LCID 10-K & 10-Q changes, risk factors and insider trading

•Failure to attract customers,or failureretain tocustomers completethrough the purchase process with customers, and customer cancellation of orders may have a material adverse impact on our business, prospects, results of operations and financial condition.

•A global economic recession, government closures of banks and liquidity concerns at other financial institutions,downturn or other downturnadverse economic conditions may have a material adverse impact on our business, prospects, results of operations and financial condition.

•If we fail to manage our future growth effectively, we may not be able to develop, manufacture, distribute, market and sell our vehicles successfully.

•We face risks associated with international operations, including possible unfavorable regulatory, political, tax and labor conditions, which could harm our business.

•We have experienced and may in the future experience significant delays in the design, manufacture, launch and financingmanufacture of our vehicles, including the Lucid Air, the Lucid Gravity and our upcoming Midsize platform, which could harm our business and prospects.

•Our ability to continue production and our future growthgrow depends upon our ability to maintain relationships with our existing suppliers and source suppliers for our critical components, and to complete building out our supply chain, while effectively managing the risks due to such relationships.

•We are dependent on our suppliers, the majority of which are single-source suppliers, and the inability of these suppliers to deliver necessary components of our products according to our schedule and at prices, quality levels and volumes acceptable to us,products, or our inability to efficiently manage these components or to implement or maintain effective inventory management and other systems, processes and personnel to support ongoing and increased production,components, could have a material adverse effect on our results of operations and financial condition.

•We may not be able to accurately estimate the supply and demand for our vehicles, which could resultprevent inus afrom variety of inefficiencies inmaximizing our business and hinder our ability to generate revenue. If we fail to accurately predict our manufacturing requirements, we could incur additional costs or experience delays.

•Any unauthorized control, manipulation, interruption or compromise of or access to our products or information technology systems or networks could result in loss of confidence in us and our products, harm our business and materially adversely affect our financial performance, results of operations or prospects.

•We are subject to evolving laws, regulations, standards, policies, and contractual obligations related to data privacy andprivacy, cybersecurity, and anyartificial actualintelligence, or perceivedand failure to comply with such obligations could harm our reputation and brand,reputation, subject us to significant fines and liability, or otherwise adversely affect our business.

•We may fail to adequately obtain, maintain, enforce, defend and protect our intellectual property and may not be able to prevent third parties from unauthorized use of our intellectual property and proprietary technology.technology, Ifwhich wecould are unsuccessful in any of the foregoing,harm our competitive position could be harmed and wecause could be requiredus to incur significant expenses to enforce our rights.

•We may not be able to realize the anticipated benefits of our agreementagreements with Aston Martin.Martin, Uber, and Nuro.

•The issuance of additional shares of our common stock or other equity or equity-linked securities, including ourupon Redeemableconversion, Convertibleoptional Preferredredemption Stock,or repurchase of convertible securities, or sales of a significant portion of our common stock, could depress the market price of our common stock.

•We are a “controlled company” within the meaning of the applicable Nasdaq rules of Nasdaq and, as a result, qualify for exemptions from certain corporate governance requirements. Our stockholders do not have the same protections afforded to stockholders of companies that are not controlled companies.

•The PIF and Ayar beneficially own a significant equity interest in us and have significant influence over us, which could decrease the relative ownership interest and voting power other holders of our common stock have over us.

We are an early-stage company withhave a limited operating history,history operatingand operate in a rapidly evolving and highly regulated market. Furthermore, we have only released two commercially available vehicles, and we have limited experience manufacturing or selling a commercial product at scale. We have yet to generate significant revenue from the sale of electric vehicles, and asAs a result of the capital-intensive nature of our business, we expect to continue to incur substantial operating losses for the foreseeable future.

We have encountered and expect to continue to encounter risks and uncertainties frequently experienced by early-stage companies in rapidly changing markets, including risks relating to our ability to, among other things:

•successfully design, build, manufacture and market new variants and models of electric vehicles,EVs, such as our upcoming Midsize platform;

•navigate an evolving and complex regulatorylandscape environmentof regulations, policies, and government incentives; and

•increase our sales, service and marketing activities and develop our distribution infrastructure; and

•expand our general and administrative functions to support our growing operations and status as a public company.

If our product development or commercialization of future vehicles or models is delayed, our costs and expenses may be significantly higher than we currently expect. We will incur the costs and expenses from these efforts before we receive any incremental revenues with respect thereto; therefore, we anticipate our losses in future periods will be significant.

We will require significant capital to develop and grow our business. We have incurred and expect to continue to incur significant expenses, including leases, sales and distribution expenses as we build our brand and market our vehicles; expenses relating to developing and manufacturing our vehicles, constructing, tooling and expanding our manufacturing facilities; research and development expenses (including expenses related to the development of the Lucid Air, the Lucid Gravity, our Midsize platform and other future products); raw material procurement costs; and general and administrative expenses as we scale our operations and continue to incur the costs of being a public company. Increased competition and adverse economic conditions have in the past and may continue in the future to require us to spend additional resources to attract customers, which in turn may result in higher marketing and incentive expenses. Furthermore, lower production and sales volumes have in the past and may in the future result in an inability to fully utilize our purchase commitments with suppliers which could result in increased costs and excess inventory as well as potential inventory write-offs. InWe addition,periodically review and record write-downs for excess or obsolete inventories based upon assumptions about current and future demand forecasts, considering shelf-life and technological obsolescence of certain inventories. Our current and future demand forecasts are based on our historical sales, market share performance, macroeconomic factors and trends in quantities or prices of orders for our products. We evaluate whether raw materials are approaching the end of their shelf-lives or becoming technologically obsolete, and the likelihood that we havewill incurredbe able to use the raw materials in production. If our inventory on-hand is in excess of future demand forecast and expectmarket toconditions, continuethe toexcess incuramounts significantare costs servicing and maintaining customers’ vehicles, including establishing our service operations and facilities and undertaking product recalls. As a company, we have limited historical experience forecasting and budgeting for any of these expenses, and these expenses could be significantly higher than we currently anticipate. In addition, any disruption to our manufacturing operations, obtaining necessary equipmentprovisioned or supplies, expansion of our manufacturing facilities, or the procurement of permits and licenses relating to our expected manufacturing, sales and distribution model could significantly increase our expenses. In such event, we could be required to seek additional financing earlier than we expect, and such financing may not be available on commercially reasonable terms, or at all.written-down.

In the longer term, our ability to become profitable in the future will depend on our ability not only to effectively manage our capital expenditures andexpenditures, control costs on a timely basis, but also toand sell in quantities and at prices sufficient to achieve our expected margins. If we are unable to appropriately price and cost-efficiently design, manufacture, market, sell, distribute and service our vehicles, our margins, profitability and prospects will be materially and adversely affected.

Delays in customer deliveries, delays in the availability of options, potential changes in customer preferences, competitive developments, increased interest rates, negative publicity, loss of government incentives, decreased demand for electricEVs, vehicles,insufficient charging infrastructure, and other factors could result in failure to attract customers, failure to complete the purchase process with customers, and customer cancellation. Increases in interest rates could make financing unaffordable for segments of our customer base and any event or incident which generates negative media coverage about us or the safety or quality of our vehicles could result in failure to attract customers, failure to complete the purchase process, and customer cancellations. In addition, if we encounter delays in customer deliveries of our vehicles that further lengthen wait times or in the event of negative media coverage, a significant number of orders may be cancelled. As such, no assurance can be given that the purchase process will be completed, orders will not be cancelled, and orders will ultimately result in the final purchase, delivery and sale or lease of vehicles.

A global economic recession, government closures of banks and liquidity concerns at other financial institutions,downturn or other downturnadverse economic conditions may have a material adverse impact on our business, prospects, results of operations and financial condition.

A global economic recessionrecession, downturn or other downturn,adverse economic conditions, whether due to changes or uncertainties in trade policies, the imposition or proposed imposition of tariffs, export controls, threat of a trade war, persistent inflation, political instability, global or regional conflicts or other geopolitical events including the evolving conflicts in the Middle East,events, public health crises, interest rate increases or other central bank policy actionsactions, by major central banks, governmentbank closures of banks and liquidity concerns at other financial institutions, or other factors, may have an adverse impact on our business, prospects, financial condition and results of operations. If any of our suppliers, sub-suppliers or partners experience financial distress, insolvency or disruptions in operations, they may be unable to fulfill their obligations or meet our production and quality requirements. Adverse economic conditions as well asand uncertainty about the current and future domestic or global economic conditions may also cause our customers to defer purchases or cancel their orders in response to higher interest rates, availability oflimited consumer credit,credit decreasedavailability, lower cash availability,reserves, fluctuations in foreign currency exchange rates, and weakened consumer confidence. ReducedA reduction in demand for our products may result in significanta decreasesdecline in our product sales, which in turn would havewith a corresponding material adverse impact on our business, prospects, financial condition and results of operations. Due toGiven our premium brand positioning and pricing, an economic recession or downturn is likely to have a heighteneddisproportionate adverse effect on us compared to many of our electriccompetitors vehiclein the EV and traditional automotive industry competitors,sectors, to the extent that consumer demand for luxury goods is reduceddeclines in favor of lower-pricedmore cost-conscious alternatives. In addition, anyadverse economic recessionconditions orand otheruncertainties downturnsurrounding trade policies, tariffs and export controls could also cause supply chain and logistical challenges and other operational risksrisks. ifIn anyparticular, the U.S. federal government enacted the law commonly referred to as the One Big, Beautiful Bill Act (the “OBBBA”), which eliminates, limits or phases out certain tax credits that had previously provided significant benefits to lessees and purchasers of ourEVs suppliers,and sub-suppliersadds ornew partnerseligibility becomerequirements insolventon or are otherwise unablemanufacturers to continue theirclaiming operations,tax fulfillcredits theiron obligationsEV components. It also eliminates certain penalties for noncompliance with certain fuel efficiency standards and introduces certain key tax law modifications. Taken together, adverse economic conditions and uncertainties surrounding trade policies, government grants or incentives, tariffs and export controls, coupled with supply chain challenges and the potential difficulty of passing costs to us,customers or meetsharing the burden with suppliers, could reduce demand for our futureproducts demand.and have a material adverse effect on our business, prospects, results of operations and financial condition.

In addition, the deterioration of conditions in global credit markets may limit our ability to obtain external financing to fund our operations and capital expenditures for business growth on terms favorable to us, if at all. If we are unable to obtain adequate financing or financing on terms satisfactory to us, when we require it, we will have to significantly reduce our spending, delay or cancel our planned activities or substantially change our corporate structure, and we might not have sufficient resources to conduct or support our business as projected, which would have a material adverse effect on our business, prospects, results of operations, and financial condition. See “—Risks Related to Financing and Strategic Transactions — We will require additional capital to support business growth, and this capital might not be available on commercially reasonable terms, or at all.”

We currently depend primarily ongenerate revenue generated from the Lucid Air,Air and Lucid Gravity, and in the foreseeable future will be significantly dependent on a limited number of models.models, Although we have started production of the Lucid Gravity and have other vehicle models on our product roadmap,as we are not scheduled to introduce another vehicle model for sale until late 2026. We expect to rely on sales from the Lucid Air and the Lucid Gravity, among other sources of financing, for the capital that will be required to develop and commercialize future models on our product roadmap. To the extent that production of our current or future models is delayed or reduced, or if our current or future models are not well-received by the market for any reason, our revenue and cash flow would be adversely affected, we may need to seek additional financing earlier than we expect, and such financing may not be available to us on commercially reasonable terms, or at all.

In August 2023, we entered into anthe EV purchase agreement with the Government of Saudi ArabiaArabia, a related party of the PIF, as represented by the Ministry of Finance (the “EV Purchase Agreement”), which supersedes the letter of undertaking that we entered into in April 2022. Pursuant to the terms of the EV Purchase Agreement, the Government of Saudi Arabia and its entities and corporate subsidiaries and other beneficiaries (collectively, the “Purchaser”) may purchase up to 100,000 vehicles, with a minimum purchase quantity of 50,000 vehicles and an option to purchase up to an additional 50,000 vehicles during a ten-year period. Under the EV Purchase Agreement, the Purchaser may reduce the minimum vehicle purchase quantity by the number of vehicles set out in any purchase order not accepted by us or by the number of vehicles that we fail to deliver within six months from the date of the applicable purchase order. The Purchaser also has the sole and absolute discretion to decide whether to exercise the option to purchase the additional 50,000 vehicles. See Item 1 “Business” and Note 16 “Related Party Transactions” to the consolidated financial statements included elsewhere in this Annual Report for more information.

If we experience delays in manufacturing and delivering vehicles ordered by the Purchaser, fail to or experience delays in complying with Saudi Arabian regulations or the requirements of the EV Purchase Agreement, fail to provide adequate service or support for the vehicles, or fail to set the appropriate purchaseappropriately price for suchour vehicles, our revenue, cash flow and results of operations and financial condition could be adversely affected. Furthermore, if the Purchaser reduces the minimum vehicle purchase quantity, delays the purchase of vehicles, does not exercise its option to purchase additional vehicles, or purchases significantly fewer vehicles than we currently anticipate for any reason, including for reasons beyond our control, our business, prospects, results of operations and financial condition could be materially and adversely affected.

