself fully in the mid-size platform. Great. We'll move to the next question: Could you provide an update regarding the development of your energy storage system? What is the current status of your ESS pilot program testing, and when should we expect it to go into production phase? Thanks, Maynard. Yeah, in addition to the vehicle development and tech licensing businesses, we have envisioned that energy storage systems could be another monetization option for us. This could be ESS as the vehicle itself or residential storage systems, as an example. While we have completed some early pilot work, it's not a strategic focus for us right now. In light of macroeconomic uncertainty and higher interest rates, we think it's important at this time to stay focused on our two highest priorities, which is our vehicle sales business and our tech licensing business. Thanks, Sherry. The next one we addressed, in terms of the delivery numbers in the back half, so we'll move to the question after. Is the partnership with Apple still in the works? It, it's a company policy, where I can't, I can't speak of potential partnerships with, with, with, with any, with any company, clearly. I would say that we were delighted to have rolled out Apple CarPlay, and I think that really addressed a, a lot of... You know, we, we, we listened to the, the voice of the customer, and I think that was a, a, a big win for so many people. I think we have developed now a really fantastic user experience with our software, but it's important to give the customers choices they want and to let them choose. We're open to all partnerships that make sense.... you know, I, I, I'm including that. Thanks, Peter. The next question we already addressed in terms of our increasing brand awareness. Let me move to the next question. How often will we see ventures where Lucid is licensing or allowing companies like Aston Martin to use Lucid technology in the next five to ten years? Well, first of all, I'm really thrilled to be partnering with Aston Martin, you know, such a storied company with such a great history and just an ideal partner for us. Lucid started with relatively high-end, high-performance technology that we're seeing in Lucid Air, and we'll see very soon in Sapphire. It's appropriate and timely that we have a partner whose core DNA is high technology and high-performance attributes. There's a perfect synergy here. As we progress as a company and come progressively down market into a more accessible place and more affordable, our technology, our powertrain technology will become more affordable, and then that would, in turn, suit more mainstream partners in the future. I believe there's a timescale to this. I believe the market will come to us. I mean, it, it's little known, the vast majority of car companies today are just buying their powertrain from other companies. We are maybe one of maybe two or three that are vertically integrated. We believe that we're about at least three years ahead of the nearest competitor, and that nearest competitor is probably many, many years ahead of their closest competitor in terms of core EV technology. Now, I think a lot of the traditional car companies are starting to look at this, but frankly, they're way behind. You know, I, I think that as we increase the gap, you know, the very fact we're getting to these extraordinary levels of efficiency, the 4.74 miles per kilowatt hour, this is an indicator that the gap is growing, not narrowing. I think that a number of these traditional car companies are gonna be left behind, and then I think that will be a real opportune moment for us as they seek to get onto the electric vehicle bandwagon, which we'll be a juggernaut by then. Thanks, Peter. Now we'd like to take questions from the phone lines. Tawanda, can we queue up the first question, please? Sure. Ladies and gentlemen, as a reminder to ask the question, that's star one one on your telephone. To remove yourself from the queue, that's star one one again. Please stand by for our first question. Our first question comes from the line of John Murphy with Bank of America. Your line is open. Good evening, everybody. Just a first question, Peter. I mean, the Aston Martin contract sounds great, and it seems like it might be the tip of the spear of things to come on selling the powertrain technology or licensing it. I'm just curious if you can, you know, confirm that there are other talks going on or that is part of the game plan. I know you can't talk about specific companies. Then maybe sort of secondarily with that, you know, explain the economics beyond the initial sort of payments here on shares and cash, that $225 million of powertrain development payment or, you know, revenue. I'm not sure exactly how you want to characterize that. Sherry, you know, what kind of economics does that bring with it? Is there something, you know, beyond this initial $450 million payment? Hi, John, Peter here. Yeah, I mean, we're thrilled to have Aston Martin as a partner. It's a, it's a supply and technology partnership. Well, the elements, the core elements that we're gonna supply are Wunderbox battery modules and battery technology, part of our battery monitoring system, and the twin rear drive unit that is, is destined for Sapphire. This is top-flight technology, which we're enabling Aston Martin really to get a completely ahead of the pack with in terms of their move to electrification, and it's a wonderful result for both parties. We're also gonna help with the technological implementation and the