WSJ Tech News Briefing: Bold Names Episode: Why This Tesla Pioneer Says the Cheap EV Market 'Sucks'
Release Date: November 16, 2024

Introduction

In this episode of WSJ Tech News Briefing, hosts Christopher Mims and Tim Higgins delve into the competitive landscape of the electric vehicle (EV) market, focusing on Peter Rawlinson, the CEO of Lucid Motors. Rawlinson, a key figure in the EV revolution and former engineer behind the Tesla Model S, shares his insights on why the affordable EV segment is fraught with challenges and why Lucid is steering away from that crowded space.

Lucid’s Technological Advancements and Strategic Focus

Peter Rawlinson emphasizes Lucid's commitment to advancing EV technology to overcome significant barriers to widespread adoption, such as range anxiety and battery costs.

“We have raised in a brutal market around 1.75 billion right now and I think that puts us in an incredible position. It helps secure the future of this company...”
— Peter Rawlinson [01:03]

Rawlinson discusses Lucid's innovative approach to increasing vehicle efficiency, allowing longer ranges with smaller, less expensive batteries. This strategy not only addresses range anxiety but also aims to reduce the overall cost of EVs by minimizing battery size, the most significant cost component in EV manufacturing.

“With a more efficient car, we can travel further with less batteries. And batteries are the most significant cost element of the cost structure of an EV.”
— Peter Rawlinson [03:25]

Product Lineup and Market Positioning

Lucid has garnered acclaim for its Lucid Air, a high-end sedan, and is preparing to launch the Gravity, a three-row SUV. While Lucid Air has received numerous awards, sales have not yet met early expectations. The company is now focusing on a mid-size vehicle priced around $48,000 to $50,000, positioning itself between luxury automakers like Mercedes-Benz and more affordable segments.

“Our mid size vehicle which is scheduled for start of production late '26, we anticipate that being priced at about $48 to $50,000.”
— Peter Rawlinson [07:53]

Rawlinson also touched upon the decision not to pursue the ultra-affordable $20,000 EV market internally, citing low margins and challenging manufacturing demands. Instead, Lucid plans to license its technology to other original equipment manufacturers (OEMs) better positioned to handle mass production.

“That market is notorious because you get into mass manufacture, terrible low margins... our vision is... to license and enable others to make more affordable.”
— Peter Rawlinson [06:36]

Financial Position and Capital Raising

Amidst a tough market environment, Lucid successfully raised approximately $1.75 billion, bolstering its financial stability and ensuring a cash runway into 2026. This influx of capital, supported by Saudi Arabia's Public Investment Fund, has fortified Lucid's position during a period when many EV makers are struggling.

“The media's construed it as we are diluting in order to raise. No, I want to change the narrative here. We have raised... $1.75 billion... with the public investment fund... secures our Future well into 2026.”
— Peter Rawlinson [17:24]

Competition in the EV Market

Lucid faces fierce competition from both established automakers and emerging Chinese EV manufacturers. Rawlinson critiques the mass-market approach of many competitors, arguing that while there is a substantial market for mediocre EVs, the industry’s future lies in high-quality, technologically advanced vehicles.

“There is a market for mediocrity. There is a mass market for mediocrity. But there's always room at the top for the best.”
— Peter Rawlinson [13:56]

He highlights that Chinese companies are making significant strides in vehicle engineering and user interface design but have yet to innovate substantially in core EV technologies. Additionally, state subsidies and a low-cost workforce give Chinese manufacturers a competitive edge.

“In terms of body engineering... user interface... they have low cost workforce.”
— Peter Rawlinson [24:15]

Future of EVs and Lucid’s Vision

Looking ahead, Rawlinson envisions Lucid playing a pivotal role in the transition to sustainable transportation. He underscores the necessity of pure battery electric vehicles (BEVs) over hybrids and fuel cells, asserting that only BEVs offer a scientifically and logistically viable path forward.

“Our vision of the company that I have set out is by the early '30s that we'll be able to produce a million of those vehicles a year... better gross margin per vehicle than anyone else can achieve.”
— Peter Rawlinson [19:12]

Lucid aims to leverage its technological advancements to achieve scalability and profitability, focusing on producing high-margin vehicles that set industry standards.

Autonomous Vehicles and Robo Taxis

The conversation shifts to the realm of autonomous driving, where Rawlinson expresses skepticism about the feasibility of Elon Musk's ambitious robo-taxi plans in the near term. He emphasizes the considerable technological and intellectual challenges that remain before achieving full vehicle autonomy.

“Robot taxis aren't possible, not with today's technologies and certainly not in the next 10 years.”
— Peter Rawlinson [21:56]

Comparing Lucid’s approach to autonomous technology with that of companies like Waymo, Rawlinson notes that while Waymo employs extensive sensor fusion and multiple LIDAR systems, Lucid is taking a more measured approach, currently operating at Level 2+ autonomy.

“We're like a level two plus right now. But what is misunderstood is that Tesla FSD is not yet at level three.”
— Peter Rawlinson [22:41]

Conclusion

Peter Rawlinson's insights reveal Lucid's strategic focus on high-efficiency, technologically advanced EVs and its preference for sustainable, pure battery electric solutions over mass-market, low-margin models. Despite facing intense competition and market skepticism, Lucid's robust financial backing and commitment to innovation position it as a formidable player in the evolving EV landscape.

“I have absolute faith that this is a tech race and there's always room at the top for the best technology.”
— Peter Rawlinson [25:30]

Lucid's vision underscores a long-term commitment to shaping the future of sustainable mobility, leveraging cutting-edge technology to outpace competitors and drive the industry forward.

Key Takeaways:

• Lucid’s Technological Edge: Focus on efficiency and reducing battery size to lower costs and increase vehicle range.
• Strategic Product Positioning: Targeting the luxury segment with plans to license technology for more affordable EVs.
• Financial Stability: Secured significant funding to ensure sustainability through critical growth phases.
• Competitive Landscape: Navigating challenges from Chinese manufacturers and traditional automakers with incomplete EV strategies.
• Future Vision: Committed to pure battery electric vehicles and advancing autonomous driving responsibly.

For more insights and detailed analyses, visit WSJ.com.