Our business and prospects will heavily depend on our ability to develop, maintain, protect and strengthen the “Lucid” brand association with luxury and technological excellence. Promoting and positioning our brand will likely depend significantly on our ability to provide a consistently high-quality customer experience, an area in which we have limitedgained experience.experience over years but may continue to face challenges. To promote our brand, we will be required to invest in, and over time change our customer development and branding practices, which could result in substantially increased expenses, including the need to use public relationsrelations, media, event planning, and advertising firms. Our ability to successfully position our brand could also be adversely affected by perceptions about the quality of our competitors’ vehicles or our competitors’ success. For example, certain of our competitors have been subject to significant scrutiny for incidents involving their self-driving technology and battery fires, which could result in similar scrutiny of us.

Maintaining such confidence may be difficult as a result of many factors, including our limited operating history, others’ unfamiliarity with our products, uncertainty regarding the future of electric vehicles,EVs, any delays in scaling production, delivery and service operations to meet demand, competition and our production and sales performance compared with market expectations. Many of these factors are largely outside of our control, and any negative perceptions about our long-term business prospects, even if exaggerated or unfounded, would likely harm our business and make it more difficult to raise additional capital in the future. In addition, as discussed above, a significant number of new electric vehicleEV companies have recently entered the automotive industry, which is an industry that has historically been associated with significant barriers to entry and a high rate of failure. Certain of these new entrants or other traditional automotive manufacturers now producing electric vehiclesEVs have become insolvent, and if additional manufacturers producing electric vehiclesEVs become insolvent or are perceived to likely become insolvent, discontinue production of electric vehicles,EVs, produce vehicles that do not perform as expected or otherwise fail to meet expectations, such failures may have the effect of increasing scrutiny of others in the industry, including us, and further challenging customer, supplier and the investment community’s confidence in our long-term prospects.

Third-party dealer networks are the traditional method of vehicle sales distribution and service.service in North America. Currently, we sell directly to consumers; therefore, we do not have a traditional dealer product distribution and service network. We have limited experience distributing directly to consumers, and we expect that continuing to build a national and global in-house sales and marketing function, including an expanded physical sales, marketing and service footprint via our Lucid studios and service centers, will be expensive and time consuming. We have experienced delays in the construction and opening of our Lucid studios and service centers and any significant delays to establish Lucid studios and service centers in key markets in the future could have an adverse effect on our business, results of operations, prospects and financial condition. In addition, if our lack of a traditional dealer distribution and service network results in lost opportunities to generate sales, it could limit our ability to grow. Moreover, our business model of selling directly to consumers and directly servicing all vehicles may be limited by regulatory constraints. To the extent we are unable to successfully execute on such plans in all markets, we may be required to develop a third-party dealer distribution and service network, including developing and implementing the necessary information technology infrastructure to support them, which may prove costly, time-consuming or ineffective. If our use of an in-house sales, marketing and service team is not effective, our results of operations and financial conditions could be adversely affected. As we expand globally, we are actively evaluating alternative importer and agency models to enhance flexibility and optimize our distribution strategy in response to evolving market dynamics. Such efforts may prove costly, time-consuming or ineffective.

Our ability to generate meaningful product revenue will depend on consumer adoption of electric vehicles.EVs.

We are developing and producing onlyEVs electricand vehiclesrelated products and services and, accordingly, our ability to generate meaningful product revenue will highly depend on sustained consumer demand for alternative fuel vehicles in general and electric vehiclesEVs in particular. If the market for electric vehiclesEVs does not develop as we expect or develops more slowly than we expect, or if there is a decrease in consumer demand for electric vehicles,EVs, these factors may harm our business, prospects, financial condition and results of operations. The market for electric and other alternative fuel vehicles is relatively new, rapidly evolving, characterized by rapidly changing technologies, price competition, additionalmarket competitors,entrants, evolving government regulation (including the availability, reduction or elimination of government incentives and subsidies) and industry standards, frequent new vehicle announcementsintroductions and changing consumer demands and behaviors. Any number of changesdevelopments or disruptions in the industry could negatively affect consumer demand for electricEVs vehicles in generalbroadly and for our electric vehiclesEVs in particular.

In addition, demand for electric vehiclesEVs may be affected by factors directly impacting automobile prices or the cost of purchasing and operating automobiles such as the availability, reduction or elimination of sales and financing incentives including tax credits, prices of raw materials and parts and components, cost of fuel, availability of consumer credit, interest rates, and governmental regulations, including tariffs, import and export regulation and other taxes. Volatility in demand may lead to lower vehicle unit sales, which may result in downward price pressure and adversely affect our business, prospects, financial condition and results of operations. Further, sales of vehicles in the automotive industry tend to be cyclical in many markets, which may expose us to increased volatility, especially as we expand and adjust our operations and retail strategies. Specifically, it is uncertain how such macroeconomic factors will impact us as a new entrant in an industry that has globally been experiencing a recent decline in sales.

Other factors that may influence the adoption of electric vehiclesEVs include:

•perceptions about electric vehicleEV quality, safety, design, performance and cost;

•perceptions about the limited range over which electric vehiclesEVs may be driven on a single battery charge;

•perceptionsconsiderations about the total cost of ownership of electric vehicles,EVs, including the initial purchase price and accumulated depreciation, as well as operating and maintenance costs, both including and excluding the effect of government and other subsidies and incentives designed to promote the purchase of electric vehiclesEVs;

•perceptions about the sustainability and environmental impact of electric vehicles,EVs, including with respect to both the sourcing and disposal of materials for electric vehicleEV batteries and the generation of electricity provided in the electric grid;

•the availability of other alternative fuel vehicles, including plug-in hybrid electric vehiclesEVs;

•the quality and availability of service for electric vehicles,EVs, especially in international markets;

•government regulations and the availability, reduction or elimination of economic incentives promoting fuel efficiency and alternate forms of energy including reductions, limitations or eliminations pursuant to the OBBBA;

•access to charging stations compatible with our vehicles and cost to charge an electric vehicle,EV, especially in international markets, and related infrastructure costs and standardization;

•the availabilityavailability, reduction or elimination of tax and other governmental incentives to purchase and operate electric vehiclesEVs or future regulationregulations requiring increased use of nonpolluting vehicles; and

The influence of any of the factors described above or any other factors may cause a general reduction in consumer demand for electric vehiclesEVs or our electric vehiclesEVs in particular, either of which would materially and adversely affect our business, results of operations, financial condition and prospects.

Demand for our vehicles will depend in part on the availability of charging infrastructure both domestically and internationally. While the prevalence of charging stations has been increasing, public charging station locations are significantly less widespread than gas stations. Furthermore, public charging stations often experience downtime, leading to customer dissatisfaction. Although we have partnered with third-party electric vehicleEV charging providers to offer charging stations to our customers, the public charging infrastructure available to our customers may be insufficient to meet their needs or expectations, especially in certain international markets. Some potential customers may choose not to purchase our vehicles because of the lack of more widespread and reliable public charging infrastructure. In addition, although we have agreedgained access to join Tesla’s Supercharger network, thereany may be delaysdelay in makingimplementing changes to our vehicles or the network necessary forin Lucid vehicles required by Tesla with respect to charge atports may result in Tesla Superchargers,denying our access to their network, and there is no guarantee that our customers will not experience performance, access or other issues with this or other charging networks. In addition, although the prior U.S. presidential administration proposed a plan to deploy 500,000 additional public charging stations across the United States by 2030, theThe current administration has issued an executive order tothat pausepaused the disbursement of funds appropriated through the Inflation Reduction Act of 2022 (the “IRA”) or the Infrastructure Investment and Jobs Act, including funds designated for electric vehicleEV charging stations through the National Electric Vehicle Infrastructure Formula Program and the Charging and Fueling Infrastructure Discretionary Grant Program. Although this pause was lifted in August 2025, there has been continued administrative scrutiny into funding that supports the EV industry. Consequently, the deployment of public charging stations may not occur at planned levels, which could limit the development of public charging infrastructure and increasedecrease the relativeattractiveness attractivenessof EVs. Lastly, Congress may pass or amend legislation related to potentialEVs customersthat could adversely impact the availability of afunding proprietaryunder chargingexisting solution.programs.

The following discussion and analysis provides information that Lucid management believes is relevant to an assessment and understanding of Lucid’s consolidated results of operations and financial condition as of December 31, 20242025 and for the fiscal year ended December 31, 2024.2025. The discussion should be read together with our consolidated financial statements and related notes that are included elsewhere in this Annual Report on Form 10-K (this “Annual Report”).Report. For discussion related to our financial condition as of December 31, 2023,2024, results of operations for the fiscal year ended December 31, 20232024 and year-to-year comparison between the years ended December 31, 20232024 and 2022,2023, refer to the Annual Report on Form 10-K for the fiscal year ended December 31, 20232024 filed with the SEC on February 27,25, 2024 with the U.S. Securities and Exchange Commission (the “SEC”).2025. This discussion may contain forward-looking statements based upon Lucid’s current expectations, estimates and projections that involve risks and uncertainties. Our actual results could differ materially from those anticipated in these forward-looking statements as a result of various factors, including those set forth under “Risk Factors” in Part I, Item 1A of this Annual Report.

We are a technology company withthat ais mission to advanceshaping the state-of-the-artfuture of EVmobility technologythrough forour the benefits of all. We are setting new standards with the world’s mostinnovations, advanced EVs,technology, theand software-defined vehicle platforms. Our award-winning Lucid Air and all-new Lucid Gravity.Gravity set new standards with their unmatched combination of performance, range, space, and efficiency. Our focus on in-house hardware and software innovation, vertical integration, and a “clean sheet” approach to engineering and design led to the development of the award-winning Lucid Air and Lucid Gravity.Gravity, and upcoming Midsize platform.

We sell vehicles directly to consumers through our retail sales network and through direct online sales,channels, including utilizing Lucid Financial Services. We believe that owning and operating our sales network provides anthe best opportunity to closely manage the customer experience, gather direct customer feedback, and ensure that customerevery interactionsinteraction areis tailored to our customers’customer needs. We are also actively exploring alternative importer and agency models to enhance flexibility and optimize our distribution strategy in response to evolving market dynamics. We also own and operate a vehicle service network comprised of service centers in major metropolitan areas and a fleet of mobile service vehicles. In addition to our in-house service capabilities, we established and continue to grow an approved list of specially trained collision repair shopsshops, which also serve in some cases serve as repair hubs for our mobile service offerings.service.

Potential Impact of anAdverse Economic DownturnConditions and Trade Policy Uncertainties on our Business

A global economic recessionrecession, downturn or other adverse economic downturn,conditions, whether due to changes or uncertainties in trade policies, the imposition or proposed imposition of tariffs, export controls, threat of a trade war, persistent inflation, political instability, global or regional conflicts or other geopolitical events, public health crises, interest rate increases or other central bank policy actionsactions, by major central banks, governmentbank closures of banks and liquidity concerns at other financial institutions, or other factors, may have an adverse impact on our business, prospects, financial condition and results of operations. If any of our suppliers, sub-suppliers or partners experience financial distress, insolvency or disruptions in operations, they may be unable to fulfill their obligations or meet our production and quality requirements. Adverse economic conditions as well asand uncertainty about the current and future domestic or global economic conditions may also cause our customers to defer purchases or cancel their orders in response to higher interest rates, availability oflimited consumer credit,credit decreasedavailability, lower cash availability,reserves, fluctuations in foreign currency exchange rates, and weakened consumer confidence. ReducedA reduction in demand for our products may result in significanta decreasesdecline in our product sales, which in turn would havewith a corresponding material adverse impact on our business, prospects, financial condition and results of operations. Due toGiven our premium brand positioning and pricing, an economic recession or downturn is likely to have a heighteneddisproportionate adverse effect on us compared to many of our electriccompetitors vehiclein the EV and traditional automotive industry competitors,sectors, to the extent that consumer demand for luxury goods is reduceddeclines in favor of lower-pricedmore cost-conscious alternatives. In addition, anadverse economic recessionconditions orand otheruncertainties economicsurrounding downturntrade policies, tariffs and export controls could also cause supply chain and logistical challenges and other operational risksrisks. ifIn anyparticular, the U.S. federal government enacted the law commonly referred to as the OBBBA, which eliminates, limits or phases out certain tax credits that had previously provided significant benefits to lessees and purchasers of ourEVs suppliers,and sub-suppliersadds ornew partnerseligibility becomerequirements insolventon or are otherwise unablemanufacturers to continue theirclaiming operations,tax fulfillcredits theiron obligationsEV tocomponents. us,It oralso meeteliminates ourcertain futurepenalties demand.for Innoncompliance addition,with thecertain deteriorationfuel ofefficiency conditions in global credit markets may limit our ability to obtain external financing to fund our operationsstandards and capitalintroduces expenditurescertain onkey termstax favorablelaw to us, if at all. See “Risk Factors” in Item 1A of Part I of this Annual 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.”modifications.

We believe that we are positioned to be a leader in the electric vehicleEV market by unlocking the potential for advanced, high-performance, and long-range electric vehiclesEVs to co-exist. We designdesigned the Lucid Air and the Lucid Gravity with race-proven battery and powertrain technologies, offering robust performance together with a sleek exterior design and expansive interior space due to our miniaturized key drivetrain components. The Lucid Gravity is a groundbreaking new class of SUV, conceived from the ground up. Enabled by our revolutionary technology, the Lucid Gravity provides the interior space and practicality of a full-size SUV within the exterior footprint of a mid-size SUV. As a result, it provides a sophisticated space for up to seven adults, game-changing versatility, and an unparalleled driving experience.