integration, such as traction control, stability control, and braking systems. The way that our power unit is integrated into their chassis, into their tires, the weight of the vehicle, the weight distribution of their vehicle. That sort of leads to the two elements of, of revenue here. There's a piece which is accessing the technology, and I'd let Sherry elaborate on that. It's an accessing fee, and then there's a supply fee, which is based upon clearly the number of vehicles that will be sold. I'm, we've stated for some time we've been in dialogue with a number of parties. We're not proactively reaching out to anybody, and my priority is to have a, you know, really satisfy our first customer, Aston Martin. That is my number one priority now, is to ensure that they get excellent service and get the full might of our technological prowess behind them. you know, I'm, I'm, I'm, I'm open to, to the, to dialogue with any other interested party that may come along. Clearly, right now, the technology we've got today suits higher-end products. in a few years' time, we'll be in a situation where we could countenance a partnership for a more mainstream product when we get mid-sized platform technology ready. Great. I'll take the economics part of that question, John. As we said, Lucid is gonna get a technology access fee of $232 million. That's comprised of $100 million in ordinary shares. and aggregate cash payments of $132 million, that's gonna be phased over 3 years. A portion of the cash, $33 million, some engineering fees, and the $100 million ordinary shares, that is available after deal closing, which we expect later this year. That will initially be recorded as deferred revenue, which will begin to release into the income statement as prototypes and/or production parts are shipped to AML. The second part, the minimum spend on powertrain components of $225 million, that will be for prototype parts as well as production parts, and then there will also be engineering integration fees. That will occur over time, so as the parts are shipped, the revenue will be due to us. Okay, just to follow up on that, I mean, a very simple question. I mean, do you think those margins will be sort of very strong, you know, supplier margins that would be in the mid-teens with return on invested capital in the high twenties, or is that still TBD? This is gonna be very strong margins for the company. Okay. This is a John, this is a technology company play. Yeah. Yeah, no, I, yeah, yeah, I, understand. Okay, that's, that's great. This isn't, this isn't an automotive supplier type of contract. This is a technology play. Okay. That's, that's very interesting. Then just second on- It's also very thoughtfully constructed, such that the dollars coming in are anticipated to cover our costs as we go through the development cycle with them. Yeah, no, it seems like there's a lot of opportunity here, and need for this. Just a second question on, in the SG&A step up, Sherry. I mean, you didn't mention marketing dollars, increasing as far as that step up, but I would imagine those probably had some impact on, on the step up in SG&A, or am I misinterpreting something? 'Cause it just seems like we're seeing a lot more commercials, and there, there's, there's talk about this. I just, just curious what that marketing spend was and how much it stepped up or didn't. Yeah, marketing is certainly part of the SG&A. You know, we stayed largely within the bounds that we had budgeted and planned for Q2. As we had said last quarter, we really took a targeted approach. We were really thoughtful about where those dollars were spent, that we were gonna get the largest ROI. Now that we're seeing those targeted dollars providing ROI, we plan to put more dollars into the targeted marketing spend, and then additionally, as we said, capitalize it through the incorporation of, and reinstatement of our original pricing program. As you go forward, the next couple of quarters, I would guide that SG&A will continue to be up somewhat, particularly as we are investing in infrastructure. This company is growing, it's growing globally, and there's important IT, G&A, and launch costs associated with opening into some of these new markets, and particularly marketing, that is gonna happen. I don't expect this to be significant, but it could be up 15%-20% as you look forward on a year-over-year basis. As you look at a year-over-year basis, say, maybe up 15%-20% on SG&A. That's very helpful. I got a bunch more, but I'll follow up later. Thank you very much, guys. Thanks, John. You're welcome. Thank you. Please stand by for our next question. Our next question comes from the line of Steven Fox with Fox Advisors. Your line is open. Hi, good afternoon. 