Northvolt CEO quits on tumble into administration
Troubled battery maker files for Chapter 11 protection in the US
Automaker aims to limit inventory to boost margins
US EV pure play Lucid expects only a 6.7pc increase in production in 2024 compared to 2023, in a move which the company says will match supply to demand and improve margins.
The production guidance marks a sharp downturn in Lucid's growth rate, as production for full-year 2023 saw a 17pc increase compared to 2022.
"Moving to the outlook for 2024. We forecast production of approximately 9,000 vehicles in 2024, and we will continue to prudently manage and adjust our production to meet our sales and delivery needs," Lucid interim CFO Gagan Dhingra told investors on the automaker's Q4 earnings call.
Lucid's decision not to aim for significant production growth is partly an attempt to moderate inventory levels.
The company has historically struggled with its conversion rate – the percentage of manufactured vehicles it has sold – putting the company at risk of losing money as inventory depreciates.
Lucid has managed to gradually reducing its inventory, with Dhingra saying that in Q4 total inventory decreased 12.9pc sequentially, primarily due to raw material drawdowns.
This will boost profitability by reducing inventory impairment charges, according to Dhingra.
"Looking forward to the first quarter of 2024, we anticipate improvements to gross margin despite the price adjustments in the quarter for Pure and Tooling. The improvements are expected to be driven primarily by projected reductions in impairments," he says.
Another part of this anticipated margin growth will be driven by the company's ongoing strategy of opening studios and service centres across the US – a key aspect of its brand-building mission.
But Lucid's attempt to grow margins will be tempered by increased operating expenses in 2024, according to the CFO.
"Looking into 2024 we expect operating expenses to be up year-over-year on an absolute basis, but expect it to decrease as a percentage of revenue," Dhingra says.
Enjoying EV inFocus? Hit follow on Google News to get us in your feed.
Insider Focus LTD (Company #14789403)