The Lucid Air and the Lucid Gravity are true software-defined vehicles, designed to improve over time, with OTA software updates and key hardware already in place in the vehicle. This holistic systems approach to the integration of hardware and software is what allows us to provide these value-addcontinuous updatesOTA and is what sets us apart in the automotive industry.updates.

TheWe designed the Lucid Gravity is designed to share components with the Lucid Air where possible, and we continue to evaluate opportunities to apply components developed for the Lucid Gravity to the Lucid Air, further expanding the number of common parts while also enhancing the customer experience in the Lucid Air. We anticipate that all of theseThese measures will enable efficiency in design, engineering, and capital expenditure deployment for the Lucid Gravity. We anticipate continued consumer demand for the Lucid Air based on its luxurious design, high-performance technology, sustainability leadership, and the growing acceptance of and demand for electric vehiclesEVs as substitutes for gasoline-fueled vehicles. We also expectanticipate that these attributes will drive customer demand for the Lucid Gravity, and our future models, including our upcoming Midsize platform.

Direct-to-ConsumerDistribution ModelModels

We operate a direct-to-consumer sales and service model,model in North America, which we believe allows us to offer a personalized experience for our customers based on their purchase and ownership preferences. We expect to continue to incur significant expenses in our sales, service and marketing operations for salesales of the Lucid Air, the Lucid Gravity, and otherany electricfuture vehiclesvehicle programs, including the upcoming Midsize platform, that we may offer over the coming decade, including to open additional studios, expand our sales force, grow marketing and brand awareness, and establish a robust service center operation. As of December 31, 2024,2025, we have opened 5762 studios and service centers (excluding temporary and satellite service centers): 3740 in the United States (1214 in California, four in each of Florida and New York, two in each of Arizona, Illinois, Massachusetts, New Jersey, Texas, Virginia and Washington, and one in each of Colorado, Georgia, Michigan, New JerseyMichigan and Pennsylvania), seven in Germany, five in Canada, sevenfour in Germany,Saudi twoArabia, three in Switzerland, one in Netherlands, one in Norway, three in Saudi Arabia, and one in the United Arab Emirates. We also plan to hire additional sales, customer service, and service center personnel. We believe that investing in our direct-to-consumer sales and service model will be critical to delivering and servicing the Lucid electric vehiclesEVs we currently manufacture and sell.

EstablishingExpanding and Improving Manufacturing Capacity and Processes

Achieving commercialization and growth for each generation of our electric vehiclesEVs requires us to make significant capital expenditures to scale our production capacity and improve our supply chain processes in the United States and internationally. We expect our capital expenditures to increase as we continue constructing the completely-built-up (“CBU”) portion of AMP-2 and expanding AMP-1. The amount and timing of our future manufacturing capacity requirements, and resulting capital expenditures, will depend on many factors, including the pace and results of our research and development efforts to meet technological development milestones, our ability to develop and launch new electric vehicles,EVs, our ability to achieve sales and meet customer demand at anticipated levels, our ability to utilize planned capacity in our existing facilities and our ability to enter new markets.

We develop in-house batterybattery, powertrain, and powertrainsoftware technology, which requires significant capital investment in research and development. The electric vehicleEV market is highly competitive, including both established automotive manufacturers and new entrants. To establish market position and attract customers, we plan to continue making substantial investments in research and development for the commercialization and continued enhancements of the Lucid Air and the Lucid Gravity, the development of our Midsize platform, as well as future generations of our electric vehiclesEVs and other products.

We recognize revenue from vehicle sales when the customer obtains control of the vehicle, which is upon delivery. We also generate revenue from non-warranty after-sales vehicle services and parts, sales of battery pack systems, powertrain kits, retail merchandise, regulatory credits, and regulatorysales credits.of non-Lucid vehicles acquired as part of the trade-in program. We generate regulatory credits revenue from the sale of tradable credits we earn under various regulations. This includeincludes credits related to zero emission vehiclesZEVs and greenhouse gas,GHG, and the Corporate Average Fuel Economy (“CAFE”) credits.

Cost of other revenue includes direct parts, material and labor costs, manufacturing overhead, including depreciation of tooling costs, shipping and logistic costs. Cost of other revenue also includes costs associated with providing non-warranty after-sales services and costs for retail merchandise.

Cost of revenue decreasedincreased by $205.1$879.2 million, or 11%,51%, for the year ended December 31, 2024,2025, as compared to the year ended December 31, 2023,2024, primarily due to higher delivery volume of the decreasesLucid invehicles and higher inventory write-downs including losses from firm purchase commitments, and lower material and other cost, partially offset by improvements in vehicle cost efficiency driven by higher deliveriesproduction volume. Cost of therevenue Lucidincluded Airapproximately vehicles.$120 Wemillion expectof ourincremental tariff cost perimpact vehicleduring to improve in fiscalthe year 2025ended asDecember compared31, to fiscal year 2024 while ramping up production volumes.2025. In the near term, we expect our production volume of vehicles to continue to be less than our manufacturing capacity.

We recorded write-downs of $617.4$815.7 million and $926.9$617.4 million for the years ended December 31, 20242025 and 2023,2024, respectively, to reduce our inventories to their net realizable values, for any excess or obsolete inventories, and losses from firm purchase commitments. The decreaseincrease in the inventory write-downs and losses from firm purchase commitments and reduction of inventory obsolescence was primarily due to improvement of cost per unit and lowerhigher inventory balance and firm purchase commitments driven by the Lucid Gravity production ramp-up and tariff impacts for the year ended December 31, 2025, as compared to the year ended December 31, 2024. While the final scope and application of recently announced changes in trade policy remain uncertain at this time, higher tariffs on imports and subsequent retaliatory tariffs could adversely impact our financial results. We expect inventory write-downs could negatively affect our costs of vehicle sales in upcoming periods in the near term as we ramp production volumes up toward our manufacturing capacity.

On August 16, 2022, the Inflation Reduction Act of 2022 (the “IRA”) was enacted with clean energy incentives. For the year ended December 31, 2024 and 2023, theThe impact of the IRA on our results of operations was not material.material for the years ended December 31, 2025 and 2024. We will continue to evaluate the expected future impact of the IRA on our business and financial statements upon the issuance of additional regulatory guidance.

Our research and development efforts have primarily focused on the development of our battery and powertrain technology, the Lucid Air, the Lucid Gravity, and future generations of our electric vehicles,EVs, including our Midsize platform. Research and development expenses primarily consist of materials, supplies andsupplies, personnel-related expenses for employees involved in the engineering, designing, and testing of electricEVs, vehicles.and contractor fees. Personnel-related expenses primarily include salaries, benefits and stock-based compensation. In addition, research and development expenses include prototype material, engineering, design and testing services, and allocated facilities costs, such as office and rent expense and depreciation expense.

Selling, general, and administrative expenses primarily consist of personnel-related expenses for employees involved in general corporate, selling and marketing functions, including executive management and administration, legal, human resources, facilities and real estate, accounting, finance, tax, and information technology. Personnel-related expenses primarily include salaries, benefits and stock-based compensation. Selling, general, and administrative expenses also include allocated facilities costs, such as office, rent and depreciation expenses, professional services fees, sales and marketing expenses and other general corporate expenses. As we continue to grow as a company, build out our sales force, and commercialize the Lucid Air and Lucid Gravity, and future generations of our electric vehicles,EVs, including the development of our Midsize platform, we expect thatan increase to our selling, general and administrative costs will increase.costs.

Selling, general, and administrative expense increased by $103.7$133.0 million, or 13%,15%, for the year ended December 31, 2024,2025, as compared to the year ended December 31, 2023.2024. The increase was primarily attributable to higher personnel-related expensesincreases of $82.6$52.3 million ($89.2 million increase due to our growth in headcount, partially offset by $6.6 million lower stock-based compensation expense), an increase in sales and marketing expensesexpenses, of $19.9 million, and an increase of $14.6$34.7 million in allocated facilities and rental related costs, $33.1 million in payroll related expenses due to our continued commercialization and growth strategy, $11.6 million in utilization of contractors and professional fees, and $11.3 million in other general corporate expenses. These increases were partially offset by a decrease of $12.6$26.6 million in otherstock-based generalcompensation corporateexpenses, expenses.primarily driven by a reversal of previously recognized expenses for the former CEO’s unvested time-based RSUs during the year ended December 31, 2025.

On May 24, 2024, we 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. We substantially completed the 2024 Restructuring Plan induring 2024.the first quarter of 2025. During the year ended December 31, 2024, we recorded restructuring charges of $20.3 million.

On February 22, 2021, Churchill entered into a definitive merger agreement with Atieva, Inc. in which Atieva, Inc. would become a wholly owned subsidiary of Churchill (the “Merger”). Upon the closing of the Merger on July 23, 2021, Churchill was immediately renamed to “Lucid Group, Inc”. Our common stock warrant liability relates to the privately placed common stock warrants (the “Private Placement Warrants”) to purchase shares of our common stock that were effectively issued upon the closing in connection with the merger.Merger. Our common stock warrant liability is subject to remeasurement to fair value at each reporting period.

The Private Placement Warrants remained unexercised as of December 31, 2024.2025. The liability was remeasured to a fair value,value resultingof nil and $19.5 million as of December 31, 2025 and 2024, respectively. The change in fair value resulted in unrealized gains of $34.2$19.5 million and $86.9$34.2 million for the years ended December 31, 20242025 and 2023,2024, respectively,respectively. andThe change in fair value was classified within change in fair value of common stock warrant liability in the consolidated statements of operations and comprehensive loss. See Note 7 “Common Stock Warrant Liability” to our consolidated financial statements included elsewhere in this Annual Report for more information.

On November 6, 2023, pursuant to the terms of the Implementation Agreement, integration and supply arrangements became effective, under which we will provide Aston Martin access to our powertrain, battery system, and software technologies, work with Aston Martin to integrate our powertrain and battery components with Aston Martin’s battery electric vehicle chassis, and supply powertrain and battery components to Aston Martin (collectively, the “Strategic Technology Arrangement”). Inin connection with the commencement of the Strategic Technology Arrangement with Aston Martin, we received 28,352,273 ordinary shares of Aston Martin (subject to a lock-up provision of 365 days from its issuance).Martin. The ordinary shares of Aston Martin are subject to remeasurement to fair value at each reporting period. Such shares were initially measured at a fair value of $73.2 million and were remeasured to a fair value of $37.8$24.3 million and $81.5$37.8 million as of December 31, 20242025 and 2023,2024, respectively. The change in fair value resulted in an unrealized losslosses of $43.1$15.8 million and an unrealized gain of $6.0$43.1 million for the years ended December 31, 20242025 and 2023,2024, respectively, and was classified within change in fair value of equity securities of a related party in the consolidated statements of operations and comprehensive loss. See Note 5 “Fair Value Measurements and Financial Instruments” and Note 16 “Related Party Transactions” to our consolidated financial statements included elsewhere in this Annual Report for more information.

In March 2024, we entered into a subscription agreement (the “Series A Subscription Agreement”) with Ayar. Pursuant to the Series A Subscription Agreement, Ayar agreed to purchase from us 100,000 shares of our 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. Subsequently, in March 2024, we issued the shares to Ayar pursuant to the Series A Subscription Agreement and received aggregate net proceeds of $997.6 million after deducting issuance costs of $2.4 million.

In August 2024, we entered into a subscription agreement (the “Series B Subscription Agreement”) with Ayar. Pursuant to the Series B Subscription Agreement, Ayar agreed to purchase from us 75,000 shares of our Series B Redeemable Convertible Preferred Stock for an aggregate purchase price of $750.0 million in a private placement. Subsequently, in August 2024, we issued the shares to Ayar pursuant to the Series B Subscription Agreement and received aggregate net proceeds of $749.4 million after deducting issuance costs of $0.6 million.

We concluded that the conversion features, inclusive of all settlement outcomes where the pay-off is indexed to the if-converted value, meets all the requirements to be separately accounted for as a bifurcated derivative. As a result, we bifurcated the Series A Redeemable Convertible Preferred Stock and Series B Redeemable Convertible Preferred Stock (the “Redeemable Convertible Preferred Stock”) between (i) the host contracts which are accounted for within mezzanine equity, and (ii) the bifurcated derivative liabilities related to the conversion features. The bifurcated derivatives are remeasured to fair value at each reporting period with changes in fair value recorded in the consolidated statement of operations and comprehensive loss.

The derivative liabilities of the Series A Redeemable Convertible Preferred Stock and Series B Redeemable Convertible Preferred Stock were initially measured at fair values of $497.1 million and $297.7 million, respectively. The derivative liabilities of the Redeemable Convertible Preferred Stock were remeasured to a fair value of $16.2 million and $639.4 million as of December 31, 2024.2025 and 2024, respectively. We recognized a gaingains of $88.3$623.2 million relatedand to$155.4 the Series A Redeemable Convertible Preferred Stockmillion for the yearyears ended December 31, 2024, primarily driven by the decreases in term to maturity2025 and credit2024, spread, partially offset by an increase in our stock price. We also recognized a gain of $67.1 million related to the Series B Redeemable Convertible Preferred Stock for the year ended December 31, 2024,respectively, primarily driven by decreases in term to maturity, credit spread, and our stock price. We recognized the combined gains of $155.4 million related to the Series A Redeemable Convertible Preferred Stock and Series B Redeemable Convertible Preferred Stock for the year ended December 31, 2024price, within change in fair value of derivative liabilities associated with redeemable convertible preferred stock (related party) in the consolidated statements of operations and comprehensive loss. See Note 8 “Redeemable Convertible Preferred Stock” to our consolidated financial statements included elsewhere in this Annual Report for more information.