2 questions from me also, if I could. First of all, when we think about the right sizing or slowing down of the manufacturing, given this lower deliveries than maybe you would have expected 1 year ago, how much further could you go if, say, you know, you're growing sales, but maybe not by as much as you think? Like, what, what are the backstops you have to sort of continue to narrow the gross profit losses? I had a follow-up. Okay, you had a question on manufacturing specifically, and then additionally, you had a question on growth margin more generally. In manufacturing specifically, we were able to see some significant efficiencies through the productivity initiatives and the workforce reduction that we did earlier in the year. We're sitting in a good position relative to that. We don't see a lot of creep up in manufacturing labor as we exit the year. Might be a little bit as we transition into our new general assembly hall, and we move to the logistics center that's gonna be on site. We are being very thoughtful about the staged turning on of the new equipment with phase two. As we are in 2023, at this point, we're really only expecting that we'd be turning on depreciation expense associated with the new general assembly hall and the warehouse, which would be essentially the internal logistics center. As you look through the course of the year, that will come on board, but that's only gonna be an increase in depreciation expense of, say, 10%-20%. The rest of that, we're going to move to 2024, more so when the Gravity comes on board late in 2024. On gross margin, lots of activities that are going on there. We're sitting in a good position with respect to our contribution margin, also known as variable margin, as we're exiting the year. There's even more that we can do there on bill of materials. As I said in my prepared remarks, I think you're gonna see more of that action being effective in 2024, I do see additional freight reductions in logistics costs down through the balance of the year. Those are two things on the variable margin I think, we'll be working on through the balance of the year. I referenced our 5-point cost control program, part of that is focused in the manufacturing cost area. There's still a lot to do in manufacturing overhead, I already spoke to depreciation. We're really gonna be working to get scrap down and to be looking at professional services in the manufacturing overhead area, really focused on getting that down. Those are the areas of primary focus for this year. Great. That's, that's helpful detail, and obviously, it's a complex math to figure out. Then just as a follow-up, you guys were successful in raising capital this past quarter, but you also diluted your shareholders by-- the existing shareholders by 20%-25%. Can you sort of talk about how you plan to move forward on any potential capital raise relative to protecting your shareholder base? Thanks. Well, first of all, as we said, there's not an immediate need to raise cash. We will continue to be opportunistic. What I'm excited about is there's a lot of catalysts potentially coming forward here with the bring on of the rear-wheel drive, with the scale-up of the all-wheel drive of the Pure, with the Sapphire coming out, with the Gravity unveil later this year. All of these things are gonna be interim and major milestone points that I would think could be very positive to the valuation of the company. As you go further in time, if you add more shares then, it might not be as dilutive because you have these major milestone events and progress points in your business. We'll continue to look at all types of liquidity for the business. We have available to us the ATM. We have available to us loan in, in the Kingdom of Saudi Arabia as we advance our production there. We continue to have debt options as well as, of course, equity options. Great. That's very helpful. Thank you. Thank you. Please stand by for our next question. Our next question comes from the line of Itay Michaeli with Citi. Your line is open. Great. Thanks. Hi, everyone. Just 2 questions from me. You know, Peter, you mentioned seeing an increase in orders since the recent, very recent price adjustment. I'm hoping you can elaborate a bit more on that, particularly, in which trims did you see some of the strongest order response? Secondly, Sherry, thanks for the color on SG&A going forward. I was hoping you could also provide some color on how we should think about R&D over the next couple of quarters. Thank you. Thank you, Itay. We, we, we can't give guidance on the specific breakdown between trims, but what I would say is that we're already seeing a very positive feedback from our recent adjustments. We've also seen the value of just growing the awareness of the brand. I think also, there's, there, there's another factor here that so many people had it in their minds that the car was more expensive than it really was in the first place. Then you combine that with the entrance of the Pure rear wheel drive, which is scheduled for production start in September. I think this puts us in a very positive position now. It's all about growing awareness, customer awareness of just how great the product is. We received a very significant endorsement just in the last few days, indeed, from MotorTrend, that voted us the best luxury EV offering available in the US, putting us above Tesla, Porsche, and Mercedes. I think, I think we're looking forward to a pretty bright future now. I can cover off on the R&D question that you had over the next couple of quarters. We've been able to hold R&D, you know, pretty flat the last couple of quarters, but I do expect it to tick up over the next two. The reason for that is we're now reaching the important phase in the Gravity development, where we'll be doing prototype vehicles. We'll also be doing engineering, design, and testing on the Gravity, and also early work on the mid-size with continued work on advancements in powertrain. We also talked about the fact that we would have Aston Martin coming on, but that's really has cash inflows designed to offset it. I would expect maybe up 20% year-over-year would be the guidance that I'd, I'd look to give on a year-over-year basis in R&D. That's, that's all very helpful. Thank you. Thank you. Please stand by for our next question. Our next question comes from the line of Andres