Lucid Motors made an incredible impact when the company went public via SPAC in 2021. LCID shares soared to as high as $57 during its peak but things have changed drastically since the epic bull run.

I mentioned in my article, Will Lucid Motors Stock Be Like Tesla, that the company lost a lot of money ever since going public and may be at risk of bankruptcy in the future.

Let’s take an in-depth look into Lucid Motors to see if the company can survive long enough to scale production and become profitable before the money runs out.

Will Lucid Motors Survive Any Longer?

Lucid CEO Peter Rawlinson mentioned on the Q4 2022 earnings call that Lucid Motors currently has enough cash to survive until Q1 2024, which gives them some breathing room to continue to develop and market their products.

However, Lucid lost $1.3 billion in 2022 and continues to burn through its cash reserves to fund production growth.

Year	Net Loss (per share)
2021	-$4.7 billion ($6.48)
2022	-$1.3 billion ($0.48)

Lucid has a free cash flow problem that compounds with every additional EV the company produces. The good news is that Lucid raised the prices for its Lucid Air flagship electric car in June to help eliminate the massive cash burn.

However, Lucid Motors issued an $8 billion at-the-market dilutive stock sale to help strengthen the company’s balance sheet. The truth is that Lucid Motors is burning through cash with no end in sight.

Lucid Motors will probably continue diluting shareholders to keep the lights on. I do believe Lucid Motors will survive the current financial environment but the company needs to fix its free cash flow problem.

Lucid Motors Has a Cashflow Problem

Free cash flow is arguably the most important metric for any business because it shows exactly how much money a company keeps over time.

Unfortunately, Lucid Motors ended 2022 with a negative FCF of $3.3 billion, which explains the dilutive stock offerings. As the company spends more money, you will notice cash on hand declines sharply.

Year	Lucid Motors Cash on Balance Sheet
2021	$6.4 billion
2022	$4.4 billion

Lucid Motors spent almost half of its cash reserves in just 1 year and filed a stock offering plus raised cash from the Saudi PIF to improve cash on hand.

It’s possible that the recent Lucid Air price hike will help alleviate the cash burn, which is a healthy sign for LCID shareholders.

More Dilution May Be Coming Soon

With over 28,000 reservations and a goal of producing 500k EVs annually by 2025, I seriously wonder how Lucid Motors will fund all of this demand and growth.

The company could continue rising prices but that would reduce the number of potential customers. The only logical answer is to offer more shares and raise more funds from institutional investors such as the Saudi PIF.

Tesla did the same thing during its initial growth phase, which helped the company survive several bankruptcy scares.

When Lucid Motors announced its first dilutive offering, LCID stock dipped below $15 for the first time since December 2020. Future offerings could push LCID stock below $10 to around $5 if FCF doesn’t turn positive.

Is Lucid Motors Going Out of Business?

It’s hard to say definitively whether Lucid Motors will go out of business, as it ultimately depends on various factors such as market demand for their products, their ability to produce and deliver vehicles on time, and competition from other companies.

Conclusion

I’m a huge Lucid Motors bull who believes in the company’s mission to fight climate change and build the best EV on the planet. I’m also well aware that the company may not survive unless management controls costs and fixes the free cash flow problem.

My prediction is that many SPAC or newer companies will go bankrupt in 2023 but I hope Lucid Motors survives and avoids the corporate-startup dust bin.