Interest income increaseddecreased by $8.8$56.6 million, or 4%,27%, for the year ended December 31, 2024,2025, as compared to the year ended December 31, 2023,2024, primarily due to higherlower interestaverage rates from cash on handbalances and ourhigher investmentsaverage purchase price of available for saleavailable-for-sale securities.

Interest expense primarily consists of contractual interest and amortization of debt discounts and debt issuance costs incurred related to the 2026 NotesNotes, issuedthe in2030 DecemberNotes, 2021,and the 2031 Notes, commitment fees and amortization of deferred issuance costs from the five-year senior secured asset-based revolving credit facility (“ABL Credit Facility”) and the $750.0 million five-year unsecured delayed draw term loan credit facility (the “DDTL Credit Facility”),Facility, interest on committedborrowings SARfrom 1.0the billion (approximately $266.1 million) revolvingGIB credit facility (the “2023 GIB Credit Facility” and on our finance leases, and capitalized interest on construction in progress related to significant capital asset construction.

Interest expense increased by $8.0$62.2 million, or 32%,189%, for the year ended December 31, 2024,2025, as compared to the year ended December 31, 2023.2024. The increase was primarily due to higher interest expense of $4.3$48.5 million from the 2023issuances of the 2030 Notes and the 2031 Notes during the year ended December 31, 2025 and higher interest expense of $12.9 million from the GIB credit facility resulting from higher average borrowings and commitment fees related to the DDTL Credit Facility, and a decrease of $2.7 million in interest capitalized on construction in progress related to significant capital asset construction during the year ended December 31, 2024,2025, as compared to the year ended December 31, 2023.2024.

Other Income (Expense),Expense, net

Other income (expense),expense, net primarily consists of foreign currency gains and losses and changes in residual value guarantee reserve. Our foreign currency exchange gains and losses relate to transactions and monetary asset and liability balances denominated in currencies other than the U.S. dollar. We expect our foreign currency gains and losses to continue to fluctuate in the future due to changes in foreign currency exchange rates.

Other income (expense),expense, net changeddecreased by $18.4$9.8 millionmillion, or (53)%, for the year ended December 31, 2024,2025, as compared to the year ended December 31, 2023,2024, primarily due to changes in foreign currency exchange rates and residual value guarantee reserve.rates.

•Our distribution model primarily relies on a direct-to-consumer strategy.strategy domestically, and we are pursuing alternative distribution models internationally where we have less experience.

•We are dependent on our suppliers, the majority of which are single-source suppliers, and the inability or unwillingness of these suppliers to deliver necessary components of our products, or our inability to efficiently manage these components, could have a material adverse effect on our results of operations and financial condition.

•The loss of key employees or an inability to attract, retain and motivate qualified personnelpersonnel, including executive leadership, may impair our ability to expand our business.

We have incurred net losses each year since our inception, including net loss of $1,028.3$1,034.9 million and $2,063.2 million for the three and six months ended MarchJune 31,30, 2026.2026, respectively. As of MarchJune 31,30, 2026, our accumulated deficit was $16.6$17.7 billion. As a result of the capital-intensive nature of our business, we expect to continue to incur substantial operating losses and increasing expenses in the foreseeable future as we:

•increase our sales, service and marketing activities and develop our distribution infrastructure; and

•expand into new markets; and

We require significant capital to develop and grow our business. We have incurred and expect to continue to incur significant expenses, including leases, sales and distribution expenses as we build our brand and market our vehicles; expenses relating to developing and manufacturing our vehicles, constructing, tooling and expanding our manufacturing facilities; research and development expenses (including expenses related to the development of theour Lucidcurrent Air,and future products, including the Lucid Gravity, ourupcoming Midsize platform and other future products); raw material procurement costs; and general and administrative expenses as we scale our operations and incur the costs of being a public company. Increased competition and adverse economic conditions have in the past and may continue in the future to require us to spend additional resources to attract customers, which in turn may result in higher marketing and incentive expenses. Furthermore, lower production and sales volumes have in the past and may in the future result in an inability to fully utilize our purchase commitments with suppliers which could result in increased costs and excess inventory as well as potential inventory write-offs. We periodically review and record write-downs for excess or obsolete inventories based upon assumptions about current and future demand forecasts, considering shelf-life and technological obsolescence of certain inventories. Our current and future demand forecasts are based on our historical sales, market share performance, macroeconomic factors and trends in quantities or prices of orders for our products. We evaluate whether raw materials are approaching the end of their shelf-lives or becoming technologically obsolete, and the likelihood that we will be able to use the raw materials in production. If our inventory on-hand is in excess of future demand forecast and market conditions, the excess amounts are provisioned or written-down.

Demand and supply in the automobile industry is volatile. A number of factors may impact our ability to attract customers and complete the purchase process. Such volatility may result in customer cancellations,process, including delays in customer deliveries, delays in the availability of options, potential changes in customer preferences, competitive developments, increased interest rates, negative publicity, loss of government incentives, decreased demand for EVs, and insufficient charging infrastructure. For example, during the first quarter of 2026, deliveries of the Lucid Gravity were disrupted for 29 days due to a supplier quality issue with the second-row seats. As a result of this, our ability to meet customer demand was impacted. Increases in interest rates could make financing unaffordable for segments of our customer basebase. and anyAny event or incident which generates negative media coverage about usus, or the safety or quality of our vehiclesvehicles, couldhave in the past, and may continue to result in failure to attract customers, failure to complete the purchase process, and customer cancellations. In addition, if we encounter delays in customer deliveries of our vehicles that further lengthen wait times or in the event of negative media coverage, a significant number of orders may be cancelled. As such, no assurance can be given that the purchase process will be completed, orders will not be cancelled, and orders will ultimately result in the final purchase, delivery and sale or lease of vehicles.

We currently generate revenue from the Lucid Air and Lucid Gravity, and are expecting to launch the Midsize platform in the near future. For the foreseeable future, we will be significantly dependent on a limited number of models. We expect to rely on sales from theour Lucidcurrent Airvehicle and the Lucid Gravity,models, among other sources of financing, for the capital that will be required to develop and commercialize future models on our product roadmap. To the extent that production of our current or future models is delayeddelayed, reduced or reduced,retired, or if our current or future models are not well-received by the market for any reason, our revenue and cash flow would be adversely affected, we may need to seek additional financing earlier than we expect, and such financing may not be available to us on commercially reasonable terms, or at all.

Consumers may be less likely to purchase our products if they do not believe that our business will succeed or that our operations, including service and customer support operations, will continue for many years. Similarly, suppliers and other third parties will be less likely to invest time and resources in developing business relationships with us if they are not convinced that our business will succeed. Accordingly, to build, maintain and grow our business, we must establish and maintain confidence among customers, suppliers, the investment community and other parties with respect to our liquidity and long-term business prospects. If we are unable to establish or maintain confidence among these parties with respect to our liquidity and long-term business prospects, we may lose our relationships or contracts with such parties and may suffer monetary losses, operational interruption, or damage to our reputation and brand.

Maintaining such confidence may be difficult as a result of many factors, including our limited operating history, others’ unfamiliarity with our products, uncertainty regarding the future of EVs, any delays in scaling production,production or launch of the upcoming Midsize platform, delivery and service operations to meet demand, competitioncompetition, and our production and sales performance compared with market expectations. Many of these factors are largely outside of our control, and any negative perceptions about our long-term business prospects, even if exaggerated or unfounded, would likely harm our business and make it more difficult to attract customers and raise additional capital in the future. In addition, as discussed above, a significant number of new EV companies have recently entered the automotive industry, which is an industry that has historically been associated with significant barriers to entry and a high rate of failure. Certain of these new entrants or other traditional automotive manufacturers now producing EVs have become insolvent, and if additional manufacturers producing EVs become insolvent or are perceived to likely become insolvent, discontinue production of EVs, produce vehicles that do not perform as expected or otherwise fail to meet expectations, such failures may have the effect of increasing scrutiny of others in the industry, including us, and further challenging customer, supplier and the investment community’s confidence in our long-term prospects.

Our distribution model primarily relies on a direct-to-consumer strategy.strategy domestically, and we are pursuing alternative distribution models internationally where we have less experience.

Third-party dealer networks are the traditional method of vehicle sales distribution and service in North America. Currently, we sell directly to consumers; therefore, we do not have a traditional dealer product distribution and service network. We have limited experience distributing directly to consumers, and we expect that continuing to build a national and global in-house sales and marketing function, including an expanded physical sales, marketing and service footprint via our Lucid studios and service centers, will be expensive and time consuming. We have experienced delays in the construction and opening of our Lucid studios and service centers and any significant delays to establish Lucid studios and service centers in key markets in the future could have an adverse effect on our business, results of operations, prospects and financial condition. In addition, if our lack of a traditional dealer distribution and service network results in lost opportunities to generate sales, it could limit our ability to grow. Moreover, our business model of selling directly to consumers and directly servicing all vehicles may be limited by regulatory constraints. If our use of an in-house sales, marketing and service team is not effective, our results of operations and financial condition could be adversely affected. As we expand globally, we are actively evaluatingevaluating, and have adopted in certain markets, alternative importer and agency models designed to enhance flexibility, increase our speed to market in a capital efficient manner, and optimize our distribution strategy in response to evolving market dynamics. SuchWe have limited experience utilizing alternative distribution models, and such efforts require significant information systems to be developed and deployed, which may prove costly, time-consuming or ineffective.

•perceptions about EV quality, safety, design, performanceperformance, value, and cost;

•the cost and availability of other alternative fuel vehicles, including plug-in hybrid EVs;

•the qualityquality, reliability, and availability of service for EVs, especially in international markets;

Demand for our vehicles will depend in part on the availability of charging infrastructure both domestically and internationally. While the prevalence of charging stations has been increasing, public charging station locations are significantly less widespread than gas stations. Furthermore, public charging stations sometimes experience downtime, leading to customer dissatisfaction. Although we have partnered with third-party EV charging providers to offer charging stations to our customers, the public charging infrastructure available to our customers may be insufficient to meet their needs or expectations, especially in certain international markets. Some potential customers may choose not to purchase our vehicles because of the lack of more widespread and reliable public charging infrastructure. In addition, although we have gained access to Tesla’s Supercharger network, any delay in implementing changes in Lucid vehicles required by Tesla with respect to charge ports may result in Tesla denying our access to their network, and there is no guarantee that our customers will not experience performance, access or other issues with this or other charging networks. In addition, there has been additional scrutiny into funding that supports the EV industryindustry, including EV charging infrastructures, under the current U.S. administration.administration, and such scrutiny may result in legislation that could adversely impact the availability of funding under existing programs. Consequently, the deployment of public charging stations may not occur at planned levels, which could limit the development of public charging infrastructure and decrease the attractiveness ofand demand for EVs. Lastly, Congress may pass or amend legislation related to EVs that could adversely impact the availability of funding under existing programs.

Any failure to manage our growth effectively could materially and adversely affect our business, prospects, results of operations and financial condition. We are expanding our operations significantly and our current and future expansion plans may include:

We require qualified personnel, including design and manufacturing personnel and service technicians for our vehicles. Our vehicles are based on a different technology platform than traditional internal combustion engines, individuals with sufficient training in EVs may not be available to hire, and as a result, we will need to expend significant time and expense training the employees we do hire. Competition for individuals with experience in supply chain management and logistics as well as designing, engineering, manufacturing, producing, selling, and servicing EVs is intense, and we may not be able to identify, attract, train, motivate or retain sufficient highly qualified personnel in the future. Furthermore, we have in the past reduced the size of our workforce, and recently implemented a workforce reduction plan in February 2026plans and other actions relating to contractors in Aprilthe 2026.first half of 2026, including the elimination of the second shift of production at our AMP-1 factory. We have also announced a number of changes to our executive leadership team. Any such plan may adversely affect our internal programs and initiatives, our ability to recruit and retain skilled and motivated personnel, may be distracting to employees and management and may negatively impact our business operations, reputation, or ability to serve customers. We cannot provide any assurances that we will not have to undertake additional workforce reductions or similar actions in the future. The failure to identify, attract, train, motivate and retain these employees could seriously harm our business and prospects. In addition, our employee equity program is a key factor in our ability to attract and retain talent and continue to support the growth of the company. If we are unable to grant equity awards, or if we are forced to reduce the value of equity awards to be received by the employees for any reason, we may not be able to attract, hire and retain the personnel necessary for our business, which would have a material adverse effect on our business, prospects financial condition and results of operations. In addition, our success is substantially dependent upon the continued service and performance of our senior management team and key technical and vehicle management personnel. If any key employees were to separate their employment with us, such separation would likely increase the difficulty of managing our current operations and future growth and heighten the foregoing risks.