Sheppard with Cantor Fitzgerald. Your line is open. Hi, good afternoon. Thanks for taking our questions, and congratulations on the quarter. A lot of our questions have been asked by now, but maybe I was hoping, is it possible to perhaps better quantify the agreement with Saudi Arabia in terms of deliveries for Q3 and Q4? Just trying to figure out how best to model it. I know you said maybe not material in Q3, but just seeing if perhaps we can get a little more color there. Thank you. Well, thank thank you. Yes, we're able to announce today that we have signed the finalized the agreement. This is an agreement and a commitment for at least 50,000 vehicles and an option up to an additional 50,000, making 100,000 vehicles in all. Of all models of Lucid, this includes cars like Lucid Air being made in Arizona and also in Arizona. We've, we've successfully shipped homologated cars at scale to Saudi Arabia already, and that's a real milestone. These were in transit at the end of the quarter, and that arrived shortly after the quarter end. We hope to get them landed and delivered before the Eid and summer holidays in KSA, but we encountered a couple of issues there which have now been resolved. We're looking forward to beginning ramping deliveries to customers, both in Q3 and Q4. Right now, I have to say, we're not providing exact numbers. We don't plan to provide a geographic mix today. Got it. Okay, Peter, thank you. Maybe just a, a quick follow-up. Just wondering if you can maybe give us a sense of pricing for the Gravity, the SUV. I know you haven't disclosed that, but are you able to perhaps point us in the right direction as to what you're thinking or what is something that you're targeting there? Sure, sure. Well, we've indicated for some time now to anticipate prices that are very similar to the sort of price structure that you get with Lucid Air. But we're not in a position today to disclose those prices. We are planning a major launch event for Gravity in November, and I hope to be in a position that we can disclose those as a pricing structure at that juncture. Got it. Thanks very much, Peter. I'll pass it on. Thank you. Thank you. Thank you. Thank you. Please stand by for our next question. Our next question comes from the line of Ronald Jewsikow with Guggenheim. Your line is open. Yes, Peter, Sherry, good evening, and, thanks for taking my questions. Hi. With the production guidance being maintained, implying a pretty big step up in back half deliveries, or at least back half production, how should we think about your pricing strategy going forward? Is your goal to, to price your product line up, line up to limit inventory increases from the current level? Would you rather flex pricing or limit production from, from the current levels? Well, I think we want to make the car competitively priced to make it a super compelling proposition, which I think it is now. I think it's an absolute bargain right now, quite frankly. We need to add more vehicles to the visible fleet on the road. The best advertisement we can get is a Lucid Air driving in the wild. The more people see the cars, the more they get used to them, the more confidence that they have in our potential customer base. You know, we're seeking to, of course, draw down upon existing inventory here and get the cars in customers' hands, because our best salespeople are our customers. They are our best, our firmest advocates. This creates a sort of natural catalytic effect. That's what we're achieving. Now, of course, we've got two bookends coming. We've got the Halo product, our Sapphire performance car coming imminently, going into production in September, first deliveries in early October. At the same time, going very, very similar time, we've got the rear-wheel drive version of our Pure going into production in Arizona in September. This will be our most affordable, most attainable variant of the car. I think we need to watch this space. We're always willing to adjust to market conditions. That's very important to retain that flexibility. The key is to get product out into the wild in customers' hands. That's the best marketing tool we've got. Yeah, that, that makes perfect sense to me. Maybe just a quick one for Sherry, on the impairment charges this quarter, does that reflect the latest pricing moves, or what should we think about for LCNRV charges into the Q3? It does already contemplate the reinstatement of the original pricing program for the balance of the year. Perfect. Thank, thank you both. Thank you. Thank you, Ron. Thank you. Please stand by for our next question. Our next question comes from the line of James Picariello with BNP. Your line is open. Hi, everyone. Hi. Just on gross profit, following up on the LCNRV impact, it took another step higher in the Q2, but with not all of the impact this quarter reflecting non-cash. Curious, you know, what might be, you know, unpacked there, and just how you foresee LCNRV, you know, trending through the remainder of the year, and should gross profit per loss, excluding this impact, improve through the remainder of the year? Thanks. ... Yeah, the LCNRV was impacted by the original pricing program. It was also impacted by obsolescence and firm losses on firm commitments. In, in terms of the cost of revenue overall, there were some, some write-offs with respect to inventory. You get things like expired inventory, et cetera. Those are deemed to be more of a one-off nature. You always have some, but we thought it was exceptionally high in Q2, was our opinion. As we go