We also have limited experience to date in high volume manufacturing of our vehicles. We cannot assure our investors that we will be able to develop and implement efficient, automated, low-cost manufacturing capabilities and processes, and reliable sources of component supply that will enable us to meet the desired quality, price, engineering, design and production standards, as well as the production volumes, required to successfully market and sell our vehicles. We have also experienced, and may continue to experience, internal and external logistics challenges with respect to our manufacturing and warehousing facilities, including disruption to manufacturing operations due to the consolidation of our logistics operations with our manufacturing operations at AMP-1 and AMP-2. Any failure to develop and implement such manufacturing processes and capabilities within our projected costs and timelines could impact our future growth and impair our ability to produce, market, service and sell or lease our vehicles successfully. In addition, our rapid growth, competitive real estate markets, and increasing rental rates, may hinder our ability to obtain suitable space to accommodate our growing operations or to renew existing leases on terms favorable to us, if at all. Any failure to obtain or renew leases for real property on terms favorable to us when we need them may limit our growth, impact our operations and have an adverse impact on our financial condition. If we fail to manage our growth effectively, such failure could result in negative publicity and damage to our brand and have a material adverse effect on our business, prospects, financial condition and results of operations.

As we expand our international presence and operations, we will be increasingly subject to the legal, geopolitical, regulatory and social requirements and economic conditions in these jurisdictions. Additionally, as part of our growth strategy, we have been expanding and may continue to expand our sales, maintenance and repair services outside of the United States.U.S. We are also continuing the construction of AMP-2 in Saudi Arabia and may continue to further expand our manufacturing activities outside the United States.U.S. However, we have limited experience to date manufacturing or selling our vehicles outside of the United States,U.S., and such expansion has and will continue to require us to make significant expenditures, including the hiring of local employees and establishing facilities and related systems and processes, in advance of generating any significant revenue. We are subject to a number of risks associated with international business activities that may increase our costs, impact our ability to sell, service and manufacture our vehicles, and require significant management attention. These risks include:

•foreign government taxes, regulations and permit requirements, including foreign taxes that we may not be able to offset against taxes imposed upon us in the United States,U.S., and foreign tax and other laws limiting our ability to repatriate funds to the United StatesU.S.;

•United StatesU.S. and foreign government trade restrictions, tariffs, price or exchange controls, and export controls, including political risk and customer perceptions based on such changes and risks;

•political instability, natural disasters, pandemics, wars, military actions, global or regional conflicts or other geopolitical events (including the war in Ukraine, the military operations in the Gulf region and the Middle EastEast, and the potential escalation and broadening of the conflict in Iran, each of which affect global energy prices and disrupt supply chains both regionally and globally, and have and may continue to adversely impact our operations in the Middle East, including the ramp-up of operations at AMP-2 and the manufacturing of our Midsize platform, increase our operating costs and reduce our margins, delay shipments of equipment and components, particularly those that go through the Strait of Hormuz shipment route, or hinder the movement of personnel necessary for our international manufacturing and logistics activities), or events of terrorism; and

The automobile industry is characterized by significant barriers to entry, including large capital requirements, investment costs of designing, manufacturing, and distributing vehicles, long lead times to bring vehicles to market from the concept and design stage, the need for specialized design and development expertise, regulatory requirements, establishing a brand name and image, and the need to establish sales and service locations. Since we are focused on the design of EVs, we face a variety of added challenges to entry that a traditional automobile manufacturer would not encounter, including additional costs of developing and producing an electric powertrain that has comparable performance to a traditional gasoline engine in terms of range and power, inexperience with servicing EVs, regulations associated with the transport or storage of batteries, the need to establish or provide access to sufficient charging locations and unproven high-volume customer demand for EVs. While we have developed and started producing the Lucid Air and Lucid Gravity and have completed the first two phases of construction of AMP-1 and the SKD portion of AMP-2, we have not finished tooling all production lines for AMP-1, and further construction of AMP-1 and the second phase of AMP-2 is underway. If we are not able to overcome these barriers, our business, prospects, results of operations and financial condition will be negatively impacted, and it will harm our ability to grow our business.

The global automotive market, particularly for electric and alternative fuel vehicles, is highly competitive, and we expect it will become even more so in the future. In recent years, the EV industry has grown, with the emergence of several companies that focus completely or partially on the EV market. In addition, traditional automotive manufacturers are also producing and selling electric and alternative fuel vehicles. We expect additional companies to enter this market within the next several years. EV manufacturers with which we compete include Tesla, Rivian, an increasing number of U.S.-based and international entrants and traditional automotive manufacturers, many of which have begun, or announced plans to begin, selling their own EVs in the near-term. We also compete with established automobile manufacturers in the luxury vehicle segment, including certain manufacturers who have entered or plan to enter the alternative fuel and EV market with either fully electric or plug-in hybrid versions of their vehicles. We compete for sales of luxury vehicles with internal combustion engines from established manufacturers. Certain of our competitors, particularly EV manufacturers based in China, have benefited from government support, including subsidies, tax incentives and other industrial policies, which may enhance their competitive position and lower their costs. Many of our current and potential competitors have significantly greater financial, technical, manufacturing, marketing and other resources than we do and may be able to devote greater resources to the design, development, manufacturing, distribution, promotion, sale, servicing, and support of their products, including the ability to significantly reduce prices of their products. In addition, many of these companies have longer operating histories, greater name recognition, larger and more established sales forces, broader customer and industry relationships and other resources than we do. Our competitors may be in a stronger position to respond quickly to changing market conditions and new technologies and may be able to design, develop, market and sell their products more effectively than we do. Vehicle price reductions by our competitors may result in downward price pressure and reduced demand for our vehicles. We may not be able to adjust our pricing strategies effectively, and there can be no assurance that such adjustments will allow us to successfully compete against our competitors, which may have a material adverse effect on our brand, business, prospects, inventory levels, results of operations and financial condition. In addition, increased competition has in the past and may continue to require us to increase marketing and incentive expenses, which may have a material adverse effect on our operating results and financial condition. We expect competition in our industry to significantly intensify in the future in light of the increased demand for alternative fuel vehicles, global competitors, macroeconomic uncertainty, and consolidation in the worldwide automotive industry. Our ability to successfully compete in our industry will be fundamental to our future success in existing and new markets. There can be no assurance that we will be able to compete successfully in our markets.

We benefit from government and economic programs in the United StatesU.S. and abroad that encourage the development, manufacture or purchase of EVs, such as ZEV credits, production tax credits, GHG credits and similar regulatory credits, the loss of which has and may continue to harm our ability to generate revenue from the sale of such credits to other manufacturers; the availability of tax credits and other incentives to consumers, without which the net cost to consumers of our vehicles could increase, reducing demand for our products; and investment tax credits for equipment, tooling and other capital needs, without which we may be unable to procure the necessary infrastructure for production to support our business and timeline; and certain other benefits, including a California sales and use tax exclusion and certain other hiring and job training credits in California, Michigan and Arizona. In addition, changes to non-financial incentives may also impact demand for our products, such as the federal government’s announcement that electric and other clean air vehicles will no longer be able to use carpool lanes without meeting the high occupancy requirements. We may also benefit from government loan or grant programs. While such EV-related governmental programs and economic incentives have been available in the United States,U.S., Canada and the EU, there is no guarantee that they will be available in the future. Any reduction, elimination, limitation or selective application of tax and other governmental programs and economic incentives because of policy changes, fiscal tightening or other reasons may result in the diminished competitiveness of the EV industry generally or our EVs in particular, which would adversely affect our business, prospects, financial condition and results of operations. On July 4, 2025, the OBBBA was enacted, which among other things, eliminated certain tax credits related to the EV industry. In addition, the OBBBA eliminated the penalties that automakers would pay if they failed to meet CAFE standards, effectively eliminating the financial incentive to comply with those standards. Additionally, the current U.S. presidential administration has issued executive orders that aim to revoke or weaken fuel efficiency and emissions regulations established by the prior administration, and has issued proposed rulemakings that would repeal federal GHG emission standards for certain vehicles and engines and eliminate our CAFE credits. While certain aspects of the OBBBA and the proposed actions by the administration remain subject to the outcome of pending litigation, the ultimate resolutions of such matters remain uncertain. The administration has issued a policy statement aimed at eliminating the “EV mandate,” which targets state-level emissions waivers and governmental subsidies. The administration also revoked the waiver by the U.S. Environmental Protection Agency (“EPA”) that had allowed California and certain other states to implement more stringent emissions standards for heavy-duty vehicles and to require all new passenger cars, trucks, and SUVs sold in California to be zero-emission by 2035. In particular, the National Highway and Traffic Safety Administration (“NHTSA”) has proposed a rule that would, among other things, reset and reduce CAFE standards and eliminate CAFE EV credit trading. In response, California and certain other states have initiated litigation challenging the legal validity of these actions. The outcome of the litigation remains uncertain. These, and any similar legislative or executive actions in the future, may adversely affect demand for our vehicles as well as our business, prospects, financial condition and results of operations. See “— Failure to attract customers, failure to complete the purchase process with customers, and customer cancellation of orders may have a material adverse impact on our business, prospects, results of operations and financial condition.” These, and any similar legislative or executive actions in the future, may adversely affect demand for our vehicles as well as our business, prospects, financial condition and results of operations.

We offer leasing and financing of our vehicles to potential customers through third-party financing partners and intend to do the same in new markets, but we cannot provide any assurance that such third-party financing partners will continue, or would be able or willing, to provide such services on terms acceptable to us or our customers, if at all. Furthermore, because we have only sold a limited number of vehicles and only a limited secondary market for our vehicles exists, the future resale value of our vehicles is difficult to predict, and, if the actual resale value of our vehicles is lower than anticipated, it would make providing leasing terms that appeal to potential customers through such third-party financing partners more difficult. We believe that the ability to offer attractive leasing and financing options—whether due to the availability, reduction or continued elimination of tax incentives and certain governmental or economic programs, the availability of agreements with our third-party financing partners on terms acceptable to us or our customers, or other reasons—is particularly relevant to customers in the luxury vehicle segments in which we compete, and if we are unable to offer our customers an attractive option to finance the purchase of or lease the Lucid Air, the Lucid Gravity or planned future vehicles, including the upcoming Midsize platform vehicles, such failure could substantially reduce the population of potential customers and decrease demand for our vehicles. See “— The unavailability, reduction or elimination of certain government and economic programs could have a material adverse effect on our business, prospects, financial condition and results of operations.” and “— Failure to attract customers, failure to complete the purchase process with customers, and customer cancellation of orders may have a material adverse impact on our business, prospects, results of operations and financial condition.”

We may apply for federal, state and foreign grants, loans and tax incentives under government programs designed to stimulate the economy and support the production of alternative fuel and EVs and related technologies. We anticipate that in the future there may be new opportunities for us to apply for grants, loans and other incentives from the United StatesU.S. federal and state governments, as well as foreign governments. Our ability to obtain funds or incentives from government sources is subject to the availability of funds under applicable government programs and approval of our applications to participate in such programs. The application process for these funds and other incentives will likely be highly competitive. We cannot guarantee that we will be successful in obtaining any of these additional grants, loans and other incentives. If we are not successful in obtaining any of these additional incentives and we are unable to find alternative sources of funding to meet our planned capital needs, our business and prospects could be materially adversely affected.

We design our vehicles with proprietary ADAS hardware and software. The Lucid Air and Lucid Gravity are equipped with Level 2 (partial automation) ADAS functionality. Additionally, our vehicles are capable of integrating third-party ADAS and autonomous vehicles (“AV”) hardware and software. For example, in July 2025, we entered into an integration agreement with Nuro to install autonomous driving software in Lucid Gravity vehicles, in conjunction with our agreement with Uber, to enable Uber and its designated fleet operators to operate such vehicles, in specified geographical area,areas, without human intervention (“Level 4 autonomy”). In addition, we entered into the Second VPA with Uber in April 2026, further expanding our strategic partnership in connection with our Midsize platform vehicles. Over time, we plan to upgrade our vehicles with additional ADAS and autonomous vehicles (“AV”) capabilities. ADAS and AV technologies are emerging and subject to known and unknown risks, and there have been accidents and fatalities associated with such technologies. The safety of such technologies depends in part on user interaction, and users, as well as other drivers on the roadways, may not be accustomed to using or adapting to such technologies. In addition, self-driving technologies are the subject of intense public scrutiny and interest, and previous accidents involving autonomous driving features in other non-Lucid vehicles, including alleged failures or misuse of such features, have generated significant negative media attention and government investigations. We and others in our industry are subject to a Standing General Order issued by NHTSA that requires us to report anycertain crashes in which certain ADAS features were active, and these crash reports willmay become publicly available. To the extent accidents associated with our ADAS or third-party technologies occur, we could be subject to significant liability, negative publicity, government scrutiny and further regulation. Any of the foregoing could materially and adversely affect our results of operations, financial condition and growth prospects.

In addition, we face substantial competition in the development and deployment of ADAS and AV technologies. Many of our competitors, including established automakers and technology companies, have devoted significant time and resources to developing self-driving technologies. If we are unable to develop or improve competitive Level 2 or more advanced ADAS or AV technologies in-house or acquire access to such technologies via partnerships or investments in other companies or assets, we may be unable to equip our vehicles with competitive ADAS or AV features, which could damage our brand, harm our competitive position, reduce consumer demand for our vehicles and could have a material adverse effect on our business, results of operations, prospects and financial condition.

A portion of the current and expected demand for EVs results from concerns about volatility in the cost of gasoline and other petroleum-based fuel, the dependency of the United StatesU.S. on oil from unstable or hostile countries, government regulations and the availability, reduction or elimination of economic incentives promoting fuel efficiency and alternative forms of energy, as well as concerns about climate change resulting in part from the burning of fossil fuels. If the cost of gasoline and other petroleum-based fuel decreases significantly, the outlook for the long-term supply of oil to the United StatesU.S. improves, the government eliminates or modifies its regulations or economic incentives related to fuel efficiency and alternative forms of energy or there is a change in the perception that the burning of fossil fuels negatively impacts the environment, the demand for EVs, including our vehicles, could be reduced, and our business and revenue may be harmed. In addition to the OBBBA, the current U.S. presidential administration has prioritized efforts that encourage domestic production of fossil-fuel energy, including oil. If increased production of oil lowers gas prices, demand for EV vehicles may decline.

Changing and at times, conflicting expectations from global regulations,regulators, our investors, customers and employees with respect to sustainability matters may impose additional costs on us or expose us to new or additional risks.

Our Midsize platform is still under development, and may be delayed or not proceed as planned. Additionally, prior to mass production of our EVs, they must be fully approved for sale in accordance with a range of jurisdiction-specific requirements, including but not limited to regulatory approvals in the various geographies where we intend to launch. Likewise, we have encountered and may continue to encounter delays with the design, construction, and regulatory or other approvals necessary to bring online our future expansions in Arizona and Saudi Arabia, or any other future manufacturing facilities. We have experienced and may continue to experience delays in the launch and ramp of our vehicles and as a result, our growth prospects could be adversely affected.

Furthermore, we rely on third-party suppliers for the development, manufacture, and supply of many key components and materials used in our vehicles, as well as for provisioning and servicing equipment at our manufacturing facilities. We have experienced, and may in the future experience, delays if our suppliers are unwilling to supply components on acceptable terms, do not agree to our timing or volume requirements, fail to meet agreed-upon timelines and volumes, experience capacity constraints, or deliver components that do not meet our quality standards or other requirements. We have also been affected by ongoing, industry-wide challenges in logistics and supply chains, such as increased supplier lead times and the limited availability of reliable third-party suppliers. For example, the military operations in the Gulf region and the Middle EastEast, and the potential escalation and broadening of the conflict in Iran, each of which affect global energy prices and disrupt supply chains both regionally and globally, have and may continue to adversely impact our operations in the Middle East, delay shipments of equipment components, particularly those that go through the Strait of Hormuz shipment route, or hinder the movement of personnel necessary for our international manufacturing and logistics activities. These challenges have affected our ability, as well as the ability of our suppliers, to obtain parts, components and manufacturing equipment on a timely basis, and in some instances, have resulted in increased costs and delays in facilities construction and expansion as well as vehicle production ramp-up. We expect the risk of unexpected disruptions to continue for the foreseeable future. Any delays by our suppliers in delivering or developing necessary components may result in further setbacks to our production and delivery timelines.

The continued development, manufacturing and production ramp of our vehicles, including the Lucid Air, the Lucid Gravity and our upcoming Midsize platform,vehicles are and will be subject to risks, including with respect to:

Our success, including our ability to continue production of theour Lucidcurrent Airvehicle and Lucid Gravity,models, and commence production of our Midsize platform, will depend on our ability to enter into supplier agreements and maintain our relationships with hundreds of suppliers that are critical to the production of our vehicles. To date, we have not secured long-term supply agreements for all of our components, and for some components, our supply agreements do not guarantee sufficient quantities of components for our vehicle production ramp. We seek opportunities to secure long-term committed supply agreements for certain of these components. The supplier agreements we have or may enter into with key suppliers in the future may not be renewed or may contain provisions under which suppliers may refuse to supply. To the extent that we do not have long-term supply agreements with guaranteed pricing for our parts or components, we will be exposed to fluctuations in prices of components, materials and equipment. In addition, our agreements for the purchase of battery cells and other components often contain pricing provisions that are subject to adjustment based on changes in market prices of key commodities or currency values. Substantial increases in the costs for such components, materials and equipment, whether due to supply chain or logistics issues, adverse economic conditions, geopolitical conflicts, changes in trade policies or agreements, the uncertainties surrounding domestic and foreign tariffs, export controls, inflation, or increased energy or natural gas costs, would increase our operating costs and could reduce our margins if we cannot offset these increased costs. Any attempts to increase the announced or expected prices of our vehicles in response to increased costs could be viewed negatively by our potential customers and could adversely affect our business, prospects, financial condition or results of operations.

We are dependent on our suppliers, the majority of which are single-source suppliers, and the inability or unwillingness of these suppliers to deliver necessary components of our products according to our schedule and at prices, quality levels and volumes acceptable to us, or our inability to efficiently manage these components or to implement or maintain effective inventory management and other systems, processes and personnel to support ongoing and increased production, could have a material adverse effect on our results of operations and financial condition.

We rely on hundreds of third-party suppliers for the provision and development of many key components and materials used in our vehicles. While we seek to obtain components from multiple sources whenever possible, many components used in our vehicles will be custom-designed and purchased by us from a single source. Our limited, and in many cases single-source, supply chain exposes us to delivery failure or component shortages for our production, including continued production of the Lucid Air and Lucid Gravity.production. Our third-party suppliers may not be able to meet our required product specifications and performance characteristics, which would impact our ability to achieve our product specifications and performance characteristics as well. Additionally, our third-party suppliers may be unable to obtain required certifications or provide necessary warranties for their products that are necessary for use in our vehicles.

Any significant increases in our production, such as production ramp of our vehicles, may require us to procure additional components in a short amount of time and our suppliers may not ultimately be able to sustainably and timely meet our cost, quality and volume needs, requiring us to replace them with other sources. In many cases, our suppliers provide us with custom-designed parts that would require significant lead time to obtain from alternative suppliers, or may not be available from alternative suppliers at all. If we are unable to obtain suitable components and materials used in our vehicles from our suppliers or if our suppliers decide to create or supply a competing product, our business could be adversely affected. Further, if we are unsuccessful in our efforts to control and reduce supplier costs, our results of operations will suffer. Alternatively, if our production decreases significantly below our projections for any reason, we may not meet all of our purchase commitments with suppliers with whom we have non-cancelable long-term purchase commitments. In cases where we are unable to fully utilize our purchase commitments, we have in the past and may continue to face fees, penalties, increased prices, excess inventory or inventory write-offs, and there could be a material adverse effect on our results of operations. In addition, lower production volumes or demand, or reductions in our projected production volumes, have negatively affected, and could continue to adversely affect, our relationships with suppliers, who may seek to increase pricing, assert contractual or other claims, or otherwise fail to perform or comply with contractual obligations. We currently have, and may in the future have, supplier contractual claims, which would adversely affect our ability to obtain services and components from such suppliers. In addition, if we are unable to establish or maintain confidence among suppliers with respect to our liquidity and long-term business prospects, we may lose our relationships or contracts with such suppliers. Any such action has resulted, and may in the future result, in supply disruptions, increased costs, or disputes, which could materially and adversely affect our business, financial condition, and results of operations.

In addition, we have experienced, and in the future could continue to experience, delays if our suppliers are unwilling to supply components on acceptable terms, do not agree to our timing or volume requirements, fail to meet agreed-upon timelines and volumes, experience capacity constraints, or deliver components that do not meet our quality standards or other requirements. This may seriously harm our reputation, increase our warranty and other costs, or lead to product returns or recalls, any of which may materially harm our business. For example, during the first quarter of 2026, deliveries of the Lucid Gravity were disrupted for 29 days due to a supplier quality issue with the second-row seats.seats, which affected our production and sales. Any disruption in the supply of components, including battery cells, magnets and semiconductors, whether or not from a single source supplier, could temporarily disrupt production of our vehicles until an alternative supplier is able to supply the required material. Any such delay, even if caused by a delay or shortage in only one part, could significantly affect our ability to meet our planned vehicle production targets. Even in situations where we may be able to establish alternate supply relationships and obtain or engineer replacement components for our single source components, we may be unable to do so quickly, or at all, at prices or quality levels that are acceptable to us. This risk is heightened by the fact that we have less negotiating leverage with suppliers than larger and more established automobile manufacturers, which could adversely affect our ability to obtain necessary components and materials on a timely basis, on favorable pricing and other terms, or at all. The industry in which we operate has recently experienced severe supply chain disruptions, and we expect these conditions to continue for the foreseeable future. Any such supply disruption could materially and adversely affect our results of operations, financial condition and prospects.

Furthermore, as we scale our vehicle production, we will need to accurately forecast, purchase, warehouse and transport components to our manufacturing facilities and servicing locations internationally and at much higher volumes. We are only beginning to scale production in our manufacturing facilities and in the process we have experienced challenges associated with such activities. If our production decreases significantly below our projections for any reason, we have incurred in the past, and may incur lossin the future, losses due to inventory write-downs or assets impairment. We are also only in the process of scaling our vehicle servicing operations. Accordingly, we have not thoroughly tested our ability to scale production and vehicle servicing and mitigate risks associated with these activities. In addition, our current systems and processes are not mature, which may affect our ability to timely initiate critical and time sensitive projects and increase project costs. If we continue to experience logistics challenges, are unable to accurately match the timing and quantities of component purchases to our actual needs, successfully recruit and retain personnel with relevant experience, timely comply with applicable regulations, or successfully implement automation, inventory management and other systems or processes to accommodate the increased complexity in our supply chain and manufacturing operations, we may incur unexpected production disruption, storage, transportation and write-off costs, which could have a material adverse effect on our results of operations and financial condition.

Furthermore, unexpected changes in business conditions, materials pricing, labor issues, wars, global or regional conflicts or other geopolitical events, governmental changes, political uncertainty, trade policies and agreements, the uncertainties surrounding domestic and foreign tariffs, export controls, natural disasters, health epidemics, and other factors beyond our and our suppliers’ control could also affect these suppliers’ ability to deliver components to us on a timely basis. For example, someconflicts ofin the Middle East have affected, and may continue to affect certain shipping routes in the Red Sea haveas beenwell affectedas byshipping routes through the conflictsStrait inof the Middle East,Hormuz, resulting in delays in delivery of components and an increase in shipping costs globally. Prolonged or recurring geopolitical disruptions could limit our ability to accurately forecast demand, which may adversely affect our ability to project supplier purchase commitments and manage costs effectively. Additionally, governmental and policy changes may continue to result in new or increased tariffs on imported components. Our ability to mitigate these cost increases may be limited by the lack of alternative suppliers from unaffected countries or domestic suppliers with production capabilities to meet our requirements. Such disruptions or increase in costs could have a material adverse impact on our business, including our ability to timely manufacture and distribute our products in a cost-effective manner and adversely affect our results of operations and financial condition.

Our ability to manufacture our vehicles or any future energy storage systems will depend on the continued supply of battery cells for the battery packs used in our products. A growth in popularity of EVs without a significant expansion in battery cell production capacity could result in shortages which would result in increased materials costs to us, and would impact our expected manufacturing and delivery timelines, and adversely affect our business, prospects, financial condition, results of operations, and cash flows. We have limited flexibility in changing battery cell suppliers, and any disruption in the supply of battery cells from such suppliers could disrupt production of our vehicles until a different supplier is fully qualified. In addition, pursuant to the agreement we entered into in connection with the supply of lithium-ion battery cells, we have made certain non-cancelable long-term purchase commitments. If our production decreases significantly below our projections for any reason, we may not meet all of our purchase commitments. In cases where we are unable to fully utilize our purchase commitments, we have in the past and may continue to face fees, penalties, increased prices, contractual or other claims, excess inventory or inventory write-offs, and there could be a material adverse effect on our business, financial condition, and results of operations.

Furthermore, our ability to manufacture our vehicles depends on continued and reliable access to semiconductors and microchips that incorporate them. The global semiconductor supply shortage, including as a result of China’s export controls over Nexperia’s microchip products, has impacted the automotive industry and affected many suppliers and manufacturers, including us. In addition, global supply constraints for DDR4 and DDR5 memory may persist due to increasing demand driven by artificial intelligence applications, which could adversely affect availability and costs. We have experienced, and may continue to experience, an impact on our operations as a result of such shortages, which could delay or reduce planned production levels of our current and future vehicles and have an adverse effect on our business, prospects and results of operations. Moreover, export controls, particularly those affecting components within our supply chain, such as China’s restrictions on certain rare-earth minerals, has posed, and could continue to pose, risks to our production and distribution capabilities. In addition, foreign currency fluctuations, tariffs, shortages in petroleum or natural gas and other economic or political conditions have contributed to and may continue to result in significant increases in freight charges and raw material costs. These risks could be further magnified by geographical developments, global or regional conflicts or other geopolitical events, including the war in Ukraine, the military operations in the Gulf region and the Middle East, potential escalation and broadening of the conflict in Iran, which affects shipping routes both regionally and globally and in particular, the Strait of Hormuz shipment route.route, In particular, geopolitical conflicts in Iranand have disrupted and may in the future disrupt the supply of materials critical in our manufacturing processes. Although we have been actively pursuing alternative sources, our remaining inventory may be limited, and any delay in qualifying replacement suppliers could adversely impact production. Substantial increases in the prices for our raw materials or components would increase our operating costs and could reduce our margins. Any attempts to raise product prices in response to increased material costs could lead to reduced demand for our vehicles and materially and adversely affect our brand, image, business, results of operations, prospects and financial condition.