forward, we would expect LCNRV to go down the next two quarters. That would be our expectation, and that's based on really the, the, the points that I made, that, you know, there's fewer one-offs that we already have quite a bit of inventory on the books, and those would be the major drivers. I, I mean, I know it's, it's tough to say, but given the, the pricing announcements that you've recently made, should the gross profit per loss, the gross profit loss per unit improve through the back half? we've already contemplated, you know, the adoption of the original pricing program in the LCNRV. Okay, all right. Then just one, one last one on, you know, the commentary regarding the company's current, you know, $6.25 billion in liquidity to sustain, you know, the company ear... Into early 2025. The, you know, the implied cash burn rate over the next, you know, seven quarters would be roughly $900 million per quarter. I mean, is there any other way to, to read into that provided timeline? I mean, I know we won't get into, you know, 2024 guidance right now, but just, you know, high level, how should we be thinking about your CapEx relative to operating losses, you know, just informing that timeline? Thank you. Yeah, I think that you're right, it would go into 2025. We're expecting to go through the launch of the Gravity program, the cash. I think that your, you know, your estimate is a reasonable one. We have been, you know, sharing CapEx all along. I did guide down a bit on CapEx to $1.1 billion-$1.3 billion for the balance of the year, so that gives you a little bit of runway into thinking about the next two quarters. As we get closer to the end of the year, I'll probably guide for 2024 on CapEx. Thanks. Thank you. Please stand by for our next question. Our next question comes from the line of Tobias Beith with Redburn. Your line is open. Hi, good evening. Thanks for taking my questions. I, I had 2, if that's okay. I guess where, where I'd like to start is on engineering changes. I, I think you mentioned a couple of, or you'd mentioned that you'd made a start on engineering changes to the Lucid Air during this quarter and also in the last quarter. I, but I was wondering if you could actually give some examples of changes that have been made or are incoming to reduce the Lucid Air, the Lucid Air's BOM. Perhaps outside of that, what opportunities are there to decontent the vehicle to reduce its BOM? Then I have 1 follow-up. Yeah, I, I think, I think the, the most significant point here that affects the, the, the bill of material cost, it's not so much a change, but it's a, it's a new model which was planned, so there's a, there's a difference in the engineering. It's not a sort of unplanned change. It is a structured part of our product rollout, and that is the rear-wheel drive, two-wheel drive, Lucid Air Pure. This has got just one drive unit at the rear, and so the other cars have got two drive units, one at the front and one at the rear. You save the cost of a drive unit. That in itself is very helpful. We're down to just an 88 kWh battery pack, which for most other companies would remain quite a, an unacceptably small range. We're achieving 419 miles on the new EPA cycle with just this 88 kWh pack, which is unprecedented. Because the battery pack is the biggest single cost item in the bill of materials, this has significant, a downward pressure on the cost of building the car. I think that's the most significant change that we're making. I, I, I wouldn't portray it, that we're making, implementing a series of changes to the vehicle, other than on the software side, because we're able to download over the air, significant software changes to existing customers, which see their cars become better through the course of ownership. you know, and, and, and I also would like to indicate this, that because we have this modular battery pack, it means that we can just reduce the number of modules in the pack to downsize the pack for the rear-wheel drive, 88 kilowatt hour pack. It's not a fundamentally different battery pack, it's just a natural derivative designed in from the outset of the pack we've got. Actually, we use a very similar philosophy on the pack of Gravity. It's very similar to the pack of Air, using a very high% of carryover components to reduce cost and maximize economy of scale as well for us. Got it. That is super helpful. Thank you. Thank you. I guess my, my second question is really for, for Sherry. I calculate Lucid has written down approximately $1.1 billion worth of inventory and firm purchase commitments since starting production in the Q3 of 2021. I was wondering, when exactly do you expect to benefit from consuming this stock or perhaps cease writing down new purchases? Over the next few quarters, we're gonna continue to use inventory that has already had LCNRV charges taken against it. That would be over the next few quarters. You can see what the inventory balance is on a raw material basis, work in process, as well as finished goods, you know, through the footnotes in the 10-Q, and then you can do some rough math, you know, essentially to think about the, you know, the costs that, that would be attributed to the vehicles that are sold and think about the volumes in your model in order to do that math. Got it. Okay, that is helpful. Thank you both. Sure. Thank you. Thank you. At this time, I would like to turn the call back over to Brian Marks. Thank you. This concludes Lucid's Q2 2023 earnings conference call. Thank you all for joining us today. You may now disconnect.