We have completed the initial and second phases of construction at AMP-1 and the SKD portion of AMP-2, and further construction of AMP-1 and the second phase of AMP-2 is in progress. We also acquired select assets and assumed leases for certain facilities previously belonging to Nikola Corporation, including Nikola’s former Coolidge manufacturing facility. However, tooling these facilities for production of our vehicles and our future expansion plans is complicated and presents significant challenges and may require us to take vehicle production offline. In addition, certain of our suppliers may be unable to complete tooling with respect to finalized components of our vehicles in the planned timeframe after we deliver final component specifications, which could adversely affect our ability to continue commercial production of theour Lucid Air and Lucid Gravityvehicles on the expected timing and at the quality levels we require. As with any large-scale capital project, these efforts could be subject to delays, cost overruns or other complications. In addition, we may encounter problems or disputes with our vendors for a variety of reasons, including for reasons beyond our control, and such disputes, with or without merit, could also cause significant delays and cost overruns. These risks could be increased because we are building our facilities from the ground up to support our EV production processes, which differ substantially from traditional automobile production processes for which expertise is more readily available. In connection with the commercial production at AMP-1 and SKD production at AMP-2, we have hired and trained and continue to hire, retain, and train a significant number of employees and integrate a yet-to-be-fully-developed supply chain. Any failure to continue commercial or SKD production on schedule would lead to additional costs and would delay our ability to generate meaningful revenues. In addition, it could prevent us from gaining the confidence of potential customers, spur cancellations of orders and open the door to increased competition. All of the foregoing could hinder our ability to successfully launch and grow our business and achieve a competitive position in the market.

In addition, if any of our manufacturing facilities are not constructed in conformity with our requirements, repair or remediation may be required to support our planned phased manufacturing build-out and could require us to take vehicle production offline, delay implementation of our planned phased manufacturing build-out, or construct alternate facilities, which could materially limit our manufacturing capacity, delay planned increases in manufacturing volumes, delay the start of production of our future vehicles, or adversely affect our ability to timely sell and deliver our EVs to customers. Any repair or remediation efforts could also require us to bear substantial additional costs, including both the direct costs of such activities and potentially costly litigation or other legal proceedings related to any identified defect, and there can be no assurance that our insurance policies or other recoveries would be sufficient to cover all or any of such costs. Any of the foregoing consequences could have a material adverse effect on our business, prospects, results of operations and financial condition and could cause our results of operations to differ materially from our current expectations. Although we do not currently expect that we will be required to take vehicle production offline or reduce our planned manufacturing volumes,offline, any such repairs or remediation could entail significant costs, and we may be unable to recover some or all of such costs from the applicable contractor(s).

We cannot provide any assurance as to whether we will be able to develop and implement efficient, automated, low-cost logistics and production capabilities and processes and reliable sources of component supply that will enable us to meet the quality, price, engineering, design and production standards, as well as the production volumes, required to successfully mass market and ramp up production of our vehicles. Even if we are successful in developing our high volume production capability and processes and reliably source our component supply, no assurance can be given as to whether we will be able to do so in a manner that avoids significant delays and cost overruns, including as a result of factors beyond our control such as problems with suppliers and vendors, political changes or instability, wars, military actions, global or regional conflicts or other geopolitical events or force majeure events, or in time to meet our commercialization schedules, or to store and deliver parts in sufficient quantities to the manufacturing lines in a manner that enables us to maintain our production ramp curve and rates, satisfy the requirements of customers and potential customers or fully utilize our purchase commitments with suppliers. For example, as result of the conflicts in the Middle East, we have experienced an impact on our shipping routes in the Red Sea, which has resulted in shipping delays and increased shipping costs globally. Any failure to develop, implement and maintain such logistics, production, quality control, and inventory management processes and capabilities within our projected costs and timelines could have a material adverse effect on our business, results of operations, prospects and financial condition. Moreover, we have experienced logistics challenges as we continue to refine our manufacturing, logistics and inventory management processes, and efforts to implement or improve such processes may cause halts or delays in production and result in additional costs. Bottlenecks and other unexpected challenges have and may continue to arise as we continue commercial production of theour Lucid Air and Lucid Gravity,vehicles, and it will be important that we address them promptly while continuing to control our logistics and manufacturing costs. If we are not successful in doing so, or if we experience issues with our logistics and manufacturing process improvements, we could face further delays in establishing and sustaining our production ramps or be unable to meet our related cost and profitability targets.

Our vehicles or the components installed therein have in the past and may in the future contain defects in design or manufacture, including components designed or manufactured by suppliers, that may cause them not to perform as expected or that may require repairs, recalls, or design changes, any of which would require significant financial and other resources to successfully navigate and resolve. Our vehicles use a substantial amount of software code to operate, and software products are inherently complex and may contain defects and errors. Our vehicles have encountered a significant number of software issues and may continue to do so in the future. If our vehicles contain defects in design or manufacture that cause them not to perform as expected or that require repair, or if certain features of our vehicles take longer than expected to become available, are legally restricted or become subject to additional regulations, our ability to develop, market and sell our products and services could be adversely affected. In addition, our OTA software updates may fail to achieve their intended repair and performance goals, expose our customers’ vehicles to vulnerabilities, or have unintended consequences, and may require our customers to bring their vehicles to our service centers.

Any defects, delays or legal restrictions on vehicle features, failed OTA software updates, or other failure of our vehicles to perform as expected, could harm our brand and reputation and result in delivery delays, product recalls, order cancellations, reduced customer demand, product liability claims, breach of warranty claims or significant warranty and other expenses, and could have a material adverse impact on our business, results of operations, prospects and financial condition. Any such defects or noncompliance with legal requirements could also result in safety recalls. See “— Risks Related to Litigation and Regulation — We have in the past and may choose in the future, or we may be compelled, to undertake product recalls or take other actions, which could adversely affect our business, prospects, results of operations, reputation and financial condition.” As we build customer relationships and earn trust, these effects could be significantly detrimental to us. Additionally, problems and defects experienced by other consumer EVs could by association have a negative impact on perception and customer demand for our vehicles.

It is difficult to predict our future revenues and appropriately budget for our expenses, and we have limited insight into trends that may emerge and affect our business. We will be required to provide forecasts of our demand to our suppliers several months prior to the scheduled delivery of vehicles to our prospective customers. Currently, there is limited historical basis for making judgments about the demand for our vehicles or our ability to develop, manufacture, and deliver vehicles, or our profitability in the future. Furthermore, unexpected factors beyond our control, including prolonged or recurring geopolitical disruptions, could limit our ability to accurately forecast demand, which may adversely affect our ability to project supplier purchase commitments and manage costs effectively. If we overestimate our requirements, our suppliers may have excess inventory, which has in the past and may continue to indirectly increase our costs. If we underestimate our requirements, our suppliers may have inadequate inventory, which could interrupt manufacturing of our products and result in delays in shipments and revenues. In addition, lead times for materials and components that our suppliers order may vary significantly and depend on factors such as the specific supplier, contract terms and demand for each component at a given time. If we fail to order sufficient quantities of product components in a timely manner or fail to establish the delivery processes and infrastructure to make deliveries, the delivery of vehicles to our customers could be delayed, which would harm our business, financial condition and results of operations. Moreover, reductions in our production volumes have adversely affected, and could continue to adversely affect, our relationships with suppliers, who may seek to increase pricing, assert contractual or other claims, or otherwise fail to perform or comply with contractual obligations. We currently have, and may in the future have, supplier contractual claims, which would adversely affect our ability to obtain services and components from such suppliers. In addition, if we are unable to establish or maintain confidence among suppliers with respect to our liquidity and long-term business prospects, we may lose our relationships or contracts with such suppliers. Any such action has resulted, and may in the future result in supply disruptions, increased costs, or disputes, which could materially and adversely affect our business, financial condition, and results of operations. Tariffs announced by the United StatesU.S. and resulting retaliatory tariffs and other trade barriers, including China’s changes to its export controls for rare-earth minerals and semiconductor-related products have had and may continue to have, an adverse impact on our ability to predict our manufacturing requirements, costs and production, and our ability to receive raw materials and components.

We and our suppliers may be impacted by weather events, natural disasters, wars, military actions, global or regional conflicts or other geopolitical events, health epidemics or pandemics, security incidents or other events outside of our control. For example, our corporate headquarters are located in seismically active regions in Northern California, and our manufacturing facilities in Arizona and Saudi Arabia are located in sandstorm-, flood-, or tornado-prone areas. If major disasters such as earthquakes, wildfires, floods, tornadoes or other events occur, or our information technology systems or communication networks break down or operate improperly, our headquarters and manufacturing facilities may be seriously damaged, or we may have to stop or delay production and shipment of our products. Furthermore, we could be impacted by physical security incidents at our facilities, which could result in significant damage to such facilities that could require us to delay or discontinue production of our vehicles. In addition, we have established a foreign trade zone with respect to certain of our facilities in Casa Grande, Arizona. To the extent any such physical security incidents are determined to result from insufficient security measures, we could face the risk of loss of our foreign trade zone approval, as well as financial penalties or fines, which could increase the cost of our duties and tariffs. See “— Risks Related to Litigation and Regulation — A failure to properly comply with foreign trade zone laws and regulations could increase the cost of our duties and tariffs.” In addition, global or regional conflicts or other geopolitical events, including the recent conflict in Iran, have increased, and may continue to increaseincrease, the likelihood of supply chain interruptions and may impair our ability to compete in current or future markets, or otherwise subject us to potential liability. See “—Risks Related to Manufacturing and Supply Chain — if we fail to successfully tool our manufacturing facilities or if our manufacturing facilities become inoperable, we will be unable to produce our vehicles and our business will be harmed.” and “— Risks Related to Litigation and Regulation — Changes in U.S. trade policy, including the imposition of or uncertainties surrounding tariffs or revocation of normal trade relations and the resulting consequences, could adversely affect our business, prospects, results of operations and financial condition.” We may incur significant expenses or delays relating to such events outside of our control, which could have a material adverse impact on our business, results of operations and financial condition.

Cyber threat actors may in the future attempt to gain unauthorized access to, modify, alter or use our vehicles, products, systems and networks to: (i) gain control of, (ii) change the functionality, user interface or performance characteristics of or (iii) gain access to data stored in or generated by, our vehicles, products, systems and networks. Advances in technology, such as AI-enabled technologies, new vulnerability discoveries, an increased level of sophistication and diversity of our products and services, an increased level of expertise of cyber threat actors and new discoveries in the field of cryptography could lead to a compromise or breach of the measures that we or our third-party service providers use. Some of our products and information technology systems contain or use open-source software, which can create additional risks, including potential security vulnerabilities. Increasing use of such products and services in our vehicles, including with our partnerships with Nuro and Uber for AV capabilities, and AI frontier model generative AI providers of large language models (“LLMs”) heightens the risk and severity of a cybersecurity breach of our or our third-party partners’ systems. We and our third-party service providers’ systems have in the past and may in the future be affected by security incidents.

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our condensed consolidated financial statements and related notes included elsewhere in this Quarterly Report and our Annual Report on Form 10-K for the year ended December 31, 2025, filed with the SEC on February 24, 2026. This discussion may contain forward-looking statements based upon Lucid’s current expectation,expectations, estimates and projections that involve risks and uncertainties. Our actual results could differ materially from those anticipated in these forward-looking statements as a result of various factors, including those set forth under “Risk Factors”, in Part II, Item 1A of this Quarterly Report.

We are a technology company that is shaping the future of mobility through our innovations, advanced technology, and software-defined vehicle platforms. Our award-winning Lucid Air and Lucid Gravity set new standards with their unmatched combination of performance, range, space, and efficiency. Our focus on in-house hardware and software innovation, vertical integration, and a “clean sheet” approach to engineering and design led to the development of the award-winning Lucid Air and Lucid Gravity, and our upcoming Midsize platform.

We sell vehicles directly to consumers through our retail sales network and online channels, including Lucid Financial Services.Services, in North America and the Middle East. We believe that owning and operating our sales network provides the best opportunity to closely manage the customer experience, gather direct feedback, and ensure that every interaction is tailored to customer needs. We are also actively exploringexploring, and have adopted in certain international markets, alternative importer and agency models to enhance flexibilityflexibility, preserve capital, and optimize our distribution strategy in response to evolving market dynamics. We also own and operate a vehicle service network comprised of service centers in major metropolitan areas and a fleet of mobile service vehicles. In addition to our in-house capabilities, we continue to grow an approved list of specially trained collision repair shops, which in some cases serve as repair hubs for mobile service.

We designed the Lucid Gravity to share components with the Lucid Air where possible, and we continue to evaluate opportunities to apply components developed for the Lucid Gravity to the Lucid Air, further expanding the number of common parts while also enhancing the customer experience in the Lucid Air.possible. These measures enable efficiency in design, engineering, and capital expenditure deployment for the Lucid Gravity. We anticipate continued consumer demand for theour Lucid Airvehicles based on itstheir luxurious design, high-performance technology, sustainability leadership, and the growing acceptance of and demand for EVs as substitutes for gasoline-fueled vehicles. We also anticipate that these attributes will drive customer demand for the Lucid Gravity, and our future models, including our upcoming Midsize platform.

We operate a direct-to-consumer sales and service model in North America, which we believe allows us to offer a personalized experience for our customers based on their purchase and ownership preferences. We expect to continue to incur significant expenses in our sales, service and marketing operations for sales of theour Lucidcurrent Air, the Lucid Gravity,vehicles and any future vehicle programs, including the upcoming Midsize platform, that we may offer over the coming decade, including to open additional studios, expand our sales force, grow marketing and brand awareness, and establish a robust service center operation. As of MarchJune 31,30, 2026, we have opened 62 studios and service centers (excluding temporary and satellite service centers): 39 in the United StatesU.S. (14 in California, four in New York, three in Florida, two in each of Arizona, Illinois, Massachusetts, New Jersey, Texas, Virginia and Washington, and one in each of Colorado, Georgia, Michigan and Pennsylvania), seven in Germany, five in Canada, four in Saudi Arabia, three in Switzerland, two in Norway, one in the Netherlands, and one in the United Arab Emirates. We also plan to hire additional sales, customer service, and service center personnel. We believe that investing in our direct-to-consumer sales and service model will be critical to delivering and servicing the Lucid EVs we currently manufacture and sell.

As we expand globally, our strategy includes establishing third-party distribution partnerships through proven business models such as importer, dealer, agent, and authorized repairer relationships. Introducing these channels is expected to enable rapid growth in these markets while optimizing the capital required to build a comprehensive sales and service network. All third-party partnerships are expected to be governed by robust agreements, standards, and guidelines to ensure compliance and maintain the Lucid customer experience throughout the entire journey.

Achieving commercialization and growth for each generation of our EVs requires us to make significant capital expenditures to scale our production capacity and improve our supply chain processes in the United StatesU.S. and internationally. We expect our capital expenditures to increase as we continue constructing and putting into operation the CBU portion of AMP-2 and expanding AMP-1. The amount and timing of our future manufacturing capacity requirements, and resulting capital expenditures, will depend on many factors, including the pace and results of our research and development efforts to meet technological development milestones, our ability to develop and launch new EVs, our ability to achieve sales and meet customer demand at anticipated levels, our ability to utilize planned capacity in our existing facilities and our ability to enter new markets.

We develop in-house battery, powertrain, and software technology, which requires significant capital investment in research and development. The EV market is highly competitive, including both established automotive manufacturers and new entrants. To establish market position and attract customers, we plan to continue making substantial investments in research and development for the commercialization and continued enhancements of theour Lucidcurrent Airvehicles andwhere thestrategically Lucid Gravity,warranted, the development of our Midsize platform, as well as future generations of our EVs and other products.

We recognize revenue from vehicle sales when the customer obtains control of the vehicle, which is upon delivery. We also generate revenue from non-warranty after-salesafter-sale vehicle services and parts, sales of battery pack systems, powertrain kits, retail merchandise, regulatory credits, and sales of non-Lucid vehicles acquired as part of the trade-in program. We generate regulatory credits revenue from the sale of tradable credits we earn under various regulations. This includes credits related to ZEVs and GHG, and CAFE credits.

Revenue increased by $47.4$145.9 million, or 20%56% and $193.3 million, or 39% for the three and six months ended MarchJune 31,30, 2026, respectively, as compared to the same periods in the prior year. The increases were primarily driven by higher Lucid vehicle deliveries for the three and six months ended June 30, 2026, as compared to the same periodperiods in the prior year,year. primarilyIn driven byaddition, our ramp-up of the Lucid Gravity. Lucid GravityGravity, which has a higher average selling price, resulted in a favorable product mix that further contributed to the increaseincreases in the revenue. The increase in revenue was partially offset by a decrease of $31.5$24.8 million in regulatory credit sales for the threesix months ended MarchJune 31,30, 2026,2026 as compared to the same period in the prior year. We believe the recent proposal to lower the U.S. federal fuel economy standards and eliminate CAFE EV credit trading may create uncertainties regarding our ability to generate future regulatory credit sales. Please see “Risk Factors — Risks Related to Our Business and Operations — The unavailability, reduction or elimination of certain government and economic programs could have a material adverse effect on our business, prospects, financial condition and results of operations”.

Cost of revenue increased by $130.6$300.3 million, or 28%56% and $430.9 million, or 43% for the three and six months ended MarchJune 31,30, 2026, as compared to the same periodperiods in the prior year,year. The increases were primarily due to higher deliveries of Lucid vehicles and higher inventory write-downs includingassociated losseswith frominventory firmoptimization purchase commitments and approximately $41.0 million of incremental tariff cost impact resulting from U.S. tariffs implemented in February 2025, and increased in unit costs attributable to a higher Lucid Gravity product mix. These increases wereactions, partially offset by anreduction estimatedin losses on firm commitment as a result of lower volume for the three and six months ended June 30, 2026, as compared to the same periods in the prior year. The increases were also partially offset by the IEEPA tariff refund of approximately $53.0$9.5 million,million and $62.5 million recorded during the three and six months ended June 30, 2026, following the U.S. Supreme Court’s February 2026 ruling that certain tariffs imposed under the IEEPA were unlawful. See Note 4 “Balance Sheets Components” to our condensed consolidated financial statements included elsewhere in this Quarterly Report for more information. In the near term, we expect our production volume of vehicles to continue to be less than our manufacturing capacity.

We recorded write-downs of $237.9$299.7 million and $151.6$537.6 million for the three and six months ended MarchJune 31,30, 20262026, respectively, and 2025,$184.7 million and $336.3 million for the same periods in the prior year, respectively, to reduce our inventories to their net realizable values, for any excess or obsolete inventories, and losses from firm purchase commitments. The increaseincreases in the write-downs waswere primarily due to higher inventory balancebalances driven by thehigher Lucid Gravity production ramp-up and tariff impactsmix for the three and six months ended MarchJune 31,30, 2026, as compared to the same periodperiods in the prior year. While the final scope and application of recently announced changes in trade policy remain uncertain at this time, higher tariffs on imports and subsequent retaliatory tariffs could adversely impact our financial results. We expect inventory write-downs could negatively affect our costs of vehicle sales in the near term as we ramp production volumes up toward our manufacturing capacity.

On August 16, 2022, the Inflation Reduction Act of 2022 (the “IRA”) was enacted with clean energy incentives. The impact of the IRA on our results of operations was not material for the three and six months ended MarchJune 31,30, 2026 and 2025. We will continue to evaluate the expected future impact of the IRA on our business and financial statements upon issuance of additional regulatory guidance.

Our research and development efforts have primarily focused on the development of our battery and powertrain technology, the Lucid Air, the Lucid Gravity, and future generations of our EVs, including our Midsize platform.platform, and our robotaxi program. Research and development expenses primarily consist of materials, supplies, personnel-related expenses for employees involved in the engineering, designing, and testing of EVs, and contractor fees. Personnel-related expenses primarily include salaries, benefits and stock-based compensation. In addition, research and development expenses include prototype material, engineering, design and testing services, and allocated facilities costs, such as office and rent expense and depreciation expense.

Research and development expense increased by $84.4$47.5 million, or 34%17% for the three months ended MarchJune 31,30, 2026, as compared to the same period in the prior year. The increase was primarily attributable to increases of $42.9$41.1 million in engineering, design and testing services, and prototype materials related mostly to the Midsize platform, $27.6$8.4 million in payroll related expenses,expenses and $8.0$3.9 million in utilization of contractorsfacilities and professional fees primarilyrental related tocosts, anpartially increaseoffset with $8.6 million in headcountlower tostock-based supportcompensation our Midsize platform.expenses.

Selling, general, and administrative expense increased by $92.0$43.6 million, or 43%17% for the three months ended MarchJune 31,30, 2026, as compared to the same period in the prior year. The increase was primarily attributable to increases of $32.1 million in stock-based compensation expenses, primarily driven by a reversal of previously recognized expenses for the former CEO’s unvested time-based RSUs during the three months ended March 31, 2025, $18.1 million in payroll related expenses due to our continued commercialization and growth strategy, $16.5 million in facilities and rental related costs, and $15.8$15.5 million in sales and marketing expenses.expenses, $14.7 million in utilization of contractors and professional fees, and $8.5 million in other general corporate expense.

On February 20, 2026, we announced the February 2026 Plan that intended to align with our long-term operating goals as we focus on the start of production of our Midsize platform, expansion into the robotaxi market and development of ADAS technologies, as well as the sale and distribution of our current models in existing and new geographies. We expect to substantially completecompleted the February 2026 Plan by the end ofin the second quarter of 2026, subject to local law and consultation requirements. As a result of the 2026 Plan, we expect to incur total workforce reduction charges of approximately $40 million, primarily related to severance payments, employee benefits, and employee transition. During the three months ended March 31, 2026, we recorded workforce reduction charges of $37.9 million. See Note 3 “Workforce Reduction” to our condensed consolidated financial statements included elsewhere in this Quarterly Report for more information.2026.

Other Income (Expense),Income, net

The following table presents our other income (expense),income, net for the periods presented (in thousands):

The Private Placement Warrants remained unexercised as of MarchJune 31,30, 2026, and the liability was remeasured to a fair value of nil as of MarchJune 31,30, 2026 and December 31, 2025. The changes in fair value were nil and $12.9 million during the three and six months ended MarchJune 31,30, 20262026, and 2025,resulted respectively,in unrealized gains of $5.3 million and were$18.2 million for the same periods in the prior year, respectively. The change in fair value was classified within change in fair value of common stock warrant liability in the condensed consolidated statements of operations and comprehensive loss.

On November 6, 2023, in connection with the commencement of the Strategic Technology Arrangement with Aston Martin, we received 28,352,273 ordinary shares of Aston Martin. The ordinary shares of Aston Martin are subject to remeasurement to fair value at each reporting period. Such shares were remeasured to fair values of $13.6$14.2 million and $24.3 million as of MarchJune 31,30, 2026 and December 31, 2025, respectively. The changes in fair value resulted in an unrealized lossesgain of $10.2$0.5 million and $13.5an unrealized loss of $9.7 million for the three and six months ended MarchJune 31,30, 20262026, respectively, and 2025,an unrealized gain of $3.9 million and an unrealized loss of $9.5 million for the same periods in the prior year, respectively, and were classified within change in fair value of equity securities of a related party in the condensed consolidated statements of operations and comprehensive loss. See Note 5 “Fair Value Measurements and Financial Instruments” and Note 15 “Related Party Transactions” to our condensed consolidated financial statements included elsewhere in this Quarterly Report for more information.

Change in Fair Value of Derivative Liabilities and Subscription Agreements Associated with Redeemable Convertible Preferred Stock (Related Party)

In March 2024, we entered into the Series A Subscription Agreement with Ayar. Pursuant to the Series A Subscription Agreement, Ayar agreed to purchase from ussold 100,000 shares of our Series A Redeemable Convertible Preferred Stock to Ayar for an aggregate purchase price of $1.0 billion in a private placement. Subsequently,In in MarchAugust 2024, we issuedsold the75,000 shares of our Series B Redeemable Convertible Preferred Stock to Ayar pursuantfor to the Series A Subscription Agreement and receivedan aggregate netpurchase proceedsprice of $997.6$750.0 million afterin deductinga issuanceprivate costs of $2.4 million.placement.

InOn AugustApril 2024,14, 2026, we entered into the Series BC Subscription Agreement with Ayar. Pursuant to the Series BC Subscription Agreement, Ayar agreed to purchase from us 75,00055,000 shares of our Series BC Redeemable Convertible Preferred Stock, for an aggregate purchase price of $750.0$550.0 million in a private placement. Subsequently, inon AugustApril 2024,28, 2026, we issued the shares to Ayar pursuant to the Series BC Subscription Agreement and received aggregate net proceeds of $749.4$548.9 million after deducting issuance costs of $0.6$1.1 million. We determined that the Subscription Agreement was required to be accounted for at fair value between the execution date and the settlement date as it represented a contract to sell redeemable stock. As a result, we recognized a gain of $142.2 million reflecting the change in fair value of the contract as measured upon settlement based on the difference between the fair value of the Series C Redeemable Convertible Preferred Stock at issuance versus the cash purchase price negotiated at fair value at contract inception, such that the Series C Redeemable Convertible Preferred Stock is initially recognized at fair value of $292.4 million on the issuance date.

The derivative liabilities of the Redeemable Convertible Preferred Stock were remeasured to a fair value of $8.8$163.7 million and $16.2 million as of MarchJune 31,30, 2026 and December 31, 2025, respectively. We recognized gains of $7.4$102.8 million and $281.7$110.2 million for the three and six months ended MarchJune 31,30, 20262026, respectively, and 2025,gains of $111.5 million and $393.2 million for the same periods in the prior year, respectively, primarily driven by a decreasechanges in our stock price,price. The gains for the three and six months ended June 30, 2026 includes $142.2 million of gain from Series C Subscription Agreement. The change in fair value are recorded within change in fair value of derivative liabilities and subscription agreements associated with redeemable convertible preferred stock (related party) in the condensed consolidated statements of operations and comprehensive loss. See Note 7 “Redeemable Convertible Preferred Stock” to our condensed consolidated financial statements included elsewhere in this Quarterly Report for more information.

Interest income decreased by $39.1$34.7 million, or 75%78% for the three months ended MarchJune 31,30, 2026, as compared to the same period in the prior year, primarily due to lower average cash and investment balances.balances and lower interest rates on investments.